State Tax Rulings
Free state tax letter rulings and advisory opinions with plain-English summaries, full citations, and the original source on every page.
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For New York's '548-day rule,' do the days a taxpayer's minor child spends in New York at a legally separated spouse's home count against the taxpayer, and what about scheduled visitation days?
No - once the taxpayer is legally separated under a written agreement giving the spouse physical custody, the child's ordinary time at the spouse's New York residence does not count toward the 548-day…
Were process-serving and skip-trace charges subject to Florida sales tax when billed to law-firm clients?
Freestanding or separately stated process-serving charges were not taxable. Skip-trace and locate services were taxable investigative services, and failing to separate them from process service made t…
Could a small roadside seller avoid penalty and interest because she did not know her firewood, produce, crafts, and babysitting receipts were taxable?
No. Pauline Gee sold firewood, fruit, vegetables, arts and crafts, and occasional babysitting services in 2008 and 2009. She reported Schedule C income federally but had no CRS number, filed no gross …
Which server-training programs does South Carolina recognize as a mitigating factor for alcohol-licensing penalties (per SC IL #13-7)?
SC Information Letter #13-7 lists the alcohol server/seller training programs the Department recognizes as a mitigating circumstance when it assesses penalties for beer, wine, and distilled-spirits vi…
Did replacing a retiree's pension payments with an annuity make the payments taxable in Illinois?
Possibly. Section 203(a)(2)(F) covered amounts included federally under specified retirement provisions, including Section 403(a) annuities purchased by qualifying employee trusts. The plan's purchase…
What made tuition at an Illinois school eligible for the education expense credit?
The school had to be a public or nonpublic Illinois elementary or secondary school, comply with Title VI of the Civil Rights Act of 1964, and provide attendance sufficient to satisfy Illinois's mandat…
Did an ambiguous letter saying assessments were sent in error and asking for confirmation of zero tax count as a timely protest, and did it prove claimed business losses?
The letter counted as a timely protest, but the taxpayer still lost on the merits. Collin Sanchez wrote within 30 days that the assessments were sent in error and asked the Department to confirm that …
Is a lump-sum settlement of SERP and deferred compensation plan benefits that a nonresident received after his former employer's bankruptcy exempt from New York income tax?
Yes. Federal law bars states from taxing a nonresident's retirement income, and a settlement payment takes on the same tax character as the payments it replaces, so the Department ruled that JPMorgan …
Could the post-merger Virginia group switch from combined to consolidated corporate returns?
No. Virginia held that the merger-of-equals election policy did not apply because one side had only a single Virginia-taxable subsidiary, not an affiliated Virginia group. That subsidiary joined the e…
Were removable data-center equipment and claimed application switches exempt from local BTPP tax?
No. Virginia upheld local BTPP tax on backup generators, modular data-center equipment, transformers, and switchgear because the lease treated them as removable property owned by the operator. The ope…
Were medical gases and argon used in cryosurgery exempt from Virginia sales tax?
Qualifying prescription medical gases could be sold exempt to specified licensed practitioners and medical facilities with supporting documentation. Argon used in cryosurgery was taxable because the F…
Was Illinois's January 2013 moist-snuff tax 30 cents per ounce even though 15% of the cigarette-package tax equaled 29.7 cents?
Yes. IDOR read 35 ILCS 143/10-10 as expressly setting the January 1, 2013 moist-snuff tax at $0.30 per ounce. It treated the separate 15%-of-cigarette-tax language as a cap on future moist-snuff rate …
Were prepaid wireless electronic PINs taxed as telephone service or as tangible personal property, and did the 9-1-1 surcharge also apply?
A qualifying prepaid telephone calling arrangement was treated as tangible personal property subject to Illinois Retailers' Occupation and Use Taxes plus applicable local occupation taxes. A prepaid s…
Did IDOR decide whether the software license attached to ST 13-0015-GIL qualified for Illinois's canned-software exemption?
No. IDOR declined to issue a PLR or decide whether the attached agreement met the exemption, saying 86 Ill. Adm. Code 130.1935 was clear enough for licensors and licensees to apply. It stated generall…
How did Illinois classify food, medicines, grooming products, diabetes supplies, propane exchanges, and coupon books for sales tax?
IDOR did not classify every listed product. It explained that qualifying food, drugs, medicines, and medical appliances received the lower 2013 state rate, while grooming and hygiene products used the…
Could an Illinois-based IFTA carrier destroy original fuel receipts after creating electronic images for tax records?
Yes, generally. Electronic imaging of original IFTA and motor-fuel records was acceptable if the records were complete, supported the quarterly return, and remained accessible. During an audit, the ca…
Could a contractor remove untaxed purchases and penalties from its Virginia use-tax audit?
Not on the records submitted. Virginia found that the contractor's proof did not reconcile to four audited purchases, but allowed 45 days for corrected documentation. It upheld the compliance penalty …
Did the taxpayer prove that she had abandoned Virginia domicile during 2008?
Yes. Virginia abated the 2008 assessment because the taxpayer's employment, resident income-tax filing, voter registration, and other evidence showed that she established domicile in another state and…
New York Advisory Opinion TSB-A-13(5)C / (4)I: How is a 'qualifying census tract' for the historic rehabilitation credit determined when the 2010 census lacks median-family-income data?
A qualifying census tract for the historic rehabilitation credit is determined using a combination of the 2000 federal census and the most recent American Community Survey, because the 2010 census lac…
Was an exempt organization's Illinois E-number letter enough for its contractor to buy floor-covering materials tax-free?
No. A contractor incorporating materials into real estate owned by an exempt organization or government entity could buy them tax-free, but it had to give the supplier both the owner's active E-number…
Could an Illinois resident subtract pension income paid by a foreign employer's retirement plan?
No, based on the facts presented. Illinois begins with federal adjusted gross income and permits only expressly authorized modifications. The foreign employer's plan did not appear to fall within the …
Was a pension earned from a private foreign employer excludable from Illinois income?
No. The wife's pension from a private employer in another country was included in federal income, and the plan did not appear to fit any federal retirement provision listed in Section 203(a)(2)(F). Be…
Could a highway contractor buy taxable cleaning and security services tax-free for resale to its state customer?
Only after fixing the documentation. Future purchases could qualify for resale if contracts named the single state customer, both invoice levels separately stated the services, and resale records comp…
Did equipment used after treated water entered storage qualify for Virginia's processing exemption?
No. Virginia held that water became a finished product when it left processing and entered the storage tank. Equipment and testing used during later transmission to customers were taxable distribution…
Did tax paid by a REIT lessor when buying hotel property eliminate tax on leases to hotel operators?
No. Virginia held that leases of the hotel furniture, fixtures, and equipment were taxable and that the tax was the lessees' legal debt, even though the lessor claimed it paid tax when buying the prop…
Did a tiered partnership need alternative-apportionment permission to use the Illinois amounts reported on its partnership schedules?
Not if the LLC only meant to apply Section 305 to the Illinois amounts reported by its lower-tier partnerships on Schedules K-1-P; no Section 304(f) petition was needed for that statutory method. If i…
Did a tiered limited partnership need alternative-apportionment permission to use the Illinois amounts on its partnership schedules?
Not if the partnership only meant to apply Section 305 to the Illinois amounts reported by its lower-tier partnerships on Schedules K-1-P; that statutory method did not require a Section 304(f) petiti…
Could a Virginia retailer remove audited assets when Virginia or another state's tax was already paid?
Yes. Virginia reviewed the retailer's invoices and removed ten amounts from the Asset Exceptions list because Virginia use tax or another state's similar sales tax had already been paid. The audit wou…
Was the entire portable-toilet rental and servicing charge taxable in Virginia?
Yes. Virginia treated the portable toilet as the true object and waste-removal service as incidental, making the entire charge taxable. The administrative appeal was also filed two days after the 90-d…
Could two one-time lead-lined drywall purchases be projected across the full audit period?
No for this audit period. Virginia found that the two untaxed lead-lined drywall purchases were isolated specialty purchases outside the contractor's normal business. The contractor accepted and paid …
Could an online seller exclude charges labeled shipping and handling from Virginia sales tax?
Only with adequate proof that the charges were separately stated transportation-out and contained no handling. The seller's spreadsheet labeled them shipping and handling, and its sample invoice fell …
Could an online seller exclude charges labeled shipping and handling from Virginia sales tax?
Only with adequate proof that the charges were separately stated transportation-out and contained no handling. The seller's spreadsheet labeled them shipping and handling, and its sample invoice fell …
Did overseas foreign-service assignments prove that a couple had ended Virginia domicile?
Not on the facts presented. Virginia said the couple likely became Virginia domiciliaries during 2004-2007. Although they took substantial steps to abandon Virginia when moving overseas, they showed n…
Could an auto-parts seller keep submitting exemption certificates after a four-year audit review?
No. Virginia upheld the remaining assessment after the seller received at least six information requests over four years. Certificates were missing, incomplete, dated after the sales, or did not cover…
Did Virginia's temporary-storage exemption cover materials fabricated here for an out-of-state government project?
No. The subcontractor was the taxable user and consumer of materials it fabricated in Virginia into property installed in an out-of-state building. The materials were not merely stored in Virginia pen…
Could a hotel replace Virginia's sample assessment with a detailed audit of one customer's sales?
No. Virginia upheld the sample because the customer's recurring lodging purchases were taxable and formed a consistent part of the hotel's normal business, not isolated transactions. The customer was …
Which nonprescription drugs and proprietary medicines qualified for Virginia's sales-tax exemption?
A product qualified when it was a nonprescription drug or proprietary medicine, was sold for internal or topical use, and was intended to cure, mitigate, treat, or prevent human disease. Cosmetics, gr…
Were Illinois public school districts exempt from state Telecommunications Excise Tax because they were local-government entities?
No. The Telecommunications Excise Tax Act's exemptions were limited to the State and federal governments, state universities created by statute, and specified wholly owned corporate-subsidiary purchas…
Did prototype production make the taxpayer a manufacturer exempt from local BPOL tax?
Not on the record presented. Production for end use can be manufacturing, but prototypes made to advance research and development are business services. After inspecting facilities, contracts, and inv…
Were welding fabrication and repair-part charges taxable even when the welder paid suppliers tax?
Yes. Welding that changed property into a different form was taxable fabrication, and separately stated repair parts were taxable retail sales; lump-sum repair charges including parts were fully taxab…
Who bore the tax when a purchased Virginia land-preservation credit was later reduced?
The credit purchasers remained liable to Virginia after the donor and Department agreed to a lower conservation-easement value. Their good-faith purchase and private indemnification agreement did not …
Was a former wife personally liable for gross receipts tax assessed against her ex-husband's D & M Recovery sole proprietorship when she never worked in or controlled it?
No. D & M Recovery was Dennis Fluitt's automobile-repossession sole proprietorship. Mariah Affentranger never worked for it, managed it, reviewed its finances or tax filings, or caused it to conduct b…
Could a solid-waste consultant deduct management and operating services resold by a governmental authority as taxable garbage-collection services even though the services were not identical?
Yes. Southern Oasis effectively operated the North Central Solid Waste Authority: it managed employees, budgets, billing, collections, equipment, environmental compliance, and daily garbage operations…
How are South Carolina counties ranked for the job tax credit for 2013, and which counties qualify for the fee-in-lieu and tax moratorium (per SC IL #13-6)?
SC Information Letter #13-6 publishes South Carolina's county rankings for the job tax credit for 2013, together with the counties that qualify for a reduced minimum investment under the fee in lieu o…
Could a part-year Virginia couple claim credit for tax on wages excluded from Virginia income?
No. The wife earned and was taxed on the wages while she was a resident of the other state, so Virginia's part-year rule barred the credit for that period. The couple also excluded those wages from Vi…
What Virginia tax interest rates applied during the second quarter of 2013?
Virginia's second-quarter 2013 rates remained 5% for tax underpayments and 5% for overpayments. The reduced rate for a qualifying assessment under administrative appeal was 0% after nine months until …
When could two bone-repair medical devices be sold exempt from Virginia sales tax?
Device B could be sold exempt when purchased specifically for an identified patient's use, but bulk purchases were taxable. Device A required FDA Class III approval before receiving the same treatment…
Did a 2012 retailer classification automatically entitle an equipment broker to earlier BPOL refunds?
No automatic refund followed. Claims before 2009 were time-barred. For 2009-2011, Virginia remanded because both sides relied mainly on the taxpayer's self-descriptions rather than evidence of its act…
New York Advisory Opinion TSB-A-13(4)C: Is an out-of-state company whose New York independent contractors hold consigned inventory and make sales and deliveries subject to franchise tax, or is it protected by the fulfillment-services exclusion or Public Law 86-272?
Yes. The out-of-state company is subject to franchise tax, because consigned inventory it still owns in New York gives it nexus, and neither the fulfillment-services exclusion nor Public Law 86-272 pr…
What is South Carolina's tax interest rate for the period ending June 30, 2013 (per SC IL #13-5)?
3%. SC Information Letter #13-5 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through June 30, 2013. Interest is compounded daily, exce…
Could spouses claim $100,000 of land-preservation credit when only the husband donated the easement?
No. Only the husband appeared on the easement deed and credit application, so only he earned the land-preservation credit. Marital funds did not make the wife a donor, and no credit had been transferr…
Could New Mexico estimate a smoke-shop owner's Tobacco Products Tax from a comparable retailer when he failed to provide adequate purchase records?
Yes. Hamza Benderra admitted that he sold pipe tobacco and was its first purchaser but had not paid Tobacco Products Tax. Because he repeatedly failed to provide adequate records, the Department reaso…
Are membership dues for a business-networking / referral association subject to NY sales tax as social or athletic club dues?
No. NY taxes dues only for a social or athletic club (Tax Law 1105(f)(2)). This association is a 'club' (its members control admission and activities), but it is not an athletic club (it has no sports…
New York Advisory Opinion TSB-A-13(3)C: Does a U.S. bank holding company stay taxed under Article 9-A (rather than Article 32) after a reorganization and the sale of its banking subsidiary, under the Gramm-Leach-Bliley transition rules?
Yes. Holdco continues to be taxed under Article 9-A. A bank holding company that first registered and elected financial-holding-company status after January 1, 2000 cannot be forced into Article 32 co…
How could a Virginia manufacturer average full-time employees for the single-sales-factor election?
A manufacturer could use a mean, median, or mode based on employee counts that represent the entire taxable year, and it could change methods from year to year. It could not use only the last day's he…
Did Louisiana Revenue Ruling 13-003 exclude repair parts for leased or rented equipment from sales tax?
No. The ruling said repair parts and maintenance materials did not qualify, whether installed by the lessor or a repair shop. The Department suspended its implementation effective July 18, 2013.
How is the federal credit for prior year minimum tax recomputed to determine the Nebraska minimum tax credit on a 2012 fiduciary (estate or trust) return?
Recompute the federal prior-year minimum tax credit for the estate or trust using Nebraska's adjustments, then apply a 29.6% factor. Revenue Ruling 23-12-2 tells fiduciaries filing a 2012 Nebraska Fid…
How is the federal alternative minimum tax recomputed to determine the Nebraska minimum tax on a 2012 fiduciary (estate or trust) income tax return?
Recompute the federal fiduciary AMT using Nebraska's adjustments. Revenue Ruling 23-12-1 tells estates and trusts filing a 2012 Nebraska Fiduciary Income Tax Return (Form 1041N) to recalculate the alt…
When does a professional trapeze artist have to collect NY sales tax -- on performance fees, instruction, or admissions?
Only when she performs directly for the public and charges an admission. Being hired for a fee -- to instruct aerial skills, to perform at events booked by event planners or private hosts, or as a sub…
Will selling a minority (up to 49%) ownership stake in a Qualified Empire Zone Enterprise LLC to an outside investor cause it to lose its QEZE tax credits?
No. New York concluded that transferring no more than a 49% ownership interest in Petitioner to an unrelated third party will not cause a loss of Qualified Empire Zone Enterprise (QEZE) tax benefits, …
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