Virginia State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Virginia, with full citations and the original source on every page.
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Are separately billed hotel parking charges subject to Virginia sales tax when the customer also buys accommodations?
Yes. Parking sold to a customer who also purchased hotel accommodations was an additional charge connected with the room and was taxable, even when billed outside the room revenue. Parking sold by its…
Did Virginia's mining exemption or customers' direct-payment permits protect a contractor's untaxed mine-site purchases from use tax?
No. Virginia upheld the use-tax assessments. Vegetation-control chemicals, power-transmission poles, and protective fencing were not used directly in mining, and customers' direct-payment permits did …
Did a granulated drink mix with a Supplement Facts panel qualify for Virginia's reduced food rate, and who owed undercollected tax?
No. Virginia classified the drink mix as a dietary supplement because it carried a Supplement Facts panel, so the full sales-tax rate applied. Because the dealer had charged too little tax on Virginia…
Did nutritional shakes labeled with a Supplement Facts panel qualify for Virginia's reduced sales-tax rate for food?
No. Virginia treated the shakes as dietary supplements because their labels carried Supplement Facts panels, so they did not qualify as food for home consumption and were taxable at the full rate appl…
Could an electrical contractor use a city's Form ST-12 or federal energy-grant funding to buy lighting-upgrade materials tax-free?
No. Virginia held that the electrical contractor was the taxable user and consumer of materials installed in city facilities. The city's Form ST-12 could not pass through its government exemption, fed…
Was an 18% mandatory banquet gratuity excluded from Virginia's taxable sales price even though 3% was kept as a house gratuity?
Yes. Virginia held that the entire 18% mandatory gratuity was excluded from taxable sales price because it did not exceed 20% of the meal price. The 3% house share did not make the lump-sum charge tax…
Were tumor-treating-field cancer therapy devices exempt from Virginia sales tax as durable medical equipment?
Yes, when purchased by or on behalf of a specific individual. Virginia found the tumor-treating-field devices qualified as durable medical equipment. Bulk sales or leases to for-profit hospitals, phys…
Which dealers had to make Virginia's accelerated sales-tax payments in June 2015 and 2016, and how did payment and reconciliation work?
For June 2015 and June 2016, a dealer with at least $2.5 million of taxable sales or purchases in the prior fiscal year generally had to prepay 90% of the previous June's sales-and-use-tax liability, …
Did pilot-line equipment qualify for Virginia's R&D sales-tax exemption when it was also used for quality control and customer-specific work?
No. Although the technical center performed qualifying research, the same pilot-line equipment also supported quality control, customer-specific modifications, cost reduction, and competitor analysis.…
Could a Virginia seller reduce an audit assessment with valid customer exemption certificates obtained after the audit began?
Yes. Certificates obtained after an audit begins are not accepted as having been taken in good faith and receive greater scrutiny, but Virginia found the submitted customer certificates valid and sent…
Did installed bowling lanes, pinsetters, ball returns, and scoring equipment become real-property fixtures for Virginia sales-tax purposes?
Yes. Virginia found the bowling equipment became part of the real property after installation. It was annexed to the premises, adapted to the bowling-alley use, and intended to remain. The contractor …
Could a federal contractor buy Army property tax-free merely because the solicitation named it purchasing agent and advanced government funds?
Not on the facts supplied. Calling the contractor a purchasing agent and advancing federal funds did not prove that the United States' credit was directly bound. Virginia could not determine who was t…
Could an office-furniture seller accept Form ST-11 after Virginia said manufacturing machinery may be bought exempt?
No. Virginia's email said machines used in manufacturing may qualify; it did not approve office furnishings. The seller knew the furniture was not used in production and directed the customer to use F…
Was a hospital's one-time sale of laboratory equipment exempt as an occasional sale even though the hospital was registered for other retail sales?
Yes. The hospital's sales-tax registration covered its cafeteria and gift shop, not the laboratory assets, so the one-time equipment sale qualified as an occasional sale. A refund was due only after t…
Could a restaurant replace Virginia's reconstructed alcoholic-beverage sales audit with bank-based reports that ABC had not yet verified?
Not yet. Virginia could use ABC reports to reconstruct sales because the restaurant lacked adequate daily records. It would accept revised bank-based MBAR figures only after ABC verified them within 6…
Could a mobile repair business overturn an estimated Virginia sales-tax audit when its records were stolen and it supplied no proof of exempt services or sales?
No. With no returns or sales records, Virginia could estimate taxable sales from ticket books, bank statements, corporate returns, and prior audit data. Unsupported claims about exempt services did no…
Did Virginia's seven-year collection limit bar a 2014 collection effort on sales-tax assessments converted to a responsible officer in 2004?
No. The converted bills were governed by the 20-year collection period in effect when the 2003-2004 assessments were issued, not the seven-year period in the 2015 statute. Virginia's 2014 collection e…
How did Virginia tax a country club's 20% service charges, minimum quarterly food charges, and fertilizer reimbursements?
Virginia removed tax from the club's mandatory service charges of 20% or less and from quarterly charges imposed when members bought too little food. Fertilizer reimbursements were taxable retail sale…
Were hotels' mandatory 20% service charges on banquet and meeting meals subject to Virginia sales tax?
No. Mandatory gratuity or service charges of 20% or less on the hotels' meal charges were excluded from taxable sales price; only the portion above 20% was taxable. Virginia reversed the assessments a…
Was a private country club's mandatory 20% service charge on banquet meals subject to Virginia sales tax?
No. The country club qualified under the broad restaurant definition used for the meal-charge exclusion, so its mandatory service charge of 20% was not taxable. Only a portion above 20% would be taxab…
Could a live-performance business overturn Virginia use-tax audit items without records showing electronic delivery, out-of-state assets, or tax already paid?
Not without proof. The taxpayer initially failed to document electronic software delivery, assets that allegedly never entered Virginia, and tax already paid on an asset. Virginia remanded the audit f…
Did Virginia's manufacturing exemption cover a propane storage tank and stair handrails on an exempt raw-material silo?
No. The propane itself was an exempt production supply, but the tank merely stored it and was taxable. The raw-material silo qualified as part of integrated manufacturing, but its stair handrails only…
Were walk-in bathtubs, stairway wheelchair lifts, and outdoor ramps exempt as durable medical equipment without a physician's prescription or work order?
No. The products met Virginia's durable-medical-equipment criteria, but a sale was exempt only when purchased by or on behalf of an individual under a licensed physician's prescription or work order. …
How did Virginia tax an out-of-state company's equipment leases, maintenance contracts, delivery, Internet access, and third-party billing?
The out-of-state lessor had to register and collect tax on Virginia leases. Half of a flat parts-and-labor maintenance contract was taxable; qualifying installation and transport charges were exempt; …
Was electronically delivered software exempt when it was an integral part of a taxable medical hardware system?
No. Although electronically delivered software is generally nontaxable by itself, this software and its related services were integral to a taxable medical hardware system. Virginia included the charg…
How did Virginia resolve two sales/use-tax audits involving fixed assets, return reconciliations, wrong tax rates, exemption certificates, and customer-paid use tax?
Virginia sent both paid audits back for document review and adjustments. Reconciliations and several exemption certificates supported reductions; fixed-asset tax required more seller proof; customer-p…
Were a surgery center's required software training, bulk eye-surgery devices, distilled water, and documented purchases exempt from Virginia sales tax?
Mostly no. Required training was taxable as part of the medical-records system; bulk-purchased eye devices were not bought for named patients; and distilled water was not an exempt controlled or nonpr…
Did transformers, electrical distribution, compressed air, bulk gases, a machining center, and its isolated foundation qualify for Virginia's manufacturing exemption?
Yes. Virginia found the listed equipment directly used in manufacturing: 87% of the general electrical system served production, the compressed air and gases powered production, the machining center c…
Did a Maryland piano seller have to collect Virginia tax merely because a separate Virginia store used the same name?
No. Virginia found no evidence that the Maryland seller and same-named Virginia store were affiliated or the same legal entity, and the seller did not meet the then-applicable sufficient-activity test…
Could Virginia assess one piano retailer for untaxed sales made by a separate Maryland company using the same name?
No. The evidence showed the Virginia LLC and the Maryland piano company were separate legal entities with different owners, despite using the same name and sharing connections to a management company.…
Were airline ground-support equipment, repair parts, labor, and maintenance contracts exempt from Virginia sales tax?
Yes when sold to a qualifying scheduled common-carrier airline for direct use in its service. Ground-support equipment and repair parts were exempt, separately stated installation and repair labor was…
Could an advertising firm remove allegedly isolated printing, software, and asset purchases from Virginia's audit samples without transaction records?
No. Printing-related services were taxable with the printed property, and the firm did not document that software and other purchases were electronically delivered, isolated, or unusual. As a service …
Did Virginia's industrial-processing exemption cover a waste collector's bins, trucks, and equipment used to sort and bale recyclable paper and metal?
No, on the facts presented. The bins and collection trucks were taxable property used in a waste-disposal service. The sorting and baling operation also failed the industrial-processing test because t…
How did Virginia tax furnished apartment rentals shorter or longer than 90 days, and who paid tax on the furniture?
The provider had to register and collect sales tax on furnished accommodations rented for less than 90 continuous days. Stays of 90 days or more were not taxable; month-to-month stays required collect…
Did Virginia's agricultural sales-tax exemption cover rented water-treatment equipment and salt used to irrigate greenhouse plants for sale?
Yes. The greenhouse grew plants for wholesale and retail sale, and the equipment treated irrigation water to prevent iron from yellowing the plants. Virginia found the rented treatment units and the s…
Were a hotel's mandatory banquet gratuities of 20% taxable when part was retained by the house and the hotel was not treated as a conventional restaurant?
No. Virginia's statute excluded mandatory gratuities up to 20% of the meal price without requiring the full amount to be distributed to employees, and the exemption covered hotels and other places ser…
How did a vending operator with machines at both nonprofit schools and for-profit businesses have to report Virginia sales tax?
The nonprofit-only rule did not apply because some machines were at for-profit businesses. Under the historical rates in the ruling, the operator generally had to remit 7% on the wholesale cost of all…
Did documentation support refunds for Virginia sales tax allegedly paid in error to two vendors during an audit period?
Only in part. Virginia found the records sufficient for Vendor A and allowed a refund with interest, but denied the Vendor B claim because the taxpayer did not prove that tax had been paid erroneously…
Was a hotel's full contract charge for canceled rooms and meals taxable when the agreement labeled it liquidated damages plus applicable taxes?
Yes. The customer remained obligated to pay 100% of the contracted rooms, food, and beverages as liquidated damages plus applicable taxes. Virginia treated the balance, after credit for services the c…
Who collected Virginia tax when an out-of-state consignor sold goods for resale to a separate online seller that lacked Virginia nexus?
Under the 2014 facts, neither company collected tax on the retail sale. X did not sell to Virginia consumers and was not a Virginia dealer; Y made the consumer sale but had no Virginia nexus. Y should…
Did Virginia apply a Fairfax County circuit-court ISP equipment exemption statewide, and which purchases qualified for a refund?
No. Virginia continued to construe the ISP equipment exemption narrowly and declined to apply the Fairfax County Cisco decision statewide. It allowed a refund, with interest, only for equipment the au…
Did a telecom repair pricing agreement qualify for the rule taxing only half of a parts-and-labor maintenance contract?
No. The agreement set prices for optional repair and replacement transactions but imposed no predetermined fee or total charge when signed. It was a pricing agreement, not a qualifying maintenance con…
Did a telecom repair pricing agreement qualify for the rule taxing only half of a parts-and-labor maintenance contract?
No. The agreement set prices for optional repair and replacement transactions but imposed no predetermined fee or total charge when signed. It was a pricing agreement, not a qualifying maintenance con…
Did Virginia sales tax remain due on the remaining payments under a noncancellable equipment lease after the customer returned the equipment early?
Yes. The four-year lease was noncancellable and required payment despite dissatisfaction. Returning the equipment after one year did not eliminate the remaining gross proceeds, so the out-of-state les…
Was propane used to heat migrant-worker housing exempt as agricultural production, and were movable tobacco-curing barns taxable?
The housing propane was taxable because worker comfort and personal needs were not agricultural production for market. By contrast, movable tobacco-curing barns placed on concrete pads remained tangib…
Could a grocery store replace Virginia's two-day estimated sales-tax audit with revised EBT schedules when it lacked records of gross food sales?
Not yet. The store's inadequate records allowed Virginia to estimate taxable sales from a two-day observation period the store had accepted. EBT records could support revised exempt sales, but they di…
Were chemicals used between printing-ink production runs exempt as supplies used directly in manufacturing?
No. Although cleaning prevented color contamination and protected product quality, the chemicals were used only after one ink run stopped and before the next began. Because they were not actively and …
Which sales and equipment purchases did Virginia remove from a packaged-concrete manufacturer's sales/use-tax audit?
Virginia granted partial relief. It removed one qualifying underground-mine project sale for this audit, an exempt label machine, a server first used and taxed in another state, and replacement compre…
Which furniture-manufacturing, advertising, certificate, and penalty items did Virginia change in a sales/use-tax audit?
Virginia ordered a partial audit revision. It removed a valid resale sale, certified pollution-control filters, direct out-of-state shipments, and qualifying printed materials; it kept invalid carrier…
Could a separate tobacco packaging-and-shipping service buy cartons, paper, chipboard, and strapping under Virginia's manufacturing exemption?
No. The service provider did not process or change the tobacco and performed handling, storage, packaging, and shipping away from the manufacturer's plant. It was therefore the consumer of its cartons…
How did Virginia classify selected lip, acne, earwax, fiber, mouthwash, medical, beverage, propane, and coupon products for sales tax?
Virginia issued a product matrix. Acne medicine, Debrox, antiseptic mouthwash, qualifying heating pads and ice bags, domestic propane exchanges, and entertainment coupon books were exempt. Several bal…
Did reusable fabric sandwich and snack bags qualify as lunch boxes during Virginia's school-supplies sales-tax holiday?
No. The holiday guidelines used an all-inclusive list of qualifying school supplies. Lunch boxes were listed, but reusable fabric bags that held only sandwiches were more like ordinary plastic sandwic…
What Virginia state and local tax legislation did the Department summarize for the 2014 General Assembly and Special Session I?
This Department guide summarizes state and local tax legislation enacted during Virginia's 2014 General Assembly and Special Session I through July 1, 2014. It covers administration, income tax, tobac…
Did Virginia's ISP equipment exemption cover assets used for wholesale Internet service and web hosting as well as retail Internet access?
Only in part. Assets used in Fairfax County could qualify for the ISP exemption for retail or wholesale Internet service under a county circuit-court decision. Outside Fairfax, Virginia continued to d…
Could a federal construction contractor and its subcontractor buy freestanding office furniture tax-free for resale to the agency?
Yes. Modular panels, freestanding furniture, chairs, shelving, file cabinets, power strips, and similar items that would not be incorporated into or permanently affixed to the building could be bought…
Could a contractor buy modular buildings tax-free because it installed them for a federal agency under a government contract?
No. The contractor installed modular buildings as real-property construction and was the consumer of the materials, even though title passed to a federal agency and the agency supplied an exemption ce…
Were ceiling-track movable office partitions tangible personal property for resale, or real-property installations making the fabricator liable for use tax on materials?
They were treated as real-property installations. The partitions were attached to ceiling and floor systems, adapted to long-term office use, and not shown to be temporary. The contractor therefore co…
Could a retailer overturn an estimated Virginia sales-tax assessment without keeping sales, invoice, bank, or register records?
No. The retailer discarded records after a few months and could not substantiate claims about meat costs, gradual growth, a competitor's closure, invoices, deposits, or reported sales. Virginia found …
Did a Virginia seller owe Virginia sales tax when out-of-state manufacturers shipped products directly to buyers' locations outside Virginia?
No. The products never entered Virginia, and title and possession passed to the buyers outside Virginia with no use in the state. The sales therefore fell outside Virginia's retail-sales-tax jurisdict…
How did Virginia apply the true-object test and resale exemptions to mixed tasks under a federal prime contract and subcontract?
Virginia applied the true-object test to each lowest-level mixed task, not the 16-task instruction as a whole. Tasks 3, 14, and 16 primarily sought tangible personal property; their services facilitat…
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These are official tax letter rulings and advisory opinions issued by Virginia's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.