State Tax Rulings

What changed for Kansas individual income tax in 2024 -- rates, Social Security, deductions, and exemptions?

Kansas Notice 24-08 summarizes several individual income tax changes made by 2024 Special Session Senate Bill 1, effective for tax year 2024 and after. Tax rates (K.S.A. 79-32,110) become two brackets…

What are the new penalties for an employer that pays Kansas withholding tax late?

Kansas Notice 24-07 explains a change to late-payment penalties for employer withholding tax, made by 2024 Senate Bill 410, Section 17, which amended K.S.A. 79-32,107. Under prior law, an employer tha…

Where can taxpayers find South Carolina Department of Revenue advisory opinions by tax topic through June 30, 2024?

Use the subject index attached to SC Information Letter #24-9. It organizes South Carolina Department of Revenue advisory opinions issued from 1987 through June 30, 2024 under administrative, alcoholi…

How can taxpayers check whether a South Carolina Department of Revenue advisory opinion had been modified, superseded, or made obsolete through June 30, 2024?

Use the citator attached to SC Information Letter #24-8. It lists South Carolina Department of Revenue advisory opinions from 1987 through June 30, 2024 that the Department identifies as modified, mod…

When an auction house gives a winning 'irrevocable bidder' a negotiated fee that reduces what they pay, does that reduce the sales tax due on the item?

No. A negotiated 'Fee' an auction house applies to reduce a winning irrevocable bidder's payment does NOT reduce the sales-tax base. Sales tax is on the full receipt — the hammer price plus buyer's an…

Which defense-technology project items were exempt in Florida TAA 24A-008?

Florida exempted all eight reviewed categories, including foundations, a fire pump house, control structures, storm-water systems, utility feeds, piles, consumable materials, and rented installation e…

When was South Carolina's 2024 sales tax holiday, and which items were tax-free?

South Carolina's 2024 sales tax holiday ran from 12:01 a.m. Friday, August 2, 2024 through midnight Sunday, August 4, 2024. During this annual 72-hour holiday under S.C. Code Ann. § 12-36-2120(57), el…

Does the short-term-rental portion of a historic building count as 'residential' so it can qualify for Utah's 20% Historic Preservation Tax Credit?

No. The short-term-rental portion of a historic building is not 'residential,' so it does not qualify for Utah's Historic Preservation Tax Credit (20% of qualified rehabilitation costs over $10,000). …

Does a New York business owe sales tax on a hosted business e-mail / Microsoft Exchange subscription it buys from an out-of-state provider?

No. The Department concluded that a subscription to a secure hosted Exchange e-mail service is not subject to New York sales tax. Even though e-mail can count as taxable telephony/telegraphy under Tax…

Does a New York company that hauls away food waste / organics for composting have to charge sales tax, and does it owe tax on a roll-off dumpster service it buys?

Yes — both are taxable. Because the food waste has no value to the customer or to the hauler, removing it is taxable 'trash and garbage removal' (a real-property service under Tax Law § 1105(c)(5)), a…

Does sales tax or use tax apply to Rent-to-Own payments on a portable building, and does it depend on whether the dealer is inside or outside Missouri and where the building is delivered?

It depends on where the dealer and the building are located: an in-state dealer renting to an in-state customer for delivery inside Missouri owes sales tax on the rental payments; delivery outside Mis…

When a fabricator sells custom curtain walls to a contractor who installs them on a New York building, is it a tax-free capital improvement — and is the fabricator taxed only on its raw materials?

Mixed. Installing the curtain walls IS a tax-exempt capital improvement (it meets the three-prong test in Tax Law § 1101(b)(9)). BUT the fabricator's sale of the curtain walls to the contractor is a t…

My company's foreign brand-licensing royalties are excluded from my Illinois sales factor because they're under 50% of gross receipts -- can I get alternative apportionment to include them anyway, since they're a big, high-margin chunk of our income?

No -- the Department denied the petition. Illinois's rule excluding intangible-property royalties from the sales factor unless they exceed 50% of gross receipts is not inherently distortive just becau…

Does Colorado charge sales tax on non-alcoholic beer, kombucha, sweetened bottled coffee, and insulin sold without a prescription?

Mostly taxable, with a nuance on insulin. Colorado charges sales and use tax on non-alcoholic beer and kombucha (any trace of alcohol disqualifies them from the food exemption) and on sweetened bottle…

If a contractor shows me a valid Colorado sales tax license, is that enough to sell them building materials tax-free for resale — and does it matter whether the goods go to their warehouse or a job site?

Yes. Verifying that a retailer-contractor holds a valid Colorado sales tax license is enough to treat their purchases of building and construction materials as tax-exempt resale purchases — whether de…

I never protested my New Mexico tax assessment in time and the state levied my bank account — can I still argue the tax was wrong and get all my money back?

No. Enrique Arroyo, a New Mexico framing contractor, was assessed gross receipts tax for 2013-2016 after a Schedule C mismatch but never protested within the 90-day window, so he became delinquent and…

Is an e-cigarette that passes vapor through a sealed capsule of granulated tobacco subject to New York's tobacco products tax, sales tax, and the 20% vapor products tax?

Taxable on all three fronts. The Department concluded that the product — a battery, a liquid/gel vapor cartridge, and a sealed capsule of granulated tobacco leaf — is subject to New York's tobacco pro…

Does Illinois sales tax or marketplace facilitator law apply to a call-answering/call-center service that takes food orders but never collects payment?

No. The Illinois Department of Revenue concluded that Retailers' Occupation Tax and Use Tax do not apply to sales of service, and that a call-answering service for restaurants does not meet the defini…

A vendor sells employers a software-based employee-rewards program; employees redeem points for merchandise or gift cards. What's taxable — the program sold to employers, the merchandise, or the gift cards?

It splits three ways. Selling the rewards program to employers (setup, points, transaction fees) is a nontaxable service. Gift cards employees redeem are not taxable (they're an intangible right, taxe…

Do manufacturer coupons reduce the price Kansas charges sales tax on?

Kansas Notice 24-05 explains that 2024 House Bill 2098, New Section 4, changed the definition of "selling price" for Kansas retailers' sales tax, effective July 1, 2024. It amended K.S.A. 2023 Supp. 7…

My employer's office is in Virginia, but I worked remotely from my home state and my employer withheld Virginia tax anyway -- am I entitled to a full refund even though I also excluded that income on my home state's return?

Yes -- what matters is WHERE the work was actually performed, not where the employer's office is located, and the Department can't rely solely on another state's tax return to deny a Virginia refund. …

I'm active-duty military stationed outside Virginia claiming a different home state -- is claiming a tax credit on my other state's return enough by itself to prove I'm not a Virginia resident?

No -- claiming a credit on another state's return for taxes paid to Virginia doesn't, by itself, prove you're not a Virginia domiciliary resident; you need actual evidence like a State of Legal Reside…

The Department's audit says my subcontractors should have been classified as employees, but the audit report just says I told them what job to do -- is that enough to support the assessment?

No -- and the Department overturned this misclassification assessment because the audit's reasoning was too thin. A drywall and painting LLC was audited and told three of its subcontractors should hav…

I lived and worked in Maryland for over two years and filed a Maryland resident return -- can Virginia still tax me as a resident because I kept my house and driver's license here?

Yes -- Virginia can still tax you as a domiciliary resident if you never actually abandoned your Virginia connections, even after living and working elsewhere for years. A taxpayer and his family move…

Can I deduct contributions to a Kansas first-time home buyer savings account?

Kansas Notice 24-04 explains that 2024 Senate Bill 360, Section 2, amended K.S.A. 79-32,117 to expand the income tax subtraction for contributions to a first-time home buyer savings account. Under sub…

Can I deduct 529 education savings or ABLE account contributions on my Kansas return, and when?

Kansas Notice 24-03 explains that 2024 Senate Bill 360, Section 2, amended K.S.A. 79-32,117 to expand the income tax subtraction for contributions to certain education savings accounts and ABLE accoun…

How does the Kansas Disability Employment Act tax credit work?

Kansas Notice 24-02 explains that 2024 Senate Bill 15, Section 4, amended K.S.A. 79-32,273 -- now known as the disability employment act -- to continue and expand the income tax credit for buying good…

Are manufacturer cash rebates on a new vehicle exempt from Kansas sales tax?

Kansas Notice 24-01 explains that 2022 Senate Substitute for House Bill 2239 amended the definition of "sales or selling price" in K.S.A. 79-3602(ll)(3)(E) to remove the sunset on excluding certain ma…

Does Illinois sales tax apply to a self-publishing platform's charge for online book-drafting access and to the printed book it produces?

The Department did not decide the taxpayer's specific facts in a binding way (that's what a GIL is), but it laid out the general framework: true SaaS access that is never downloaded is not subject to …

What Illinois sales tax rate applies to a human/veterinary product marketed as a probiotic 'medical food,' and how does the state tell a 1% low-rate medicine or food apart from a 6.25% general-merchandise sale?

It depends on the label. Illinois taxes drugs and medicines — including nonprescription products whose label makes a medicinal claim (that it cures, treats, or relieves a disease, illness, injury, or …

Are repair services performed in Tennessee on equipment that is then shipped to an out-of-state customer subject to Tennessee sales tax?

It changed on July 1, 2024. Before then, repairing tangible personal property in Tennessee was a taxable service even if the repaired item was shipped back to an out-of-state customer, and the shippin…

Are streetlights, photocells, smart nodes, and poles a contractor installs for a public power authority subject to Tennessee sales and use tax?

No — they're exempt. When a contractor buys and installs streetlights, photocells, smart nodes, and poles as part of an electric distribution system owned or operated by a Tennessee government body (a…

Did the cultural attraction qualify as an exhibition hall in Florida TAA 24A-007?

Yes. Florida treated the attraction as an exhibition hall, so its agreement licensing premises to a restaurant for café and shop concessionaire services qualified for the real-property rental exemptio…

I came to Virginia on a student visa, worked here for a few years, then moved back to my home country before returning later on a work visa -- was I still a Virginia resident, and did a 1099 issued to my old Virginia address make me taxable here, for the year I was living abroad?

No to both -- the assessment was abated. The Department flagged that a taxpayer may have owed 2019 Virginia income tax, based on IRS information; no Virginia return was on file, and when he didn't ful…

My landscaping business had several workers found misclassified in the same audit -- doesn't Virginia's '72-hour single offense' rule mean I only owe one penalty total, not one per worker?

No -- Virginia's misclassification civil penalty applies separately to EACH misclassified worker, even when every misclassification is discovered in the same audit and treated as a single 'offense.' A…

I sold an out-of-state rental property and had to report depreciation recapture as income -- can I subtract the part attributable to years before I moved to Virginia, since I never got a Virginia tax benefit from those deductions?

No -- Virginia doesn't allow a subtraction for IRC § 1250 depreciation recapture just because some of the underlying depreciation deductions were taken before you were a Virginia resident. A married c…

I mailed my Virginia return years ago, but the Department has no record of ever receiving it and now says my refund claim is too late -- does it matter that I can't prove when I mailed it?

No -- without proof the Department actually received (or that the taxpayers can otherwise establish timely mailed) an earlier return, the later-filed return controls, and the refund claim was time-bar…

The IRS adjusted my federal return and I think the IRS got it wrong -- can Virginia hold off on assessing me while I keep fighting the IRS?

No -- the assessment was upheld. The IRS notified the Department that it had adjusted a taxpayer's 2019 federal return (reducing her itemized deductions after a 2022 examination), and because no amend…

I moved for a new job in another state, but I still own a Virginia vacation home and briefly got a Virginia driver's license during the move -- does that make me a Virginia resident for tax purposes?

Not necessarily -- a Virginia driver's license and a Virginia vacation home are only two factors among many, and here they didn't outweigh the rest of the evidence pointing to a genuine move. The Depa…

The Department's audit says my painting subcontractors should have been classified as employees, but the audit report just concludes they were 'employees' without walking through the actual control/investment/relationship factors -- can that stand?

No -- and the Department overturned this misclassification assessment for the same reason it has in similar cases: the audit's conclusion wasn't backed by a real factor-by-factor analysis. A single-ow…

Does Illinois sales, use, or service occupation tax apply to a company's domain name registration, web hosting, and creation of emails and SSL certificates?

No. The Illinois Department of Revenue explained that a company's domain name registration, web hosting, and creation of emails and SSL certificates qualify as custom, intangible computer property (no…

Can a Colorado business subtract, from its federal taxable income, the wages that federal law disallowed as a deduction because it claimed the COVID-19 employee retention credit?

Yes — under the specific circumstances of this ruling. A taxpayer that reduced its federal wage deduction under IRC § 3134(e) because it claimed the COVID-19 employee retention credit may subtract tho…

My tax preparer e-filed my return and I mailed an amendment years ago, but Virginia has no record of either -- shouldn't the Department have told me my return was missing, instead of letting the refund deadline quietly expire?

No -- Virginia's tax system puts the burden on the taxpayer to make sure a return is actually filed and received, and the Department has no duty to proactively notify anyone that a return is missing. …

I thought Virginia's filing extension was automatic, and I had other personal hardships that delayed my filing -- can I still get my refund even though I filed my return more than three years after the original due date?

No -- personal hardship and a misunderstanding about Virginia's extension don't extend the refund deadline. A taxpayer filed her 2019 Virginia individual income tax return in June 2023 seeking a refun…

Could the affiliated group stop filing Florida consolidated returns under TAA 24C1-002?

Yes. Florida found sufficient reasonable cause based on significant changes in the group's business and granted permission to discontinue consolidated corporate income tax returns, subject to four con…

Are the sales and use tax exemption and $750 income tax credit for energy efficient manufactured homes still available in South Carolina?

No. Both incentives for energy efficient manufactured homes ended. The total sales and use tax exemption under S.C. Code § 12-36-2110(B) and the $750 nonrefundable income tax credit under S.C. Code § …

Does a company that runs contracted shuttle bus services for business clients owe Georgia sales tax on the flat fees it charges, or is that transportation exempt?

It is taxable. Georgia treats the sale of transportation services as a taxable retail sale. A shuttle bus operator that is not a limousine, taxi, ride-share, or referral service is not covered by Geor…

Can a dialysis company — not just an individual doctor or nurse — deduct its managed-care and insurer payments from New Mexico gross receipts tax?

Yes. Home Dialysis of New Mexico, an LLC owned by kidney-care physicians and nurses, could deduct its managed-care and insurer receipts under Section 7-9-93, so the Administrative Hearings Office gran…

How did Florida TAA 24A-006 tax current and former United States legal tender?

Current United States legal tender was exempt even when sold above face value or for precious-metal content. Coins or currency formerly, but no longer, used as United States legal tender were taxable.

Can an existing Georgia job qualify for the job tax credit only because its pay later rises above the wage threshold, and are unrelated job gains and losses in different counties treated as transfers?

A later salary increase does not turn a long-existing position into a new full-time employee job for Georgia's job tax credit: the job must meet the pay requirement when it is created. Separately, new…

Which club dues and facility-use charges qualified for Florida's 2023 Freedom Summer Sales Tax Holiday?

The holiday covered qualifying club payments made May 29 through September 4, 2023, only for access occurring through December 31, 2023. It did not exempt the club's entire October 2023-September 2024…

Does a company that cross-docks and delivers already-owned tobacco product to a retailer's stores -- without buying, selling, or holding title to it -- need an Illinois Tobacco Products Tax Act license?

Only persons who meet the Tobacco Products Tax Act's definition of "distributor" or "retailer" must get an Illinois Department of Revenue license under 35 ILCS 143/10-20 or 10-21; the Department's GIL…

Is money collected from coin-operated laundry machines subject to Missouri sales tax, and are wash/dry/fold service sales taxable?

It depends for the coin machines: if the business bought the machines tax-free using a resale exemption certificate, the money customers pay to use them IS subject to Missouri sales tax, but if the bu…

If an HVAC distributor takes and processes orders in Illinois but delivers by its own trucks to Missouri customers, and its invoice says title doesn't pass until payment is made in full, does it owe Missouri sales tax on those sales?

Yes. Because the distributor's own invoice terms keep title from passing to the customer until payment is made in full, and that sale is completed in Missouri, title transfers to the customer in Misso…

If an out-of-state seller ships materials into Missouri for a Missouri fabricator to modify before shipping them back out of state to an out-of-state customer, does Missouri sales tax or use tax apply?

No Missouri sales tax applies, because title to the material passed to the buyer outside Missouri (upon pickup by the common carrier in Illinois). However, Missouri vendor's use tax does apply, becaus…

I'm an Illinois resident claiming the credit for taxes paid to other states on guaranteed payments allocated out of state -- do I really have to allocate my whole HSA deduction to those other states too, shrinking my credit?

My client's irrevocable trust was formed in Illinois, but the trustees and beneficiary have since moved out of state, and now both Illinois and the other state claim the trust as a resident -- can the trust still claim Illinois's credit for taxes paid to other states even though it's a dual resident?

Yes -- the Department confirmed that an Electing Small Business Trust (ESBT) that qualifies as an Illinois resident trust (because its grantor was domiciled in Illinois when the trust became irrevocab…

How is a bonus and restricted stock units paid in February 2019 sourced for a taxpayer who became a New York part-year resident in October 2018?

Both are New York State and City income for 2019. The 2018-performance bonus was not 'fixed and determinable' when the taxpayer became a resident in October 2018 (it depended on full-year performance …

Are a beneficiary's distributions from an inherited New York City teacher tax-deferred annuity (403(b)) exempt from New York State and City income tax?

A lump-sum distribution the beneficiaries take from the inherited TRS NYC tax-deferred annuity (TDA) is exempt from New York State and City income tax. If they instead roll it into an inherited IRA, t…

Must a New York company withhold New York State income tax from fees it pays to a non-employee member of its board of directors who is a foreign citizen and resident?

No. The company is not subject to the withholding requirement under Tax Law § 671 for these payments. New York's withholding rules apply to wages paid to an 'employee,' and that term (borrowed from fe…