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 tire seller avoid Virginia sales-tax audit items with late exemption certificates, claimed delivery labor, or tax collected after the sampled sales?
Mostly no. The seller was liable for tax when it failed to collect Virginia tax or hold valid exemption certificates. Incomplete certificates, an undocumented handling charge, and an unsupported claim…
Under Virginia's 2012 motion-picture credit guidelines, which productions and expenses qualified, how large were the credits, and how were they claimed?
Under these 2012 guidelines, an approved production spending at least $250,000 in Virginia could receive a refundable base credit of 15% of qualifying expenses, plus a 5% distressed-area bonus and sep…
Is the service of installing and dismantling scaffolding, safety netting, hoisting equipment, and temporary pedestrian walkways subject to NY sales tax?
It depends on whether the item is a 'temporary facility' and whether the underlying job is a capital improvement. Installing scaffolding, safety netting, hoisting equipment, and temporary pedestrian w…
Were separately billed vending-program implementation, hosting, management, and processing fees part of an Illinois retailer's taxable gross receipts?
Yes, based on the information provided. IDOR said the implementation, web-hosting, management, and payment-processing fees appeared to cover the retailer's costs of selling products through customer-s…
Did a restaurant owe use tax on contracted floor repairs and on a second purchase supported only by unclear, unreconciled invoices?
The floor-repair charge was not taxable to the restaurant. The contractor installed cement board, sealant, tile base, and grout as a real-property repair and was the taxable user of those materials, s…
Do reusable, part-specific protective containers that move components from storage to a factory's assembly line qualify for Tennessee's industrial machinery sales tax exemption?
Yes. The Department ruled that a manufacturer's reusable, part-specific protective containers — used to move components from a parts-storage area to the production and assembly line, then returned to …
Does Tennessee's sales tax exemption for energy fuels used directly in manufacturing apply to natural gas burned in a factory's ovens — and does it matter whether each oven is separately metered?
Yes, but only for the metered ovens. The Department ruled that natural gas a food manufacturer burns in its direct-fired processing ovens qualifies for Tennessee's FULL energy-fuel exemption (Tenn. Co…
Are fees a company charges to manage clients' cooperative advertising funds — tracking balances, processing reimbursement claims, and reporting — subject to Tennessee sales tax?
No. The Department ruled that fees for managing a client's cooperative advertising fund — maintaining the Co-op database and balances, fielding customer calls about fund usage and claims, processing a…
Could a taxpayer use overpayments from 2004-2006 returns filed in December 2010 to offset 2007 tax and avoid Virginia penalty and interest?
No. The three-year refund deadlines for 2004, 2005, and 2006 expired before the taxpayer filed all six returns on December 5, 2010, so those old overpayments could not be refunded or used as requested…
Did a restaurant microbrewery's 67% on-site beer sales conclusively defeat Virginia's industrial manufacturing exemption for its brewery equipment?
Not conclusively. The auditor reasonably treated 67% on-site beer sales as evidence that brewing was incidental to the restaurant, but sales volume was not the only permitted measure of the business's…
Could Virginia residents subtract a 2008 gain from foreign real property because the foreign country taxed it and federal law allowed a foreign tax credit?
No. Virginia began with the couple's federal adjusted gross income, which included the gain, and the General Assembly had repealed the state's foreign-source-income subtraction for taxable years begin…
Could an Illinois resident claim the other-state tax credit for Kentucky county income tax withheld from wages?
Yes. The Illinois-Kentucky reciprocity agreement barred Kentucky state income tax on an Illinois resident's wages but did not cover county or city income taxes. The Kentucky county withholding therefo…
Could church staff or members use the church's Illinois E number for meals or supplies they bought personally and were later reimbursed for?
No. An Illinois E number exempted qualifying purchases made by the church in furtherance of its organizational purposes, not purchases by individual staff or members. Staff and member restaurant meals…
Which Illinois taxes and 9-1-1 surcharge applied when a wireless retailer accepted payments for prepaid or subscription plans?
A true prepaid calling arrangement—service bought in advance and exhausted in known units or dollars—was tangible personal property subject to Retailers' Occupation Tax. A payment credited to an exist…
Was a specialty vehicle exempt from Virginia retail sales tax when a broker-arranged carrier picked it up in Virginia and delivered it out of state?
Yes. The ordinary Virginia motor-vehicle retail-tax exemption did not apply because the vehicle was not titled in Virginia and Virginia motor-vehicle sales tax was not paid. But the manufacturer docum…
When could a charity provide a T-shirt with a donation without owing Illinois Retailers' Occupation Tax?
A charity's E number generally exempted its qualifying purchases, not its own retail sales. Its sales remained taxable unless a limited exception applied. T-shirts could qualify as exempt noncompetiti…
Were vehicle telematics plans limited to communication with a call center subject to Illinois Telecommunications Excise Tax?
No. Vehicle telematics that allowed voice and data communication only between the vehicle and a call center, without public-switched-network calling, were information services and not subject to Telec…
What annual caps and proration factors applied to Virginia's Qualified Equity and Subordinated Debt Investments Tax Credit for 2011-2013?
For taxable year 2011, the cap was reduced from the $5 million statutory amount to $3 million. Because taxpayers requested $8.09 million, Virginia prorated commercialization-investment credits to 52.6…
Could a Virginia resident defeat a 2005 nonfiler assessment by arguing that IRS data sharing was illegal and that his income was not federal adjusted gross income?
No. Virginia law required a resident with taxable income to file, and federal law authorized the Department to receive IRS return information under its written coordination agreement. The taxpayer did…
Could a retired service member claim Virginia's military-spouse income-tax protection without sharing the active-duty spouse's out-of-state domicile?
No. The Servicemembers Civil Relief Act protection required the spouse claiming exemption and the active-duty service member to share the same domicile. The claimant showed intent to adopt another sta…
What Illinois wages belonged in Box 16 when an Illinois resident worked in another nonreciprocal state?
Wages for an Illinois resident working 100% in Minnesota were not Illinois wages in Box 16 because no services occurred in Illinois. The same applied if the employee worked 100% in Tennessee or anothe…
Did a packaging wholesaler's machine qualify for Virginia's manufacturing exemption because it folded corrugated cardboard into self-locking boxes?
No. Virginia accepted that erecting self-locking boxes could be processing, but the exemption required industrial processing as the business's primary activity. The company was classified as a packagi…
Did transferring a vehicle title between an individual and that individual's trust trigger Illinois Vehicle Use Tax?
Yes. A vehicle-title transfer from a trust to an individual, or from an individual to a trust, was subject to Illinois Vehicle Use Tax. The preferential $15 family-transfer rate did not apply because …
Were sales tax and a prepaid wireless 9-1-1 surcharge automatically improper on a monthly phone recharge?
Not automatically. A true prepaid calling arrangement was tangible personal property subject to Retailers' Occupation Tax, and prepaid wireless retail transactions also faced the 9-1-1 surcharge rules…
Was a rental company's one-off sale of a used man lift from rental inventory subject to Illinois sales or use tax?
No, under the stated non-motor-vehicle facts. A business that was strictly a lessor and sold only items no longer needed in its rental inventory made a nontaxable isolated or occasional sale. The less…
Did a small auto repair shop's de minimis serviceman status eliminate Form ST-1 filing for its retail tire sales?
No. Selling tires was a retail sale subject to Retailers' Occupation Tax, separate from repair services taxed under Service Occupation Tax when property was transferred. A retailer generally had to fi…
Is a flat subscription fee for online access to reference materials, library databases, and simulation programs subject to Tennessee sales tax — and did the answer change when Tennessee started taxing 'specified digital products' in 2009?
It depends on the period. The Department ruled that a flat subscription fee giving customers online access to reference databases, dictionaries/encyclopedias, library content, and computer simulation …
Is the labor to construct a new underground electrical 'duct bank' exempt from Kansas sales tax as original construction?
Taxable. The labor to construct a new underground electrical distribution 'duct bank' — a conduit and manhole system that protects and routes electrical wiring — is not exempt as 'original constructio…
When did Kansas's environmental assurance fee on petroleum products resume in 2012?
This Kansas Department of Revenue notice (approval date July 24, 2012) advises all Kansas Environmental Assurance Fee filers that, effective September 1, 2012, the environmental assurance fee of $.01 …
Are charges from a third-party contractor for fabricating, installing, reworking, or repairing parts and inventory during a Tennessee manufacturer's production process subject to sales and use tax?
Mostly exempt, with one exception. The Department ruled that a manufacturer's third-party contractor charges for (1) fabricating parts of the product, (2) installing parts on the product, and (3) rewo…
Could a taxpayer who moved out of Illinois claim the property-tax credit for the months the Illinois home was the principal residence?
Yes, proportionately. The taxpayer used the Illinois house as his principal residence from January 1 through October 1, 2009, continued to own it, and paid the 2009 property tax in 2010. Residence in …
Could an Illinois tobacco retailer receive more time after July 31, 2012, to sell its existing inventory of unstamped little cigars?
No. IDOR said it could not delay enforcement beyond July 31, 2012. Under the 2012 law, qualifying little cigars purchased on or after July 1 had to bear cigarette tax stamps, and unstamped inventory r…
Did manufacturing-execution software, wireless inventory scanners, and their maintenance contract qualify for Virginia's direct-use manufacturing exemption?
No. The MES software collected and processed production data for inventory control but did not operate equipment or control product quality, making it a taxable administrative tool. The wireless gun s…
Who owed Illinois tax on equipment provided under a lease with a $1 purchase option when the out-of-state lessor lacked Illinois nexus?
The $1 purchase option generally made the arrangement a conditional sale rather than a true lease. In the situation described, if the out-of-state lessor lacked Illinois nexus and was not registered, …
Were custom-printed magnetic hotel, casino, loyalty, and gift cards a taxable sale of property or a sale of service in Illinois?
IDOR described manufacturing and selling custom-printed magnetic cards as a sale of service, but the card and its custom printing were tangible personal property transferred with that service and were…
How did Illinois answer a 2012 survey about moving services, special-event exemptions, invoice tax display, repossessions, and responsible-person liability?
IDOR gave separate answers. Moving services without transferred property were outside Service Occupation and Use Tax, but packing materials sold to movers or storage companies were taxable retail sale…
Could a Virginia resident avoid a 2007 assessment by refusing to report an IRS audit increase and claiming he had no federally taxable activity?
No. A taxpayer had one year after the final federal change to file an amended Virginia return. Because this taxpayer did not report the IRS increase, Virginia could assess the resulting tax at any tim…
Did a Virginia advertising franchise owe tax on an in-state printer's full charge for printing, inserting, and mailing direct-mail advertisements?
Yes. The franchise provided exempt professional advertising services to its Virginia customers, but as an advertising business it was the taxable user of the printed direct-mail materials. Because its…
Did Virginia finally uphold a 2008 residency assessment when a former service member claimed another domicile but supplied no supporting evidence?
Not finally. The taxpayer had not answered two Department requests or provided objective evidence supporting his claimed out-of-state domicile, so Virginia had no basis to revise the presumptively cor…
Could financial hardship excuse a 2007 Virginia refund return filed more than six months after the three-year deadline?
No. The original 2007 return had to be filed within three years of its due date to claim a refund, making the deadline May 2, 2011 because May 1 fell on a Sunday. The taxpayer filed on November 11, 20…
Are animal shelter adoption fees subject to Kansas sales tax?
Kansas Notice 12-15 (July 19, 2012) revokes Revenue Ruling 19-2012-01, dated June 15, 2012, which had stated that animal adoption fees charged by animal shelters are subject to retailers' sales tax. T…
Could a C corporation use a net-loss carryover against the pre-2011 portion of a straddle year after electing specific accounting?
No. Section 207(d) made the C corporation's Illinois net-loss carryover deduction zero for a taxable year ending after December 31, 2010 and before December 31, 2012. Section 202.5(c)(3) only directed…
Which resale deductions survived when a valve seller held multistate certificates for two buyers, received Intel's NTTC late, and held the wrong certificate for KSL?
The Kinetic Systems and Grainger deductions survived. Albuquerque Valve timely held multijurisdictional certificates, and under Siemens the buyers' New Mexico identification numbers alone did not prov…
Could an Illinois township buy diesel for off-road equipment free of sales tax and Motor Fuel Tax, and what documentation did it need?
The two taxes had different rules. A governmental body's retail purchase was sales-tax exempt only when supported by an active Illinois exemption identification (E) number. Local governments generally…
Did Virginia finally uphold a 2008 residency assessment against a student who lived in two other states but kept a Virginia driver's license?
Not finally. The student said she lived and attended college in two other states and paid tax there, but provided no supporting records despite two information requests. Her Virginia driver's license,…
Did evidence that eliminated a 2008 Virginia residency assessment also prove the taxpayer was not domiciled in Virginia during 2007?
No. Virginia had already abated the 2008 assessment based on additional evidence, but the 2007 record was different: the employer attributed all wages and withholding to Virginia, federal tax document…
Are portable-toilet rentals with waste removal exempt from NY sales tax when the customer is performing a capital improvement?
No. Providing portable toilets together with waste removal is a taxable service of maintaining/servicing real property under Tax Law 1105(c)(5), and the capital-improvement exclusion does not reach it…
Must a Kansas gun dealer collect sales tax on a firearm shipped in from an out-of-state seller and handed to a resident buyer?
No tax on the transfer — but the dealer's own retail sales are still taxable. A Kansas Federal Firearms Licensee (FFL) that simply receives a firearm shipped by an out-of-state seller and transfers it…
Does Tennessee sales tax apply to a single-use vein-ablation catheter and its bundled treatment supply packs sold to treat venous reflux disease (varicose veins)?
Mostly yes, taxable. The Department ruled that the single-use catheter — inserted into a diseased vein to seal it shut with heat, then removed during the same procedure — is subject to Tennessee sales…
Could a corporation use separate accounting because its Illinois office showed a loss while formulary apportionment produced Illinois income?
Not on the submitted showing. Section 304(f) permits separate accounting or another method only when the statutory formula does not fairly represent Illinois activity. A profit-and-loss statement show…
Did purchased homeschool books, maps, DVDs, games, and equipment qualify for Illinois's education expense credit?
No, based on the receipts submitted. Purchased books, maps, DVDs, games, and similar items remained the family's property and did not appear substantially consumed during the school year. By contrast,…
What is South Carolina's tax interest rate for the period ending September 30, 2012 (per SC IL #12-8)?
3%. SC Information Letter #12-8 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through September 30, 2012. Interest is compounded daily,…
Did Virginia's airline exemption cover cargo trucks, sorting equipment, repair assets, and other property in an integrated air-and-ground delivery network?
Partly. The scheduled cargo airline qualified for the exemption, and Virginia extended it to property directly and principally used in its integrated air-and-ground common-carrier service, including c…
Could a floor-maintenance subcontractor deduct service-for-resale receipts when the buyer delivered the Type 5 NTTC 72 days after the audit deadline?
No. Louis Ortega did not possess the Type 5 NTTC when his 2006 returns were due or within 60 days after the Department's audit notice. Although he persistently asked SMS for the certificate, he receiv…
For New York's '548-day rule,' do the days a Petitioner's minor child spends in New York at a legally separated spouse's home count against Petitioner, and what about days the child is with Petitioner on visitation?
No - if the taxpayer and spouse are legally separated under a written agreement giving the spouse physical custody, the child's days at the separated spouse's New York residence do not count toward th…
Are Orthovisc, Euflexxa, and Hyalgan injections for knee osteoarthritis exempt from NY sales tax?
Yes. Orthovisc, Euflexxa, and Hyalgan are all hyaluronan-based treatments a physician injects into an osteoarthritic knee to supplement the joint's natural fluid, improving the knee's operation and ma…
Are EMS units, orthopedic pillows/cushions, massage devices, mattresses, whirlpool baths, and infrared lamps exempt as medical equipment if sold by prescription?
No. The medical-equipment exemption under Tax Law 1115(a)(3) applies only to equipment that is primarily and customarily used for medical purposes and is not generally useful in the absence of illness…
Are over-the-counter acne products exempt from NY sales tax, and what makes a product an exempt 'acne preparation'?
Yes -- acne preparations that contain a recognized active acne drug are exempt. Tax Law 1115(a)(3) exempts drugs and medicines used to treat illness in humans. An 'acne preparation' qualifies if it co…
Could a Virginia resident claim a state credit for foreign tax withheld from mutual-fund investment income?
No. Virginia's ordinary resident credit applied to qualifying income tax paid to another U.S. state, not to a foreign country. A separate foreign-country credit covered pension or retirement income de…
Could a Virginia resident subtract annuity-surrender gain because he borrowed the money before moving to Virginia and called it a death benefit?
No. Although the taxpayer borrowed from the annuity before moving to Virginia, he did not recognize the cash-surrender value, including the unpaid loan, until he surrendered the contract in 2008 while…
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