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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Are a software company's four SaaS offerings for optometry practices — patient communication automation, online lens ordering, digital marketing sync, and a bundled marketing-consultant package — all taxable as data processing services in Texas?
Yes, all four. Texas ruled that a software company's four Software-as-a-Service offerings for optometry and ophthalmology practices are each taxable as data processing services: patient-relationship-m…
Is the "success fee" an AI-driven online recruiting marketplace charges employers — only when they hire a candidate — a taxable information service in Texas?
Yes. Texas ruled that an online recruiting marketplace's "success fee" — 15% of a new hire's first-year base salary, charged to employers only when they actually hire a candidate through the platform …
Were an out-of-state online bakery's products exempt, and did decorative tins or Florida internet sales require registration?
Ordinary brownies, cookies, and bars sold for off-premises consumption were exempt. A single-price package became taxable if its decorative tin or box exceeded 25% of total value; at 25% or less, the …
What is South Carolina's tax interest rate for underpayments and overpayments for the period ending June 30, 2020 (per SC IL #20-1)?
5%. SC Information Letter #20-1 sets South Carolina's interest rate on tax underpayments and overpayments at 5% for the period July 1, 2019 through June 30, 2020. Interest is compounded daily, except …
Is a yoga and meditation studio's instruction, classes, memberships, and retreats subject to Texas sales tax as taxable amusement services?
Instruction itself is not taxable, but related sales are. Texas ruled that yoga and meditation classes, private sessions, memberships, workshops, and retreats are all nontaxable instructional services…
Could taxpayers receive Virginia's Qualified Equity and Subordinated Debt Investments Tax Credit when their 2018 applications arrived after April 1, 2019?
No. The applications arrived May 8, 2019, after the hard April 1 deadline for capped credits. The taxpayers also could not move the 2018 investments into the 2019 credit pool; the 15-year carryforward…
Did listing a New Mexico home address on Schedule C make an Ohio tea shop's sales subject to New Mexico gross receipts tax?
No. Bruce Winchell proved with Ohio registration, sales-tax returns, location evidence, and credible testimony that At Portage Lakes, LLC operated entirely in Akron and earned all 2014 sales there. Th…
Does Illinois tax the transportation and delivery charges that trucking companies charge when they sell and deliver rock, sand, or gravel from a quarry to a customer?
Yes, in most cases. Illinois treats trucking companies that sell and deliver rock, sand, or gravel from a quarry as retailers subject to Retailers' Occupation Tax, and under the 'inseparable link' rul…
How should a Virginia taxpayer report bonus depreciation embedded in a federally suspended passive activity loss?
The suspended loss and embedded bonus depreciation were not in federal adjusted gross income, so separate Virginia additions and subtractions were not required. The passive loss offset the bonus-depre…
Could a Virginia distributor use the manufacturers' single-sales-factor election because it owned 99.9% of a separate manufacturing partnership?
No. The distributor was a Sector 42 entity that did not produce or assemble products. Its Sector 31 partnership's manufacturing activity, income, and factor attributes could flow through proportionate…
Is the service fee a mobile lottery-ticket-purchasing app charges users — covering OCR ticket scanning, secure storage, and management of public/private lottery pools — taxable in Texas, and is the licensed retailer's sales commission also taxable?
The app's fee is taxable; the retailer's commission is not. Texas ruled that a mobile app letting users buy Texas Lottery tickets is subject to sales tax on its Service Fee (9% of the funding amount p…
Was a proposed allocation between taxable and exempt rent reasonable for a project combining student housing, common areas, classrooms, and wetlands?
Mostly yes. Florida accepted the proposed square-footage allocation for residential units and resident-only common areas and allowed supported relative appraisal values for wetlands and other parcels.…
Were sealed, refrigerated meals sold through a weekly plan exempt when customers reheated them later?
Yes. The meals were prepared and sealed at a separate non-seating facility, delivered or picked up in insulated bags with ice packs, required refrigeration and reheating, and were not sold with utensi…
New York Advisory Opinion TSB-A-20(3)C: Does New York follow the federal IRC section 338(h)(10) treatment of a stock sale and a pre-sale asset distribution when computing Article 9-A entire net income?
Yes. If a stock sale and a pre-sale distribution of assets conform to IRC section 338(h)(10), New York follows the federal tax treatment for Article 9-A entire net income, because entire net income st…
Is a nonresident limited partner's loss on liquidating a partnership New York source income when the partnership sold its New York building the day before?
No. The loss is not derived from or connected with New York sources. New York source treatment for a partnership-interest loss depends on the partnership owning New York real property worth at least 5…
What does Illinois General Information Letter ST 20-0006-GIL conclude about Leasing?
Lessors who lease tangible personal property, like portable buildings or motor vehicles, into Illinois under a 'true lease' owe Illinois Use Tax up-front on their own cost price of the property -- the…
Are a federal contractor's (and its subcontractors') purchases of equipment and construction materials for a new steam-production facility on U.S.-government-owned land in Tennessee exempt from sales and use tax?
Yes — with an important limit. The Department ruled that equipment and materials a federal contractor (or its subcontractors) buy to build and install a new closed-loop steam-production facility on U.…
Did Virginia decide whether an event venue's space rentals were taxable when the operator refused to provide rental records during audit?
No. Without the records, the Department could not evaluate the venue's claim that it rented only space and provided no transient lodging. The estimated six-year assessments were upheld, but the operat…
Were oil-and-gas title research and lease-acquisition receipts taxable merely because the prospects involved New Mexico land?
No. Continental Land Resources proved that its products were title reports, leases, or lease-acquisition efforts—not merely the management of landmen—and that out-of-state clients received and first u…
What does Illinois General Information Letter ST 20-0005-GIL conclude about Sale At Retail?
It depends on whether the seller has a contract to permanently affix the home to real estate. If so, the seller acts as a construction contractor and owes Illinois Use Tax on its own cost price of the…
Which companies must use Virginia's Debt Buyer Apportionment method, and how are recovered-debt receipts sourced?
A company whose majority business is buying qualifying nonperforming debt from unaffiliated commercial entities must use a single sales factor. Debt recoveries are sourced first to the debtor's actual…
How should a Virginia county calculate BPOL tax for a multistate staffing firm with temporary workers at client sites?
The county had to first apply the staffing-firm deduction, then identify the taxpayer's own definite places of business and situs remaining receipts under the statutory hierarchy, and only then test t…
Could a Virginia county require a farm winery's event-rental operation to hold a separate BPOL license and assess up to six preceding years of omitted tax?
Yes, if local officials found the event rentals were an independent business rather than ancillary to winemaking. The winery license would not cover that business, and failure to apply allowed—but did…
Does a company owe Georgia sales tax on the fees it charges distributors to attend business training meetings, seminars, and conventions?
No. Georgia taxes admissions to amusement, entertainment, and exhibition events, but fees for these business training meetings, seminars, and conventions are not taxable. The Department found the even…
When a non-exempt landlord builds a facility and leases it to a Texas tax-exempt charter school, is the construction contract exempt from sales tax, and how long does the lease term need to be?
Yes. A construction contract between a non-exempt landlord and a Texas tax-exempt charter school is an exempt contract under Section 151.311 if the school qualifies for exempt status AND the lease ter…
When a charter school temporarily co-locating at another campus signs a 25-year build-to-suit lease to finance its permanent campus, does the two-prong exempt-contract test still exempt the construction materials from sales tax?
Yes. Texas ruled that a 25-year build-to-suit lease under which a private landlord finances and constructs a permanent campus for an open-enrollment charter school -- while the school temporarily oper…
Can an irrevocable resident trust with an out-of-state trustee avoid New York fiduciary income tax if a small share of its income is New York source income?
No. The trust is taxed by New York on all its income. A resident trust escapes tax only if it meets all three conditions of Tax Law § 605(b)(3)(D): no New York trustee, no New York corpus, and no New …
Could a Virginia convenience store overturn an assessment for sales tax collected but not remitted when earlier records were destroyed and no proof of overpayment was supplied?
No. Available 2018 z-tapes and tax records showed that the store collected tax at correct rates but underreported sales and tax. The assessment was presumed correct, and the owner supplied no evidence…
Were structural 'blue boxes' permanently attached to a building to support a manufactured sign treated as real property or taxable tangible personal property in Virginia?
They were taxable tangible personal property. Virginia's manufactured-sign rule covered the sign and structural additions built to support it, even when permanently attached to the building. The Commi…
Could an IFTA carrier replace destroyed 2015 fuel records with a reconstructed four-month sample from 2018 and avoid the default 4.0 MPG assessment?
No. Distribution Management Corporation kept fuel records for only 90 days even though IFTA required four years, so it could not produce 2015 gallonage, fuel type, vehicle identification, or other raw…
Are a member-owned golf club's membership dues subject to New York sales tax?
Yes. The club is a 'social or athletic club' (its material purpose is golf, and it is member-owned and member-managed), so under Tax Law § 1105(f)(2) its dues are taxable because an active annual memb…
Could a regulated investment company subtract undistributed capital gains from Virginia income, or could resident shareholders claim credit for Virginia tax paid by the company?
No. Federal conformity included the undistributed gains in both the RIC's Virginia taxable income and resident shareholders' FAGI. Virginia law provided neither the requested corporate subtraction nor…
Could a Virginia home-staging company keep design services nontaxable by separately stating them from taxable furniture rentals on the same invoice?
Yes. 'Billed separately' required separate line-item charges, not separate invoices. Because the staging company separately stated design services and furniture rentals and collected tax on the rental…
Could a New Mexico manufacturer substantiate R&D wage allocations with drafting logs and engineer interviews instead of a formal project-timekeeping system?
Yes. Process Equipment & Service Company proved its 2014 and 2016 qualified R&D wage expenditures through contemporaneous drafting logs, project-change codes, engineer interviews, and payroll data. Se…
Does a small city's luxury hotel-and-convention-center project qualify for a 10-year Chapter 351 tax rebate, are resort fees included, and can the city back more than one such project?
Yes — the project qualifies, and the Comptroller answered all thirteen questions favorably. The city (population under 6,000, meeting the adjacent-county and landmark criteria of Section 351.152(17)) …
Does a city's proposed luxury hotel and convention center project qualify for Texas's 10-year state tax rebate under Tax Code Chapter 351, and what taxes and facilities does the rebate cover?
Yes. A city's proposed hotel and connected convention center qualified as a "qualified hotel project" under Tex. Tax Code Chapter 351, entitling the city to a rebate of state sales tax, state hotel oc…
How does a married couple file Louisiana income tax when one spouse is a Louisiana resident and the other lives in another community-property state?
The couple keeps the federal joint filing status but uses Louisiana Form IT-540B. Louisiana includes the resident spouse's half of all community income plus the nonresident spouse's half of community …
What does Illinois General Information Letter ST 20-0004-GIL conclude about Exempt Organizations?
An educational institution that trains optometrists does not owe Retailers' Occupation Tax or Service Occupation Tax on prescription eyeglasses and contact lenses it transfers to patients as part of i…
Does a city's hotel and convention center project, financed through a public facility corporation and a municipal development district, qualify for Texas's Chapter 351 state tax rebate, and how is the rebate obtained?
Yes. A city that met Tax Code § 351.152(27)'s population-and-county criteria, and structured its hotel and convention center project through a public facility corporation (which will own the hotel) an…
Does a city's planned hotel-and-convention-center project qualify for the Chapter 351 'qualified project' program, entitling the city to rebates of state and (with consent) local taxes generated at the project?
Yes — the project qualifies, and the Comptroller answered all eleven questions favorably. The city (population 70,000–90,000, located in two counties — one over four million, one under 50,000) is an e…
Does a company that arranges events for clients have to charge sales tax on its service fees, and how does gross receipts tax apply to caterers?
Caterers owe Illinois Retailers' Occupation Tax on their entire gross receipts from selling food, with no deduction for overhead costs like linens, dishes, flowers, or delivery. A pure event-planning …
Does Illinois sales/use tax apply to tangible personal property an electric-vehicle maker buys to build pre-production test vehicles?
No, not in this case. The Illinois Department of Revenue ruled that tangible personal property an electric-vehicle manufacturer buys to build pre-production, non-saleable test vehicles used for resear…
Which Georgia franchise startup charges and online-store sales were taxable: truck and business outfitting, direct-mail marketing, operations training, apparel, or promotional items?
Truck Outfitting and Business Outfitting charges were taxable retail sales because they were specific charges for tools, equipment, supplies, apparel, and marketing property transferred to franchisees…
Could a hotel-site-selection company buy Georgia rooms tax-free for resale, and when could federal-government rooms avoid the $5 state hotel-motel fee?
The company could buy hotel rooms tax-free for resale by giving the hotel a properly executed resale certificate, then had to collect and remit sales tax on its own selling price to end users unless a…
Can a customary one-way hauler claim New Mexico's reduced weight distance tax rate when its logs show total trip miles but not separate empty and loaded miles?
No. Star Paving's trucks customarily hauled material one way, but the reduced rate also required proof that at least 45% of each qualifying vehicle's annual New Mexico mileage was traveled completely …
Does a convention center that a developer conveys to a city's local government corporation only in a reversible 'determinable fee' qualify as municipally owned, so the project earns Texas 'qualified hotel project' tax rebates?
No. To be a 'qualified hotel project' eligible for state tax rebates under Section 151.429(h), the convention center must be owned by the municipality (here, a city of 1,500,000+) as defined in Govern…
Does a convention center count as "owned by a municipality" for Texas's qualified-hotel-project tax rebate if the city's ownership interest is a reversionary "determinable fee" instead of outright fee simple?
No. A convention center conveyed to a city-affiliated local government corporation in "determinable fee" — meaning title could revert back to the private developer after a set period — does not satisf…
When an Illinois resident pays alimony and earns income taxed by another state that won't let her deduct the alimony against that nonresident income, does the alimony still reduce her Illinois credit for taxes paid to that other state?
Yes. The Department ruled that because Article 3 of the Illinois Income Tax Act would let a nonresident allocate 100% of an alimony deduction to Illinois, the alimony deduction must be allocated to th…
Is a U.S. REIT that is more than 50%-owned by publicly traded foreign REIT-type entities a 'captive REIT' under Illinois law, requiring it to add back its federal dividends-paid deduction?
No. The Illinois Department of Revenue ruled that the taxpayer, a U.S. REIT more than 50%-owned (directly and constructively) by a Dutch REIT-type entity whose Class A shares are staple-traded on fore…
Who decides whether a building is in a qualifying census tract for New York's historic rehabilitation tax credit, and is that decision binding on the Tax Department?
The New York State Office of Parks, Recreation and Historic Preservation (OPRHP) decides, and its determination is controlling. Where OPRHP has determined and certified that a building is in a qualify…
What does Illinois General Information Letter ST 20-0002-GIL conclude about Computer Software?
A cloud-based online file storage service that does not transfer any tangible personal property (including computer software) to its customers is generally not subject to Illinois Retailers' Occupatio…
Was a federal civilian employee a Virginia resident for 2015 after obtaining a Virginia license, spending less than six months abroad, and returning to Virginia?
Yes. The taxpayer established Virginia domicile in 2014 and did not prove abandonment when he lived abroad for less than six months and returned. He also spent more than 183 days in Virginia during 20…
Could medical disability, an assessment-period waiver, or an IRS credit-transfer notice extend Virginia's three-year deadline for refunds claimed on late original returns?
No. Virginia required a fiduciary or agent to file for a disabled taxpayer and did not toll the refund period. Assessment waivers did not extend original-return refund claims, and the IRS notice did n…
Did creating a new parent company let a Virginia affiliated group replace its separate-return election with consolidated filing?
No. A new parent and reorganization did not create a new election or extraordinary circumstances; the group remained bound by its established method. A later change could be possible under the statuto…
Were points used only to activate games and rides taxable when sold with food in an entertainment center's value-deal and birthday-party packages?
No. The points were neither admission charges nor taxable meal-related charges, gave no entitlement to food, and activated only games and rides. Including them in a package with food did not make them…
What proof did Virginia require before refunding use tax paid on software claimed to have been delivered electronically?
An invoice, contract, sales agreement, or comparable evidence had to expressly confirm electronic delivery and that no tangible software medium was or would be supplied. The taxpayer failed to provide…
Could a Virginia business remove sales-tax audit items through an appeal without providing invoices, exemption certificates, or other supporting records?
Not on the existing record. Virginia required suitable transaction records and a complete appeal supported by essential documentation. The taxpayer had supplied none, so it received one final 30-day p…
Could part-year Virginia residents subtract all of a spouse's 2015 wages when Form W-2 data showed he earned wages after the couple moved into Virginia?
No. Part-year residents owed tax on income attributable to their Virginia residency period. Because the husband earned wages after the August move, subtracting 100% was incorrect. The estimated assess…
Did a taxpayer abandon Virginia domicile after moving to another state for work even though she retained a Virginia driver's license and voter registration?
Yes. She leased a home, worked, registered and garaged vehicles, used the other-state address for federal tax documents, and remained there until an unexpected 2017 job loss. Considering all facts, Vi…
Was a Virginia LLC that bought, renovated, and sold two properties subject to the BPOL contractor rate even though it argued it did not accept construction contracts?
Yes. A business that improves real estate for its own account and sale is treated at the contractor rate, including a speculative builder that engages others to perform the work. The LLC's purchase, r…
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