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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Is frac sand that has been extracted, washed, dried, and screened by grain size (but not cut, crushed, or mixed) subject to Texas sales tax as "processed" tangible personal property?
Not taxable. Texas ruled that sand mined for oil and gas fracking — which is scooped from the ground, washed in attrition scrubbers to remove clay/silt/organics, dried, and screened by grain size — re…
Are a firm's digital marketing services and the third-party software licenses it resells subject to New York sales tax?
It depends. Helping clients track and improve their own marketing is a non-taxable advertising service. But when the firm resells a third-party software license to the client, that is a taxable sale o…
Are monthly clothing-rental subscription fees exempt under New York's clothing exemption?
Yes. Renting clothing is a sale, but clothing sold or rented for less than $110 per item is exempt from State sales tax. Even subscription plans costing more than $110 a month qualify, because the per…
For the lower-Manhattan commercial-lease sales tax exemption, when does the tenant's one-year exemption period begin?
It begins on the first day the tenant has the right to occupy the leased premises, which in this case is the lease's Commencement Date, not the earlier date the lease was signed. Tax Law 1115(ee) give…
Are collagen wound dressings and membranes used in dental surgery exempt from New York sales tax?
Yes, but under a different exemption than the seller claimed. They are not exempt 'prosthetic aids,' because they don't replace a missing or permanently malfunctioning body part. But where they are le…
Is a hosted digital advertising campaign platform that lets customers build and manage their own ads subject to New York sales tax?
Yes. Giving customers the right to access and use the platform's prewritten software tools to create, deliver, and manage their own advertising is a taxable sale of prewritten software, taxable to the…
Can I appeal a Virginia locality's meals (food and beverage) tax assessment to the Department of Taxation?
No. The Virginia Department of Taxation has no authority to decide appeals of a locality's food and beverage (meals) tax. The Department's power to hear local-tax appeals is limited by statute to the …
Can I appeal a Virginia locality's BPOL (business license) tax straight to the Department of Taxation, or do I have to go through the locality first?
You have to go through the locality first. The Department of Taxation can hear a BPOL (business license) tax appeal only after the locality's assessing official has issued a final determination on a p…
Is a bundled 'unlimited bowling' package taxable just because it includes the option of bowling shoes?
No. A bowling alley's 'Cosmic Bowling' package -- unlimited bowling for a set time, with bowling shoes offered as an option -- is a nontaxable service, not a taxable sale of shoes. Virginia uses the '…
Is a Virginia Indian tribe exempt from Virginia sales and use tax on purchases it makes off the reservation for use on the reservation?
No. The Virginia Department of Taxation ruled that a federally recognized Indian tribe has no exemption from the retail sales and use tax on purchases it makes off its reservation, even when the items…
As the spouse of a service member stationed in Virginia, do I owe Virginia income tax if I've started putting down roots here but haven't fully cut ties with my home state?
No -- the assessment was abated. A military spouse stationed in Virginia with his service-member wife was assessed Virginia income tax as a resident, but the Commissioner found he remained domiciled i…
Can a Virginia sales tax auditor keep an unusually large month in the audit sample if it skews the error rate applied to the whole audit period?
No -- not if that month isn't representative. Virginia auditors project a tax 'error factor' from a sample of months and extrapolate it across the entire audit period, so the sample must fairly repres…
When was South Carolina's 2020 sales-tax holiday, and which purchases qualified for the state and local tax exemption?
South Carolina's 2020 sales-tax holiday ran from 12:01 a.m. Friday, August 7 through midnight Sunday, August 9. Eligible purchases were free from the 6% state sales and use tax and Department-collecte…
Did a nonresident aircraft avoid Florida use tax when brought in for an FAA inspection connected to third-party management and a possible sale?
The aircraft did not qualify for the exemption limited to entry exclusively for training, repairs, alterations, refitting, or modification because management and a possible sale were also purposes. Ev…
What South Carolina filing and payment relief applied to people and businesses affected by the April 2020 tornadoes, storms, and flooding?
South Carolina matched the IRS and postponed covered state-equivalent filing and payment deadlines to October 15, 2020 for affected taxpayers in Aiken, Barnwell, Berkeley, Colleton, Hampton, Marlboro,…
Is the entire selling price of a wheelchair-adaptive van taxed at the general 6.25% rate, or can the modification be taxed separately at the 1% low rate?
It depends on who did the modifying. If a dealer buys a van, converts it for a disabled person, and sells the finished van, the entire selling price is taxed at the general 6.25% (plus local tax) rate…
Does the Illinois Enterprise Zone sales tax exemption on building materials cover the components used to build a privately owned solar farm?
It depends item by item. Illinois exempts 'building materials' permanently incorporated into real estate within an Enterprise Zone from sales/use tax, but only if the purchaser holds an Enterprise Zon…
Are tobacco-company buydown payments to South Carolina retailers included in taxable gross proceeds?
Yes, when the tobacco-company payment is based on the retailer's actual retail sales. The customer payment and later tobacco-company reimbursement together make up taxable gross proceeds, because both…
Are retail sales of mitten clips, used to attach gloves or clothing, exempt under New York's clothing exemption?
No. Mitten clips are taxable tangible personal property. They are not themselves clothing, and unlike zippers or snaps they do not become a physical component part of a garment; they are accessories t…
Are 'healthy' snack mixes of nuts, seeds, and dried fruit taxable as candy when they contain chocolate or honey coatings?
Mostly yes. Food is generally exempt, but candy and confectionery are taxable. When otherwise-exempt foods like nuts, seeds, or dried fruit are mixed with chocolate pieces, fudge, or honey/sugar coati…
Did a retiree living in another country abandon his Virginia domicile when he kept a Virginia home, driver's license, and voter registration and spent months a year in Virginia?
No -- he remained a Virginia domiciliary resident and stayed taxable for 2015 and 2016. A retiree moved to Country A for his spouse's health but kept a Virginia home, a Virginia driver's license, a Vi…
Are gas boilers that generate steam used as a heat and energy source throughout a chemical plant subject to the local machinery and tools tax?
Likely yes -- if the boilers power the manufacturing, they are taxable machinery and tools, though the local assessor makes the final factual call. A resin and chemical maker asked whether gas boilers…
Can an agricultural dealer get audit exceptions removed for exemption certificates verified after the audit, and must the second-audit compliance penalty stand?
Partly. An agricultural supply dealer was audited for sales lacking valid exemption certificates and for its own untaxed purchases. The Tax Commissioner allowed relief where it could be verified: for …
Must a cable provider's gross receipts be sitused entirely to the county where its only offices are, and is the BPOL tax a capped 'franchise fee' under the Cable Act?
Yes to full situs, no to the Cable Act cap. On reconsideration of P.D. 20-3, the Tax Commissioner reaffirmed that all of a cable provider's gross receipts are sitused to the county where it had its **…
Is a special-purpose LLC that holds land and hires others to build condominiums for sale a 'contractor' with a definite place of business subject to BPOL tax?
Yes. A single-purpose LLC bought land in a county to develop and sell condominium units, holding title while hiring a general contractor and a marketing firm to do the actual work. It had no employees…
Can a cigarette retailer escape a resale-tax assessment by claiming the exempt purchases shown in a distributor's records were made without its knowledge?
No, on this record. Virginia's cigarette compliance program matched distributor records showing this retailer bought cigarettes tax-free for resale, then assessed sales tax because those cigarettes sh…
Are sales of kombucha, a fermented tea beverage, subject to New York sales tax?
No. Although carbonated soft drinks are taxable, tea is specifically exempt from sales tax under Tax Law 1115(a)(1). Kombucha is a flavored, naturally fermented tea, so it qualifies as exempt tea and …
What does Illinois General Information Letter ST 20-0010-GIL conclude about Aircraft Use Tax?
It depends on the FAA airworthiness certificate. Illinois' Aircraft Use Tax Law taxes a non-retailer transfer of an 'aircraft,' but an aircraft kit does not count as an aircraft until the FAA issues a…
Does a Nevada trust set up by an Illinois decedent's family member have to file an Illinois fiduciary income tax return (IL-1041), even though the trust was created and is administered in Nevada?
It depends on facts the Department said were unclear from the taxpayer's letter. A trust is an Illinois resident trust — and must file an IL-1041 — if it was either (1) created by the will of a decede…
When does a brownfield site count as 'used primarily for manufacturing,' raising the tangible-property credit cap from $35 million to $45 million?
When manufacturing is the principal use - here, 50,000 of 80,000 square feet (more than half). The Brownfield Redevelopment Tax Credit's tangible-property credit component is capped at the lesser of $…
Are subscription fees to access an online library of instructional video courses subject to New York sales tax?
No. Subscriptions that let users stream video courses to learn new skills are not tangible personal property and are not a taxable information service, because their purpose is to impart knowledge. Do…
Could a nonresident recover Virginia income tax withheld from 2014 wages when the first refund claim was filed after the three-year deadline?
No. The 2014 return was due May 1, 2015, so a Form 763-S or other refund claim had to be filed by May 1, 2018. The taxpayer did not claim the withholding until 2019, after the limitation period expire…
Is a heat-not-burn tobacco vapor system -- a battery, liquid cartridge, and sealed tobacco capsule -- subject to Virginia's tobacco products tax?
No -- as of this 2020 ruling, the tobacco vapor system was not subject to Virginia's tobacco products tax. The device has a battery, a liquid cartridge, and a sealed capsule of granulated tobacco; the…
Does the occasional-sale exemption cover a tractor bought from a farmer, and is a trailer bought from a Virginia dealer but picked up out of state subject to Virginia tax?
Split result. A truck-driver training school was assessed use tax on fixed-asset purchases. On the **tractor** it bought from a livestock-and-hay farmer, the Tax Commissioner agreed the occasional-sal…
When an entertainment company bundles a taxable photo-booth rental with exempt disc-jockey services in one contract, is the photo-booth charge taxable?
Yes -- the photo-booth rental is taxable. A wedding and party entertainment company bundled disc-jockey services (exempt) with photo-booth rentals in a single contract and argued the whole package was…
Can the contractors building a municipal wastewater-treatment plant expansion buy the equipment and construction materials free of Tennessee sales and use tax?
Yes — broadly. The Department ruled that the contractors building a Tennessee municipality's wastewater-treatment plant expansion can buy both the processing equipment AND the construction materials f…
Were regular and CARES Act unemployment benefits taxable in South Carolina in 2020, and could recipients withhold state tax?
The June 2020 letter said regular unemployment compensation and the expanded CARES Act benefits were taxable for federal and South Carolina income-tax purposes. A recipient could elect 7% South Caroli…
How did South Carolina's 2020-2025 credit and deduction for uncompensated clinical preceptors work?
For tax years 2020 through 2025, an eligible South Carolina physician, physician assistant, or nurse practitioner who was not compensated for qualifying student clinical rotations could earn a nonrefu…
Could a South Carolina Future Scholar 529 account pay K-12 public, private, or religious school tuition tax-free?
Yes. Beginning with tax year 2018, a Future Scholar withdrawal of up to $10,000 per year per beneficiary for tuition at a public, private, or religious K-12 school was a qualified withdrawal and was n…
Was the first federal COVID-19 economic impact payment taxable income for South Carolina income-tax purposes?
No. The CARES Act economic impact payment was not included in federal gross income and was not taxable for South Carolina income-tax purposes. It was an advance payment of a refundable federal credit …
Does Illinois sales/use tax apply to a web-based (SaaS) fleet management service and the free companion mobile app that goes with it?
No. The Illinois Department of Revenue ruled that a company's web-based (SaaS) fleet management service is a nontaxable service because no software or tangible personal property changes hands -- custo…
What South Carolina tax interest rate applied from July 1 through September 30, 2020, and what did eligible refunds earn?
The listed rate for South Carolina tax underpayments and overpayments from July 1 through September 30, 2020 was 3%. Interest was compounded daily, except simple interest applied to underpayments of d…
Are online training courses subject to Tennessee sales tax — and does it matter whether the course is taught by a live instructor or is self-paced?
It depends on whether the course is live or self-paced. The Department ruled that the company's two live, instructor-led online course formats are NOT subject to Tennessee sales and use tax — the stud…
Are a coupon clearinghouse's products, sold to retailers and advertisers, subject to New York sales tax?
No. The primary function of the clearinghouse's products is processing redeemed coupons and handling payments between retailers and advertisers, which is not a taxable service. The prewritten software…
My New York City brewery sells most of its beer to wholesalers but also sells beer by the glass and growler in our public tasting room. Do we owe the state Alcoholic Beverage Tax on both the wholesale sales and the tasting-room sales?
It depends on the sale. As a beer manufacturer, the brewery is a "distributor" and owes the state Alcoholic Beverage Tax (ABT) and NYC excise tax on its sales and uses of beer -- except that sales to …
Can a contractor buy glue tax-free when it is used to bond ceramic tile to the floor of a building owned by the Port Authority?
Yes. When a contractor improves real property owned by a tax-exempt governmental entity, materials that become an integral component part of that property are exempt from sales and use tax. The glue i…
Are private cooking, baking, and cake-decorating lessons taught in a customer's home subject to New York sales tax?
No. Teaching cooking and baking is not one of the services New York taxes under Tax Law 1105(c). Even when the instructor supplies some ingredients or hands over recipes on paper, those items are inci…
Is orgeat almond syrup, a sweet mixer used in soft and alcoholic drinks, subject to New York sales tax?
Yes. Although most food and beverages are exempt, the exemption does not cover soft drinks and beverages ordinarily dispensed at soda fountains, or fruit drinks with less than 70% natural fruit juice.…
How does Illinois sales, use, and service occupation tax apply to open-source software licenses and to paid software subscriptions?
Free open-source software licenses are not subject to Illinois Retailers' Occupation Tax because there's no charge for the software; the company owes no Use Tax either, since it also acquired the soft…
Does a company that leases land under triple net leases, where tenants happen to store vehicles on it, owe Illinois Parking Excise Tax on the rent it collects?
No. The Illinois Department of Revenue ruled that a company leasing land to tenants under triple net leases -- even when the tenants use it to store vehicles -- does not owe Parking Excise Tax on the …
Are the site safety manager, fire safety manager, and emergency watchman services a company provides on construction sites subject to New York sales tax?
Yes. These site safety officials regularly patrol and inspect construction sites to protect against fire, property damage, and injury to persons, so New York treats their services as taxable protectiv…
Is the service fee a federally licensed firearms dealer charges to transfer a firearm to a New York resident subject to sales tax?
No. The FFL's transfer services, receiving the firearm, recording it, running the NICS background check, and completing the required forms, are not among the services New York taxes under Tax Law § 11…
Are charges for the annual government-mandated inspection of backflow prevention devices subject to New York sales tax?
Not by themselves. A government-mandated inspection performed solely for code compliance, and not in conjunction with installing or repairing the device, is not taxable. But an inspection done at the …
When a cigarette manufacturer funds a 'buy-down' price reduction, does the retailer calculate sales tax on the reduced price or the full price?
On the full price. A manufacturer-funded buy-down is a reimbursement the retailer receives after the sale, so the taxable receipt includes both the reduced price the customer pays and the buy-down amo…
When does a bridal shop owe sales tax on a wedding dress, at the deposit or when the dress is finished?
When title to the dress transfers, which is when the customer has fully paid. If a customer pays a 50% deposit and the balance later, the sale occurs (and tax is collected) at full payment. If a custo…
Which items at a meat-processing plant qualify for Virginia's manufacturing exemption, and can the audit penalty be waived as a new area?
Mixed, with the penalty upheld. At a meat-processing plant, Virginia's manufacturing exemption covers property 'used directly' in an integral step of production, not ancillary maintenance (Va. Code Se…
Does Virginia's military basic-pay subtraction require more than 90 consecutive days of active duty, or do nonconsecutive days count?
No -- the subtraction was denied. A married couple claimed Virginia's military basic-pay subtraction for 2016-2018, arguing the husband served more than 90 days of active duty each year even though th…
Must a restaurant show free employee meals on payroll or W-2s to claim the wages exemption, or can policy and accounting records prove it?
Yes, exempt -- the restaurant won. The Department had assessed use tax on free meals a restaurant gives employees during shifts, because the value wasn't shown in the payroll account or on W-2 forms. …
Can a partnership match its Virginia bonus-depreciation subtraction to owners using shifting distributive-share percentages, relying on the tax benefit rule or on Virginia's alternative apportionment method?
No. Virginia does not conform to federal bonus depreciation, so a business must add back the bonus deduction and later subtract the difference as regular depreciation is claimed. A partnership asked t…
How are a restaurant's fiscal-year reporting, free meals to employees' families, and complimentary meal cards treated in a sales tax audit?
Mixed. A five-restaurant operator's audit raised three issues. On its 52-53 week fiscal year, the Department found catch-up payments made its remitted sales tax consistent with its income return, so t…
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