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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Is a replacement fee charged when a customer loses a rented book subject to Illinois sales tax under a true lease?
Generally no. When a book rental is a true lease, Illinois imposes no Retailers' Occupation Tax on rental receipts or related lease charges such as late fees or replacement fees. The lessor is treated…
Could a corporation avoid Virginia's related-party factoring-fee addback by asserting a valid securitization business purpose during its audit appeal?
Not through the procedure it used. The corporation had to report the addback, pay the tax, penalty, and interest, and then petition with clear and convincing business-purpose evidence. Because it clai…
Are the FCC-mandated 'shared costs' a number-portability administrator allocates to telephone carriers subject to NY sales tax?
No. The petitioner runs the regional databases that let phone customers keep their number when they switch carriers, and federal rules make the carriers share the cost of that system. Although it conv…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #11-16)?
Use the citator attached to SC Information Letter #11-16. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified,…
Could Jeannie Myers recover a $12.28 estimated-tax penalty when temporary Census wages pushed her 2010 tax above the $500 exception?
No. Myers owed $742 of 2010 personal income tax and had only $21 withheld, leaving a $721 difference—more than the $500 penalty exception. Her 2009 liability was $493, she had paid it in one lump sum …
Do Metro-North Commuter Railroad maintenance-of-equipment workers who sometimes work in both New York and Connecticut owe income tax only to their home state, or to every state where they perform services?
They must pay income tax to every state where they perform services, plus their resident state. The federal railroad tax exemption in 49 U.S.C. § 11502(a) (added by the Amtrak Reauthorization and Impr…
Did consumer home shows qualify as industry trade shows so that exhibitor booth subleases were exempt from Florida real-property rental tax?
Yes. The shows focused on the home-and-garden industry, displayed relevant products and services, and were marketed through trade channels. The organizer owed tax on its prime convention-center lease,…
Must Virginia deed-recordation tax use the property's assessed value when it exceeds the stated consideration?
Not automatically. Recordation tax used the greater of consideration or actual property value, and assessed value carried a strong presumption of accuracy. But the circuit-court clerk could consider c…
Could Virginia Taxation exempt or refund tax on pollution-control equipment before a statutory certifying authority approved it?
No. The Department of Taxation administered the exemption only after a statutory certifying authority approved the equipment; it had no power to make that technical certification itself or override DE…
Does an Illinois public school district owe Retailers' Occupation Tax when it sells books and supplies to students?
Yes. Illinois said a school district incurred Retailers' Occupation Tax when selling books and supplies to students because those sales competed with private retailers and were not direct performance …
When a vehicle lease has an end-of-lease 'true-up' payment between the leasing company and the customer, how is Colorado state and local sales/use tax adjusted, refunded, or collected?
Treat the true-up as an adjustment to the earlier lease payments. Because the lease agreement says the payments are only estimates to be finalized when the vehicle is sold at lease-end, the true-up re…
How did Illinois analyze sales tax, service tax, nexus, and voluntary disclosure for an out-of-state repair dispatcher using Illinois contractors?
Illinois did not expressly decide the repair dispatcher's nexus or final tax liability. It explained that construction contractors were end users owing Use Tax on materials permanently incorporated in…
Are niche walls, wall fittings, and paneling installed during a retail store's initial build-out taxable fixtures or nontaxable capital improvements?
They're capital improvements, so they aren't taxable as tangible personal property. The floor-to-ceiling display niche walls, wall fittings, and paneling were installed during the store's initial buil…
Is an unavoidable percentage fee added to a taxable Illinois retail transaction itself included in taxable gross receipts?
Generally yes. Illinois Retailers' Occupation Tax applied to all consideration received for a retail sale, and the seller could not deduct materials, labor, freight, overhead, processing, or other bus…
Did an out-of-state return and voter registration overcome evidence from a Virginia driver's license and vehicle registrations?
No. The out-of-state resident return and voter card supported domicile elsewhere, but the taxpayer obtained a Virginia driver's license in March 2007, renewed it in 2010, and kept two vehicles and a t…
Were out-of-state insurance companies exempt from Illinois corporate income and replacement tax?
No. Illinois corporate income and personal property replacement taxes applied to insurance companies whether domiciled in Illinois or another state. Business income was apportioned using Illinois dire…
Could a C corporation use an Illinois net-loss carryover on its final return during the historical 2011–2014 suspension?
No. Historical Section 207(d) prohibited a C-corporation carryover deduction for any taxable year ending after December 31, 2010 and before December 31, 2014. The statute did not provide an exception …
When spouses file separate Virginia returns and one is a nonresident, what income measure allocates shared deductions and exemptions?
Federal adjusted gross income was the example Virginia used for proportional allocation. Each spouse first had to account separately for income, deductions, and exemptions. Only items that could not b…
Could a taxpayer relitigate business deductions in Virginia after the IRS made a final 2005 itemized-deduction adjustment?
No. Virginia generally follows federal figures and does not look behind the IRS's final determination after a federal examination. The taxpayer had one year to report the federal change on an amended …
Was a machine dispensing exempt gloves, ear plugs, and safety glasses itself exempt manufacturing equipment?
No. The machine controlled and dispensed safety supplies but was neither indispensable to nor an immediate part of production. Exempt safety apparel did not make the storage-and-dispensing machine exe…
Why did Illinois sales tax appear on mail-order prescription drugs, and how did a pharmacist calculate and collect that tax?
Qualifying drugs, medicines, and medical appliances were taxed at a reduced 1% Illinois state rate plus applicable local taxes; items not qualifying for the reduced rate used the 6.25% general-merchan…
Could a county impose BPOL tax on a foreign parent because its wholly owned service subsidiary operated in the county?
No. The subsidiary was a separate legal business operating at the county location, while the foreign parent had no facility, employees, property, or business activity there. Virginia ordered the count…
Did a public school division's annual or every-other-year surplus auction qualify as an occasional sale?
Only if all of the school division's sales stayed within the occasional-sale limit. Government surplus sales were generally taxable. A seller making three or fewer separate sales occasions in a calend…
Was a worker living in Virginia over 183 days a resident, and could she deduct Virginia housing as temporary-job lodging?
Virginia treated her as an actual resident because she maintained a Virginia abode for more than 183 days, even if her domicile remained elsewhere. Housing was not deductible as temporary-job lodging …
Was an individual personally liable for a dissolved company's tax merely because her Social Security number appeared on company returns?
No. The available evidence showed that her Social Security number had been used erroneously on company returns and that she had never been a shareholder, officer, director, or employee. She therefore …
Who owes Illinois tax on building and remodeling materials that a construction contractor permanently incorporates into real property?
The construction contractor owed Use Tax on the cost of materials permanently affixed to or incorporated into Illinois real property. If the supplier did not collect the tax, the contractor had to sel…
How do loyalty points and paperless autopay discounts affect South Carolina sales tax on wireless service, phones, and accessories?
Loyalty points do not change the taxable monthly wireless fee when issued, and redeemed discounts generally reduce the taxable price. But phones transferred for one cent or far below cost may be taxab…
Was a former president personally liable for company use tax when tax and finance duties belonged to the CFO?
No. His responsibilities were limited to operations and sales, while the CFO handled tax filings, financial reporting, and bank accounts. The president left active involvement before the company recei…
Could an out-of-state receivables affiliate join a Virginia combined return or avoid factoring addbacks through a business-purpose claim made on appeal?
No. The receivables affiliate operated entirely outside Virginia, lacked Virginia nexus, and would not have been subject to Virginia income tax on a separate return, so it could not join the combined …
May an Illinois manufacturer buy pallets, containers, wrapping, and packing materials tax-free for resale when ownership passes to customers with the shipped product?
Yes for pallets and qualifying containers, wrapping, and packing materials when ownership transferred to the customer together with the shipped product. Illinois treated the container seller's transac…
Can a nonresident partner claim an additional passive activity loss to offset New York's required bonus-depreciation add-back, even though the partnership had a larger overall economic loss?
No. The Tax Law contains no provision letting a nonresident partner claim an extra passive activity loss equal to the New York adjustments. Because the required bonus-depreciation add-back under Tax L…
Are a layaway service fee and a layaway cancellation fee subject to Kansas sales tax?
Not taxable. A non-refundable layaway service fee and a layaway cancellation fee are not subject to Kansas sales tax, because no retail sale has been made. On a layaway, sales tax is due only when the…
Could New Mexico keep two later tax liens on Samuel Ponce's property when both duplicated one 1997 assessment and extended beyond its ten-year collection period?
No. New Mexico issued one 1997 personal-income-tax assessment, then recorded overlapping liens in 1998, 2003, and 2006. Filing a lien counted as a collection action, and the Department admitted later …
Did year-round employees supporting a customer at its county facility create a BPOL definite place of business?
Likely yes. The provider owned no local property and had no phone, advertising, mail, or administration at the client site, but its employees performed around-the-clock services there 365 days a year.…
Could Mark and Debra Stanger avoid New Mexico penalty after an IRS audit disallowed pension-plan deductions that an earlier IRS letter and their accountant had supported?
Yes as to penalty, but not interest. Mark and Debra Stanger reasonably relied on their accountant and an IRS determination letter when claiming defined-benefit-plan contribution deductions. After the …
Is a subscription to an educational website with videos, study guides, practice questions, and no software download taxable in Illinois?
The GIL did not expressly classify the educational subscription. It stated that electronically transferred or downloaded information and data were not tangible personal property, while canned software…
Can a nonprofit single-member LLC use its educational nonprofit parent's Illinois E number without applying separately?
Generally no. An organization's purchases were taxable unless that organization had an active Illinois E number, even when it was related to an organization holding one. The discretionary statute allo…
Are engineering and design charges for custom bridges taxable in Illinois, and what if engineering is sold without tangible property?
It depends on the bridge transaction. If the bridge was a retail sale, separately stated engineering and design were costs of doing business included in taxable gross receipts. If the bridge met all s…
Can a trailer used only to transport and store combine headers qualify for Illinois's farm-machinery and equipment exemption?
Yes, they may qualify. Illinois said combine-header transport trailers were not general transportation vehicles when used solely to carry headers for installation on a combine or store them when remov…
Did homeowners qualify for Virginia's same-lender refinance tax rule when the broker had sold the original mortgage to its parent bank?
No. The reduced recordation-tax rule applied only when the refinancing lender was the lender then holding the existing deed-of-trust debt. Although both loans went through the same broker, the broker …
Did a Virginia-domiciled travel nurse owe Virginia tax on wages earned in other states?
Yes. She admitted that she had not changed her Virginia residency, so Virginia taxed her as a resident on federal adjusted gross income even though she lived and worked elsewhere. She qualified for Vi…
Could Thomas Nagle claim estimated 2006 wage-withholding credits without W-2s, and could New Mexico apply the later 20% penalty cap?
Partly. Thomas Nagle credibly proved $39.25 of withholding for his final 2006 pay period because his December 15 pay statement and equal-pay testimony established a regular pattern. He could not prove…
What corrections did Illinois suggest for a private publication about moving property into Illinois and taxing rented vehicles?
Illinois did not approve or endorse the private publication. It suggested limited corrections: the moving-to-Illinois exemption language should refer to individuals because businesses were not exempt,…
Did a military spouse qualify for a Virginia withholding refund when she and the service member did not share the same domicile?
No. The spouse appeared to retain domicile in State A, but the service member had never been physically present there and therefore could not acquire State A domicile despite vehicle registration, vot…
How did Florida source a cable programmer's distributor subscription revenue and national advertising revenue for the corporate sales factor?
Both were sourced under the income-producing-activity rule to the taxpayer's customer location. Subscription revenue was Florida sales when the distributor was located in Florida; advertising revenue …
How did Illinois tax retail and private-party vehicle transfers, military purchases, trade-ins, and motor-vehicle leases in 2011?
This 2011 GIL was a broad survey, not a ruling on one transaction. It said retail sales of the listed vehicles were subject to Retailers' Occupation and Use Tax, while private-party transfers could tr…
Are aircraft repair and maintenance services or the parts transferred with them exempt from Illinois tax?
Unresolved for the requester. Illinois could not determine the treatment because the letter did not identify the exact service or maintenance work or the aircraft parts involved. A service with no tra…
If a Tennessee LLC taxed as a partnership makes a federal IRC Section 754 election, do the resulting basis step-ups under Sections 743(b) and 734(b) also affect the LLC's Tennessee excise tax net earnings?
It depends on which kind of Section 754 basis adjustment is involved. An IRC Section 743(b) adjustment (triggered when a member's interest is SOLD) only steps up the PURCHASING MEMBER's own personal/i…
When are medical-supply payments involving Medicare, Medicaid, or Illinois HFS exempt from Illinois sales tax?
A payment was exempt only when Medicare, Medicaid, or the Illinois Department of Healthcare and Family Services paid the provider directly and the government exemption was properly documented with an …
What Virginia tax interest rates applied during the fourth quarter of 2011?
Virginia's fourth-quarter 2011 rates were 5% for tax underpayments and 5% for overpayments, reflecting 3% corresponding federal rates plus two percentage points. For estimated-tax additions, June 30 y…
Could Sunrooms Plus exclude claimed loans, reimbursements, and returned checks from a bank-deposit gross-receipts audit without supporting records?
Mostly no. The Department could use bank deposits to estimate Sunrooms Plus's unreported gross receipts because the company did not timely provide complete records. The hearing officer excluded $1,493…
Did South Carolina extend tax relief to victims of Hurricane Irene (per SC IL #11-15)?
Yes. Following the IRS, the South Carolina Department of Revenue extended the same tax relief to victims of Hurricane Irene, postponing certain filing and payment deadlines to October 31, 2011 — inclu…
When a corporate group emerges from Chapter 11 bankruptcy with discharged debt, does Tennessee follow the federal rules that exclude cancellation-of-debt income but also shrink the group's net operating losses, basis, and loss carryforwards after an ownership change?
Tennessee's excise tax excludes discharge-of-indebtedness income from net earnings the same way federal law does (Tenn. Code Ann. § 67-4-2006(b)(1) doesn't require adding it back), but Tennessee does …
Is an LLC that's wholly owned by an individual's IRA (through a custodian) exempt from Tennessee franchise and excise tax as a family-owned entity, if its only income is residential rent?
Yes, conditionally. An LLC wholly owned (through a custodial IRA) by one individual qualifies as a "family-owned noncorporate entity" exempt from Tennessee franchise and excise tax under Tenn. Code An…
When were Florida towing, vehicle-storage, and related administrative charges taxable?
Separately stated towing was not taxable, but a bundled taxable-and-nontaxable charge was fully taxable. Storage was exempt only for a documented lawful impoundment; ambiguous records required tax. Ad…
May an Illinois licensed cigarette distributor sell cigarettes and other tobacco products directly to retail customers?
Yes for a cigarette distributor within the first statutory definition of 'distributor' that held a Section 4 license. A retail-sales location could not hold unstamped cigarette packages, and the distr…
What Virginia filing and payment relief applied to Hurricane Irene victims with September 15, 2011 deadlines?
Virginia gave qualifying individuals and businesses seven extra days, through September 22, 2011, for income- and withholding-tax returns and payments otherwise due September 15. Relief applied when n…
Can a Tennessee series LLC with dozens of individual series file one combined franchise and excise tax return, or does every series have to file its own separate return?
No, a single combined return isn't allowed. Each individual series of the series LLC -- potentially up to thirty of them -- must file its OWN separate Tennessee franchise and excise tax return, and so…
Did Healthsouth preserve its 2006 gross-receipts-tax refund by filing the original claim on time and later refiling after Department inaction?
No. Healthsouth timely filed its original refund claim on October 8, 2009, but the Department did not act within 120 days and Healthsouth did not protest or sue by May 6, 2010—the 210-day deadline. It…
Were monthly payments under a long-term lease-purchase agreement taxable as rent when the agreement required transfer of the deed?
No. The agreement was substantively an installment sale and mortgage, not a lease: payments amortized principal and interest, the seller had no reversion, the buyer could pay off the balance, bore pro…
How these rulings are useful
- See how the rule applies: A letter ruling shows how a state revenue department actually applied the tax law to a specific business and set of facts.
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