State Tax Rulings

I already established that I'd moved away from Virginia, but I later got a new Virginia driver's license just for a work benefit -- does that mean I re-established Virginia domicile even though I never actually moved back?

No -- a Virginia driver's license by itself can't re-establish Virginia domicile without also actually moving back and physically living there with intent to stay, because domicile legally requires bo…

I overpaid New Mexico gross receipts tax but only asked for the refund a few years later — is there a deadline that can bar my claim?

No — the claim was too late. EthosEnergy Light Turbines paid gross receipts tax in December 2018 (for the November 2018 period) and asked the Department for a refund on December 2, 2022. New Mexico re…

Which farm purchases are exempt from South Carolina sales tax, and how does the SCATE card work?

South Carolina exempts many farm purchases from state (and Department-collected local) sales and use tax, but usually only for farmers in the agriculture BUSINESS who present a valid South Carolina Ag…

How does Virginia's Food Donation Tax Credit work for farmers and food producers who donate food crops or wholesome food to a nonprofit food bank?

Starting with Taxable Year 2023, Virginia gives a credit equal to 50% of the fair market value of food crops or wholesome food that a person engaged in the business of farming donates to a Virginia no…

My out-of-state SaaS company is going to start having customers headquartered in Illinois -- does that create nexus requiring us to file an Illinois corporate income tax return, and if so, what sales threshold triggers it?

The Department would not say definitively whether selling SaaS to Illinois customers creates Illinois corporate income tax nexus -- nexus determinations are considered too fact-specific for a letter r…

Would the mandatory assessment paid by property owners for common-area and club-facility maintenance become taxable after the club merged into the homeowners' association?

No. The assessment was mandatory, paid to the homeowners' association as a condition of property ownership, and used for common-area maintenance rather than as a charge for access.

Does an out-of-state company that mails lab test kits to Illinois customers and analyzes the returned samples owe Illinois Use Tax, or is the whole transaction an untaxed service?

Yes, Use Tax generally applies: when a company ships tangible personal property (here, at-home sample-collection kits) that it purchased outside Illinois to Illinois customers for their use, the compa…

If a company operates an EV charging station and sells electricity at retail to drivers, does it -- rather than the electric cooperative or utility that supplied the power -- have to register with the Department and collect and remit the Electricity Excise Tax?

Yes. The EV charging station operator, as the last supplier delivering electricity to the retail consumer, is the "delivering supplier" responsible for registering with the Illinois Department of Reve…

Can I get a Virginia use tax refund by recalculating my own error factor under a direct pay permit, without a Department-approved front-end agreement?

No, not on your own. A direct pay permit holder can only use an estimated "error factor" instead of tracking actual taxable use item-by-item if it has a written front-end agreement with the Department…

As a part-year Virginia resident, can I claim a credit for Maryland tax withheld on wages I earned while I was still a Maryland resident?

No. Virginia Code § 58.1-303 specifically bars part-year residents from claiming a credit against Virginia tax for tax paid to their prior state of residence for the period they lived there -- even un…

If I move to Virginia partway through the year but haven't yet finished changing my legal domicile, is income I receive right after I arrive taxable by Virginia?

Yes. Once you spend more than 183 days in Virginia during the year, Virginia taxes you as an actual resident starting on the day you first arrived -- even if you hadn't yet finished changing your lega…

How should the taxpayer source flow-through financial-service fees in its Florida corporate income tax sales factor?

The fees were sourced to Florida to the extent the underlying customers were located in Florida. The partnership's flow-through sales factor had to reflect that customer-location sourcing.

Which self-propelled vehicles qualify as motor vehicles for South Carolina's $500 maximum sales and use tax?

For South Carolina's maximum-tax rule, a motor vehicle is any motorized, self-propelled, wheeled vehicle that does not run on rails; highway use or DMV licensing is not required. Effective April 26, 2…

Can a construction contractor that can't tell at the time of purchase whether materials will be installed into real estate or sold over the counter buy everything tax-free from its supplier and self-report a flat percentage of tax later?

Only partly. Under 86 Ill. Adm. Code 130.2075(b), a contractor who genuinely can't tell at purchase whether materials will be installed into real estate or sold at retail may certify to its supplier t…

Does Missouri LR 8270 exempt a telecommunications provider's purchase of portable equipment huts and their HVAC units from sales or use tax?

NO to both -- neither the portable equipment huts nor their climate-control HVAC units qualify for Missouri's manufacturing-equipment sales/use tax exemption, because supporting infrastructure that me…

Does Missouri tax canned non-alcoholic beverages sold direct to consumers at the reduced 1% food sales tax rate?

YES, these canned non-alcoholic beverages qualify for Missouri's reduced 1% food tax rate, because the Department looks at whether the sale is for home consumption (not the abstract type of product), …

An out-of-state government agency presented its own state's tax exemption at our Missouri location and says it shouldn't owe Missouri sales tax -- is that right?

Yes. Out-of-state government tax exemptions do not carry over to Missouri -- a Missouri seller must still collect Missouri sales tax from an out-of-state government agency unless some other, independe…

As a caterer that bills a hotel directly for banquet meals, must I keep collecting sales tax on those catering charges even after the hotel gives me an exemption certificate?

Yes -- the caterer (as the original seller of the meals to the hotel) must keep collecting and remitting sales tax on its catering charges to the hotel. The exemption certificate the hotel provided do…

Were court-ordered settlement payments taxable as commercial rent after the tenant surrendered possession and could no longer use the property?

No. The tenant had returned the property, had no right to occupy it, and recorded the payments as lease-termination damages rather than rent after zoning barred the intended store.

Our sales factor excludes our foreign licensing royalties because they're under Illinois's 50%-of-gross-receipts threshold -- can we get alternative apportionment to include them anyway since they're a big, high-margin chunk of our income?

No -- the Department denied the petition because the taxpayer only showed that the statutory 50%-of-gross-receipts test excludes its foreign royalties from the sales factor and that a different formul…

How could the consolidated taxpayer calculate income and tax generated by its qualified project for the Capital Investment Tax Credit?

The Department approved a pro forma Florida return that separately computed the project's taxable income, apportioned Florida tax liability, and allowable Capital Investment Tax Credit.

Is a biometric identity-verification service that lets airport travelers skip through security lines faster subject to Texas sales and use tax?

No. A biometric identity-verification service that lets enrolled travelers move faster through airport security is not subject to Texas sales and use tax. It isn't a taxable security service because t…

What are Nebraska's adjusted debtor exemption dollar limits for 2023 through 2027?

For 2023 through 2027, the CPI-adjusted Nebraska debtor exemption limits are: personal property (Neb. Rev. Stat. § 25-1552) $5,970; and under Neb. Rev. Stat. § 25-1556, household goods $3,582, tools a…

What does Missouri LR 8246 conclude about Taxability of Candy Sales?

YES, candy, fudge, and chocolate sold to-go (not hot, not further prepared) qualify for Missouri's reduced 1% food tax rate because they are SNAP-eligible food. Applicant sells in-house made fudge, in…

Which alcohol server-training programs does South Carolina recognize as a mitigating circumstance when an employee sells to an underage person?

SC Information Letter #23-13 lists the alcohol server-training programs the Department's Alcohol Beverage Licensing (ABL) section recognizes as a mitigating circumstance when deciding penalties. When …

Did South Carolina extend tax filing and payment deadlines because of Hurricane Idalia, and which taxes qualified?

Yes — South Carolina matched the IRS's Hurricane Idalia relief and postponed certain filing and payment deadlines to February 15, 2024. After FEMA designated all of South Carolina a disaster area and …

Are a marijuana cultivator and dispensaries 'affiliated' for the retail marijuana excise tax when they have no common ownership but are both controlled by the same branding company through contracts?

Yes. Common ownership is not required for affiliation. Because one branding company contractually controls both the cultivator and the dispensaries, they are 'affiliated marijuana business licensees' …

Did Kansas increase its research and development tax credit and who can claim it?

Kansas Notice 23-09 explains that 2022 House Bill 2239 (Section 41) amended K.S.A. 79-32,182b to increase and broaden the Kansas research and development income tax credit. Starting with tax year 2023…

What is the Kansas Affordable Housing Tax Credit and how does it work?

Kansas Notice 23-08 explains the Kansas Affordable Housing Tax Credit Act, created by 2022 House Bill 2237 (Sections 1-6, now K.S.A. 2022 Supp. 79-32,304 through 79-32,309). For tax years beginning af…

What is the Kansas Housing Investor Tax Credit and who can claim it?

Kansas Notice 23-07 explains the Kansas Housing Investor Tax Credit Act, created by 2022 House Bill 2237 (Sections 7-12, now K.S.A. 79-32,310 through 79-32,315). For tax year 2022 and after, a qualifi…

Can I use a Virginia assessment appeal to fix my own reporting mistakes on my original return, even if I agree the audit itself was correct?

No. A Virginia Code § 58.1-1821 administrative appeal must identify actual errors the Department made in the assessment itself -- it can't be used as a backdoor way to fix mistakes you made on your ow…

As a part-year Virginia resident, do I use my full-year federal adjusted gross income or only my Virginia-period income to calculate the 10% medical expense deduction floor?

Only your Virginia-residency-period federal adjusted gross income (adjusted for fixed date conformity), not your full-year FAGI. Because no statute, regulation, or form instruction directly addressed …

What is the correct combined Hotel Operators' Occupation Tax rate that a Chicago hotel should charge, and why does the Department-administered portion come out to 11.9% instead of the seemingly simpler 11.5%?

For a Chicago hotel, the Illinois Department of Revenue confirmed the rate it administers (State Hotel Operators' Occupation Tax + Chicago Municipal Hotel Tax + Illinois Sports Facilities Tax + MPEA t…

What major South Carolina tax-law changes and 2023-2024 budget provisions did the Department summarize in its 2023 legislative update?

The 2023 update reports South Carolina IRC conformity through December 31, 2022; a 6.4% top individual rate for tax year 2023; the earned income credit reaching 125% of the federal credit and the two-…

What South Carolina tax interest rate applied from October 1 through December 31, 2023, including eligible refund interest?

South Carolina's listed tax interest rate increased from 7% to 8% for October 1 through December 31, 2023. Interest generally compounded daily, except estimated-tax underpayments used simple interest.…

My bakery charges admission for cookie-decorating classes at community events -- is that fee subject to Missouri sales tax?

No, admission fees for a genuine instructional class (here, a hands-on cookie-decorating class with step-by-step teaching) are exempt from Missouri's amusement/admission sales tax, because the law car…

Does Virginia's agricultural sales tax exemption cover support posts for young trees and grape vine trellises on a farm?

Yes. Both temporary posts used to support newly planted trees and wood trellises built to support grape vines qualify for Virginia's agricultural production sales and use tax exemption, because both a…

Can I get transactions with an unusual vendor removed from a Virginia sales tax audit sample, or settle for less if I only dispute the sampling method?

Generally no. To remove a vendor's transactions from a sales/use tax audit sample, you must show they were an isolated event, not part of your normal business operations -- buying from an unfamiliar v…

If a contractor moves its fabrication work into a single-member LLC that elects to be taxed as a corporation, does the new entity qualify as a manufacturer for Tennessee's industrial-machinery and business tax exemptions?

It depends on the entity election. The Department ruled that a single-member LLC (SMLLC) that a contractor sets up to do only fabrication for resale — and that elects to be treated as a corporation — …

Is an all-inclusive, bundled multi-day train 'travel experience package' — which lumps interstate train travel, on-board sightseeing/guides, catered meals, and a Colorado hotel night into one price — subject to Colorado sales tax?

No. Where a multi-day travel experience is sold as one inseparable, all-inclusive bundle, Colorado taxes it by the transaction's 'true object.' Here the true object is the nontaxable train travel expe…

Are self-paced online training courses, downloadable course textbooks, and live-instruction courses subject to Tennessee sales tax?

It depends on the format. The Department ruled that self-paced online courses — a real-estate licensing course and an exam-guide course delivered through the school's learning-management system — are …

Which of a benefits administrator's employee health-benefit and retirement plan administration services are subject to Texas sales and use tax?

It depends on the specific service. Flex Spending Account/HRA administration, COBRA administration, and retirement plan/401(k) recordkeeping services are NOT taxable in Texas. ACA Comprehensive compli…

We sold a discrete segment of our multi-state business, and the small Illinois piece of that segment was only a sliver of the deal's value -- can we get Illinois to apportion the gain using just that entity's actual share instead of the standard sales-factor formula?

One of our employees was granted non-qualified stock options while working in Illinois, but relocated to another state before all the options vested and were exercised -- do we need to withhold Illinois income tax when those options are later exercised?

No withholding is required. Illinois GIL IT 23-0016-GIL concludes that even though non-qualified stock option income exercised after an employee relocates out of Illinois may still count as Illinois-s…

How is a Snowdog — a tracked machine that pulls its operator in a sled — classified for Utah off-highway-vehicle registration: as a snowmobile or as an ATV?

It registers as a snowmobile. The Commission held a Snowdog meets the Utah Code § 41-22-2(22) definition of 'snowmobile' — a self-propelled motor vehicle designed for travel on snow or ice, steered an…

If I have a customer's resale exemption certificate on file at the time of a Virginia sales tax audit, does that automatically protect me from an assessment on their purchases?

A resale certificate you had on file at the time of the sale, and could produce at audit, can protect you if you reasonably relied on it in good faith -- even if the auditor initially finds a completi…

If I charged sales tax on items that weren't actually taxable, can I get a credit for the extra tax I remitted, and can a first-time audit penalty be waived if I collected tax but didn't remit it?

No, on both counts. If you collected sales tax from customers on items that weren't actually taxable, you generally can't keep a credit for that overcollection yourself -- you must show it was refunde…

What did the Illinois Department of Revenue say in its 2023 responses to a national tax-survey publisher's questionnaire about repair labor, federal excise taxes, corporate liquidations, NFTs, the simplified sellers use tax program, and a retail delivery fee?

Illinois does not impose a retail delivery fee and does not offer a simplified sellers use tax rate for remote sellers; it does tax repair labor on tangible personal property (but not repair labor on …

Can a certified large data center project in Texas be expanded to add a building on land sold to an affiliated company, and can that affiliate also become a tax-exempt qualifying owner?

Yes to both. A certified large data center project can expand to include a new building on an adjoining lot even after that lot is sold to a commonly-owned affiliate, and the affiliate can be added as…

What is South Carolina's tax credit for hiring formerly incarcerated individuals, who qualifies, and how much is it?

South Carolina gives an employer a nonrefundable credit for hiring a 'formerly incarcerated individual' as a NEW employee in a U.S. Department of Labor-registered apprenticeship program, after 2021 bu…

What is South Carolina's tax credit for hiring veterans, who qualifies, and how much is it?

South Carolina gives an employer a nonrefundable credit for hiring a veteran of the U.S. Armed Forces — someone honorably discharged, or released for a service-connected disability, and hired within t…

If I can't produce records during a Virginia sales tax audit, can I just argue the assessment should be reduced to my own rough estimate of taxable purchases?

No. If you fail to keep or produce adequate records during a Virginia sales/use tax audit, the Department is authorized to assess tax based on the best information available to it, and the assessment …

Does North Carolina's Bailey Settlement exempting certain state retiree pensions from North Carolina tax also exempt that retirement income from Virginia tax if I'm a Virginia resident?

No. North Carolina's Bailey Settlement only limits North Carolina's own power to tax certain state/local government retirees -- it has no effect on Virginia's separate authority to tax all the income …

If my corporation changes its federal fiscal year to a calendar year, do I need Virginia's permission to make the same change on my Virginia corporate return?

No permission is needed -- a corporation's Virginia taxable year automatically changes whenever its federal taxable year changes, and a short-period Virginia return must be filed for the transition, j…

Is a limestone quarry a 'mining' operation for Virginia's local business tangible personal property and machinery & tools tax purposes, or is it taxable 'processing'?

Limestone quarrying counts as "mining" for Virginia's local business tangible personal property (BTPP) tax and machinery and tools (M&T) tax, following the Department's own prior ruling on the point -…

Does Virginia's data center sales tax exemption cover power distribution equipment and environmental control systems, not just the servers themselves?

Yes. Virginia's data center sales and use tax exemption covers not just the servers and computer equipment themselves, but also power distribution equipment, chillers, HVAC systems, and similar equipm…

Can I get a Virginia use tax refund by recalculating my own error factor under a direct pay permit, without a Department-approved front-end agreement?

No, not on your own. A direct pay permit holder can only use an estimated "error factor" instead of tracking actual taxable use item-by-item if it has a written front-end agreement with the Department…

Can I get a Virginia use tax refund by recalculating my own error factor under a direct pay permit, without a Department-approved front-end agreement?

No, not on your own. A direct pay permit holder can only use an estimated "error factor" instead of tracking actual taxable use item-by-item if it has a written front-end agreement with the Department…

Can I get a Virginia use tax refund by recalculating my own error factor under a direct pay permit, without a Department-approved front-end agreement?

No, not on your own. A direct pay permit holder can only use an estimated "error factor" instead of tracking actual taxable use item-by-item if it has a written front-end agreement with the Department…

I'm a permanent U.S. resident living in Illinois and I just started receiving my UK State Pension -- does Illinois tax that pension income?

It depends on exactly what kind of foreign pension you receive, and the Department couldn't determine that from the taxpayer's letter. If the foreign pension is treated like Social Security or railroa…