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 a pharmaceutical testing laboratory qualify for Virginia's research exemption when its work may develop or improve drugs rather than merely test samples?
Possibly, but more proof was required. Routine testing of samples for chemical content does not qualify, while systematic work developing or improving pharmaceuticals and vaccines can be exempt resear…
Did tax paid to vendors excuse untaxed employee sales or Virginia use tax when records were missing and an out-of-state tire vendor never remitted the tax?
No. Attire and tools resold to employees were taxable retail sales; the contractor should buy them under resale certificate, then collect and remit tax from employees. Current invoices could not prove…
Can a Virginia cigarette wholesaler reduce an estimated sales-tax assessment by producing signed resale certificates and sales invoices after the audit?
Yes, for the documented sales. The Commissioner accepted customer-signed resale certificates and invoices as sufficient wholesaler records and ordered those sales removed from the assessment. Cigarett…
Are an auto auction's sales of total-loss vehicles to foreign buyers exempt from Virginia retail sales tax as motor-vehicle sales, resale transactions, or foreign exports?
No, not on the documentation presented. The Tax Commissioner upheld retail sales tax because the salvage or nonrepairable vehicles no longer had valid DMV titles, the foreign buyers' multijurisdiction…
Could a cigarette wholesaler overturn reconstructed sales with unsigned invoices and resale certificates first supplied on appeal for inactive or nonfiling customers?
No. Virginia wholesalers must keep purchaser name, address, registration number, date, goods, price, and separate wholesale and retail records. The taxpayer's unsigned cash invoices lacked verificatio…
Were fees for game-terminal software activation codes taxable when the codes were sent electronically and no tangible property accompanied them?
No. The terminal software was already installed, and an operator paid only for an electronically transmitted code that activated or renewed access. Virginia treated the code as an electronically deliv…
Is a Virginia seller of topsoil, mulch, stone, compost, and soil mixes a real-property contractor when it only sells and delivers the materials without installing them?
No. The Tax Commissioner treated the business as a retailer because its invoices showed sales and delivery of tangible products but no installation or other work on real property. The special contract…
Are home-staging design fees exempt from Virginia sales tax when furniture-rental and design charges appear separately on the same invoice?
No. Interior-design services are exempt when sold alone, but listing design and furniture-rental charges separately on the same invoice still created a taxable lump-sum transaction under 23 VAC 10-210…
Must a Virginia wedding planner collect sales tax on planning fees and pass-through vendor charges for catering, cakes, salon work, and officiants?
Generally no on the documented facts. The Commissioner found that the planner was not a caterer because it did not prepare, deliver, or serve food, and that its true object was nontaxable event-planni…
Can a cigarette retailer defeat a Virginia sales-tax assessment based on distributor purchase records without providing resale, sales, or inventory documentation?
No. Distributor records showed tax-free cigarette purchases exceeding the retailer's reported sales, and the retailer produced no resale certificates, sales records, or inventory documentation explain…
After an assessment was upheld because a business never produced its records, can it get one more chance to provide them?
Yes -- the Department granted one final opportunity to provide the records. A gas station and convenience store operator had a retail sales and use tax assessment (January 2013 through April 2017) uph…
Can a contractor get audited purchases removed from a use tax assessment by later producing documents proving sales tax was already paid, and can the interest be waived?
The contested purchases were removed, but the interest stayed. A construction company sought reconsideration of a retail sales and use tax audit (July 2009 through June 2015). The auditor had held sev…
Can Virginia hold a minority shareholder and corporate officer personally liable for unpaid company sales and withholding taxes when he knew of the delinquency but lacked responsibility and authority over tax payments?
No. Although the taxpayer was a 15% shareholder, vice president, secretary, director, and knew the company was behind on taxes, his father controlled budgeting, bills, and tax payments. Because the ta…
Could a countertop fabricator avoid Virginia sales tax on fabrication and related service charges by claiming Department representatives gave incorrect advice, and how did a July 2017 law change affect later transactions?
No relief was available for the May 2013-April 2016 audit. The taxpayer could not document qualifying written Department advice under Va. Code § 58.1-1835, and fabrication labor plus services connecte…
Under Virginia's 2017 guidelines, how did purchasers and dealers claim refunds of erroneously paid retail sales and use tax, what made a claim complete, and when did limitations and interest begin?
The purchaser generally had to seek a refund from the dealer first. If the dealer could not provide it, a direct Department claim required a complete Refund Claimant Return, transaction spreadsheet, i…
Could corrected fencing invoices separating materials from installation labor reduce a Virginia sales tax assessment that originally taxed lump-sum charges?
Yes, for this audit. Virginia accepted corrected invoices that separately stated fencing materials and installation labor, returned the audit for revision, and warned that future pre-July 2017 lump-su…
Were software purchases and a support renewal exempt from Virginia sales and use tax when some software was downloaded but manuals and a CD were delivered?
The two asset-software purchases were exempt because documentation showed electronic delivery. The annual support transaction was not fully exempt because manuals and a CD were physically delivered be…
Can a wastepaper recycler qualify for Virginia's industrial processing exemption when it performs mechanical treatments beyond ordinary sorting and baling?
Possibly. Virginia reaffirmed that ordinary sorting and baling of wastepaper was not qualifying industrial processing. But if the recycler proved that it also shredded, fluffed, compacted, compressed,…
Did Virginia sales tax apply to a provider's charges for furnishing medical records in print, by fax, or electronically along with coding and related services?
No. The true object was the provider's medical-record and information services, not the paper or other property transferred, so charges to healthcare providers and requesting parties were not subject …
Could a telecommunications carrier remove software, maintenance, labor, and asset-gross-up purchases from a Virginia use-tax audit without invoices or contracts?
No, not on the existing record. The carrier supplied no invoices, contracts, or other evidence proving electronic software delivery, labor-only service, or another exemption. Every contested line and …
Could a telecommunications company reduce an Invoice Capture Tool asset gross-up when the supporting records for related contested assets had not been provided?
Not yet. The taxpayer did not dispute a specific item, and the related entity had not supplied the invoices and other records needed to remove assets feeding the Invoice Capture Tool calculation. Virg…
How did Virginia treat grocery food sold in decorative tins, late or defective resale certificates, and repairs to built-in versus standalone refrigeration?
The result was mixed. Decorative tins were packaging, so qualifying food inside received the reduced rate; food bundled with separate ineligible items did not. Verified resale certificates removed som…
Could Virginia consider a dental-practice sales-tax appeal faxed November 25 when the 90-day filing period expired November 20?
No. The August 21 assessments had to be appealed by November 20, 2015 under Virginia's 90-day rules, but the dental practice faxed its challenge on November 25. The Tax Commissioner therefore could no…
Did a for-profit family medical practice need each controlled-drug invoice to name a licensed physician or DEA number to claim Virginia's medical-entity exemption?
No. The physician-name or DEA-number invoice requirement applied to a separate exemption for controlled drugs purchased by an individual licensed practitioner. After the 2006 amendment, a qualifying f…
Who owed Virginia sales or use tax when a retailer sold and installed a modular home, and how did the 2013 regional rates apply?
The retailer that contracted to furnish and install the modular home was the taxable real-property contractor; the resident customer owed no sales tax on the construction-service transaction. Under th…
Was a nonprofit hospital's fee for screening, testing, pasteurizing, storing, and distributing donated human milk subject to Virginia retail sales tax?
No. Virginia treated donated human milk as a self-replicating body fluid and the hospital's screening, testing, pasteurization, storage, and distribution fee as a nontaxable processing service. Becaus…
What audit relief did Virginia grant a food and facilities management company that disputed untaxed sales, purchases, penalties, and a local meals-tax overpayment?
Only limited relief. Virginia removed one sale covered by a customer's direct payment permit and one documented purchase, but kept the other unsupported audit items and denied penalty waiver. The comp…
Was a Virginia sales-tax appeal timely when the 90th day fell on Sunday but the envelope was postmarked Tuesday?
No. The 90th day fell on Sunday, so Virginia extended the filing deadline only through Monday, the Commonwealth's next business day. The taxpayer's appeal was postmarked Tuesday—one day late—so the De…
Were Virginia vacation-home rentals for fewer than 90 continuous days subject to retail sales tax, including seasonal rentals?
Yes. Virginia treated vacation homes regularly offered for fewer than 90 continuous days as taxable transient accommodations, whether the provider was a business or individual and whether an entire ho…
Did storing resale inventory in a Virginia fulfillment center require out-of-state online sellers to register for Virginia sales tax in 2015?
No, under the 2015 statute and stated facts. The sellers owned resale inventory stored in independent Virginia fulfillment centers but had no Virginia offices, employees, locations, warehouses, agents…
Did an initial letter that questioned Virginia sales-tax assessments count as a complete appeal before the 90-day deadline?
No. The initial letter merely questioned the assessments and did not fully identify the alleged errors, supporting facts, requested remedy, or controlling authority. Virginia warned the taxpayer and g…
Could a tire wholesaler accept a valid resale certificate from a dealer not registered for Virginia's tire recycling fee?
Yes. Virginia sales-tax law did not require a tire buyer to be registered for the tire recycling fee before giving a valid resale certificate. Sales supported by complete Form ST-10 certificates had t…
Could a restaurant overturn reconstructed sales-tax liability with revised figures unsupported by daily sales records?
No. The restaurant kept no daily sales logs or register tapes to reconcile its tax returns and alcoholic-beverage reports. Virginia could therefore use the best information available—beverage reports …
Could a federal real-property contractor buy freestanding office furniture for resale tax-free and recover use tax paid on it?
Yes. Freestanding furniture, fixtures, and equipment that remained unattached to the buildings could be purchased with Form ST-10 for resale and then sold tax-free to the federal agency. Virginia orde…
Could Virginia extend the three-year deadline for sales-tax refunds voluntarily overpaid from February 2008 through March 2012?
No. The latest disputed period's three-year refund deadline expired before the taxpayer's May 2015 request. Virginia law authorized refunds only through a timely amended return and provided no applica…
How did Virginia sales tax apply to ATM installation, sign replacement, repairs, and delivery for financial institutions?
Virginia treated a business primarily furnishing and installing ATMs or financial-institution security property as a retailer for post-June 2011 work, requiring it to collect tax on the property rathe…
Which Virginia dealers had to make the June 2014 accelerated sales-tax payment, and how did payment, reconciliation, and hardship relief work?
For June 2014, a dealer with at least $48.5 million of taxable sales or purchases in the prior fiscal year generally had to prepay 90% of its June 2013 sales-and-use-tax liability. Payment was due Jun…
Was solar electricity sold under a power-purchase agreement exempt while leasing the photovoltaic equipment remained taxable in Virginia?
Yes, on the facts presented. Electricity sold to host customers under a power-purchase agreement qualified for the exemption for electricity delivered through lines. An unmetered customer agreement wh…
Did a customer's later use-tax payment remove an untaxed sale from a Virginia seller's audit sample?
No. A customer's later use-tax payment did not erase the seller's duty to collect tax or remove the sale from the audit sample. Virginia kept those sales in the sample but allowed one-time credits for…
When would Virginia remove disputed hardware-store transactions from an audit sample or accept a claimed nonprofit exemption?
Virginia removed a documented 44-day customer account from the sample and taxed those sales separately, while sending an unusually large truss sale for review under a larger sample. Unsupported nonpro…
What counted as a small quantity of domestic-use propane, and was the Virginia rule applied per sale or by averaging transactions?
Virginia generally treated a small portable propane cylinder—such as a 20- or 34-pound tank or smaller, filled to capacity—as a small quantity. The test applied to each sale, not an average across a m…
Did improved systems and business changes justify waiving a second-audit Virginia use-tax penalty when compliance was only 30%?
Not by themselves. Virginia removed documented purchases and transfer entries from the audit and would recompute the use-tax compliance ratio. A second-audit penalty would be fully waived if the revis…
Was a Tennessee installer of blinds, drapes, shades, valances, and cubicle curtains a retailer or a consuming contractor on Virginia jobs?
It was a consuming real-property contractor, not a retailer, because it did not maintain enough inventory of window treatments or component materials to meet Virginia's retailer definition. It owed us…
When were software sold to manufacturers, electronically delivered programs, custom software, modifications, and cloud services exempt in Virginia?
Software used primarily to direct or control production or quality control could qualify for the manufacturing exemption, while administrative monitoring software was taxable. Custom programs and sepa…
Was the full price of an amusement-center party package taxable when it bundled attraction admissions, a room, hosting, and food?
Yes. A single-priced party package that included attraction admissions and taxable food was taxable in full, even if customers primarily wanted the party experience. Virginia nevertheless removed pack…
Did Virginia's railroad-rolling-stock exemption apply when a bank bought rail cars from the manufacturer and leased them to the user?
No. The statute exempted railroad rolling stock only when sold or leased by its manufacturer. Once a financial institution bought the cars and became the lessor, the exemption did not apply—even thoug…
Which equipment at a nonutility Virginia solar facility qualified for the manufacturing sales-tax exemption?
The non-public-service company qualified as a manufacturer because it produced electricity for sale. Solar panels, inverters, wires and cables carrying electricity, and step-up transformers were direc…
Was a Virginia tax appeal filed by fax two days after the 90-day deadline considered timely?
No. The assessment was dated November 5, 2013, so a complete administrative appeal was due February 3, 2014. The taxpayer's fax arrived February 5—two days late—and Virginia treated the application as…
Were separately charged pumping services taxable when supplied with rented portable toilets, and did the taxpayer prove its claimed rental exemptions?
Pumping the taxpayer's rented portable toilets was taxable because it was inextricably tied to the lease, even when separately stated. Pumping campers or customer-owned toilets was not taxable. Virgin…
Did the taxpayer prove that three software purchases were electronically delivered without any taxable tangible medium?
Only in part. Two Vendor 1 items remained taxable because the records did not prove electronic delivery was the sole method: one transaction referenced a CD and ground shipment, and the other lacked a…
When did Virginia tire installers have to collect the tire recycling fee, and what rate applied after July 1, 2011?
Beginning July 1, 2011, a Virginia tire installer working under an agreement with a tire retailer that had not collected the retail sales and use tax also had to collect and remit the tire recycling f…
Did Virginia's railway common-carrier exemption cover locomotive cab heaters and a voice event recorder?
The cab heaters were exempt because they repaired or replaced locomotive components and were indispensable and immediately used in safe transportation. The voice event recorder and its repairs were ta…
Did Virginia use tax remain due on Tennessee equipment rentals when Tennessee properly taxed the continuous rental first?
No tax remained due on the contested rentals. Virginia concluded Tennessee had the first right to tax the continuous rental agreements and allowed a Va. Code § 58.1-611 credit for Tennessee sales tax.…
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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.