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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Which alcohol-server training programs does South Carolina recognize as a mitigating circumstance for beverage-license penalties (per SC IL #10-10)?
SC Information Letter #10-10 lists the alcohol-server training programs the Department recognizes as a mitigating circumstance when it assesses penalties for beer, wine, and distilled-spirits violatio…
Does a contractor owe Colorado use tax on goods it tests in Colorado before reselling them, and on materials it builds into products it manufactures partly in Colorado and finishes out of state?
No use tax in either case. A contractor that buys computers, performs compliance/acceptance testing on them in Colorado, then resells and delivers them is NOT liable for use tax on that testing—the te…
Was an overseas worker a Virginia domiciliary in 2006 despite having a Virginia driver's license, voter registration, and mailing address?
No. The taxpayer's indefinite overseas employment, long-term residence from 1995 through 2009, permanent home, and foreign driver's license established domicile in Country A for 2006. Virginia licensi…
Could a corporate group created by a merger of equals elect a new Virginia filing status for the 2008 tax year?
Yes. The two groups had no prior substantial ownership in each other, and the target represented about 54% of their combined value—above the Department's 45% merger-of-equals threshold. The new affili…
Did interest on obligations issued directly by a Federal Home Loan Bank qualify for Virginia's U.S.-obligation subtraction?
Yes. After reconciling the taxpayers' partial Forms 1099 and federal-return schedules, Virginia found that interest on notes, bonds, and other obligations issued directly by a Federal Home Loan Bank q…
Did an out-of-state mobile-content services company owe Virginia corporate income tax when it had Virginia users but no property, employees, or costs here?
No Virginia corporate income tax was due on the stated facts. The Department could not determine whether electronically connecting marketers to Virginia users created nexus or only a de minimis contac…
Were mastectomy bras sold for use with prosthetic breasts exempt from Virginia sales tax as durable medical equipment or related supplies?
No. The mastectomy bras did not qualify as durable medical equipment because they did not serve the medical purpose required by the statute. They also were not exempt supplies for a breast prosthesis …
Which fees of a professional-networking site are taxable -- subscriptions, in-network email, job ads, and surveys?
It splits. Premium subscriptions and paid in-network email are taxable information services: they let a customer search the site's member database and contact targeted members -- essentially buying us…
Did an electrical contractor owe Virginia use tax on materials delivered in Virginia after its vendor charged another state's 7% sales tax?
Yes. The materials were delivered in Virginia for use in real-property contracts, so the contractor owed Virginia's 5% use tax even though the vendor had charged and remitted another state's 7% sales …
Could a Virginia resident subtract an entire IRC § 457 plan distribution because Pennsylvania had taxed his employee contributions to the plan?
Not the entire distribution. Virginia allowed a subtraction for the portion attributable to employee contributions that Pennsylvania had already taxed, but investment income remained taxable when dist…
Could the Virginia Tax Commissioner waive a city's penalty when a business's accountant filed its machinery and tools tax return one day late?
No. The Tax Commissioner could review certain local business tax assessments, but a locally imposed late-filing penalty was not an assessment of tax under the governing appeal statute. Virginia law le…
Were loyalty-program membership fees taxable when members received future purchase discounts but no free merchandise?
No. New documentation showed that the loyalty membership transferred no merchandise when sold and promised only future discounts: $10 during the member's birthday month, $15 after four points, and $25…
Can a car dealer buy oil and filters tax-free for 'free' oil changes promised to vehicle buyers?
Yes -- if the deal documents say the oil changes are included in the price. When the dealer's sales invoice (or the sale/lease contract or another writing given at the time of sale) states that oil ch…
What were the significant South Carolina tax-law changes from the 2010 legislative session, as summarized by the Department (per SC IL #10-9)?
SC Information Letter #10-9 is the Department's brief summary of the significant tax and regulatory law changes enacted in South Carolina's 2010 legislative session, organized into five categories: (1…
What Virginia tax interest rates applied during the fourth quarter of 2010?
Virginia's fourth-quarter 2010 rates were 6% for tax underpayments and 6% for tax overpayments. The corresponding federal underpayment and noncorporate overpayment rates were 4%. For taxpayers with ye…
Which lost-pet recovery products and service packages were taxable under Virginia sales and use tax?
Pet-recovery service fees were nontaxable, including lump-sum packages with an incidental microchip or implantation, because customers' true object was database and recovery assistance. Stand-alone sa…
Is labor to install new range-land fencing subject to Kansas sales tax?
Taxable. Labor to install new range-land fencing is subject to Kansas sales tax. The exemption for labor performed in the 'original construction' of a building or facility under K.S.A. 79-3603(p) cove…
Could Western Disposal recover a duplicate 2004 tax payment in 2009 after the Department had misapplied its original payment and lost the report?
No. Western Disposal timely filed and paid for December 2003, but the Department misapplied the payment and lost the report. Unable to prove the first filing in 2004, the company filed and paid again.…
Could a corporate group end its grandfathered Florida nexus-group consolidated filing election after major business and structural changes?
Yes. Florida nullified the grandfathered election because the group had become substantially larger and more diverse. For later years it could file separately or elect a full consolidated return match…
Did Illinois decide whether hosted call-automation software, phone-number charges, and a regulatory recovery fee were taxable telecommunications?
No specific result was issued. The Department said the request lacked the taxpayer identity, power of attorney, and enough detail about the carrier services and their use. It gave only general rules: …
Did years of losses show that a Virginia couple's horse-breeding and hippotherapy operation was not conducted for profit?
No. After weighing the federal profit-motive factors, Virginia found that the couple operated the horse and hippotherapy venture for profit during 2002 through 2006. The wife's expertise and full-time…
Were charges for coordinating drayage, rentals, and other vendor services for customer-owned trade-show exhibits subject to Virginia sales tax?
No. For customer-owned exhibits, the customer's true object was the company's expertise in coordinating third-party support services, so the drayage and rental charges assessed in the audit were remov…
Do manufacturer or third-party 'instant' rebates reduce the Kansas sales tax base on a purchase?
Tax is charged on the full price, before the rebate. Manufacturer and third-party rebates assigned to the retailer at the time of sale do not reduce the Kansas sales tax base. Under K.S.A. 79-3602(ll)…
How did Illinois distinguish taxable conditional-sale payments from rent under a true equipment lease?
A $1 or other nominal buyout generally makes the arrangement a conditional sale, so all lessor receipts are taxable. A fair-market-value option can preserve a true lease; the lessor then owes Use Tax …
When does a business renting an Illinois hotel room block for at least 30 days qualify as a permanent resident?
A business qualified for the permanent-resident exclusion when it was unconditionally obligated to pay for a specific number of rooms for at least 30 consecutive days, even if rooms were empty or used…
Does making a federal IRC § 338(h)(10) election disqualify a stock sale from Nebraska's special capital gains exclusion, and which gains still qualify?
Making a federal IRC § 338(h)(10) election does not disqualify the sale from Nebraska's special capital gains exclusion -- but only the capital gains attributable to the stock qualify. Revenue Ruling …
If someone is a UK citizen who files a federal Form 1040NR as a nonresident alien, but qualifies as a New York State and City statutory resident because they're present here more than 183 days, what income does New York tax?
New York taxes the individual as a statutory resident under Tax Law § 612(a), meaning New York adjusted gross income equals whatever amount is includable in his federal adjusted gross income - here, t…
Could a couple deduct losses from a horse farm that trained and sold horses for fox hunting despite losses and no separate bank account?
Yes. Virginia found the farm was conducted for profit based on the wife's horse expertise, the couple's 139 to 152 monthly work hours, advertising and sales efforts, adequate books, cost reductions, a…
Did attending college and living in student housing outside Virginia prove that a taxpayer changed domicile for 2006?
No, not on the evidence provided. Virginia generally did not treat a dorm or college apartment, or temporary student employment, as proof of a permanent new domicile. The taxpayer asserted ties to ano…
Could a North Carolina resident claim a Virginia nonresident credit for North Carolina tax on Virginia S-corporation income?
No. Virginia's nonresident credit depended on the taxpayer's home state granting Virginia residents a substantially similar credit. North Carolina did not allow an income-tax credit to nonresidents, s…
Did delivering appliances into an Illinois county make an out-of-state retailer owe that county's local school sales tax?
Not merely because of delivery. The GIL said local tax was sourced to where the sale occurred, unless an out-of-state sale involved inventory located in an Illinois taxing jurisdiction. When both the …
Did a W-2, an exchange agreement, and an unsigned letter faxed by the deadline count as a timely Virginia refund return?
No. The May 1, 2008 fax did not request a stated refund, lacked the taxpayer's signature, omitted a completed prescribed return and deduction information, and did not disclose the amount of the Sectio…
Did a Florida-based employee performing online administrative duties create corporate income-tax nexus beyond Public Law 86-272 protection?
Yes. The employee performed administrative accreditation work rather than soliciting tangible-property sales, so the corporation's Florida activities exceeded Public Law 86-272 and required a Florida …
Did ten years of indefinite foreign residence establish a new domicile despite a Virginia home, license, and absentee voting?
Yes. The taxpayer had lived and worked abroad since 1997, maintained a family home there, held indefinite employment, became an official resident, and planned citizenship. Those facts outweighed retai…
Did a paint manufacturer make a taxable Virginia use of color cards shipped with paint to a retailer for customer selection?
No. The cards were bundled with paint outside Virginia, delivered by common carrier, and unpacked and placed in display racks by the retailer. The manufacturer's representatives were not responsible f…
Could a newly certified Florida renewable-energy technologies investment tax credit be transferred to another taxpayer?
Yes. Because every open tax year at the time began on or after January 1, 2009, a credit certificate then issued by the Florida Energy and Climate Commission was eligible for transfer under the stated…
Which audited sales could an industrial supplier remove using exemption certificates obtained or corrected after the transactions?
Only some sales. Certificates obtained after the transactions received closer scrutiny and had to match each customer's actual use. Virginia allowed removal of two packaging sales to one customer for …
Were banquet rooms, equipment, and setup charges taxable when a Virginia caterer served nonprofit customers?
Generally yes. Nonprofit status did not exempt room accommodations, and no qualifying written Department advice supported abatement. Audio/visual and similar equipment rentals were taxable unless the …
Could a Virginia resident claim all dependent exemptions when filing separately from a nonresident military spouse?
Yes. A Virginia resident and nonresident military spouse who filed jointly for federal purposes but separately in Virginia could allocate dependent exemptions as they mutually agreed. Proportional all…
Were chemicals used directly to purify, disinfect, stabilize, and protect water sold by a Virginia utility exempt from sales and use tax?
Yes, based on the described uses. Virginia treated the water utility as an industrial processor and found every listed chemical appeared to be used directly in treatment, to preserve the water's integ…
Did brewed coffee and frozen food heated by customers in a store microwave receive Illinois's lower food-tax rate?
Brewed coffee was taxed at the higher general-merchandise rate because retailer-prepared coffee is food for immediate consumption. A frozen item such as a burrito generally kept the lower food rate ev…
Did a hotel's purchase of assets from a special-purpose affiliated LLC qualify for Virginia's occasional-sale exemption?
Undetermined. The LLC was a separate legal entity, so its parent's regular hotel-development business did not automatically defeat the exemption. But the record did not show whether the parent or LLC …
Could Virginia residents claim an other-state credit for Kentucky income tax paid at the partnership level on a member's behalf?
Yes. Kentucky temporarily taxed partnerships and LLCs as corporations but gave individual members a credit for their proportionate entity tax. The professional LLC reported the husband's share, and th…
Who had to collect Virginia sales tax when the supplier billed and collected from large retailers but paid distributors to service the accounts?
The supplier did. Although independent distributors delivered and serviced the accounts, the Pennsylvania supplier recorded the large-retailer sale, collected the retailer's receivable, reduced the di…
Did prepackaged ice cream sold from an Illinois ice cream truck qualify for the lower food-tax rate?
Generally no. The Department said an ice cream truck generally sells ice cream for immediate consumption, so the sales incurred the higher 2010 state rate of 6.25% plus applicable local taxes rather t…
Was a nonresident servicemember's active-duty pay exempt after the couple elected to file a joint Virginia resident return for 2008?
No. By filing a joint Virginia resident return, the Virginia spouse and nonresident servicemember elected to compute joint income as if both were residents, so the Servicemembers Civil Relief Act did …
Could a town receive communications-tax trust-fund distributions after failing to report its 2006 cable franchise fees by the original deadline?
Yes. Later amendments allowed a locality to prove previously unreported fiscal-year 2006 communications taxes and fees and request an adjusted fund share. Independent accountant and provider correspon…
Which Virginia tax applied to an unlimited 30-day cellular plan funded directly or with retail-taxed prepaid calling cards?
An unlimited 30-day voice and text plan was generally subject to the Communications Sales and Use Tax because it was not sold in predetermined units or dollars that decreased with use. Retail sales ta…
Could parents deduct contributions to custodial Virginia college-savings accounts when the children, not the parents, owned the accounts?
No. Virginia's deduction required the contributor to be listed as the savings-account owner. The applications created UGMA/UTMA custodial accounts with the children as beneficiaries and the wife only …
Which charges were taxable when a wholesaler rented beverage-gas tanks and sold carbon dioxide or nitrogen for drinks?
Tank and container rentals were taxable. Carbon dioxide and nitrogen that became part of fountain drinks or beer could be sold exempt with a valid resale certificate. If rental and gas charges were no…
How did Virginia sales tax apply to automotive core charges, later core returns, exchanges, and partial refunds?
All core charges were taxable when imposed because they were part of the sales price. Tax was refundable when the part and core charge were fully refunded, proportionally refundable with a partial par…
What is South Carolina's tax interest rate for the period ending December 31, 2010 (per SC IL #10-8)?
4%. SC Information Letter #10-8 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2009 through December 31, 2010. Interest is compounded daily, ex…
Did Virginia use tax apply to equipment rentals when a Tennessee vendor charged tax but the contractor took possession in Virginia?
Yes. Each rental agreement was taxed where the contractor took possession when that agreement was made. Seven agreements identified Virginia pickup locations, so Virginia tax applied despite Tennessee…
When did Virginia retail sales and use tax apply to dyed diesel and other fuel not subject to the Virginia Fuels Tax?
Retail sales and use tax generally applied to fuel not subject to the Virginia Fuels Tax, including dyed diesel and other nonhighway fuel, unless a specific exemption and valid certificate applied. De…
Did Illinois decide whether a remotely accessed hosted email-marketing platform and its setup, messaging, and consulting fees were taxable?
No. The Department said hosted software and application-service-provider taxation belonged in formal rulemaking, not a case-by-case GIL. It supplied general rules: canned software was taxable even ele…
Is an online-advertising analytics/management platform a taxable information service in NY?
No -- it qualifies for the personal/individual exclusion. The platform lets clients monitor, manage, and optimize their online advertising across third-party ad networks; it retrieves, analyzes, and p…
New York Advisory Opinion TSB-A-10(10)C: Is a provider of one-way and two-way paging services subject to the section 184 franchise tax on local telephone business?
No. A provider of one-way and two-way paging services is not subject to the section 184 franchise tax, because it is not principally engaged in local telephone business: its paging is a telecommunicat…
Did an insurer qualify for Florida's annuity premium-tax waiver by passing the tax savings to annuity holders?
Yes, subject to audit verification. The insurer's actuary stated that rates reflected premium tax in taxing states but not Florida, and annuity holders were otherwise treated identically, satisfying t…
Are data-conversion services and data-conversion software subject to Kansas sales tax?
It depends on who runs the conversion. If your business loads the data-conversion software and runs the conversion for the customer — monitoring it and ensuring success — the charge is not subject to …
Were lump-sum contracts to furnish and install granite countertops, built-in cabinets, and knobs taxable retail sales to the customer?
No. The installed items became real-property improvements, so the contractors should not charge the customer sales tax and instead owed use tax on their fabricated cost. Any customer refund had to com…
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