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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Could unused Virginia rental losses create a Virginia-only net operating loss deduction in a later resident year?
No. The rental losses had already reduced federal adjusted gross income in the earlier years. Because no federal net operating loss deduction applied in 2013 and Virginia law did not create a separate…
Did Virginia's seven-year collection limit bar old income tax liabilities for 1998 and 2000 through 2002?
No. Paying the 2000 through 2002 assessments through Virginia's amnesty program waived the taxpayer's appeal rights for those years. The 1998 liability was assessed in 2005, when a 20-year collection …
Could spouses file a joint Virginia resident return while subtracting all income of the nonresident service member?
No. Electing a joint Virginia resident return required computing both spouses as residents. Because the wife was actually a nonresident service member, the couple could amend to separate treatment and…
Which equipment for a Florida municipal natural-gas power project qualifies for the electricity-generation sales-tax exemption?
Machinery and equipment directly integrated into electricity generation qualified; listed site or nonqualifying items did not. The city's proposed affidavit failed because it omitted the statutory war…
Is Colorado's paint stewardship fee on architectural paint part of the taxable purchase price — so that sales tax applies to the fee — and what if the paint sale itself is exempt?
Yes — and an amended clarification. Colorado's paint stewardship fee on architectural paint is included in the purchase price, so sales tax is calculated on the fee too. Sales tax is figured on the 'p…
What does Illinois General Information Letter ST 18-0008-GIL conclude about Motor Vehicles?
The Department declined to formally approve an outside survey chart on motor vehicle taxation, but confirmed the chart's general accuracy and explained Illinois' rules: trade-in credits reduce the tax…
What does Illinois General Information Letter ST 18-0007-GIL conclude about Sale For Resale?
The Department declined to endorse or complete a private trade-group survey on drop shipments, but pointed to its own rules: an Illinois seller documents a drop-shipment sale for resale with a valid C…
Does an out-of-state contractor owe Illinois sales or use tax on installing, maintaining, and supplying car wash equipment in Illinois?
A construction contractor who permanently affixes tangible personal property (like installed equipment, electrical, or plumbing materials) to real property is the end user of that property and owes Il…
Could a part-year resident claim a Virginia credit for another state's tax on income earned while the taxpayer was a Virginia resident?
Yes. The taxpayer could claim the credit for State A-source income earned during the portion of the year he was a Virginia resident, because that income was taxed by both states. No credit was availab…
Was a land-preservation-credit assessment timely when mailed before the deadline but adjusted years later?
Yes. Department records showed the assessment was mailed to the taxpayers' last known address before the May 2012 deadline. The 2017 adjustment after the credit was revalued did not alter the original…
Did moving, working, and leasing a home in another state end Virginia domicile when the taxpayer kept major Virginia ties?
No. The taxpayer likely established a home and indefinite employment in State A, but he did not prove abandonment of Virginia domicile. Renewing a Virginia driver's license while living away, along wi…
Could a taxpayer overturn a Virginia residency assessment without supplying the domicile information the Department requested?
Not on the record provided. The taxpayer retained a Virginia driver's license and vehicle registration, filed Virginia resident returns before and after 2013, and did not answer the domicile questionn…
How does Georgia sales tax apply to a senior-living facility's mandatory dining allowance and extra meal charges for long-term independent-living residents?
The mandatory dining allowance included in a long-term independent-living service fee was not taxable to the resident; the facility instead paid tax on food it bought to provide those meals. Charges f…
Does a single-member LLC, wholly owned by a tax-exempt IRC Section 401(a) trust and disregarded for federal income tax purposes, still owe Texas franchise tax?
Yes. A single-member LLC that is disregarded for federal income tax purposes (and so files no federal return of its own) is still a separate "taxable entity" for Texas franchise tax, even when its sol…
Could New Mexico use an unpublished spreadsheet-based replacement analysis to deny MVT Services' High-Wage Jobs Tax Credit for jobs that were not newly created?
Yes. The Department could sort and filter MVT's employee data to identify positions that appeared to replace existing jobs. That spreadsheet technique was an audit method, not a rule that had to be pr…
Which parts of Par Five Energy Services' disputed $135,792.11 High-Wage Jobs Tax Credit qualified under New Mexico law?
Par Five won $33,335.65 but lost $102,456.46 of the disputed credit. Six newly hired employees filled jobs that already existed, so satisfying the headcount test did not make those positions new jobs.…
Does Virginia's royalty-addback exception cover all royalties reported by an affiliate, or only the portion actually taxed after state apportionment?
Only the portion actually taxed by another state after apportionment qualifies. But the affiliate receiving the royalties does not have to be the entity that paid the tax. The court reversed and reman…
Was a refund request timely when the taxpayer sent Virginia the IRS reversal within four months of the federal change?
Yes. The taxpayer had one year after the final federal change to request a Virginia refund and supplied the IRS reversal within four months. That documentation was sufficient, so Virginia ordered a re…
Was a 2008 assessment untimely because the taxpayers said they never received it and the amount was adjusted years later?
No. Department records showed that the assessment was mailed to the taxpayers' last known address within the three-year period. Mailing made the assessment timely even if the taxpayers did not receive…
Was a seller of data-storage hardware, related software, and support a wholesaler or a business-service provider for local BPOL tax?
A wholesaler for 2011 through 2014. The physical data-storage systems were the primary product, while the installed operating system and related installation, training, consulting, and support were an…
Could taxpayers obtain review of a 2011 refund after the ordinary three-year period when they promptly reported a final federal change?
Yes. Although the ordinary refund period had expired, Virginia law gave the taxpayers 60 days after the final federal determination to request a refund. They supplied the IRS letter within 30 days, so…
Can a qualifying Texas city use state mixed beverage tax from a qualified hotel project, along with other project-tax rebates, to pay hotel-project bonds?
No, not for state mixed beverage tax. The city could receive state hotel occupancy and sales tax rebates plus local taxes a governmental body agreed in writing to rebate, but Section 351.102(c) did no…
Could a commissioned officer count all of July and taxable hazardous-duty pay in Virginia's 2013 combat-zone subtraction?
Yes. Any service in a combat zone for part of a day qualified the entire month of July. For 2013, the subtraction also included the officer's taxable hazardous-duty pay, along with the monthly basic-p…
Did working and leasing a home abroad end Virginia domicile when the taxpayer's family and major connections remained in Virginia?
No. Employment, housing, a driver's license, and an unsuccessful permanent-residency application showed an effort to establish domicile abroad. But the taxpayer did not prove abandonment of Virginia b…
In Kansas, can a general contractor use a resale exemption certificate to buy a subcontractor's construction labor tax-free, and how must contractor sales tax be shown on invoices?
No. In Kansas, taxable labor services on real property cannot be resold, so a general contractor cannot use a resale exemption certificate to buy a subcontractor's labor tax-free; the subcontractor mu…
Were a library's payments reimbursing Paragon Construction for payroll excluded from gross receipts because Paragon acted as a disclosed payroll agent?
No. Paragon, not the Embudo Valley Library, employed the temporary local workers, issued their paychecks, withheld taxes, provided workers' compensation coverage, and claimed the wages as its own busi…
Could an Arizona resident included on a Virginia unified pass-through return also claim the entity payment and an Arizona tax credit on a separate return?
No. By electing the unified return, the nonresident accepted its restrictions and gave up the separate credit for tax paid to Arizona. The entity's unified payment was not withholding tax that could b…
Did living in other states end a couple's Virginia domicile when they kept a Virginia home, business interests, licenses, and registrations?
No. Even if the couple acquired domicile in State A, they did not prove that they abandoned Virginia. They kept a Virginia residence, business interests, driver's licenses, vehicle registrations, and …
Did a taxpayer win reconsideration because the city had not proved that its BPOL tax on internet access was grandfathered under federal law?
No. Virginia agreed that a locality claiming the Internet Tax Freedom Act's grandfather exception bears the burden of proving it. But the Department concluded that the state administrative appeal proc…
What Virginia tax interest rates applied during the second quarter of 2018 to assessments, refunds, disputed assessments, and local taxes?
For April 1 through June 30, 2018, Virginia's ordinary interest rates were 7% on tax underpayments and assessments and 7% on overpayments and refunds. The reduced rate for qualifying disputed assessme…
Could a business claim Virginia's BPOL out-of-state deduction merely because county employees worked with employees in another state?
No. Virginia had jurisdiction to reconsider whether it had misapplied the governing standard, but the deduction still required receipts from business in another jurisdiction. Because the county employ…
Could a couple claim a pass-through entity's unified Virginia payment and an Arizona tax credit on their separate nonresident return?
No. The husband's election to join the pass-through entity's unified return accepted its restrictions and relinquished the separate credit for tax paid to Arizona. The unified entity payment also was …
Must a federal instrumentality pay Georgia's $5-per-night State Hotel-Motel Fee when it rents hotel rooms?
No, when the federal instrumentality itself pays. The Department ruled that its Georgia accommodation purchases are exempt from the State Hotel-Motel Fee when payment is made by a check or wire drawn …
How would Virginia treat nonresident S corporation shareholders if a stock purchase uses an IRC § 338(h)(10) election?
Virginia follows an IRC § 338(h)(10) election as made federally. The Virginia S corporation is deemed to sell its Virginia assets, making the resulting gain or loss Virginia-source business income to …
Could a Virginia nonresident subtract foreign-source income before applying the nonresident apportionment formula?
No. Virginia repealed the individual foreign-source-income subtraction effective in 2003. A nonresident first computes income as if resident and then applies the Virginia-source apportionment factor, …
Which location's local sales tax rate applies when a grocery store's flower outlet sells flowers online for pickup or delivery from a different city than where the order was placed?
Local sales tax on online flower orders is sourced to the location where the order is fulfilled -- meaning the store location from which the flowers are picked up or delivered -- not the location wher…
What is South Carolina's tax interest rate for underpayments and overpayments for the period beginning April 1, 2018 (per SC IL #18-2)?
5%. SC Information Letter #18-2 sets South Carolina's interest rate on tax underpayments and overpayments at 5% for the period April 1, 2018 through June 30, 2018. Interest is compounded daily, except…
Could a late original return serve as a timely protective refund claim after the taxpayer paid a Virginia nonfiler assessment?
Yes. The ordinary deadline for a 2011 refund had expired, and the later appeal itself was six days too late. But the original return had been filed within three years of the paid assessment and could …
Could a taxpayer defeat Virginia nonfiler assessments by alleging that the IRS information was fraudulent without providing evidence?
No. Virginia was authorized to use IRS information to determine the resident's liability, and the taxpayer supplied no evidence that the information was fraudulent. The assessments remained due, and t…
Could Wall Colmonoy correct a timely Technology Jobs and R&D Credit application that named Wall Co., Inc. and used the wrong CRS number after the deadline?
No. The December 29 application named Wall Co., Inc. and used an invalid CRS number, so the Department could not verify that the applicant was a taxpayer eligible for the $36,196 credit. The correct e…
When is brownfield tangible property 'placed in service,' and which redevelopment costs qualify as site preparation costs versus the tangible property component of the brownfield credit?
Tangible property is 'placed in service' when a separately occupied portion of the site is ready for its assigned function; if placed in service before the Certificate of Completion, it stays eligible…
Could taxpayers subtract the portion of IRA distributions derived from U.S. Treasury obligations on their Virginia returns?
Yes, to the extent the taxpayers could document that the IRA distributions came from U.S. Treasury bills, notes, bonds, or other exempt federal obligations. If an account mixed exempt and taxable inve…
What Georgia taxes must a licensed distributor collect when it sells dyed diesel to end users for highway or non-highway use?
The result depends on use. A licensed distributor may buy dyed diesel for resale tax-free with a resale certificate. On a sale to an end user for non-highway use, it must remit regular state and local…
When did South Carolina's infrastructure maintenance fee replace sales tax on vehicles and trailers under RR 18-1?
For sales beginning July 1, 2017, a motor vehicle, motorcycle, trailer, semitrailer, or other item required to be registered with the South Carolina DMV generally became subject to the infrastructure …
Is a hospital payment-review service that re-examines already-filed and already-reimbursed insurance claims a taxable insurance service or a nontaxable medical billing service?
Taxable. The Comptroller ruled that a consulting firm's hospital payment-review service is a taxable insurance service (claims adjustment/processing), not a nontaxable medical billing service, because…
Could a taxpayer exclude an acquired company's income and factors when calculating Capital Investment Tax Credit project income?
No. Florida maintained its earlier method treating all income apportioned to Florida as qualifying-project income, rather than subtracting the acquired division's income and factors. For an investment…
Can a contractor buy construction materials tax-free when building a retail shopping center on land owned by a tax-exempt university, if a for-profit university subsidiary is the actual tenant?
Not exempt. The Comptroller ruled that a contractor's purchases of construction materials for a retail shopping center on university-owned land are NOT tax-exempt under Section 151.311, because the fo…
Over how many years can a taxpayer claim the refundable enterprise-zone renewable energy investment tax credit, and how much per year?
The taxpayer may take the enterprise-zone renewable energy investment tax credit as a cash refund instead of a credit, but only by reducing the credit by 20% (so the refund equals 80% of the credit) a…
Does a church have to collect Colorado sales tax on prepared meals and prepackaged food it sells to members, or can those sales be exempt as occasional sales?
Generally taxable, unless they qualify as 'occasional sales.' Sales by a church or other charitable organization are subject to Colorado sales tax, but are exempt as occasional sales if ALL three cond…
How did Virginia's February 2018 conformity legislation affect 2017 returns and the federal medical-expense deduction?
Virginia advanced its fixed conformity date to February 9, 2018 for 2017 returns, adopting listed disaster relief and many federal provisions effective for 2017. It did not adopt the temporary 7.5% me…
Could the Virginia Department decide a nonprofit's BTPP exemption appeal when the taxpayer used the general local-tax correction procedure?
No. The nonprofit appealed under Virginia's general local-tax correction statute, which sends the next appeal to circuit court. Because it did not use the separate administrative procedure that permit…
Were Sacred Garden's receipts from state-authorized medical marijuana sales deductible as receipts from prescription drugs?
No. Sacred Garden satisfied the first statutory element because it was a state-licensed producer authorized to dispense medical marijuana. But a practitioner's certification or recommendation under th…
Could a Florida consolidated group keep filing after a reorganization placed its former parent and subsidiaries under another U.S. parent?
No. The reorganization caused the taxpayer's former affiliated group to cease existing on December 31, 2016, so it could not file Florida consolidated returns for tax years beginning on or after Janua…
Was IPC (USA), Inc. entitled to a gasoline-tax refund for fuel it claimed was taxed when racked out at Moriarty and later racked out again after being trucked to an Albuquerque terminal?
No. The protest was limited to IPC's denied $66,691.42 claim and could not be expanded to $138,083.66. IPC did not provide bills of lading or other documents proving that gasoline taxed when racked ou…
Are aircraft parts that are permanently affixed to an aircraft exempt from Colorado sales and use tax even when the aircraft is NOT used in interstate commerce by a commercial airline?
Yes. Tangible personal property permanently affixed as a component part of an aircraft is exempt from Colorado sales and use tax, and — unlike the exemption for the sale of the aircraft itself — there…
For Texas franchise tax apportionment, is a wholesale wireless reseller's revenue from selling voice/data services to a mobile virtual network operator sourced as an intangible asset (to the buyer's location) or as telecommunications/internet services (to where the service is performed)?
ALERT: This ruling cites Rule 3.591(e)(12) for internet access sourcing, but that provision was renumbered to Rule 3.591(e)(26) effective 1/24/2021 (the amended (e)(13) now covers internet hosting ins…
What does Illinois General Information Letter ST 18-0005-GIL conclude about Nexus?
The Department declined to complete the requester's nexus survey because nexus determinations are too fact-specific for a General Information Letter, but it gave general background on Illinois Retaile…
What does Illinois General Information Letter ST 18-0004-GIL conclude about Motor Vehicles?
The Department declined to verify the accuracy of a private legal publisher's compiled data (that's not what a GIL does), but as a courtesy it flagged that a listed 'local taxes' rate of 7.50% was out…
Is prescription pet food exempt from Colorado sales tax — and does it matter whether you buy it from your veterinarian or from a pet store?
It depends on where you buy it. Pet food is NOT a 'prescription drug' (food is excluded from the drug definition), so it can't be exempt on that basis. But prescription pet food can qualify for the ex…
Do natural-gas and petroleum sales made while products are in pipelines create Virginia sales-factor receipts, nexus, and PTE withholding?
A sale entered the Virginia sales-factor numerator if the seller knew at the time of sale that the product's ultimate destination was Virginia. On the stated facts, however, nexus was unlikely because…
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