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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Did a mortgage refinancing qualify for Virginia's same-lender recordation-tax exemption after the original lender merged into the new lender?
Yes. The original mortgage lender had merged into the refinancing lender, so the successor became the same lender for the existing debt. Virginia recordation tax therefore applied only to the portion …
Did a notice of intent and incomplete protest preserve Virginia's 90-day deadline for appealing a sales-tax assessment?
No. The June 2, 2009 assessment required a complete administrative appeal by August 31. The taxpayer sent a notice of intent and an August protest without supporting documentation or statutory grounds…
Could a Virginia church appoint its construction contractor as purchasing agent so project materials used the church's sales-tax exemption?
No. Virginia's church exemption covered building materials only when the qualifying church installed them itself through staff or volunteers and did not contract for installation. Naming the contracto…
Was a nominal hotel fee for cancelling after a deadline subject to Virginia retail sales tax?
No. Additional charges connected with an actual room rental were taxable, but this customer cancelled, never paid the room price, and never obtained a right to possess the room. The nominal charge was…
Did a hotel buy guest toiletries for resale, and could it redact federal credit-card numbers to only the last four digits?
The hotel was the user and consumer of toilet paper, tissues, shampoo, and similar room amenities, so it had to pay tax when buying them even though guests paid tax on lodging. For federal-government …
Did a third-party yearbook ordering service collect Virginia sales tax when acting for public or nonprofit schools?
For public schools, no tax applied when the school gave the manufacturer Form ST-12; the third-party order service acted as the school's agent and could collect student payments without tax. A private…
Did Virginia's occasional-sale exemption cover business assets bought during a bankrupt seller's five-month liquidation and reorganization?
Yes. The bankrupt seller sold business divisions to five entities over five months under an orderly liquidation and reorganization plan. Even though some branded consulting operations continued outsid…
Were bulk sales of the Mirena intrauterine contraceptive to licensed physicians, hospitals, and clinics exempt from Virginia sales tax?
Yes. Virginia treated Mirena, an intrauterine device that releases levonorgestrel, as a Schedule VI controlled drug. The wholesaler could sell it tax-free to licensed physicians, optometrists, nurse p…
Did a late, facially invalid resale certificate exempt a medical-equipment maintenance agreement billed through a third-party vendor?
No. The seller obtained the certificate after the audit began, so it faced greater scrutiny and had to prove the specific transaction qualified. The form improperly listed both the third-party vendor …
Was a Virginia sales-tax appeal timely when it was dated September 1 after an August 31 deadline?
No. The assessment was issued June 2, 2009, making August 31 the deadline for applying to the Tax Commissioner. The taxpayer's correspondence was dated September 1 and received September 2. Virginia h…
Was a hand-delivered Virginia sales-tax appeal timely when the Department received it on the 91st day after assessment?
No. Assessments issued June 26, 2009 required a complete appeal by Thursday, September 24. The taxpayer delivered a notice of intent in August but hand-delivered the actual appeal on September 25, the…
What Virginia tax assessment and refund interest rates applied during the first quarter of 2010?
Virginia tax assessments and refunds both carried a 6% annual interest rate from January 1 through March 31, 2010. The federal underpayment and noncorporate overpayment rates remained 4%, and Virginia…
How did Virginia's original 2010 Motor Vehicle Fuel Sales Tax guidelines shift collection from retailers to distributors?
These superseded guidelines moved collection on January 1, 2010 from retail dealers charging customers 2% to distributors charging retail dealers 2.1% on fuel for sale in Northern Virginia and Potomac…
How did Virginia respond when U.S. diplomatic sales-tax exemption cards moved the exemption details from the front to the reverse?
Virginia agreed to update its regulation and dealer guidance. The U.S. Department of State had redesigned diplomatic tax-exemption cards so the extent of a mission's or individual's exemption appeared…
Did a city's communications-tax exemption apply back to January 1, 2007 when its provider had one valid certificate but taxed other city accounts?
Yes. The city was a political subdivision and had never been subject to the communications tax after it began January 1, 2007. Providers still needed a properly executed exemption certificate, but one…
Could a flooring contractor offset use tax with sales tax it had wrongly billed to customers on real-property jobs?
Not directly. As a real-property contractor, the business owed use tax on untaxed flooring materials and could not satisfy that liability with sales tax wrongly billed to customers. Erroneously collec…
What initial Virginia tax relief did Tax Bulletin 09-10 announce for qualifying military spouses in 2009?
The initial bulletin said a spouse accompanying a service member under military orders could avoid gaining or losing domicile when both shared the same domicile and the spouse was present solely to ac…
When did the 2009 Virginia Tax Amnesty addendum say the 20% post-amnesty penalty would not apply to audit or appealed liabilities?
The addendum expanded and clarified exceptions to the 20% post-amnesty penalty. It covered qualifying first audits, repeat audits meeting sales- and use-tax compliance thresholds, liabilities in court…
Could an individual claim a recycling-equipment credit passed through from an S corporation for the 2005 tax year?
No. Virginia's individual recycling-equipment credit had expired after the 2003 tax year, while legislation allowing the corporate credit to pass through to individuals applied only to tax years begin…
Had the taxpayer abandoned Virginia domicile even though he kept a Virginia home, vehicles, and business interests?
Yes. After weighing all circumstances, Virginia found that the taxpayer abandoned Virginia domicile and established domicile in another state before 2005. His other-state home, driver's license, voter…
Did a district manager's sales-force work and a veterinarian's presale presentations create Virginia corporate-income-tax nexus?
No, based on the additional evidence. The district manager's recruiting, hiring, training, and supervision supported sales solicitation, while headquarters performed the forecasting, budgeting, pricin…
Were Nepro, Jevity, Glucerna, and Ensure purchased for inmates exempt from Virginia sales and use tax as medicines or medical supplies?
Only in part. The products were not exempt merely as medicines, drugs, or dialysis supplies because food is excluded from the drug definition. Products prescribed for specific inmates and used with en…
Did torque wrenches used to install die heads before production qualify for Virginia's manufacturing exemption?
No. The torque wrenches were used before production to install die heads and incidentally to replace damaged heads, not during production or in an exempt subprocessing activity. Although essential to …
Did remotely managed servers placed with Virginia customers create sales-tax duties for an out-of-state software company?
Virginia said the facts did not clearly establish whether the company was a service provider or a lessor. As a service provider, it would owe Virginia tax on servers, software delivered on them, and o…
Were the initial card charge and annual fee for a prescription savings club subject to Virginia sales tax?
No. Members paid for a program card and annual enrollment, receiving discounts on selected prescription drugs and a 10% rebate or credit on private-label purchases. Because club membership did not ent…
Did Virginia sales tax apply to memberships offering cash-back and service-related discounts but no tangible property?
No. The memberships gave customers cash-back opportunities and discounts on healthcare, financial, personal, travel, roadside, and similar services, but did not entitle members to receive tangible per…
Did buying about 80% of an asphalt company's assets in one transaction qualify as an exempt occasional sale?
Yes. The asset purchase included the asphalt plant, construction equipment, vehicles, office property, small tools, and remaining tangible and intangible asphalt-operation assets. Although the seller …
Which charges could an interior designer treat as nontaxable services, and which charges had to enter the taxable furniture sales price?
Separately billed planning and design services were not taxable when they did not include furniture handling or sales. Rearranging a customer's existing property was also a nontaxable service when unr…
Could a restaurant remove meal deductions and fixed assets from an audit without records proving the deductions or prior tax payment?
No. The restaurant could not document returned, discounted, and complimentary meal deductions, so Virginia upheld an observation method that allowed 10% of reported deductions and taxed the balance. I…
Could a Virginia resident defeat a 2005 assessment by claiming he had no 'Federal 26 CFR Income' without evidence contradicting IRS records?
No. Virginia starts with federal adjusted gross income and taxes a resident's included income unless a specific Virginia modification applies. The taxpayer did not deny receiving income and supplied n…
Could Virginia uphold estimated individual income tax assessments based on bank deposits when the taxpayer claimed she was not working?
Yes. Auditors subpoenaed corporate and personal bank records and found deposits from unreported sales in the taxpayer's accounts. Her W-2s, role as corporate president, and signatures on corporate ret…
Could a graphic printer remove audit sales by asserting exemptions, labor-only work, resale, or tax paid elsewhere without supporting records?
No. Virginia upheld the listed transactions because the printer produced no valid customer exemption certificates, no evidence that disputed charges were labor-only rather than part of a tangible prod…
Were federal leaking-underground-storage and storage-related taxes excluded from the Virginia taxable price of fuel?
No. The federal leaking-underground-storage and other storage-related charges were directly connected with the taxpayer's gas, diesel, and heating-fuel sales. Virginia's sales-price definition allowed…
Did a notice of intent preserve a Virginia tax appeal when the complete application was not filed within 90 days?
No. The assessments were issued April 30, 2009, making July 29 the deadline for a complete application stating all grounds and relevant facts. The taxpayer filed a notice of intent on May 28 but never…
Did tire-retreading customers need to conduct primarily retreading work to claim Virginia's industrial-processing exemption?
No primary-business test applied. Virginia policy treated persons engaged in tire recapping or retreading as industrial processors and did not require most of their overall sales to come from retreadi…
Was a fence installer a taxable retailer when it had no showroom and bought construction materials only after accepting each job?
No. A site visit showed no showroom or retail inventory; the company kept only job-specific construction materials and leftovers that were not offered to the public. Although fence sellers can be stat…
Could a software seller reduce tax on implementation fees and exempt support fees without supplying the requested records?
No. The seller claimed only 20% of implementation fees were taxable and support fees were exempt because updates arrived electronically, but it did not provide convincing evidence during the audit or …
Does Virginia's cable-system equipment exemption cover equipment used to distribute satellite television programming through wiring in apartment properties?
No. Even though the taxpayer used wiring to distribute programming within apartment properties, its systems were based on satellite reception and did not qualify as wired or land-based wireless cable …
Did a subcontractor's failure to collect sales tax on installed floating floors relieve the building contractor of tax?
No. Virginia treated the sale and installation of floating laminate floors as a retail sale. Although the subcontractor was obligated to collect sales tax, the tax was also a legal debt of the purchas…
Was an excavator used to resize firewood for a wholesale greenhouse's heating boilers exempt as agricultural or manufacturing equipment?
No. Virginia held that cutting purchased logs to fit boilers was ancillary to the greenhouse's agricultural production, not direct agricultural production. The manufacturing exemption also did not app…
Could a bakery and restaurant overturn estimated sales, purchase, and asset tax when its records and exemption certificates were incomplete?
Not on the existing record. Virginia upheld estimates where the bakery and restaurant lacked detailed sales and purchase support, rejected incomplete or questionable exemption certificates, and found …
Would Virginia accept delinquent resident income tax returns after federal records verified the reported income for 2001 through 2003?
Yes. Virginia initially issued statutory assessments because the residents' late returns lacked enough supporting documentation. During the appeal, the Department verified that federal returns had bee…
Were materials used in fixed church sanctuary finishes and broadcast sets exempt from Virginia sales and use tax?
No. Items fabricated and installed in fixed locations became part of real property, making the taxpayer a taxable user or consumer as a real-property contractor. The church exemption did not cover bui…
Was a corporate officer personally liable for the corporation's unpaid Virginia sales and use taxes despite claiming to be only a token officer?
Yes. The officer held three corporate offices, possessed a spreadsheet showing the Virginia tax debt, contacted the Department about a payment plan, signed a corporate return, and participated in othe…
How should a Virginia combined-return filer treat at-cost intercompany reimbursements, partnership factors, and a foreign subsidiary with a Virginia employee?
At-cost intercompany reimbursements with no gain or loss were excluded from the sales factor. The corporation had to include its proportionate shares of the factors of two partnerships where it was ge…
Was a retail tenant's storefront sign a real-property fixture rather than taxable business tangible personal property?
No. Although the sign was attached to the storefront, the lease treated signage as the tenant's property and contemplated its removal when the lease ended. The taxpayer's stated desire to remain in bu…
How should a global telemarketing company apportion direct-response receipts to a Virginia call center for BPOL tax?
Virginia upheld the general payroll-apportionment formula: worldwide receipts multiplied by Virginia call-center payroll divided by total payroll. The taxpayer could not first subtract all receipts fr…
Could a Virginia county impose BPOL tax on a Section 501(c)(6) nonprofit's dispute-resolution receipts that were not reported as unrelated business taxable income?
Not on the record presented. The county's ordinance exempted federally tax-exempt receipts of Section 501(c)(6) organizations, except receipts subject to federal tax. Because the county did not show t…
Was income earned after moving out of Virginia taxable when a former employee performed all subcontractor services for the Virginia company from another state?
No. The husband was taxable as a Virginia resident only through his May 2005 move. After becoming domiciled in State A, he contracted with his former Virginia employer but performed every service in S…
Did daily logs and receipts prove that a wife changed domicile in November 2005 and spent too few days in Virginia to be an actual resident in 2006?
Yes. Virginia accepted that the wife moved to State A in November 2005, took full-time employment, and established a home there. A daily log and receipts supported the reported number of Virginia days…
How did Virginia tax precast wall panels sold without installation versus panels installed by the fabricator?
Uninstalled panels delivered to Virginia were retail sales taxable on selling price, and tax mistakenly paid to another state did not offset Virginia tax. Installed panels were real-property contracts…
Were goods delivered to Virginia customer warehouses exempt because they were later shipped outside Virginia, and would the audit sample be reopened?
The audit sample was reopened because the projected taxable measure might exceed exempt sales originally deducted, subject to further documentation. But goods delivered to customer warehouses in Virgi…
How did Virginia's 2009 Get Square VA tax amnesty waive penalties and half the interest, and who qualified?
These historical guidelines governed the October 7-December 5, 2009 Get Square VA program. For an eligible bill or delinquent return, paying all tax and half the accrued interest waived all penalties …
Should a furniture store with separately billed design work and significant custom framing be classified only as a BPOL retailer?
Not necessarily. Furniture and furnishing sales were retail, and free design plus third-party labor tied to those sales were ancillary. Separately billed design services under 1% of receipts were unli…
What Virginia tax interest rates applied during the fourth quarter of 2009?
Virginia's fourth-quarter 2009 rates were 6% for tax underpayments and assessments and 6% for tax overpayments and refunds. The corresponding federal rates for underpayments and noncorporate overpayme…
Which Energy Star and WaterSense products qualified for Virginia's historical October sales tax holiday, and what transaction rules applied?
These expired guidelines exempted specified Energy Star appliances and WaterSense-labeled products costing $2,500 or less when bought for noncommercial home or personal use during the four-day October…
Which technology-development purchases were exempt when a nonprofit tested products but vendors performed the actual software development?
Virginia denied the broad R&D exemption because the nonprofit managed and tested projects while vendors performed actual development, third parties also tested products, and some testing served invest…
Was a federal research-support contract principally a sale of specialty hardware rather than taxable services?
Yes. The contract centered on designing, fabricating, installing, repairing, and maintaining research hardware that transferred to federal control; the contractor's operating role was secondary. Prope…
Was a wastewater heat-recovery system that preheated water for an industrial laundry exempt as direct industrial processing equipment?
Yes. The system recovered heat from hot laundry wastewater to preheat fresh water before a boiler raised it to the temperature needed by processing equipment. Virginia treated that preheating as a sub…
Did a husband change Virginia domicile when his employer transferred him out of state but his wife and children temporarily remained in their Virginia home?
Yes. The husband transferred to State A, rented and then bought a home, obtained its driver's license, registered a vehicle, and registered to vote. His wife and children temporarily remained in Virgi…
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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.