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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State Tax Ruling
No relief: the Tax Commissioner ruled the taxpayer's appeal of a 2010 individual income tax assessment was barred because it was filed more than six years after the 90-day deadline in Va. Code § 58.1-…
Are tariff costs and tariff surcharges included in South Carolina's sales or use tax base?
A tariff cost is included in taxable gross proceeds or sales price when the seller or another party is the importer and passes the cost to the purchaser, whether the amount is embedded in the price or…
Could an acquired company stop filing Florida consolidated returns after its original affiliated group ceased to exist in a merger?
Yes, subject to three conditions. The acquisition and merger ended the taxpayer's original affiliated group, and the surviving entity became part of a new parent's group that filed separate Florida re…
What does Illinois General Information Letter ST 20-0026-GIL conclude about Construction Contractors?
Construction contractors who permanently affix tangible personal property (like cleanroom walls, doors, flooring, or filtration systems) to real property are treated as the 'end user' of that property…
Does a foreign corporation that only stores inventory at a Tennessee toll manufacturer, and has no U.S. effectively connected income, owe Tennessee franchise tax?
No. The Department ruled (in an advisory, non-binding revenue ruling) that a foreign corporation — one treated as a corporation for federal tax purposes — that stores inventory at a Tennessee toll man…
If a customer refuses to pay the sales tax an aircraft repair station charged, does the repair station still have to remit that tax to Illinois?
Generally yes, a retailer must remit sales tax to Illinois even if a customer refuses to pay it. But here, Public Act 101-629 retroactively revived the Section 2-5(40) exemption for aircraft parts, eq…
Does a not-for-profit college that trains optometrists owe Illinois sales or service occupation tax on the prescription eyewear it provides to patients as part of student training?
No. The Illinois Department of Revenue ruled that the college does not owe Retailers' Occupation Tax or Service Occupation Tax on prescription eyeglasses and contact lenses transferred to patients as …
If an out-of-state investment fund's only Tennessee connection is owning mortgages secured by Tennessee property, does it owe Tennessee franchise and excise tax?
No. The Department ruled that a non-U.S. limited partnership fund whose only connection to Tennessee is owning mortgages (some secured by Tennessee property, with some borrowers possibly in Tennessee)…
What does Virginia Ruling of the Tax Commissioner P.D. 20-178 conclude about Tangible : Administration - Failure to Issue Final Local Determination?
The Tax Commissioner ruled he had no jurisdiction to decide the taxpayer's business tangible personal property tax appeal because the county's e-mail response was not a valid 'final local determinatio…
Could New Mexico residents count $1,875 paid toward delinquent 2016 state income tax as an 'other payment' credit against their 2018 tax?
No. Edward and Linda CdeBaca paid $1,875 during 2018 toward their delinquent 2016 New Mexico income tax and received credit against that 2016 liability. They could not count the same payments again as…
Is an IRA funded by rolling over a federal employee's Thrift Savings Plan exempt from New York income tax, and what about other private retirement accounts?
The IRA distributions are exempt only to the extent they represent the rolled-over Thrift Savings Plan (TSP) amount, which qualifies for the federal-employee pension subtraction under Tax Law § 612(c)…
Are an employer's nonqualified deferred-compensation payments to nonresidents protected from New York tax, including payments made before employment ends?
Only the post-termination payments are protected. Payments from an excess-benefit nonqualified deferred-compensation plan made to a nonresident after termination of employment are 'retirement income' …
What does Illinois General Information Letter ST 20-0030-GIL conclude about Computer Software?
It depends on what is actually transferred to the customer. Illinois taxes sales of tangible personal property, and 'canned' (pre-written) computer software counts as tangible personal property, so se…
Does an out-of-state seller owe Illinois sales tax on a sale that is drop-shipped to an Illinois customer if the out-of-state buyer never gave a resale certificate?
Yes, generally. Under Illinois rules, a drop-shipped sale can qualify as a tax-exempt sale for resale, but only if the out-of-state buyer gives the seller a valid Certificate of Resale (or other adequ…
What does Virginia Ruling of the Tax Commissioner P.D. 20-177 conclude about Exemption : Rooms, Lodgings & Accommodations for 90 Continuous Days?
The 90-continuous-day exemption applies separately to each room based on the fewest rooms rented on any single day during a rolling 90-day window, and it does not extend to meals -- if a room charge i…
What does Virginia Ruling of the Tax Commissioner P.D. 20-176 conclude about Administration : Accounting - Application of Overpayments; Collections - Offsets?
Denied. The Tax Commissioner upheld the Taxpayer's 2018 corporate income tax assessment and underpayment penalty, ruling that the Department had properly offset the Taxpayer's prior-year overpayment a…
What does Illinois General Information Letter ST 20-0022-GIL conclude about Construction Contractors?
Construction contractors in Illinois are treated as end users, not retailers: they owe Use Tax on their cost price of materials permanently incorporated into real property (like an installed gas stati…
What does Illinois General Information Letter ST 20-0021-GIL conclude about Enterprise Zones?
Sales of tangible personal property used or consumed in operating a pollution control facility are exempt from Illinois Retailers' Occupation Tax (and therefore Use Tax) only if the facility is locate…
If I rent out my property through a third-party booking platform, am I responsible for Hotel Operators' Occupation Tax if the platform fails to remit it?
Generally yes: the Hotel Operators' Occupation Tax obligation belongs to the owner/host of the rented accommodations, not the third-party booking platform, unless that platform has a separate agreemen…
Does an Illinois retailer still owe Retailers' Occupation Tax on petroleum product sales to a purchaser that is exempt from use tax under federal law?
Yes, the exemption still applies. Illinois confirmed that receipts from selling petroleum products (motor fuels) to a purchaser that is exempt from use tax by operation of federal law -- here, a compa…
Is computer software subject to Illinois sales and use tax, and how does that apply to software licenses, leases, and services like death-record and address searches?
Generally yes: 'canned' (prewritten) computer software is taxable tangible personal property in Illinois, while custom-written software generally is not. A software license escapes tax only if it meet…
What does Illinois General Information Letter ST 20-0023-GIL conclude about Nexus?
It depends on whether the out-of-state company has a physical presence in Illinois, meets the Wayfair economic-nexus thresholds ($100,000 in sales or 200+ transactions to Illinois customers), or (star…
How is Illinois sales tax calculated on food and dietary products made from industrial hemp extract, like balms and tincture drops?
It depends on how the product is used and labeled. Illinois taxes hemp-extract items intended for internal human consumption (like tincture drops taken under the tongue) as food at the low 1% rate und…
What does Illinois General Information Letter ST 20-0014-GIL conclude about Construction Contractors?
When a construction contractor permanently affixes tangible personal property to real property, Illinois treats the contractor as the 'end user' of that property, meaning the contractor owes Use Tax (…
Is nonqualified deferred compensation paid to a nonresident in substantially equal annual payments over 10 years subject to New York income tax withholding?
No. Two series of substantially equal annual payments made over a 10-year period under a nonqualified deferred compensation plan qualify as 'retirement income' protected by the federal Pension Source …
Are a retired federal employee's TSP distributions (lump sum or periodic) and an IRA funded by a TSP rollover exempt from New York income tax?
TSP distributions, whether taken as a lump sum or as periodic payments, may be subtracted from federal income under the federal-employee pension subtraction (Tax Law § 612(c)(3)(ii)). When TSP money i…
What does Virginia Ruling of the Tax Commissioner P.D. 20-175 conclude about Virginia Taxable Income: No Deduction for Out-of-State Income Credit : Taxes Paid to Another State - North Carolina?
The Virginia Tax Commissioner held there is no deduction or subtraction from Virginia taxable income for income earned in another state (here, North Carolina); the correct remedy is the credit for tax…
What does Virginia Ruling of the Tax Commissioner P.D. 20-174 conclude about Dealer: Vehicle Repair Administration: Refund - Taxes Paid On Inventory, Statute of Limitations?
Partial win: the Tax Commissioner agreed to credit the taxpayer for sales tax it had erroneously paid to vendors on items later assessed as retail sales, but only for amounts the taxpayer documents it…
State Tax Ruling
No. The Virginia Tax Commissioner ruled that an Indian Tribe is not exempt from Virginia retail sales and use tax on purchases occurring off its reservation, even when the items are for the Tribe's ow…
What does Virginia Ruling of the Tax Commissioner P.D. 20-172 conclude about Audit: Identity Theft, Fraud, Records?
The Tax Commissioner upheld the full sales tax assessment against a cigarette retailer, ruling that the taxpayer's bare claim that its distributor accounts were used fraudulently, without supporting d…
What does Illinois General Information Letter ST 20-0018-GIL conclude about Miscellaneous?
This isn't taxpayer guidance in the usual sense -- it's the Illinois Department of Revenue's reply to a publisher's annual 50-state tax survey. The Department declined to fill out the questionnaire it…
Did Kansas give corporate filers penalty relief for 2019 income tax returns?
Kansas Notice 20-03 explains that the Department gave penalty relief for 2019 corporate income tax returns. The extended Kansas due date of October 15, 2020 matched the federal return; to allow more t…
State Tax Ruling
Yes on both points raised: the Tax Commissioner ruled that the taxpayer's prototype marine engines kept their research-and-development sales tax exemption because the one-time demonstration use was de…
What does Virginia Ruling of the Tax Commissioner P.D. 20-170 conclude about Administration : Audits - Employee/Subcontractor, VEC Information?
Partial win for the taxpayer: the Tax Commissioner did not cancel the withholding tax assessment but sent it back to audit staff, ruling that VEC information alone cannot establish that workers are em…
What does Virginia Ruling of the Tax Commissioner P.D. 20-169 conclude about Sales Price: True Object, Exemptions - Manufactured Signs, Permit Fees, Permit Procurement Fees, Installation?
Manufactured signs are taxable tangible personal property, so permit fees and permit procurement fees billed with a sign purchase are part of the taxable sales price, but the taxpayer's separately sta…
State Tax Ruling
Mixed outcome: the sign sold to a church stayed taxable because the church never gave the Taxpayer an exemption certificate, but the billboard/advertising charges were removed from the audit because t…
If a business didn't have invoices ready during a Virginia sales and use tax audit, can it still fix the assessment by submitting invoices later during the appeal?
Yes, but only for the specific line items where the taxpayer actually produced the missing invoices. Virginia's Tax Commissioner removed audit line items from a dermatology practice's use tax assessme…
When Tennessee corporations merge, does the surviving company keep the net operating loss carryforwards of the companies that merged into it for franchise and excise tax?
Usually not — the survival exception is narrow. For Tennessee franchise and excise (F&E) tax, a net operating loss (NOL) carryforward can normally be used only by the taxpayer that generated it; in a …
Does a restaurant have to charge sales tax or communications tax on premium content fees (games, news, songs) charged through tabletop ordering devices?
No. The Tax Commissioner ruled that fees a restaurant charges customers for access to premium content (games, news/social media, song selection) on tabletop ordering devices are charges for a service,…
If I temporarily moved to California for work and paid California tax, do I still owe Virginia income tax as a domiciliary resident, and can I claim a credit for the California tax?
Yes to both. The Tax Commissioner ruled the taxpayer remained a Virginia domiciliary resident despite living in California for nine months in 2016 (he never abandoned Virginia and returned to his Virg…
What happens to a Virginia sales and use tax appeal if the taxpayer submits the missing documentation after filing it?
The Tax Commissioner closed the appeal because the taxpayer had by then supplied the documentation that was missing during the audit. The records were referred to field audit staff for review and any …
Does a contractor who fabricates and installs mailboxes at new homes owe use tax on the materials, even if the finished mailboxes become real property?
Yes. Virginia upheld the use tax assessment because a contractor who fabricates tangible personal property (like mailboxes) and installs it so it becomes real property is a "using or consuming contrac…
If Virginia returns my sales tax refund request because it was submitted on a CD, does the three-year filing deadline still count against me?
Granted in part: the Tax Commissioner found the Taxpayer's refund requests were timely filed in December 2015, even though the Department had returned them because they were submitted on a CD, and gav…
Where did Florida source a multistate taxpayer's service revenue for the corporate income tax sales factor?
Florida used market sourcing. Service income was sourced to the location where the services were provided, identified in the redacted ruling as where the recipient was located or resided. When that re…
How could a consolidated Florida taxpayer revise its method for calculating income and tax from a Capital Investment Tax Credit project?
Florida approved a revised pro forma method. The taxpayer would compute separate-company Florida taxable income using its apportionment fraction, apply the corporate tax rate, multiply that liability …
Could a sole proprietor defeat a gross receipts tax assessment by arguing that income reported on federal Schedule C was not necessarily business income?
No. Marduk Consultants was a registered New Mexico sole proprietorship, had originally provided computer-repair or consulting services, and reported income on federal Schedule C for 2012–2016 while fi…
In a communications sales and use tax audit, did the cable/video provider succeed in overturning the erroneous-remittance charge, the cable right-of-way fee assessment, the related interest, and the bad-debt credit denial?
Mixed outcome: the Tax Commissioner gave the taxpayer another chance to document its erroneous-remittance claim (audit reopened on that point), but denied relief on the cable right-of-way fee assessme…
If the IRS limited our net operating loss carryovers after an ownership change on our consolidated federal return, does Virginia apply the same limitation to our separate Virginia corporate return?
Partly granted, partly remanded. The Tax Commissioner agreed the Department should have recalculated the IRC § 382 loss limitation on a separate-company basis (not the consolidated federal amount) and…
If I move abroad and Virginia later says I was still a full-year resident, how do I show I changed my domicile and become a part-year filer instead?
Partly granted: the Tax Commissioner found the taxpayer did abandon his Virginia domicile, but only as of late September 2015 (not earlier as claimed), so the original full-year-resident assessment wa…
How is the basis of inherited Virginia real estate determined for a capital gain/loss on the state income tax return when the taxpayer's appraisal and the locality's tax appraisal disagree?
Neither side fully won: the Tax Commissioner rejected both the taxpayers' March 2007 appraisal (too remote in time and unsupported by the actual appraisal report or estate tax return) and the Departme…
What does Illinois Private Letter Ruling ST 20-0005-PLR conclude about the manufacturing machinery and equipment exemption for a cold-storage food processing facility?
The Illinois Department of Revenue ruled that essentially all of the machinery, equipment, and related property a cold-storage food processing company planned to buy for an expanded refrigerated wareh…
Can a real estate company or team (a licensed business entity) also exclude from its BPOL gross receipts the commissions it pays to its own real estate salespersons, the way the principal broker excludes commissions paid to it?
Only if that company or team is itself licensed as a real estate broker (not merely as a real estate salesperson entity). Virginia's BPOL exclusion in Va. Code § 58.1-3732.2 lets a real estate broker …
If a taxpayer appeals a sales/use tax audit by offering to prove its customers already paid consumer use tax, what happens to the appeal?
The Tax Commissioner closed the appeal and sent it back to the auditor, who agreed to review the taxpayer's evidence (submitted in Excel format) that its Virginia customers had paid consumer use tax o…
Can a Virginia county ask the Department of Taxation for a formal advisory opinion on whether it may assess local real property tax against leaseholders of tax-exempt property?
No. The Department of Taxation's authority to issue advisory opinions on local tax matters is limited by statute to the BPOL tax and certain local mobile-property and business taxes; it has no express…
Can a taxpayer still appeal a converted sales and use tax assessment after the 90-day appeal deadline has passed, and what options remain if they cannot afford to pay it?
No. Virginia Code § 58.1-1821 gives a taxpayer only 90 days from the date of an assessment to apply for relief, and an appeal filed years after that deadline is barred regardless of its merits. A taxp…
Does a 501(c)(6) nonprofit's revenue from originating, processing, and servicing SBA 504 commercial real estate loans qualify for Virginia's BPOL tax exemption for nonprofit organizations?
Only partly. Because the Company is exempt under IRC § 501(c)(6) rather than § 501(c)(3) or § 501(c)(19), it is not a "charitable nonprofit organization" under Va. Code § 58.1-3703 C 18 a, so its rece…
Can a taxpayer void a six-year use-tax audit and challenge a one-year sample period used to project the assessment, and how does a taxpayer request relief from an assessment based on financial hardship?
No on both audit challenges: the Tax Commissioner upheld the six-year audit period (extended from three years because the contractor had never registered for or filed consumer use tax) and upheld the …
Who owes Virginia's Motor Vehicle Rental Tax and Peer-to-Peer Vehicle Sharing Tax, and how does it work?
Virginia imposes a combined Motor Vehicle Rental Tax and Fee (MVRT) of up to 10 percent of gross proceeds on traditional short-term vehicle rentals, and a separate Peer-to-Peer (PTP) Vehicle Sharing T…
Could a grandmother claim grandchildren who lived with and were supported by her when New Mexico flagged another taxpayer's duplicate dependent claim?
Partly. Lisa Chavez showed that grandchild C.C. met the qualifying-child tests in 2016 and that the child's mother did not claim dependents that year, supporting Chavez's dependent exemption and Worki…
In a consumer use tax audit of out-of-state real property contractors, how does Virginia sort dozens of contested vendor purchases into taxable versus nontaxable based on recordkeeping, the fencing/cabinets/countertops retailer exception, and taxes already paid elsewhere?
Mixed, line-item-by-line-item outcome: the Tax Commissioner reviewed the audit vendor by vendor and removed some charges (proven consuming-contractor installations, unpaid disputed invoices, items pro…
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