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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Are charges to rent reusable shipping pallets, plus related fees, subject to NY sales tax?
Yes, the pallet rentals are taxable and so are most of the add-on fees. A lease of tangible personal property is a taxable sale (Tax Law 1101(b)(5)), and renting reusable pallets to manufacturers does…
Does Louisiana treat liquefied natural gas the same as natural gas for the state sales and use tax exemption?
Yes, on the ruling's facts. LNG created only to improve storage and transport, with regasification required before use, received the same Louisiana state sales and use tax treatment as natural gas.
What restrictions applied when a licensed charitable-games supplier used, labeled, listed, or explained gaming equipment?
A licensed supplier could not distribute charitable-games equipment for a fun-only event unless the recipient held a charitable-games license. Equipment had to display the supplier's true corporate or…
Did Illinois tax a 401(k) withdrawal included in an individual's federal adjusted gross income?
No. Illinois began with federal adjusted gross income but Section 203(a)(2)(F) allowed an individual to subtract amounts included under IRC Section 402(a). Because a 401(k) withdrawal was included in …
Could a taxpayer receive Illinois withholding credit from a Form W-2 issued under a different name or Social Security number?
Yes, after adequate proof. IDOR said it would allow Illinois withholding reported on a Form W-2 whose name or taxpayer identification number did not match the return if the taxpayer proved that the IR…
Is a merchant return-authorization (fraud-scoring) service taxable in NY, and what about a linked discount-coupon service?
The return-authorization service is taxable; the discount-coupon service isn't. The authorization service compiles shoppers' return history and runs it through proprietary risk models to recommend whe…
Was a company's rotating block of hotel rooms exempt from Illinois hotel tax when reserved for at least 30 consecutive days?
Yes only for a specific number of rooms the company was unconditionally required to pay for throughout at least 30 consecutive days. Different employees could occupy those rooms during the period. If …
How did the rules for temporary beer and wine permits at South Carolina special events change effective January 1, 2011 (per SC IL #10-13)?
Effective January 1, 2011, temporary beer and wine permits for fairs and special functions are restricted to nonprofit organizations — individuals and businesses can no longer obtain them for function…
Was a Medicare Part D insurer that paid no Louisiana premiums tax exempt from corporation franchise tax?
No. The exemption covered insurance corporations paying Louisiana premiums tax. Because federal law prevented premiums tax on the insurer's Medicare Part D receipts, it paid none and remained subject …
Could a home health agency partnership subtract income from patient services as personal service income?
Yes, for compensation from the described patient services. Illinois used the former federal definition of personal service income, which included wages, salaries, professional fees, and other compensa…
Could a taxpayer exclude future installment payments from 2009 estimated tax after electing to recognize the entire sale gain in 2009?
No. By electing out of the installment method, the taxpayer recognized the entire gain in the 2009 sale year, including the fair market value of the buyer's installment obligation. Illinois estimated …
Did Shane and Kim McGrew prove that they mailed their 2001 New Mexico income tax return, making the Department's 2008 assessment too late?
Yes. The McGrews credibly testified that they followed the 2001 filing instructions, properly addressed the return, and mailed it on October 15, 2002 under a federal extension. A properly mailed lette…
Does an in-service hardship distribution from the Federal Employees' Thrift Savings Plan qualify for New York's income subtraction for federal pensions?
Yes. Tax Law § 612(c)(3)(ii) lets federal employees subtract their pension income from New York adjusted gross income, and because New York exempts in-service distributions paid to its own state emplo…
Were diapers, briefs, and protective underwear sold as incontinence products subject to Florida sales tax?
Yes. Florida classified them as taxable personal hygiene products unless they were dispensed under an individual prescription written by a qualified medical practitioner.
Did Illinois treat prescribed insulin pumps, cartridges, and infusion sets as medical appliances eligible for the reduced sales-tax rate?
Unresolved. The Department did not classify the insulin pump, disposable cartridges, or infusion sets. It explained that a medical appliance had to be intended by its manufacturer to directly substitu…
Could medical equipment qualify for Illinois's exempt-hospital lease exemption when a financing bank owned and leased it to a company that subleased it to the hospital?
Potentially. The rule did not bar a lessor from leasing qualifying equipment to an intermediary that subleased it to an exempt hospital. But every relevant lease had to be executed or in effect when t…
When a restaurant gave customers complimentary meals and drinks, was Illinois Use Tax based on menu price or the restaurant's cost?
The restaurant owed Use Tax on its cost price, not the normal menu price. Taking food or drinks from inventory and giving them to a customer made the restaurant the end user. It could satisfy the tax …
Could an out-of-state vendor exclude an estimated freight charge from Illinois tax when the invoice listed freight separately but the vendor never reconciled it to actual shipping cost?
Not automatically. A separate freight line on an invoice did not prove a separate delivery agreement. Under the 2010 rule described, nontaxable delivery required a separate agreement from the property…
Would the Illinois Department of Revenue verify the tax, fee, and vehicle-procedure information in a private legal textbook?
No. The Department would not approve the accuracy of a private legal publication. It advised the publisher to consult Illinois statutes, administrative rules, and Department publications. It said the …
Did Illinois treat a noninvasive electrical bone-growth stimulator as a medical appliance eligible for the reduced sales-tax rate?
Apparently not. After refusing to issue a binding PLR, the Department said the described bone-growth stimulator appeared not to qualify for the reduced medical-appliance rate. The appliance itself had…
What is South Carolina's latest statewide per capita income figure used for tax incentives (per SC IL #10-12)?
$32,338. SC Information Letter #10-12 publishes the updated statewide per capita personal income figure for South Carolina — $32,338 — which the Department uses to test qualification for various South…
Did Illinois decide whether subscriptions to remotely hosted application-service-provider platforms were taxable software or nontaxable information services?
Unresolved. The Department refused to classify application-service-provider subscriptions through a letter ruling and said the subject belonged in formal rulemaking. Until that review was complete, ea…
Which Virginia software, support, training, and hosted-access charges were taxable when some software was delivered on CD and some electronically?
The initial CD-delivered software package was taxable in full, including bundled training and support, because its true object was tangible software. Electronically activated add-on modules, electroni…
How did Virginia apply its per-account college-savings deduction to multiple VEST portfolios, CollegeAmerica funds, rollovers, and a missed prior-year deduction?
Virginia allowed up to $4,000 per qualifying savings trust account each year, with excess contributions carried forward. Separate VEST portfolios could be separate accounts, but multiple funds inside …
Are Red Bull Energy Shot and Sugar Free Shot drinks exempt from NY sales tax as dietary supplements?
No -- they're taxable. Tax Law 1115(a)(1) exempts food, dietary foods, and health supplements, but expressly excludes soft drinks and sodas (which include non-carbonated and dietetic beverages). Red B…
Did Illinois decide whether an out-of-state mail-order medical-supply seller using a drop-ship distributor had nexus or qualified for reduced tax rates?
Unresolved. The Department did not determine the seller's nexus, drop-shipment obligations, or the classification of its medical supplies. It directed the seller to the general drop-shipment rule and …
Did Illinois decide whether an out-of-state eye-monitoring service with devices in patients' homes had nexus or owed tax on its monthly service fees?
Unresolved. The Department did not decide nexus, registration, or the taxability of the monthly eye-monitoring service. It outlined four Service Occupation Tax or Use Tax methods for property transfer…
Did Illinois decide whether nonprescription sales of the Plan B morning-after pill qualified for the reduced drug tax rate?
Unresolved. The Department did not expressly classify Plan B. It explained that a pill or other preparation for human use qualified as a drug when its label claimed medicinal qualities, including trea…
Could Illinois trade-in credit apply to property bought or titled outside Illinois, and could a buyer add a trade-in after the vehicle sale closed?
Like-kind property could qualify as a trade-in even if it was bought, titled, or taxed outside Illinois. But a completed sale could not later be amended to invent a trade-in that was not offered at th…
Which grain-bin materials and components qualified for Illinois's farm machinery and equipment exemption?
Grain bins themselves and building materials such as concrete, steel panels, and roof vents did not qualify. Dryers, blowers, augers, temperature monitors, grain spreaders, and level indicators could …
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #10-11)?
Use the citator attached to SC Information Letter #10-11. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified,…
Were safety supplies sold to Virginia manufacturers exempt merely because production workers used them?
No. Most listed safety, first-aid, lighting, spill-control, and accident-prevention items were taxable because they were not an immediate part of production. Reflective vests used by forklift drivers …
Did a federal extension preserve Virginia refund claims when the taxpayers filed their 2005 return after Virginia's six-month extended due date?
No. For tax year 2005, Virginia's six-month extension required the original return to be filed within the extended period. Filing after that date negated the extension, so the three-year refund period…
Did a service member remain domiciled outside Virginia after registering to vote, obtaining a driver's license, and registering a car in Virginia?
No. The Department found that the service member's Virginia voter registration, driver's license, and vehicle registration, combined with little evidence of continuing ties to his former state, showed…
Did a poultry processor prove it was a vertically integrated manufacturer for Virginia local property-tax classification?
Not yet. Virginia agreed that a vertically integrated business may be classified by its substantial manufacturing activity as a whole, rather than only by activity at one county facility. But the poul…
Is buying and leasing an aircraft interest through a fractional-style program a taxable property purchase or a nontaxable transportation service?
It's a taxable purchase of tangible personal property, not a nontaxable transportation service. Whether a program like this is taxable property or an exempt transportation service turns on whether dom…
Are a financial data provider's options taxable -- aggregated investor info versus an optional analytics software tool?
Mostly not, but the optional software tool is. The provider gathers and normalizes investor-level portfolio and advisor information from many institutions and delivers it to financial institutions and…
How did Virginia estimate a cash restaurant's taxable sales when it lacked guest checks, Z-tapes, and other supporting records?
Virginia could reconstruct sales because the restaurant did not keep adequate records, and bank deposits plus cash-paid expenses could not verify all cash receipts. The auditor's 15% gross-profit-marg…
Could Virginia estimate a restaurant's underreported sales from ABC cash-register records and projections?
Yes. Virginia used sales calculated by Alcoholic Beverage Control from the restaurant's cash-register receipts and worksheets, then projected results for other audit months. Because the taxpayer provi…
Could Virginia estimate a restaurant's sales from ABC records when returns were missing or underreported?
Yes. Virginia relied on sales calculated by Alcoholic Beverage Control from the restaurant's cash-register receipts and worksheets, then used comparisons and projections for the audit periods. The tax…
Were a motel's through-the-wall heating and cooling units fixtures taxed as real estate or business tangible personal property?
Virginia did not make the final fixture classification. It found the units were not double taxed, but the city had improperly focused only on how easily they could be removed. The city had to reconsid…
Could one Virginia city tax all 2006 receipts from a call center, fulfillment center, and IT center located in three localities?
No. Virginia found the fulfillment and IT centers were definite places of business separate from the call center. One city could tax only receipts attributable to services performed or otherwise situs…
Were a fulfillment center and IT center separate definite places of business, and how should 2005 BPOL receipts be assigned among them and a call center?
Yes. Virginia found the fulfillment and IT centers were definite places of business in their own localities, so not all Virginia receipts automatically belonged to the call-center city. But the record…
How could a multistate business prove Virginia's BPOL deduction for out-of-state receipts when payroll apportionment was used to situs gross receipts?
The business first had to use payroll apportionment to assign receipts to the county, then show some evidence that employees at that Virginia office earned or helped earn receipts from customers in st…
What evidence supported Virginia's BPOL deduction for out-of-state receipts when payroll apportionment was used?
The taxpayer first had to apportion gross receipts to the city, then show evidence that employees at that office earned or helped earn receipts from customers in states where it filed an income tax re…
Could individual taxpayers claim a 2005 recyclable-materials equipment credit, or use certified unused credit amounts in later years?
The Department upheld disallowance of the credit claimed on the taxpayers' 2005 individual return. It nevertheless said unused credit tied to the recycler's certified 2005 equipment purchase could be …
Are an independent personal trainer's services subject to NY State or NYC sales tax?
No. Personal training -- cardiovascular and isometric exercise, weight and resistance training -- is not among the services enumerated as taxable under Tax Law 1105(c), so it isn't subject to New York…
We're financing an airport terminal expansion through the Port Authority. A leasehold mortgage we have to record is 'supplemental' to a governmental instrumentality's tax-exempt mortgage and secures the exact same bond debt -- does it get to piggyback on that exemption even though neither party to OUR mortgage is a government entity?
Yes, exempt -- but not because either party is a government entity. Recording of the Supplemental Leasehold Mortgage is exempt from New York's mortgage recording tax under Tax Law § 255.1(a), which ex…
Was the entire 29,156-square-foot lease of an assisted living facility exempt from Florida real-property rental tax?
Yes. All leased space served residential units for aged residents or their care, including common and recreational areas also used by nearby condominium residents, so the tenant's entire rent was nont…
Did erroneous oral advice from a New Mexico tax employee excuse Adobe Rose Bed and Breakfast from tax and interest on guests staying more than 30 days?
No. Guests staying more than 30 days at the bed and breakfast did not become real-property tenants under the lodging statute, so their payments remained taxable. Although a Department employee had ora…
Are 'peer group' market-share analysis services for financial firms taxable in NY?
Yes -- they're taxable information services, and tax must be collected from September 1, 2010. The provider pools data contributed by a consortium of financial firms and gives each customer a report c…
What purchases and transaction rules qualified under Virginia's historical 2010 Energy Star and WaterSense sales-tax holiday guidelines?
Under these historical guidelines, specified Energy Star appliances and WaterSense-labeled products costing $2,500 or less per item were exempt during Virginia's four-day October holiday when purchase…
Is a software license taxed in full because the buyer's NY office is the bill-to address, or only on the NY users?
Only on the portion attributable to users located in New York. Prewritten software is tangible personal property (Tax Law 1101(b)(6)), and a license to use it is taxed where possession is transferred …
Are receipts from printing and mailing patient billing statements subject to NY sales tax?
Yes, the printed statements and envelopes are taxable -- but with carve-outs. Producing patient bills from a customer's electronic file and supplying the envelopes is a sale of printed material, which…
How is a custom window fabricator that also installs taxed on materials, fabrication, and installation?
As a contractor. A fabricator that installs its own product is a contractor, and installing complete windows is a capital improvement -- so the charge to furnish and install windows isn't taxable. The…
New York Advisory Opinion TSB-A-10(11)C / 10(41)S: Are video switching services taxable telecommunication services, can the inputs be bought for resale, and is a rented control panel taxable equipment a broadcaster can buy exempt?
Yes. A video switching service is a telecommunication service subject to State and local sales tax and the section 186-e excise tax; the provider may buy the transmission services and equipment it res…
Could single-use sinus catheter systems be sold tax-free to licensed physicians in Virginia?
Yes, but only for patient-specific purchases. Virginia allowed the catheter systems to be sold exempt to a licensed physician when the physician provided documentation showing the system was purchased…
Were boom lifts, welders, and similar tools rented by contractors to install manufacturing equipment exempt from Virginia sales tax?
No. The contractors' lifts, welders, and similar tools were used before production could begin and were not an immediate part of manufacturing, so their rentals or purchases were taxable. Contractors …
Did a Virginia franchise-store operator prove that certain food sales qualified for the reduced sales-tax rate?
Not yet. The operator's studies and appeal documents did not reconcile with its returns or prove that the assessed food sales qualified for Virginia's reduced rate under the 80% prepared-food rule. Th…
Did Virginia sales tax apply to rentals of pools, a gymnasium, and outdoor sports facilities when no tangible property was included?
No. The pools, indoor gymnasium, and outdoor sports facilities were real property rather than tangible personal property. Because the rentals for camps and team practices included no tangible property…
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