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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Could a support-services CITC project calculate project income using a jobs-change factor applied to consolidated Florida tax?
Yes. Florida accepted the project's proposed jobs-change factor applied to tax due on the consolidated return because project support served the affiliated group, but the approval depended on the repr…
Were a captive subsidiary's accounting, tax, audit, legal, and finance support services to its parent group subject to sales tax?
No. The work was professional or personal service, and the financial documents delivered to the parent group carried no separate charge and were only inconsequential elements of those services.
Must Virginia subtract federal savings-bond income again when calculating the income limit for its Age Deduction?
No. Virginia already subtracted tax-exempt income from United States obligations when computing Virginia taxable income. The Age Deduction's separate income test reduced federal adjusted gross income …
Could Virginia retailers refund sales tax when they later paid high-volume customers a monthly rebate?
No. A month-end rebate paid to reward a high-volume customer did not qualify as a returned-goods adjustment. Because the customer returned no tangible personal property, the retailer could not deduct …
Were a resort's separately stated purchasing fees and combined shipping-and-handling charges taxable in Virginia?
Yes. A 10% purchasing fee charged only with the sale of specified tangible personal property was part of the taxable sales price even when separately stated. Separately stated transportation charges c…
Did DMME-certified pit liners and storage tanks remain exempt from Virginia sales and use tax after July 1, 2006?
Yes. Virginia changed its policy effective immediately and retroactive to July 1, 2006: DMME-certified pollution-control equipment for coal, oil, and gas production remained exempt under Va. Code § 58…
Was a percentage-of-sales fee remitted to a shopping-complex landlord for advertising and promotion taxable as rent?
Yes. The lease required the retailer to remit the percentage-of-sales fee to the landlord, the funds promoted the shopping complex, and nonpayment was a lease default, making the fee taxable percentag…
How did Illinois tax a farmer's sales of live cattle to restaurants and households for processing into meat?
A sale to a restaurant that resold the resulting meat was generally a sale for resale, supported by a resale certificate. A sale to a household was a retail sale and did not become an exempt occasiona…
A Tennessee food producer bolted storage racks into its freezer to freeze and hold its own packaged food before shipping. Are the freezer racks exempt from sales and use tax as 'industrial machinery'?
Yes. The freezer racks a food producer bolted into its freezer qualify as exempt 'industrial machinery' (Tenn. Code Ann. § 67-6-206(a)), so no Tennessee sales or use tax is due on them. The exemption …
Are a contractor's charges to update a kitchen (new cabinet doors, countertop, sink, molding) a tax-exempt capital improvement?
Yes, when sold as a complete package. A kitchen-update package -- new cabinet doors and drawer fronts, new hardware, new countertop, new sink and faucet, new molding, and painting the cabinet surfaces…
After a lessee defaults, is money an equipment lessor recovers by judgment or from a guarantor subject to NY sales tax?
It depends on the type of lease. For a TRUE lease, where the lessor collected tax on each monthly payment, any amount it later recovers on the default -- a court judgment against the lessee, or a paym…
Is the payroll a managing agent passes through for cleaning and maintenance workers subject to NY sales tax?
No. Building cleaning and maintenance services are generally taxable, but wages and other compensation an employer pays its own employees for those services are excluded from sales tax under Tax Law 1…
New York Advisory Opinion TSB-A-13(2)C: Does an S corporation keep its Empire Zone certification and tax benefits after transferring non-voting shares to grantor trusts treated as disregarded entities?
Yes. The Empire Zone certification and tax benefits survive the restructuring. Transferring non-voting shares to grantor trusts that are disregarded entities does not by itself break eligibility, prov…
Is an online driver-safety / point-reduction course subject to NY sales tax as prewritten software?
No. A DMV-regulated online accident-prevention course (an Internet Point and Insurance Reduction Program, or IPIRP) is a nontaxable educational service, not a sale of taxable software. Although the co…
If I install solar panels at my home in two separate stages, does each stage qualify for its own $5,000 tax credit, or is the credit capped in total per residence?
The $5,000 solar energy system equipment credit under Tax Law § 606(g-1) is a single aggregate cap per principal residence, not a separate cap for each installation stage. A taxpayer who installs sola…
New York Advisory Opinion TSB-A-13(1)C / 13(2)I: Does an LLC keep its Empire Zone certification and benefits after a foreign corporate member exits and the remaining member gifts a majority interest to a spouse?
Yes. The Empire Zone certification and tax benefits survive the change in the LLC's ownership. After the foreign corporate member transfers its interest (and recaptures its own credits) and the remain…
How did Virginia's elective single-sales-factor method work for qualifying manufacturing companies?
A qualifying manufacturing company could elect a modified apportionment method that used triple-weighted sales for taxable years beginning July 1, 2011 through June 30, 2013, quadruple-weighted sales …
Were fragranced antibacterial products with skin-softening claims exempt as nonprescription drugs in Virginia?
No. Even if the FDA treated the products as antiseptic hand washes, Virginia strictly construed the exemption and treated products with fragrance plus advertised skin-nourishing and softening effects …
What operational requirements and playing limits apply to keno player access devices (self-service kiosks) in Nebraska?
Revenue Ruling 35-13-1 sets the operating rules for keno 'player access devices' -- self-service kiosks that let a player place a keno wager and print their own outside ticket. After the Nebraska Coun…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #12-21)?
Use the citator attached to SC Information Letter #12-21. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified,…
Can the members of a Colorado LLC claim the Colorado source capital gain subtraction on the gain from selling all the LLC's business assets, mostly goodwill?
No. The members cannot use the Colorado source capital gain subtraction (§ 39-22-518) for gain on the sale of all of the LLC's business assets. The subtraction covers gain on (A) real or tangible pers…
Is a subscription fee for an online financial newspaper, and for interactive online stock screens and performance ratings, subject to Colorado sales or use tax?
Neither is taxable. The subscription fee for an online version of a daily financial newspaper is NOT subject to Colorado sales or use tax: Colorado excludes qualifying daily 'newspapers' from taxable …
Are Braille devices, electronic magnifiers, adapted phones, and other products that help blind and legally blind people exempt from Colorado sales and use tax?
Probably not exempt, though the Department made no determination. Three Colorado exemptions might seem to apply — optical sales, prosthetic devices, and durable medical equipment — but the optical exe…
Does a full-service truck wash owe Colorado sales tax on the wash, and use tax on the soaps, wax, water, electricity, gas, and equipment it uses?
Likely a non-taxable service — but with use tax on the supplies. A full-service wash where the company's own employees run the equipment is treated as a non-taxable service, not a taxable equipment re…
When a company buys parts out of state, has them assembled in Colorado into a finished unit, and then exports that unit out of the country, must it pay Colorado tax on the parts, or are they exempt wholesale purchases?
The parts are likely exempt as components of a manufactured product, though the Department made no determination. Colorado exempts tangible personal property bought by a manufacturer that becomes an I…
Which alarm-system sales and monitoring services could Home Security Systems and Industrial & Commercial Security Systems deduct when some transactions lacked timely or correct NTTCs or did not meet the claimed construction, resale, interstate, leasing, or government-sales rules?
Only selected transactions qualified. HSS received its T.C. Building & Realty construction-service deduction. ICSS received deductions for both Northrop Grumman interstate sales and three Jaycor/L3 se…
Could a cash-management company pay tax on customer safes and then bill one untaxed charge for the safe, armored transport, and cash services?
IDOR said the company appeared to be the end user of the safe and therefore owed Use Tax on it. But it would not confirm that the single customer charge was untaxed without reviewing the customer agre…
Which catheters and cardiovascular products qualified for Illinois's reduced medical-appliance tax rate?
The reduced rate applied only when the item was intended by its manufacturer to directly substitute for a malfunctioning body part. Catheters that introduced or removed fluids as a substitute for a bo…
Was electricity passed through salt brine during a Georgia manufacturing process exempt as an industrial material beginning in 2013?
Yes, beginning January 1, 2013, for electricity passed through salt brine in electrochemical cells and impregnated into the manufactured industrial salt. That electricity qualified as an exempt indust…
How did Florida require an online advertising company to source receipts when ordinary cost-of-performance sourcing distorted Florida activity?
Florida required alternative apportionment. For the advertising stream connected to Florida activity, the company had to use a ratio based on Florida users compared with users across the jurisdictions…
When did an Illinois gift basket containing coffee, candy, and other food qualify for the lower food tax rate?
Under the assumptions in the letter, the whole gift basket qualified for the lower 1% state food rate plus local tax when more than 50% of its value came from qualifying food. If more than 50% of the …
Was a farm winery's separately charged wedding and event rental activity a separate business for county BPOL tax?
Possibly. The separately charged facility rentals could exist independently of the winery even though events promoted wine and required a minimum wine purchase. Virginia remanded the case because the …
Did Virginia properly shift all income from a nonresident owner's LLC to Virginia because its only client was his Virginia S corporation?
Not entirely. Virginia overturned the auditor's related-party adjustment because the out-of-state LLC had economic substance and charged fees comparable to an unrelated provider. But the owner spent s…
Could a holding-company S corporation subtract gain from distributing portfolio-company stock because the companies were not unitary?
No. Virginia agreed that the S corporation and the 7%-owned company were not unitary, but that did not end the analysis. Holding and managing operating-company investments, reorganizations, and stock …
Could a mechanical contractor remove fabrication, labor, and real-property charges from a Virginia sales-tax audit without transaction records?
Not without proof. Process-piping and exhaust-system contracts generally had tangible property as their true object, fabrication labor was taxable, and exempt installation or repair labor became taxab…
Did a retailer's spreadsheets prove that sampled untaxed deductions were gift-certificate sales rather than taxable sales?
No. The retailer's spreadsheets lacked detailed deduction descriptions and did not reconcile to the sample month's reported gross sales or total deductions. A later spreadsheet also showed gift-certif…
Were a Virginia medical practice's out-of-state software license, remote hosting, and training travel charges taxable?
No, on the stated facts. Tangible software and updates were delivered to an out-of-state hosting company, title or possession passed outside Virginia, and no use occurred in Virginia. Remote hosting w…
When were a meal-plan provider's sales to schools, colleges, fraternities, and sororities taxable in Virginia?
Treatment depended on who consumed or resold the meals. Sales to a for-profit school using meals in its overall services were taxable. If the school separately resold meals, the provider could accept …
Did transferring a recreational aircraft from four individuals to their newly formed, identically owned LLC trigger Illinois Aircraft Use Tax?
Yes. IDOR said transferring the aircraft from the four individual owners to their newly formed LLC was taxable under the Aircraft Use Tax Law because the aircraft moved from one legal entity to anothe…
Could Mark Kilcoyne defeat a 2008 New Mexico personal income tax assessment by arguing that taxes were voluntary, attempting to name a Department employee as trustee, and presenting no evidence?
No. Kilcoyne presented no evidence to rebut the assessment and relied instead on arguments that paying tax was voluntary and that a purported trust could make a Department employee responsible for the…
When a Tennessee advertising agency develops a brochure through consultation, research, design, and production phases, which of those phases and charges are taxable, and which are exempt under Tennessee's 2009 advertising-materials law?
It's an 8-part split ruling that draws a line between three categories created by Tennessee's 2009 advertising-materials law: PRELIMINARY artwork and pure advertising services (the consultation, resea…
When a company sells its trade accounts receivable to an affiliated company at a discount to maintain loan collateral, is that discount an 'intangible expense' that has to be added back when calculating Tennessee franchise and excise tax — and pre-approved to be deducted again?
No — the discount isn't an 'intangible expense' at all, so the affiliate add-back rule doesn't apply to it. The Department ruled that when a company sells its trade accounts receivable (arising from o…
Could Virginia estimate an auto repair shop's sales from local business-license assessments when the shop filed no sales-tax returns?
Yes, provisionally. The shop filed no sales-tax returns and did not provide reliable sales records, so Virginia accepted the auditor's use of local business-license assessments as the best information…
What is South Carolina's tax interest rate for the period ending March 31, 2013 (per SC IL #12-20)?
3%. SC Information Letter #12-20 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through March 31, 2013. Interest is compounded daily, ex…
How are South Carolina counties ranked for the job tax credit for 2012, and which counties qualify for the fee-in-lieu and tax moratorium (per SC IL #12-19)?
SC Information Letter #12-19 publishes South Carolina's county rankings for the job tax credit for 2012, together with the counties that qualify for a reduced minimum investment under the fee in lieu …
What are South Carolina's latest per capita income figures used to qualify for tax incentives (per SC IL #12-18)?
SC Information Letter #12-18 publishes the state and county per capita personal income figures the Department uses to test qualification for various South Carolina income, sales and use, and property …
Were bakery items sold by outlets with seating exempt when packaged and recorded for off-premises consumption?
Yes. Bakery products in any quantity were exempt when packaging showed off-premises intent and the POS separately recorded the exempt sale. Coffee beans, ground coffee, and K-cup portion packs were al…
Did a manufacturer's utilization study require a city to reduce machinery-and-tools values for economic obsolescence?
No. The city's depreciated-cost method complied with Va. Code § 58.1-3507(B), and the taxpayer's utilization-based economic-obsolescence analysis alone was not a bona fide independent appraisal. Virgi…
When did a taxpayer on out-of-state and foreign job assignments successfully abandon Virginia domicile?
Virginia treated him as domiciled here through 2007 but not beginning in 2008. He had abandoned his former state in 2005 by resigning and moving to Virginia, obtaining a Virginia license and mailing a…
Could a Virginia military resident claim the full basic-pay subtraction and also subtract combat pay already excluded from federal income?
No. The extended-active-duty basic-pay subtraction was reduced dollar-for-dollar when basic pay exceeded $15,000 and fully phased out at $30,000. Combat-zone and qualified-hazardous-duty pay could be …
Were a seasonal campground's seven-month campsite leases subject to Virginia retail sales tax as transient accommodations?
No. Each seasonal lease ran for the campground's entire seven-month April-through-October operating period, identified fixed start and end dates, and was never signed for fewer than 90 days. Virginia …
Must a lessor report sales tax when litigation or a guarantor later pays part of a lease debt written off as bad debt?
Yes. When a dealer takes a sales-tax bad-debt credit and later collects all or part of that account through litigation or a third-party guarantor, Va. Code § 58.1-621 requires the recovered amount to …
Could a contractor buy U.S.-embassy construction materials tax-free when they were temporarily stored at a Virginia receiving point?
Potentially, but only under the contractor-specific exemption. The contractor had to show the materials were used solely in the foreign country, were temporarily stored in Virginia pending shipment, a…
Did Virginia retail sales tax apply when a long-term vehicle lessor passed local personal property tax to its lessees?
Virginia Tax did not decide the passed-through charge under retail sales tax. A long-term highway vehicle lease remained subject to Virginia motor-vehicle sales and use tax rather than retail sales ta…
Was a lump sum paid to a federal retiree in place of higher pension payments exempt from Illinois income tax?
No. Although the retiree's regular federal pension qualified for Illinois's retirement-income subtraction, the replacement lump sum had been subjected to FICA and Medicare taxes, indicating federal wa…
Did Illinois's $15 family-transfer vehicle tax rate apply to a transfer from a stepparent to a stepchild?
No. IDOR rescinded ST 12-0054-GIL and clarified that the $15 family-transfer rate was limited to a transferor's spouse, mother, father, brother, sister, or child; the statute did not extend that rate …
How did Virginia's 2012 International Trade Facility Tax Credit guidelines treat jobs, investment, and applications?
Under these historical guidelines, a qualifying international trade facility with at least a 10% Virginia port cargo increase could elect either $3,500 per qualified full-time employee or 2% of qualif…
How did Virginia's 2012 Barge and Rail Usage Tax Credit guidelines calculate and administer the credit?
Under these historical guidelines, a qualifying international trade facility could claim $25 for each TEU, or each 16 net tons of noncontainerized cargo, moved by barge or rail above the prior-year vo…
What did Virginia's original Insurance Premiums License Tax guidelines require, and are they still operative?
The original guide moved Insurance Premiums License Tax administration from the SCC's Bureau of Insurance to the Tax Department for taxable years beginning in 2013, while the Bureau retained licensing…
New York Advisory Opinion TSB-A-12(7)C / 12(32)S: Does a parent corporation keep the Empire Zone benefits of a certified subsidiary it absorbs in an IRC section 332 liquidation?
Yes, with a step. When a certified subsidiary is liquidated into its parent under IRC section 332 and the parent keeps running the same facility and employees in the zone, the parent stays eligible fo…
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