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Virginia Administrative Code
Title 23. Taxation
Agency 10. Department of Taxation
Chapter 120. Corporation Income Tax
12/30/2024

23VAC10-120-200. When compensation deemed paid in this Commonwealth.

A. In general. Compensation is paid in Virginia if any one of the following tests, applied consecutively, is met:

1. The employee's service is performed entirely within Virginia.

2. The employee's service is performed both within and without Virginia, but the service performed without Virginia is incidental to the employee's service within Virginia.

3. If the employee's service is performed both within and without Virginia, the employee's compensation will be attributed to Virginia if:

(i) The employee's base of operations is in Virginia, or

(ii) If there is no base of operations in any state in which some part of the service is performed, but the place from which the employee's service is directed or controlled is in Virginia, or

(iii) If the base of operations or the place from which the employee's service is directed or controlled is not in any state in which some part of the service is performed, but the employee's residence is in Virginia.

4. Any wages reported pursuant to the Virginia Unemployment Compensation Act (Va. Code § 60.1-1 et seq.) shall be presumed to be compensation paid in Virginia.

B. Definitions.

1. "Incidental" means any service which is temporary in nature or which is rendered in connection with an isolated transaction. An "isolated transaction" is a transaction which is not one of a regular or consistent series of the corporation's business transactions.

2. "Base of operations" means a place of more or less permanent nature from which the employee starts his work and to which he customarily returns in order to receive instructions from the taxpayer or communications from his customers or other persons, or to replenish stock or other materials, repair equipment, or perform any other functions necessary to the exercise of his trade or profession at some other point or points. A contractor's job site will be considered to be a base of operations.

3. "Place from which the service is directed or controlled" means the place from which the power to direct, control or supervise the employee's service is exercised by the taxpayer.

C. Examples.

Example 1: A corporation manufactures and sells technical equipment. It does not install such equipment, but if technical problems arise it will from time to time send out one of its home based experts. This service is considered "incidental" within the meaning of this subsection.

Example 2: A corporation manufactures and sells technical equipment. Due to the highly specialized nature of the equipment, the corporation either installs the equipment or supervises the installation. The installation requires 4 or 5 people for several weeks and the installation is performed under an installation contract. The installation work is not considered incidental within the meaning of this subsection. However, if the installation work is normally performed by others without the general supervision of one of the corporation's employees, the occasional inspection or supervision by an employee would be considered incidental.

Statutory Authority

§§ 58.1-203 and 58.1-413 of the Code of Virginia.

Historical Notes

Derived from VR630-3-413, eff. January 1, 1985.

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