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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I'm a cigarette retailer who got assessed after an audit -- I say manufacturer incentive payments should reduce what I owe, but I can't produce complete records of them. Do I still owe the full assessment?
Yes -- without the complete records, the assessment stands. A cigarette retailer never filed sales and use tax returns for a nearly three-year period; under Virginia's cigarette compliance program (wh…
I install wireless signal-boosting systems in buildings -- how does Virginia sales/use tax apply to my sales when a customer gives me an exemption certificate, to my own purchases, to the amplifier equipment I install, and to my shipping charges?
A company that designs and installs in-building wireless signal-boosting systems asked the Department to clarify four separate tax questions, and got four separate answers. First, if a customer provid…
If a Colorado retailer adds a credit-card surcharge to a sale, is that surcharge part of the taxable purchase price — meaning the customer pays sales tax on it too?
No, if it's done by the book. A credit-card surcharge that complies with the conditions in § 5-2-212, C.R.S. — charged only when the customer chooses a credit or charge card, shown as a separate line …
Does a company have to add a short-term intercompany trade payable back into its net worth when figuring Tennessee franchise tax?
No. The Department ruled that a foreign company was not required to 'add back' a short-term intercompany trade payable — owed by its U.S. branch to an affiliate for inventory bought to fill U.S. custo…
When an online retailer opens a large in-state fulfillment center and headquarters, is it required to collect that city's local (home-rule) Retailers' Occupation Tax on its Illinois internet sales, instead of just the state use tax?
Yes, for sales tied to that facility. The Department ruled that once the company opens its headquarters and fulfillment center in the city, it is engaged in three or more of the five 'primary selling …
What does Missouri LR 8191 conclude about Textbooks and Supply Sales for Adult Education are Exempt from Sales Tax?
No. Missouri LR 8191 holds that a public school district's sales of textbooks and supplies to students in its adult education courses are exempt from Missouri state and local sales tax, because adult …
What does Missouri LR 8190 conclude about Tickets to Non-Profit Exhibition are Exempt from Sales Tax?
Yes, but conditionally: tickets to the art exhibition are exempt from Missouri sales tax under Section 144.030.2(19), RSMo only if all the proceeds of ticket sales are retained by the nonprofit, chari…
Were electricity and LP gas purchased by a homeowners' association for exclusively residential common areas exempt from Florida sales tax?
Yes. Electricity and LP gas used in the association's commonly owned clubhouse, pool and spa, marina, pavilion, picnic area, and boat-storage area were exempt because the areas were used exclusively b…
Are rocking chairs built in New Mexico subject to gross receipts tax when the maker transports them to Texas and completes every sale there?
No. The Administrative Hearings Office fully abated a $16,450.19 gross receipts tax assessment against Emmett McIntyre's furniture business for 2013–2016. McIntyre built rocking chairs at his High Rol…
Is a fintech company's payment card management program (authorizing and settling debit/prepaid card transactions for business customers) a taxable data processing service in Texas?
No. A payment card management program that authorizes, processes, and settles debit/prepaid card transactions -- operating under a sponsorship agreement with federally insured issuing banks that have …
A county investigated and partially denied my amended-return refund claim for local business property tax -- can I appeal that response straight to the Department, or do I have to go through a local appeal first?
You have to go through a local appeal first -- a locality's response to a refund claim, even one based on its own audit-style review, is not a "final local determination" you can appeal straight to th…
My dental practice buys prosthetic devices and implants in bulk without a specific patient's name on each purchase (to protect patient privacy) -- do these still qualify for Virginia's durable medical equipment sales tax exemption?
No -- bulk purchases not tied to a specific patient at the time of purchase don't qualify, even if a patient's name isn't required to make that connection. A dental implant practice was assessed consu…
My tax preparation software subtracted my FULL unemployment benefits on my Virginia return, even though part of that amount was already excluded from my federal income under the American Rescue Plan Act -- can I blame the software and get the extra tax abated?
No -- the subtraction is limited by statute to only the portion of unemployment benefits that was actually included in federal adjusted gross income (FAGI), and using tax preparation software doesn't …
I'm a cigarette retailer who got assessed after an audit -- I argued manufacturer incentive payments should reduce it, but my vendors told me they can't produce the underlying records at all. Do I still owe the full assessment?
Yes -- when the documentation genuinely can't be produced, the assessment stands. A cigarette retailer never filed sales and use tax returns for a nearly three-year period; under Virginia's cigarette …
I argued my wages aren't legally 'income' and that the federal income tax is really just an excise tax that doesn't reach my earnings -- does that get my Virginia assessment thrown out?
No -- and pressing this kind of argument can make things worse, not better. The IRS told Virginia it had adjusted a couple's 2017 and 2018 federal adjusted gross income (FAGI) because they'd underrepo…
The Department asked me to document my itemized deductions, employee business expenses, Schedule C expenses, and student loan interest deduction across two tax years, and I never responded -- can it disallow everything and assess me?
Yes -- when a taxpayer simply doesn't respond to a documentation request, the Department can disallow the underlying deductions and the resulting assessment is upheld. Across the 2018 and 2019 tax yea…
When must an employer withhold South Carolina income tax for employees — including remote and out-of-state workers?
It turns on whether the worker is a South Carolina RESIDENT and where the services are performed. An employer must withhold SC income tax on a RESIDENT employee's wages no matter where they work (offi…
Are subscriptions to an online learning platform taxable in Connecticut as digital goods, or as an enumerated training service?
The online learning plans are generally NOT taxable as digital goods, because their true object is a nontaxable education or training service, not the sale of an audio-visual product. But depending on…
My company bought a private jet and immediately transferred it, tax-free, into a revocable trust for a diplomat's exclusive use, based at a Virginia-area airport -- does Virginia's aircraft use tax still apply?
Yes, the tax still applied -- none of the three exemption theories worked. A foreign company bought an aircraft in June 2014, transferred it (with no money changing hands) into a revocable trust one m…
I mailed my Research and Development tax credit application before the September 1 deadline, but it arrived after the deadline with no postmark on the envelope -- does my mailing date count, or does the Department only look at when it actually received the application?
The Department only counts the date it actually received your application when there's no postmark -- your own claim about when you mailed it doesn't count as proof. A taxpayer's Research and Developm…
The IRS flagged me to Virginia as a possible non-filer, and I proved I actually live in another state -- am I completely off the hook, or could I still owe Virginia something?
You can win the residency fight and still owe Virginia a return. The IRS told Virginia this taxpayer might have needed to file a 2017 return; when he didn't respond to the Department's initial informa…
Can a couple who moved from Missouri to Virginia mid-year claim a Virginia credit for income taxes they paid to Missouri and other states?
Partly yes. The couple can claim a Virginia credit for income tax paid to Missouri and other states, but only for tax on income they earned while they were dual residents of both Missouri and Virginia…
The county denied my BPOL reclassification request, so I appealed to the Department -- but what I actually want is for the Department to let me use a payroll-apportionment method I never raised with the county. Can the Department rule on that?
No -- the Department has no jurisdiction to decide an issue that was never actually presented to the locality. A business had classified itself as a business service provider for BPOL tax purposes, th…
The county denied my BPOL reclassification request, so I appealed to the Department -- but what I actually want is for the Department to let me use a payroll-apportionment method I never raised with the county. Can the Department rule on that?
No -- the Department has no jurisdiction to decide an issue that was never actually raised with the locality first. A business classified itself as a business service provider for BPOL tax purposes, t…
I separated from my spouse, moved to another state for work, and leased an apartment there -- but I still jointly owned our Virginia home and kept my Virginia license and car registrations. Did I successfully change my tax domicile away from Virginia?
No -- his ongoing Virginia ties, combined with a shaky commitment to the new state, meant he never actually abandoned his Virginia domicile. After separating from his spouse in 2017, the taxpayer took…
What can a South Carolina county spend its local 'transportation penny' sales-tax revenue on, and what's off-limits?
A South Carolina county's local 'transportation penny' sales-and-use tax (up to 1%, imposed under Title 4, Chapter 37 by ordinance and voter referendum) may be spent ONLY on the CAPITAL COSTS of the s…
Can annualizing income let a taxpayer avoid Illinois's $250,000 standard-exemption cutoff, and are Form IL-2210's annualization percentages correct?
No to both. The standard exemption is disallowed once a taxpayer's full-year federal adjusted gross income exceeds $250,000 (or $500,000 for joint filers) under IITA Section 204(g) — that threshold is…
Does Illinois tax a resident partner's full guaranteed payment even if it was earned from real estate sales in other states?
Yes. Illinois taxes the entire guaranteed payment because the partner is an Illinois resident; where the underlying real-estate sales activity happened does not matter. A credit for tax paid to other …
What are Illinois's official answers to a comprehensive national multistate survey covering sales tax nexus, economic nexus thresholds, remote-seller/service-provider activities, refund claims, voluntary disclosure agreements, and local sales taxes?
Illinois bases sales/use tax nexus on BOTH physical and economic presence, with the economic threshold set at $100,000 or more in cumulative Illinois gross receipts OR 200 or more separate Illinois tr…
Can a Colorado retailer advertise or post total 'out-the-door' prices that already include the sales tax, as long as the receipt breaks out the price and the tax separately?
Yes, but only if you meet two separate rules. A Colorado retailer may post total 'out-the-door' prices that include sales tax — but it must STILL (1) separately state the tax as a distinct item on eac…
My commercial lease bundles rent for the building together with rent for furniture, fixtures, and equipment -- can the Department override the allocation stated in my lease agreement and tax a bigger share of my rent?
No -- if your lease agreement documents a specific allocation between nontaxable real property rent and taxable tangible personal property rent, the Department will apply THAT allocation, not an audit…
I submitted an intent to appeal along with an offer in compromise, but the Department said my appeal was incomplete and closed my case -- can I still file a complete appeal after my offer in compromise is later rejected?
No -- Virginia's 90-day appeal deadline runs from the date of assessment, and pursuing an offer in compromise instead of, or alongside, a complete appeal does not extend or restart that clock. A taxpa…
My surgery center buys durable medical equipment and prosthetic devices in bulk from a vendor and only pays for items once they're withdrawn for a specific patient's procedure -- does that consignment arrangement qualify for Virginia's medical equipment sales tax exemption?
Not unless you can prove it was a genuine consignment where no money changed hands until a doctor's prescription or work order pulled a specific item for a specific patient. An ambulatory surgery cent…
An auditor disallowed my resale exemption certificates because they weren't on file at the time of the sale, or were undated or backdated -- can I still use them to remove sales from my assessment, and can I get the penalty waived?
No -- once an auditor is already looking at your sales, resale exemption certificates get much stricter scrutiny, and certificates that are undated, dated after the sale, or tied to a customer who was…
My nonprofit club sold golf tournament tickets that bundled the greens fee together with food, and separately paid out cash prizes to winners -- how does Virginia sales tax apply to each?
If you sell one ticket price that bundles a nontaxable admission fee together with a taxable meal or refreshments, and you don't separately state the two charges, Virginia taxes the ENTIRE ticket pric…
Does a capital financing lease of qualified data center equipment, treated as a conditional sale, qualify for Illinois' sales-tax data center exemption, and does the answer change depending on when the data center itself became qualified?
Illinois could not give a specific ruling in a GIL, but explained that a capital financing lease treated as a conditional sale is taxed like a sale (full Retailers' Occupation Tax on the payment strea…
Does an Illinois online classified-ads website have to collect Retailers' Occupation (sales) Tax on sales of digital 'credit packs' that customers use to publish, highlight, or promote listings?
No. The Department ruled that because purchasers of the digital credit packs receive no tangible personal property -- no inventory is shipped and nothing physical changes hands -- the sales are not su…
Does a large membrane (fabric/steel-truss) structure built onto a factory in an Illinois enterprise zone qualify for the Enterprise Zone building materials exemption from Retailers' Occupation Tax?
Yes. The Department ruled that the membrane structure -- a steel-truss, fabric-clad building anchored into a poured concrete foundation and equipped with fire suppression, electrical, and utility infr…
Because of the Emancipation Day holiday, what was South Carolina's 2021 income-tax filing and payment deadline, and by when did a 2018 refund claim have to be filed?
April 18, 2022. Because Emancipation Day (April 16) was observed Friday, April 15, 2022 in Washington, D.C., the federal deadline moved to Monday, April 18, 2022, and South Carolina — whose due date s…
Do nonresident beneficiaries owe Illinois income tax on annuity proceeds distributed to them through an Illinois estate?
No, for the nonresident beneficiaries: annuity proceeds paid to an Illinois estate (because the annuity had no named beneficiary) and then distributed to nonresident children are unspecified income un…
When a corporation spins off a subsidiary in a tax-free IRC Section 368(a)(1)(D) reorganization, must it make the bonus-depreciation addition and subtraction modifications on the transferred assets for that tax year?
Yes. Illinois follows the federal treatment of the reorganization, so in the tax year the transfer and spin-off occur, the corporation must add back the aggregate bonus-depreciation subtraction modifi…
Does a delivery-app marketplace owe Tennessee sales tax on the fees it charges sellers and delivery drivers (as opposed to the sales it facilitates to shoppers)?
No. The Department ruled that the fees a delivery-app marketplace charges to its sellers and delivery drivers are not subject to Tennessee sales and use tax. The true object of those charges is non-ta…
Is the sale of bulk non-potable water — withdrawn from ditches and reservoirs and delivered through surface hoses to oil and gas wells — subject to Colorado sales tax?
No. Bulk water withdrawn from ditches and reservoirs and delivered to customers through conduits (surface lay-flat hoses) is not 'tangible personal property,' because Colorado's rules exclude water in…
New Mexico assessed me weight distance tax on trucks I ran through the state, but I already paid the port-of-entry trip tax — do I owe both, and was the assessment even on time?
You do not owe both, and the assessment was too late. The Administrative Hearings Office granted Tyree Oil's protest and abated the entire $4,942.71 weight distance tax assessment. Tyree Oil, an Orego…
Did machinery used at a Florida limestone quarry and aggregate plants qualify for the industrial manufacturing sales-tax exemption?
Yes. Motor graders, bulldozers, haul trucks, tractors, forklifts, excavators, front-end loaders, draglines, and conveyors qualified under Fla. Stat. Sec. 212.08(7)(jjj) because the NAICS 327410 busine…
Are a company's sales of biological allergen extracts — testing kits, pre-mixed doses, and bulk extracts administered in a physician's office — exempt from South Carolina sales and use tax as injectable biologics?
Yes. A company's retail sales of biological allergen extracts are exempt from South Carolina sales and use tax as 'injectable biologics' under Code Section 12-36-2120(80)(a), because they are (1) deri…
New Mexico taxed my licensed cannabis business as if federal rule Section 280E applied, wiping out my ordinary business deductions — can the state do that when medical cannabis is legal here?
No — New Mexico may not apply federal Section 280E to a licensed cannabis business's state income tax. The Administrative Hearings Office granted summary judgment for Sandia Botanicals and abated the …
My business provides furnished temporary office space, shared workspace, meeting rooms, a business mailing address, and live phone answering on a flexible (hourly to annual) basis -- is any of this subject to Virginia sales tax?
No -- none of these services (furnished temporary office space, shared workspace, meeting rooms, business mailbox, and live phone answering) are subject to Virginia sales tax on what you charge custom…
My company provides IT and professional services across many locations and can't practically track which office's work generated which customer's revenue -- can I use payroll apportionment to situs my BPOL gross receipts to this county, and how do I compute the out-of-state deduction if so?
Yes, if it's genuinely impractical or impossible to attribute your gross receipts to a specific office under the general rule, payroll apportionment is the correct BPOL situsing method -- and once you…
I claimed employee business expenses on federal Form 2106 for 2018 and 2019, and the Department disallowed the deduction on my Virginia return -- can the Department override what I reported on my federal form?
Yes -- for 2018 through 2025, federal law suspended the Form 2106 employee business expense deduction for almost everyone, and Virginia's income tax starts from your federal adjusted gross income, so …
I claimed a Virginia subtraction for the long-term capital gain from selling stock in a big, well-known company -- why did the Department deny it?
Because the subtraction only applies to gains from investing in a small, Virginia-based company with less than $3 million in annual revenue at the time you invested -- not stock in any large or well-k…
I graduated from a Virginia university, moved to a state with no income tax for my new job, but kept my Virginia driver's license and voter registration -- do I still owe Virginia tax as a full-year resident?
Yes -- if you keep voting in Virginia elections and renew your Virginia driver's license after supposedly moving away, that's very strong evidence you never actually abandoned your Virginia domicile, …
A restaurant audit estimated my unreported cash sales using my credit card sales data because I didn't keep adequate records, and it also taxed sales I say were exempt -- can I fight both parts of the assessment without producing my own records?
No -- without your own adequate sales records, an estimate built from your available credit card sales data is a valid, previously-approved audit method, and exemption certificates you never had on fi…
My spouse claimed employee business expenses on Form 2106 and I claimed business expenses on Schedule C for my home health care business, but the Department disallowed both for lack of documentation -- do I get another chance to prove them?
Both deductions were properly disallowed for lack of proof, but you get one final chance to submit documentation before the assessments become final. A couple claimed the wife's Form 2106 employee bus…
The Department assessed me for a year I didn't file, saying I owe tax -- but I think overpayments from earlier years should have been credited to that year instead of refunded to me. Do I still owe the assessment?
No, you generally can't -- if the Department already issued you a refund check for an overpayment (and you cashed it), that same money can't also be applied as a credit against a later year's tax liab…
My business couldn't produce complete records for some sales and purchases during an audit, so the auditor assessed tax based on estimates and other transactions with the same vendor -- can I still get the assessment reduced by pointing to invoices showing tax was paid on similar purchases?
No -- Virginia's sales and use tax is a transactional tax, so you need documentation for EACH specific transaction, not just a general pattern of paying tax to the same vendor on other purchases. A co…
The IRS flagged me as never having filed a Virginia return -- I thought I was a California resident that year, but I still owned a Virginia home and renewed my Virginia driver's license. Do I owe Virginia tax, and can I still get credit for the tax I paid to California?
You likely still owe Virginia tax as a domiciliary resident if you kept meaningful Virginia ties (an owned home, a renewed driver's license) -- but if you were ALSO taxed as an actual resident of the …
Could New Mexico apply federal Section 280E to deny a licensed medical-cannabis producer's ordinary business deductions and NOL?
No, under this decision. The Administrative Hearings Office fully abated The Verdes Foundation's $132,932.36 corporate income tax assessment for 2011–2016. The Department had applied federal Section 2…
If a company sells 100% of a subsidiary's stock to an unrelated third party, but makes federal tax elections treating the deal as an asset sale followed by a liquidation into another group member, does the subsidiary's Texas franchise tax temporary credit for business loss carryforward stay with the combined group?
No. Selling 100% of a subsidiary's stock to an unrelated third party moves that subsidiary out of the seller's combined group for Texas franchise tax purposes, ending the group's right to use the subs…
Must a New Mexico medical-cannabis producer apply federal Section 280E when computing state corporate income tax for pre-2021 years?
No, under this decision. The Administrative Hearings Office fully abated a $401,126.50 corporate income tax assessment against New Mexicann Natural Medicine for 2010–2016. The Department had applied f…
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