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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My audit was closed using estimates from my tax returns because I couldn't produce records in time — now that I actually have the records, can I get a fresh look?
Yes — because the Taxpayer now says the previously missing records are available, the Department is sending the case back to field audit staff for a fresh review, rather than treating the earlier best…
I manufacture and sell window blinds from Virginia showrooms, sometimes with installation by an outside company -- do I collect sales tax, pay use tax, or both, and how do I tell which applies?
It depends on whether a particular sale includes installation, and — for the seller's overall business — which activity (installed jobs or plain retail sales) makes up most of its gross receipts. A ma…
I sold dental prosthetics tax-exempt to a customer who checked the medical-exemption box on their certificate -- why did the state still assess me use tax on those sales?
Because the durable medical equipment exemption only applies when the seller can show, at the time of the sale, that the specific item was purchased for a particular, identifiable patient -- and this …
The IRS already adjusted my federal return for the same year Virginia is auditing -- doesn't that mean Virginia's assessment is wrong?
No — not when the IRS transcript actually confirms the same result. A husband and wife who filed a joint 2020 Virginia return couldn't substantiate business expense deductions claimed on their federal…
My representative was supposed to mail my Virginia investment-credit application but it arrived after the deadline -- can the Department make an exception?
No — this is a near-identical companion to the same-day P.D. 24-135: a taxpayer's representative filed the application for Virginia's qualified equity and subordinated debt investment credit (Va. Code…
The person who prepared our Research and Development tax credit calculations died before the deadline, delaying our application by six weeks -- can Virginia excuse the late filing?
No — even a genuinely sympathetic reason for a delay, like the death of the person responsible for preparing the credit computations, doesn't excuse a late application for Virginia's Research and Deve…
I moved out of state for work years ago and pay taxes there now, but I still have a Virginia driver's license and a house I visit regularly — does Virginia still consider me a resident?
Yes, likely -- because the taxpayer kept renewing his Virginia driver's license and returned regularly to a Virginia residence he retained, the Department found he hadn't proven he abandoned his Virgi…
I invested in a qualified small business and missed the April 1 deadline to apply for Virginia's investment tax credit because my representative mailed it late — can the deadline be excused?
No — the April 1 deadline for Virginia's qualified equity and subordinated debt investment tax credit is a hard deadline with no exceptions, even when a taxpayer's own representative was responsible f…
I believed the letters approving my business's investment as credit-eligible meant I didn't need to separately file the credit application by the deadline — can Virginia excuse the late filing?
No — Virginia's April 1 deadline for the qualified equity and subordinated debt investment credit is a hard deadline, and believing that other paperwork already covered the requirement doesn't excuse …
I withdrew money from my Thrift Savings Plan, and part of my contributions were already taxed by another state — can I subtract that portion on my Virginia return?
Yes, partially — Virginia allows a subtraction only for the portion of a retirement distribution that traces back to contributions that were both deductible for federal tax purposes AND already taxed …
The Department ruled against me on my residency dispute, and I found six other cases where taxpayers won similar arguments — can I get my case reconsidered on that basis?
No -- simply disagreeing with the result, even by pointing to six other cases where taxpayers WON similar domicile arguments, doesn't meet any of the four narrow criteria Virginia requires for reconsi…
I manufacture and install signs, including for churches -- am I taxed as a contractor consuming the materials, or as a retailer selling tangible personal property, and does selling to a church change anything?
A manufactured sign is taxed as tangible personal property sold at retail, not as a contractor's consumed materials — and selling one to a church doesn't make it tax-exempt. A Virginia sign manufactur…
My e-filed corporate return was rejected and refiled a day late because I forgot a schedule -- does that shorten my three years to file an amended return, and do I have to add back interest on a loan I used to buy stock?
The corporation won on both issues. First, its 2013 return had been electronically filed on the extended due date but was automatically rejected by Virginia's e-filing system for missing a required sc…
I missed electing Virginia's manufacturer's single-sales-factor apportionment method on my original corporate return -- can I still make the election on an amended return and get a refund?
Yes, under a 2023 Virginia Court of Appeals precedent — a corporation can make the manufacturer's modified (single-sales-factor) apportionment election on an amended return, not only on the original r…
My solar company's sales tax assessment includes sales I say were shipped to out-of-state customers, but I couldn't produce the invoices during the audit -- can I still get the assessment corrected if I find the paperwork now?
The assessment stands for now, but the taxpayer gets one final 30-day opportunity to prove its case. A solar power systems company was audited and assessed sales and use tax on sales, purchases, and a…
My company pays royalties to an affiliate that in turn pays a related company for research services -- can I reduce my Virginia royalty add-back for the R&D portion, and how much of a 'subject to tax' exception do I get if the affiliate paid tax on that income elsewhere?
A mixed result on three separate issues. A corporation paid royalties to an affiliate (Affiliate A) under a contract based purely on a percentage of revenue, with no research-and-development provision…
I'm listed as a corporate officer and minority shareholder of a restaurant, but I only ever worked in the kitchen -- can the state make me personally pay the restaurant's unpaid taxes?
No — because his actual role never touched the corporations' finances or tax obligations at all. Two affiliated restaurants were assessed delinquent litter tax, withholding tax, and retail sales and u…
I run a flooring company that sells and installs floor coverings, and treated every sale as a taxable retail sale -- now I owe use tax too. If I later resell inventory I already paid tax on, how do I avoid paying tax on it twice?
A retail flooring company that sold and installed floor coverings, treating every transaction as a taxable retail sale, was correctly assessed use tax because it was actually a 'dual operator' under 2…
I missed the 90-day deadline to appeal my corporate tax assessment because we'd just been acquired, moved offices, and then hit a pandemic shutdown -- can Virginia still hear my appeal?
No — Virginia's 90-day deadline to appeal an assessment is measured from the date the assessment is MAILED to the taxpayer's last known address, and it doesn't bend for good-faith administrative disru…
I paid use tax on my company plane when we moved to Virginia, then years later got charged a separate aircraft tax to license it -- can I get the earlier payment refunded as a double payment?
No — even though the Department, on reconsideration, agreed its earlier ruling had wrongly found the refund request untimely, the taxpayer still couldn't prove it was entitled to a refund on the merit…
I called my county to dispute a BPOL tax audit assessment, and the county later asked if that call counted as my appeal -- can a phone call be a valid local appeal?
No -- and the Department dismissed the appeal for lack of jurisdiction because of it. A county audited a business's BPOL (business, professional, and occupational license) tax returns for 2019-2021 an…
The county rejected my manufacturer claim on my business equipment and I told them in person I disagreed -- why won't the state hear my appeal?
The Department dismissed the appeal for lack of jurisdiction -- twice over. An ice cream business was assessed county business tangible personal property (BTPP) tax for 2015-2024 after the county reje…
My telecom subsidiaries are disregarded entities owned by companies in my combined Virginia return -- do they compare their minimum tax to their own liability, or to the whole group's? And can Virginia tax our internet-access gross receipts at all?
Split decision -- the Department won on the combined-return methodology, and largely won on timing for the federal internet-tax issue too. A telecommunications company and its affiliates filed COMBINE…
My spouse works as a law clerk in the Commonwealth's Attorney's office -- can we claim Virginia's $15,000 state-employee salary subtraction on our joint return?
No -- the subtraction was properly disallowed. Virginia lets a taxpayer subtract the first $15,000 of salary for each 'state or federal employee' whose total annual salary from all employment is $15,0…
My business is on its third consecutive audit and I didn't provide records this time either -- do I still get a final chance to submit them, and does the exceptions list matter?
This ruling is a near-identical companion to the same-day P.D. 24-117 -- same period (May 2018-April 2021), same '3rd generation' repeat-audit fact pattern, same statutes, and the same outcome. A busi…
My business is being audited for the third time in a row, and this time I couldn't produce records during the audit -- can I still fix the estimated assessment by providing the paperwork now?
The estimated assessment stands for now, but the taxpayer gets one more chance. A business undergoing its third consecutive ('3rd generation') sales and use tax audit failed to provide adequate record…
My auditor denied my pollution control equipment refund because I didn't have Form ST-11A -- but I have an environmental permit from the state instead. Does that count?
Yes -- in this case, it did. A Virginia brewery sought a use tax refund on equipment it said qualified for Virginia's pollution control exemption (Va. Code § 58.1-609.3 9), which exempts equipment 'ce…
I sold IT equipment to a government contractor who said it was buying as an agent of the federal government under a cost-reimbursement contract -- is that sale exempt from Virginia sales tax?
No -- and the audit sample challenge also failed. A government IT contractor made untaxed sales of hardware, software, and consulting to another contractor ('Customer 1'), treating the sales as exempt…
A city taxed my personal car and my new travel trailer -- can I appeal either one to the Virginia Department of Taxation?
Split result, and neither part could be decided on the merits yet. An individual was assessed 2024 local tangible personal property tax on a personal vehicle and a travel trailer, both purchased that …
The IRS increased my income on audit, but I disagree -- can Virginia just accept the return I want to file instead of the IRS's adjusted numbers, and can I still claim my overpayment credits and age deduction?
No on all three points -- the assessments were upheld. The IRS audited a taxpayer's 2018 and 2019 federal returns and increased her adjusted gross income and self-employment income; because she never …
We moved to Virginia partway through the year and paid income tax to our old state, another state where a bonus was sourced, and California -- can we credit all of that tax paid against our Virginia tax?
Partly -- two of the three credits were reinstated, but the California credit was correctly denied for good. A couple moved to Virginia mid-2022 and filed a part-year resident return claiming credit f…
I ran my security-installation business as a retailer for years and charged my customers sales tax, but my auditor says I should have paid use tax as a contractor instead -- do I now owe use tax ON TOP OF the sales tax I already collected and paid over?
The underlying use tax assessment was correct, but the taxpayer may get real relief through Virginia's brand-new one-time credit. A business that sells and installs security gates, access control syst…
My HVAC company wants to offer long-term equipment leases through an affiliate -- does the installer pay tax as a contractor, does the affiliate collect sales tax on the lease payments, and is that double taxation?
Three separate tax obligations, not one overlapping one. An HVAC company installs equipment for Virginia homeowners and, as a consuming contractor, pays sales tax (or accrues use tax) on its own purch…
My company sells cloud-based practice management software (billing, records, patient messaging) to healthcare providers -- do I need to charge Virginia sales tax or communications tax on subscriptions?
Exempt from both taxes. A Virginia business offering healthcare providers three cloud-based subscription applications -- billing/claims management, a records manager, and a patient messaging/portal tr…
The Department didn't contact me for 13 years and then suddenly filed a wage lien on decades-old tax debt -- is it too late for them to collect, and did interest keep piling up the whole time?
Split result. A taxpayer's Virginia income tax assessments from 1997-1999 remained legally collectible, but interest and penalty stopped accruing years before the Department's most recent collection a…
I fabricate and deliver septic tanks to job sites where my customers hook them up -- am I an installer who doesn't owe sales tax, or a retailer who does? And can prior phone advice from the Department protect me either way?
The fabricator was a retailer, not an installer, and owes the sales tax -- three separate arguments all failed. A septic tank fabricator delivered finished tanks to job sites and placed them into hole…
The IRS increased my taxable income based on money a payment app reported as business income, but it was really just reimbursements from friends and family -- can I get Virginia to ignore the IRS's number?
No -- the assessment was upheld, because Virginia simply followed the IRS's own adjusted number. The IRS increased a taxpayer's 2020 federal adjusted gross income (FAGI) after a company that operates …
I fabricate and sell steel products, and a separate contractor I hire does the rebar tying and shop drawings, billed separately on my invoice -- do I have to charge sales tax on those separately stated labor charges too?
Yes -- the labor charges are taxable, and the refund was denied. A steel and rebar fabricator forms raw materials into custom products to customer specifications, then has an independent contractor pe…
I run two wood-pellet fuel production plants in Virginia -- which of my machinery, conveyors, storage domes, and pollution-control equipment qualify for the sales tax manufacturing exemption?
Mostly exempt, with specific carve-outs -- this advance ruling walks through a wood-pellet fuel producer's equipment at two Virginia plants, item by item, under the industrial manufacturing exemption …
I charge customers one lump sum for delivering and setting up furniture in their home -- can I treat that as exempt installation and delivery, or is it taxable because I combined two charges into one?
The assessment was upheld -- the retailer lost on both arguments it raised. A home furnishings retailer invoiced customers a single lump-sum fee covering delivery and setting up furniture in their hom…
My auditor included a one-off equipment lease I don't normally enter into in my sample exceptions, which then got extrapolated across my whole audit -- can I get that specific transaction excluded as unusual?
No -- the transaction stayed in the sample, and the assessment (already paid) was upheld. A Virginia furniture retailer leased product-imaging (photography) equipment from a vendor to photograph its p…
I rent portable toilets and provide waste removal service with them -- is the whole charge taxable, and can I still get credit for government sales, out-of-state sales, and taxes I already paid, even though I didn't have the paperwork ready during the audit?
Mixed result. A portable toilet rental and service company was audited and challenged its assessment on five separate fronts. FIRST -- and the one issue fully decided against the taxpayer -- the Depar…
The Department refunded my overpaid sales tax but wouldn't pay me the interest because I couldn't show I'd passed it on to my customer -- but my company merged with that customer, so there's no longer a separate customer to refund. Do I still get the interest?
Yes -- the taxpayer wins. Virginia normally won't pay interest on a sales tax refund to a DEALER unless the dealer agrees to pass that interest on to the PURCHASER who actually bore the tax (Va. Code …
My customer arranges and pays a common carrier to pick up goods at my Virginia warehouse and ship them out of state — is that sale exempt as interstate commerce, or does it depend on who arranged the pickup and where title transfers?
It depends entirely on WHERE title to the goods transfers, not merely on the fact that a common carrier is involved. A Virginia manufacturer/dealer asked about two scenarios where its customers pay a …
I install and service fire alarm and sprinkler systems and mistakenly charged my customers sales tax instead of paying use tax myself -- can I get credit for the sales tax I already collected and remitted, against the use tax the Department now says I owe?
A near-twin of this corpus's P.D. 24-111 -- same legal analysis, same one-time-credit relief, different contractor. A business that installs, maintains, and inspects fire alarms, sprinkler systems, fi…
My county overvalued my personal vehicle for tangible personal property tax -- can the state Department of Taxation review that assessment for me?
No -- the Department has no jurisdiction to review it at all, regardless of the merits. Two individual taxpayers appealed a county's assessment of tangible personal property tax on their personal vehi…
Does a new company owned by the same person as an existing affiliated business still qualify for a locality's new-business BPOL tax break?
Yes, if the new business's activities are substantially different from its affiliated businesses. A third-party retirement plan administrator and a public accounting firm, both newly formed and owned …
My city assessed excessive tangible personal property tax on my personal vehicle for 2024 -- can the state Department of Taxation review that?
No -- another light companion to this corpus's P.D. 24-96-0 and P.D. 24-92-0, reaching the identical jurisdictional dismissal, this time against a CITY rather than a county. A taxpayer appealed a city…
A county assessed business tangible personal property tax on my trucking company's vehicles, and I disagreed with the situs and the tax rate used -- I wrote asking the county to explain the assessment and then appealed to the state when they wouldn't budge, but why won't the state hear it?
The Department dismissed the appeal for lack of jurisdiction -- the taxpayer never actually filed a local appeal, only asked the county for information. An interstate trucking business was assessed co…
My county overvalued my personal vehicle and didn't properly notify me of the assessment -- can the state Department of Taxation review either problem?
No, on both counts -- this is a light companion to this corpus's P.D. 24-96-0, reaching the same jurisdictional dismissal for a single individual taxpayer. A taxpayer appealed a county's tangible pers…
My county says our theme park's rides are taxable personal property because they can technically be removed, and denied our refund for over-reported disposed assets by calling our accounting errors 'willful' -- are they right?
A win for the taxpayer on both fronts. A themed amusement park challenged its county's denial of business tangible personal property (BTPP) tax refunds for 2017-2020 on two separate issues. FIRST, the…
I provide broadband internet service and the Department denied part of my sales tax refund on equipment purchases because I sell wholesale, not retail -- but a court case said that shouldn't matter. Does my refund get reconsidered?
Yes -- the case is being sent back for reconsideration under a changed legal standard, though not every issue went the taxpayer's way. A broadband internet provider sought a refund of sales and use ta…
My county's BPOL assessment didn't count my sales reps' home offices as business locations, denied my computer-equipment resale deduction because I sold through a government contractor instead of directly to the government, and refused my out-of-state deduction for states where I could have filed a return but chose not to -- can I fix any of this on appeal?
A mixed, multi-issue result -- a genuine win on procedure and a new doctrine opened on home offices, but losses on two deduction claims. A computer products and services business appealed county BPOL …
I manufacture personalized debit and credit cards and ship them directly to cardholders on a dealer's instructions, and the dealer gave me a resale certificate after the fact -- can I get a refund of the sales tax I already collected and remitted?
Mixed, sent back for further review rather than decided outright. A manufacturer of personalized debit and credit cards sold its products to a dealer, which directed the manufacturer to mail the finis…
I fabricate and sell vinyl fencing and decking, but I also install it myself for customers -- how does Virginia decide whether I owe sales tax as a retailer or use tax as a contractor, and can I get credit for sales tax I mistakenly collected?
A dual-role fabricator of vinyl fencing, decking, pergolas, and screen porches was reclassified from retailer to real property contractor, because the primary purpose rule looks at where MOST of a fab…
I filed an appeal of old Virginia income tax assessments years late, claiming the 1099s the Department relied on were the result of fraud by the company that issued them -- can the Department still fix my assessments?
No relief on any front -- the appeal was years too late, no valid protective claim existed, and even on the merits the taxpayer had no proof. A Virginia resident was assessed individual income tax for…
I fabricate and sell vinyl fencing and decking, but I also install it myself for customers -- how does Virginia decide whether I owe sales tax as a retailer or use tax as a contractor?
A near-twin of this corpus's P.D. 24-87 -- same legal analysis, same audit period, same day, a different taxpayer. A fabricator of vinyl fencing, decking, pergolas, and screen porches that both sold f…
I filed my Qualified Equity and Subordinated Debt Investments Tax Credit application a couple weeks late because I thought the deadline was April 15 -- can the Department still grant the credit?
No -- the deadline is strict and doesn't bend for an honest mistake about the date. An individual invested in a qualified business venture during 2023 and applied for Virginia's Qualified Equity and S…
I invested in a qualified Virginia business but didn't get the required certification paperwork from the company in time -- can I still get the equity investment tax credit if I attach my documents to my income tax return instead of filing the separate credit application form?
No on both counts -- the deadline is strict, and attaching supporting paperwork to your income tax return doesn't substitute for filing the actual credit application. An individual invested in a quali…
I filed my Qualified Equity and Subordinated Debt Investments Tax Credit application a couple weeks late because I thought the deadline was April 15 -- can the Department still grant the credit?
No -- this is a byte-for-byte twin of this corpus's P.D. 24-84, same day, same outcome, a different taxpayer. An individual invested in a qualified Virginia business during 2023, filed Form EDC for th…
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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.