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 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 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 …
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 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…
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…
Were bulk purchases of Mirena and Implanon exempt controlled drugs when used by a medical practice?
Yes. Unlike a non-drug IUD addressed in an earlier ruling, Mirena and Implanon release medication. The FDA classified them as prescription drugs, and the Virginia Board of Pharmacy treated them as Sch…
Did farm exemption certificates protect sales of rodenticides, horse feed, and supplies, and were auction donations taxable livestock purchases?
Yes. Completed Form ST-18 certificates supported exempt farmer purchases of rodenticides, horse feed, and related agricultural supplies, and fencing had already been removed. Separate auction document…
Did Virginia use tax apply to freight-in charges on apparel bought only for resale when the freight cost entered the taxable retail price?
No. Freight-in normally becomes part of a product's taxable sales price, but these charges related only to apparel bought for resale and the retailers made no intervening use. The freight was built in…
Could a communications-equipment seller replace Virginia's audit sample or avoid tax because customers failed to disclose an exemption repeal?
No. Virginia found the three-month sales sample proper and declined a taxpayer-prepared detailed audit that would require extensive invoice and certificate verification. Customers were supposed to not…
Were installed audiovisual systems retail sales of tangible property, and how did Virginia tax installation labor, supplies, and wiring?
The systems were retail sales of tangible personal property, so the seller had to collect tax on the total system charge while separately stated installation was exempt. The seller owed tax on tools, …
Were a corporation's president and secretary personally liable for unpaid 2006 sales tax when another manager handled filing until December 1?
Only for November 2006. Virginia found that before December 1 the president and secretary lacked the duty, knowledge, and willful conduct required for personal liability, so March, April, May, June, a…
Could a truss seller remove delivery and design charges from its Virginia audit and receive credit for tax paid to vendors?
Only in part. The seller received 45 days to prove a reasonable delivery amount for this audit, but future exempt delivery charges had to be separately stated. Truss design services remained taxable e…
Did a countertop fabricator owe use tax on solid-surface materials it installed when customers also charged sales tax?
Yes. Selling and installing kitchen countertops was a real-property construction service, making the fabricator the consumer of all installed materials. It owed sales or use tax on their cost, and the…
Was a nursery's seasonal white poly film exempt agricultural material or taxable greenhouse construction material?
It depended on the use. Disposable film draped seasonally over movable steel supports to protect plants could qualify like exempt shade cloth. Film covering propagation houses with plumbing, electrici…
Were a farm's grinder and excavator exempt when used for storm cleanup, property repairs, ponds, fencing, and soil material?
No. The equipment was used for storm-debris cleanup, ponds, erosion work, fence lines, a stream crossing, and other real-property activities—not agricultural production for market. The planned recycli…
How many food or food-included events could qualifying nonprofits hold without collecting Virginia sales tax after July 1, 2009?
Qualifying organizations eligible under Va. Code § 58.1-609.11 could make exempt food sales or sell event tickets including food on no more than 23 occasions per year, while meeting the other occasion…
What state and local tax legislation did Virginia's Department of Taxation summarize from the 2009 General Assembly session?
This historical Department guide summarizes tax legislation enacted through the General Assembly's February 28, 2009 adjournment. It covers general administration, income and recordation tax, sales an…
Was a federal systems contract a sale of property because ordering used a GSA Schedule, and were software purchases taxable?
The contract was for continuous systems support services, not a property sale. Using a GSA Schedule did not make the agency contract an indefinite-delivery contract or require order-by-order treatment…
When did Virginia exempt charges for butchering or processing customer-supplied food from sales tax?
Effective July 1, 2009, fabrication of customer-supplied meat, grain, vegetables, or other food was exempt when consumed by the purchaser or family, purchased by a qualifying § 501(c)(3) or (c)(4) org…
How did Virginia tax purchases under federal ID/IQ task orders and an IT integration subcontract, and did computer assembly qualify as manufacturing?
Virginia applied the true-object test at the task-order level where the ID/IQ agreements did not reveal what would be purchased. Several documented government orders were exempt property sales, subjec…
Did contract and FTP records prove that prewritten software was electronically delivered and exempt from Virginia sales tax?
Yes. The statement of work expressly required electronic delivery, and an email showed the software files were uploaded to an FTP server for customer download. That met Virginia's minimum proof that n…
Could a hotel lower the use-tax value of used furniture acquired with the property below the cost basis used on its books and tax returns?
Not on the existing record. The hotel had assigned $2,062,500 to the used furniture, fixtures, and equipment on its depreciation schedule and federal partnership return, so Virginia treated that amoun…
Was a brick maker's separately stated minimum-load charge an exempt delivery charge or a taxable service?
It was exempt. A third-party carrier charged for a full truckload even when the shipment used less capacity, and the brick maker used the minimum-load line to recover the difference between actual fre…
Were a contractor's water-treatment materials, Maryland-taxed purchases, administrative supplies, and equipment charges exempt from Virginia use tax?
No. The contractor provided no required pollution-control certification, and municipal water-treatment authorities did not qualify for the claimed industrial manufacturing exemption. Maryland tax paid…
Was a medical-equipment service contract exempt when a resale certificate was obtained after audit and the contract named a third-party vendor as purchaser?
No. A certificate obtained after audit was subject to heightened scrutiny and did not by itself prove that the third party validly bought the contract for resale. The agreement between that vendor and…
Were a permanent structure housing a production crane and magnesium-chloride dust-control equipment exempt manufacturing property?
No. Steel, panels, fasteners, paint, tools, and rentals used to build a crane-housing structure were plant construction permanently affixed to realty, not component parts of exempt machinery. Magnesiu…
Could an unregistered interior designer avoid estimated tax and penalties after collecting sales tax, keeping it, filing no returns, and preserving no records?
No. The dealer collected sales tax but never registered, filed returns, remitted the trust funds, or preserved records. Virginia properly estimated sales from bank deposits because the dealer offered …
Were separately stated mileage, zone, road-service, and tire-disposal fees for on-site equipment repairs exempt from Virginia sales tax?
No. Mileage, zone, and road-service charges covered travel before and after the actual on-site repair, so they were not exempt delivery charges or repair labor; they were taxable expenses included in …
Was a cabinet seller-installer a retailer when it took orders at a business location and appeared to keep bulk cabinet materials?
Yes, based on the available evidence. A showroom was unnecessary because the business took and accepted orders at its Virginia location. The auditor reasonably found inventory where materials appeared…
Which federal modular-building transactions were exempt leases of tangible property rather than taxable real-property construction?
Virginia removed line items where contracts showed temporary or relocatable buildings leased directly to the federal government and intended for removal, making them exempt tangible-personal-property …
Is a separately stated market-development fee taxable when a vendor passes it through with a sale of materials?
Yes. Virginia treated the market-development fee as part of the taxable sales price because the vendor passed its representative's service cost through in connection with the material sale. Separately…
Which separately stated charges on a Virginia party-tent rental invoice were taxable?
Virginia taxed the tent rental and late fees. Separately stated installation and delivery charges were exempt. A separately stated fuel surcharge was exempt only when directly calculated and attributa…
When could a Virginia federal contractor treat purchases as exempt resale property instead of taxable contract-use property?
Virginia applied the true-object test at the TDL, task-order, delivery-order, or work-order level where the contracts did not identify the later mix of goods and services. It removed documented proper…
Was a sign fabricator a retailer or real property contractor during 2003-2004, and was its full audit timely?
For this 2003-2004 audit, Virginia treated attached signs as real property and the fabricator-installer as the consuming contractor, so resale and manufacturing exemptions did not apply. The September…
How did missing invoices and records affect a Virginia bank's consumer-use-tax audit appeal?
Virginia largely upheld the estimated assessment because the bank lacked invoices and transaction-level proof for real-property work, vendor tax, software delivery, accounting entries, services, and i…
Could a Virginia bank use sample invoices instead of transaction records to overturn a consumer-use-tax audit?
No. Sample invoices showing a vendor's usual practice did not prove the tax treatment of each audited purchase. Virginia removed many lines supported by matching invoices, tax payments, services, real…
Did unrelated Virginia installers create sales-tax or corporate-income-tax nexus for an out-of-state seller?
No, on the stated facts. The seller had no Virginia property, employees, sales representatives, contractor ownership, or installation supervision. Unrelated businesses installed the systems under qual…
Was a beauty retailer's paid discount membership taxable when members also received a birthday gift?
Yes. The membership was not merely a coupon program because members were entitled to tangible personal property, including a birthday-month gift valued at $10 or less. The website showed that benefit …
Did post-audit resale certificates prove that an Internet retailer's Virginia sales were exempt?
Only one reviewed transaction was removed. Virginia rejected a Puerto Rico resale certificate that became valid after the sale and a New Jersey certificate that did not match the Virginia purchaser, l…
Was a Virginia use-tax appeal timely when the assessment was dated July 8, 2008 and the appeal was mailed in February 2009?
No. Under the 90-day deadline cited in the ruling, the July 8, 2008 assessment had to be appealed by October 6, 2008. The Department's records showed no appeal correspondence until a February 2009 let…
Were aesthetic injectable implants used to treat facial wrinkles exempt from Virginia sales and use tax?
No exemption applied. Virginia treated the wrinkle-treatment injectables as medical devices rather than drugs, so the prescription-drug exemption did not apply. Because they were used for cosmetic pur…
Did an advertising company prove that CD presentation, video testimonial, and photography invoices qualified for Virginia's advertising exemption?
No. The company offered general assertions, a website, and an appreciation letter, but did not tie the disputed CD, video, and photography work to a documented public advertising campaign. Because the…
Did a notice of intent preserve a Virginia tax appeal when no complete appeal was filed within the cited 90-day period?
No. The November 3, 2008 assessment required a complete appeal by February 2, 2009 under the 90-day rule quoted in the ruling. A notice of intent did not supply the required grounds and relevant facts…
Could a restaurant use Virginia's reduced food sales-tax rate and avoid tax and interest because it had not collected the full rate?
No. The restaurant was excluded from the reduced food rate because more than 80% of its food receipts came from food for immediate consumption. It owed the uncollected tax itself, and Virginia said th…
Could a Virginia business breeding canines for pharmaceutical companies buy feed, medicines, and vaccines under the agricultural exemption?
No. The canine breeder was not raising crops, statutory livestock, or another farming activity listed in Virginia's agricultural exemption. The medicines and vaccines also were sold directly to the br…
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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.