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Virginia Tax Commissioner Determines Software Wasn’t Electronically Delivered to Taxpayer, Not Sales Tax Exempt

March 7, 2022, 5:00 AM

The Virginia Tax Commissioner Sept. 7, 2021 determined in a letter ruling that Taxpayer’s software purchases didn’t qualify for a retail sales and use tax exemption. Taxpayer, a medical services group, contracted with vendors for the purchase of software and maintenance for the software without paying sales tax. Upon audit, the Department of Taxation assessed use tax on the purchases. Taxpayer appealed, contending that the software was delivered electronically. The commissioner noted: 1) vendors’ correspondence referencing the electronic nature of the delivery was insufficient evidence that electronic delivery was the method of delivery of the software and agreements; 2) Taxpayer ...