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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Could an individual challenge Virginia's 2008-2009 estimated income-tax assessments after the 90-day appeal deadlines?
No. The taxpayer appealed the 2008 assessment more than a year after its April 4, 2012 deadline and appealed the 2009 assessment after its November 27, 2012 deadline, so both applications were barred.…
Could a Virginia resident avoid 2008-2009 income tax by claiming income earned outside a federal enclave was not taxable?
No. A Virginia resident's federal adjusted gross income was the starting point for Virginia taxable income, subject to statutory modifications, and a state may tax its residents' income even when earn…
Could a corporation deduct related-parent franchise fees and exclude all related-party royalties from Virginia's intangible add-back?
Partly. Virginia allowed the franchise-fee deduction because the parent and transactions had economic substance and independent transfer-pricing studies supported arm's-length rates. But the royalty a…
Which cable and Internet devices were exempt, and could audit penalties be waived, for a provider's mixed-use equipment?
Virginia exempted DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters used to deliver the provider's cable or Internet services. Mixed-use equipment…
Which fleet charges and cable, Internet, and phone equipment qualified for Virginia sales-and-use-tax relief in a cable-provider audit?
Virginia ordered a mixed result. DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters received the transmission or Internet-service exemption. Most r…
Which cable and Internet devices were exempt, and could penalties be waived, in a provider's Virginia consumer-use-tax audit?
Virginia exempted DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters used to deliver the provider's cable or Internet services. Mixed-use equipment…
Which cable and Internet devices were exempt, and could penalties be waived, in a provider's Virginia consumer-use-tax audit?
Virginia exempted DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters used to deliver the provider's cable or Internet services. Mixed-use equipment…
Was a nonresident retiree entitled to interest after Virginia refunded tax that his former employer had wrongly withheld from retirement pay?
No. Virginia refunded all wrongly withheld tax, but the withholding was legally deemed paid only when the retiree filed each return. The Department issued the 2007-2010 paper-return refunds within 60 …
Did launch-pad environmental-control and piping equipment become taxable real-property fixtures, or remain exempt spaceport equipment?
The equipment remained tangible personal property and qualified for Virginia's spaceport exemption. Although a refrigeration contractor installed environmental-control systems and piping around a laun…
Could a medical-supplies retailer remove sampled untaxed sales because the customer later self-assessed and paid Virginia use tax?
No. The sample measured the retailer's own duty to collect and report sales tax, not the combined compliance of the retailer and its customers. Removing sampled transactions merely because one custome…
Did using a customer's nine-digit FEIN instead of Virginia's full registration number invalidate an otherwise complete Form ST-10?
No. Virginia accepted the Form ST-10 because it was correct in every other respect and the Department's 15-digit registration number included the customer's nine-digit FEIN. Certificates obtained afte…
Which exemption certificates and separately charged services could a food-service-equipment dealer remove from its Virginia sales-tax audit?
Virginia ordered substantial audit revisions. Most updated resale certificates were accepted; an otherwise complete certificate using the customer's FEIN and another with a verifiable partial registra…
Could a satellite-equipment retailer buy equipment tax-free for resale and sell it tax-free to a satellite-programming provider?
The retailer could continue buying satellite equipment exempt for resale, but it had to collect Virginia tax on future sales to the satellite-programming provider because the provider was the taxable …
Could a manufacturer reduce 2008-2010 local machinery-and-tools tax for equipment it said was disposed of or idle after a foundry closure?
Only partly. The 2008 amended return was filed after the statutory deadline and remained barred. For 2009 and 2010, however, Virginia found that the manufacturer might have enough evidence to show tha…
Was a restaurant's shareholder-president personally liable for converted sales, withholding, and litter-tax assessments despite blaming the general manager?
Yes. Even if the general manager could also be responsible, Virginia could convert the same corporate liabilities to more than one person. The president attended collection hearings, accepted responsi…
Could a textile-services company change its sales-tax sample because a customer proved it had self-assessed and paid use tax?
Virginia would not recalculate the sample, because the seller's collection duty did not depend on whether a customer later paid use tax and similar untaxed sales outside the sample might remain unpaid…
Could a vending-and-kiosk retailer overturn Virginia use tax by asserting that vending payments were for services and kiosk payments included tax?
No. The retailer supplied no contracts or other records proving that its vending-machine payments bought exempt services rather than taxable property, so it could not satisfy the true-object test. Its…
Did a hotel prove that Virginia's Invoice Capture Tool used the wrong sample population, gross-up, or exception total in its audit?
No. The auditor removed offsetting positive and negative transactions over $20,000 and, under Department policy, excluded the remaining negative transactions from the Invoice Capture Tool population. …
Should a young company calculate Virginia's R&D credit fixed-base percentage using every prior year it was in business or only years it operated in Virginia?
Use every applicable prior taxable year the company was in business, not only the years it operated in Virginia. The company had been in business in 2010 and 2011 but operated in Virginia only in 2011…
What major Virginia state and local tax changes did the Department of Taxation identify in its 2013 Legislative Summary?
Virginia's 2013 Legislative Summary was a broad historical reference guide, not a taxpayer ruling. Major changes included electronic employer-withholding filing, IRC conformity through January 2, 2013…
Who qualified for Virginia's 2013 Port Volume Increase Tax Credit, how was it calculated, and how did taxpayers apply?
Under these historical guidelines, an agricultural, manufacturing-related, or mineral-and-gas entity generally had to own the cargo, use a Virginia port, and increase cargo volume at least 5% over its…
What did Virginia's July 2013 Insurance Premiums License Tax guidelines require after administration moved from the SCC to the Tax Department?
For taxable years beginning in 2013, the Virginia Department of Taxation took over Insurance Premiums License Tax reports, payments, billing, collections, and audits, while the SCC's Bureau of Insuran…
Did a corporation substantiate a Virginia foreign-source-income subtraction through its protective refund claim and federal Form 1118?
No. The protective claim did not state the refund amount or supply the requested evidence identifying and substantiating qualifying foreign-source income. Form 1118 showed allocable deductions exceedi…
Could an unregistered equipment seller replace Virginia's estimates for product sales and technician equipment with documented actual amounts?
Partly. Virginia allowed the company 45 days to document its actual Virginia product sales and any sales or use tax properly paid to another state on equipment used by technicians. Verified records co…
Were separately charged computer setup and configuration services exempt installation labor in Virginia?
Yes, within the ruling's limits. Unpacking and positioning a computer, attaching peripherals, loading customer-ordered off-the-shelf software, adjusting network connections, checking compatibility, an…
What did Virginia's motor-vehicle-rental tax guidelines require after the July 1, 2013 amendments?
Under these historical guidelines, most passenger-vehicle rentals for less than 12 months carried a combined 10% tax and fee. Beginning July 1, 2013, specified charges—including fines, delivery and pi…
Could a California domiciliary who became a Virginia actual resident for part of 2010 claim a Virginia credit for California tax or other states' tax?
She could not claim a Virginia credit for tax paid to California, her domiciliary state, on the 2010 part-year return. Virginia's policy expected California to grant the resident credit for Virginia t…
Could a building-supply wholesaler obtain further Virginia audit relief with a resale certificate missing an address and a later manufacturer certificate?
Yes, conditionally. Virginia removed sales supported by a Form ST-10 whose missing customer address was corroborated by business-license information and Department records, while warning that future i…
Could a manufacturer sell an FDA-approved prescription copper IUD tax-free to specified licensed medical professionals for use in their practices?
Yes. The FDA classified the copper IUD as a prescription drug, and the Virginia Board of Pharmacy treated it as a Schedule VI controlled substance. Virginia therefore allowed the manufacturer to sell …
Were a husband and wife Virginia domiciliaries in 2009 because the husband retained and renewed a Virginia driver's license?
No. The wife was continuously domiciled in State A. The husband had abandoned Virginia and established State A domicile in 2005 through indefinite employment, a permanent home, and resident returns. A…
Did taxpayers substantiate disallowed 2011 deductions for medical expenses, charitable gifts, and employee business expenses?
Not yet. Even after some additional medical proof, the revised expenses did not exceed the 2011 threshold of 7.5% of federal adjusted gross income. Charitable claims lacked required records, duplicate…
Were lumber and plywood placed in grain containers and equipment used mainly to dredge interstate waterways exempt from Virginia use tax?
Yes. The lumber and plywood were not qualifying packaging or transportation devices, but they were nonreturnable items resold to customers and therefore qualified under the resale exemption. The compa…
Were a commercial printer's mailing-list, campaign, and mail-preparation functions a separate BPOL-taxable service business?
No. Nearly every mailing-services customer also bought a printed product from the taxpayer, and combining the services made the printing business more convenient and attractive. The mailing functions …
Did a trial court's reduced restitution order prevent Virginia from collecting the remaining tax, interest, and 100% fraud penalty?
No. Criminal restitution was part of sentencing and did not replace Virginia's separate civil authority to assess all unpaid tax, interest, and the statutory 100% fraud penalty. The taxpayers entered …
Did a taxpayer disprove Virginia's 2005-2010 estimated assessments by claiming another-state residence and denying Virginia rental income?
No. The taxpayer showed an abode and vehicle in another state, but he kept a Virginia post-office box, renewed a Virginia driver's license in 2010, and was linked to multiple Virginia properties. He d…
How did Virginia tax security systems that customers self-monitored, the seller monitored regularly, or the parties changed after installation?
A fully self-monitored system was a retail sale of tangible personal property, taxable on the sales price except separately stated installation or a valid exemption. A system regularly monitored by th…
Did buying substantially all assets of a franchised motor-vehicle dealership qualify for Virginia's occasional-sale exemption?
Yes. Although the seller continued a used-vehicle operation, that activity was housed separately, did not use the transferred dealership assets, had no shown economic flow with the dealership, and did…
Was an optional beauty-product protection plan taxable when its benefit was a future gift card rather than repair or replacement?
Yes. The plan differed from a repair or replacement warranty because its benefit was an intangible gift-card right, but that distinction did not make the charge exempt. The optional plan was sold only…
What Virginia tax interest rates applied during the third quarter of 2013?
Virginia's third-quarter 2013 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after the statutory nine-m…
Could a telecommunications provider exclude its local BPOL tax from the sales price subject to Virginia communications sales tax?
No. BPOL tax is imposed for the privilege of doing business in a locality; it is not a tax on the customer's purchase, sale, use, or consumption of communications service, and it is not a government f…
How did Virginia's revised 2013 guidelines implement the statewide and regional retail sales and use tax changes?
The historical guidelines raised Virginia's total statewide retail sales and use tax rate from 5.0% to 5.3% on July 1, 2013 and imposed a 0.7% regional tax, for a 6.0% total rate, in specified Norther…
Did Virginia's additional 0.7% Hampton Roads sales tax apply in Gloucester and Surry Counties on July 1, 2013?
No. Tax Bulletin 13-8 said Gloucester and Surry Counties were members of the Planning District 23 Commission but were not located in Planning District 23, so the additional 0.7% regional tax did not a…
When did Virginia accept or reject exemption-certificate support for a technology seller's audited sales?
Virginia granted partial relief. It removed Customer A sales made after a complete resale certificate was accepted in good faith and removed Customer C sales supported by a Department authorization le…
Could a taxpayer challenge a Virginia sales-tax assessment after the 90-day appeal deadline and avoid the post-amnesty penalty?
No. The assessment was dated September 6, 2012, making the complete administrative appeal due December 5, 2012, but the Department received the taxpayer's only appeal correspondence on April 16, 2013.…
Could a Virginia resident obtain out-of-state tax credits without filing Virginia returns for 2007 and 2008?
The taxpayer first had to file Virginia returns. She conceded Virginia domicile and supplied other-state returns but had filed no Virginia return for 2007 or 2008. The Department required both Virgini…
Did a Foreign Service employee change domicile from Virginia to another state before moving overseas?
Not on the evidence submitted. The employee cut Virginia ties and obtained a license, vehicle registrations, and voter registration in another state, but moved from Virginia to an overseas post withou…
Could a county tax all machinery at a plant that continued limited operation briefly after its announced shutdown?
Not on the record presented. Although the manufacturer's March 2010 shutdown notice may have been inaccurate because some equipment operated briefly into January 2010, the Department found that some o…
Was a nonqualified pension distribution taxable by Virginia when it was earned before the taxpayers moved but paid afterward?
Yes. Although the husband's lump-sum nonqualified pension was earned and payable before the couple moved to Virginia, it was actually distributed in April 2010 after they became Virginia residents. Th…
Could taxpayers obtain a Virginia refund by filing their original 2008 part-year return after the extended due date?
No. The taxpayers filed their original 2008 part-year Virginia return on May 22, 2012, after both the extended filing deadline and the three-year refund period measured from the May 1, 2009 original d…
Did a Foreign Service officer retain California domicile or abandon Virginia domicile during an overseas assignment?
No. Virginia found that the officer abandoned California domicile and established Virginia domicile after moving, buying a home, registering a vehicle, obtaining and renewing a Virginia license, and f…
Were a ready-mix concrete seller's delivery and fuel surcharges and Virginia pickup of skid-steer equipment tax-exempt?
No. Virginia upheld tax on the ready-mix seller's delivery and fuel surcharges because mixing and processing continued in the truck until the concrete reached the job site, making the charges part of …
Could taxpayers apply a late-filed 2008 overpayment to 2009 after Virginia's refund limitations periods expired?
No. The taxpayers filed the 2008 amended return in October 2012, after the general three-year period and every applicable statutory exception had expired. Calling the requested relief a credit against…
Did a service member's statement that the military treated another state as home prove her 2009 military pay was exempt from Virginia tax?
Not by itself. The Servicemembers Civil Relief Act protected an existing domicile from changing solely because of military orders, but the taxpayer had filed a Virginia resident return, reported civil…
Did Virginia tax a nonresident interstate truck driver's wages and sole-proprietor owner/operator service fees?
Generally no, for the compensation described. Federal law barred Virginia tax on the nonresident employee's interstate motor-carrier wages and also treated qualifying transportation-service fees paid …
Did moving abroad and qualifying for the federal foreign-earned-income exclusion end the taxpayers' Virginia domicile?
No. Although the couple lived and worked indefinitely in another country, they kept a Virginia home, vehicles, voting ties, and renewed Virginia driver's licenses, and later claimed Virginia residency…
Could a taxpayer undo her 2009 Virginia resident return without clearly documenting where she lived and established domicile?
Not on the evidence submitted. The taxpayer had some ties to another state but retained a Virginia driver's license until October 2009, filed a full-year Virginia resident return, and had Virginia tax…
Did an other-state return and surrender of a Virginia license prove that a taxpayer changed domicile before 2009?
Not by themselves. The taxpayer filed a 2009 return in another state and had surrendered her Virginia driver's license in August 2008, but she did not provide the additional records Virginia requested…
Could an out-of-state partnership use separate accounting instead of Virginia's statutory apportionment formula for 2012?
No. The partnership showed only that separate accounting produced a different result after an out-of-state real-estate sale. It supplied no clear and cogent evidence that Virginia's formula was uncons…
Were no-charge oil and filter changes under a manufacturer's scheduled-maintenance warranty subject to Virginia retail sales tax?
No. The vehicles' manufacturer package covered scheduled maintenance for two years or 25,000 miles, and customers paid nothing when oil and filters were replaced. Virginia treated the work under its w…
Could a shuttle company treat its drivers as independent contractors without contracts, tax forms, or payment records?
No. The shuttle service supplied no contracts, Forms W-2 or 1099, employment forms, individual driver records, or payment documentation supporting independent-contractor status. Virginia therefore tre…
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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.