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 David Graham deduct four years of horse-breeding and racing losses against other income as expenses of a for-profit business?
No for 2012-2015. Applying the federal profit-motive factors, the AHO found Graham's horse activity was driven by personal passion rather than a good-faith profit objective. He kept few financial reco…
Was an owner-crewed yacht charter exempt from Florida sales tax when the charterer lacked operational control?
Yes. Because the owner furnished the captain and crew and retained operational control, the charter was a service transaction rather than a taxable rental of tangible personal property.
If my company still offers a pickup option (even a shrinking one), are our delivery charges tax-exempt, and would eliminating pickup entirely make delivery charges taxable?
As long as customers genuinely have the option to pick up the item without paying a delivery charge, the delivery charge is not part of the taxable selling price. If pickup is eliminated and delivery …
If I separately state equipment rental or lease charges from VoIP service charges on the bill, do I still owe Illinois Telecommunications Excise Tax on the equipment charges?
No, equipment rental or lease charges are excluded from the Illinois Telecommunications Excise Tax as long as they are disaggregated and separately stated from the telecommunications service charges i…
Does Illinois sales/use tax apply to computer software, including software as a service (SaaS)?
It depends on how the software is delivered: Illinois generally taxes sales of "canned" (prewritten) computer software as tangible personal property, but custom software and software-as-a-service arra…
How did Virginia's July 2017 law change the sales-tax treatment of separately stated automobile repair shop-supply charges?
Beginning July 1, 2017, automobile repair shops had to collect sales tax on separately stated shop-supply charges, whether or not the supplies transferred to the vehicle or customer. The shops could b…
The IRS reclassified me from contractor to employee, so I had to amend my old state returns and pay more tax. I wasn't at fault — do I still owe New Mexico interest, and isn't the assessment too old?
Yes, she still owed the interest, and no, it was not time-barred — the protest was denied. Kelly Day was treated as an independent contractor (1099s) by Edible Communities, Inc. for 2009-2011 and file…
How does the new infrastructure maintenance fee change sales tax on vehicle sales for South Carolina dealers effective July 1, 2017 (per SC IL #17-10)?
SC Information Letter #17-10 (Revised) is a notice to motor vehicle, motorcycle, and trailer dealers and retailers about the new infrastructure maintenance fee (IMF) under Act No. 40, effective July 1…
Was a corporation exempt from county BPOL tax when it packaged and sold only farm products that it had grown itself?
Yes. Virginia's farm-products exemption applied because the same corporate taxpayer grew all produce sold from the county facility. Packaging its own products did not create a taxable wholesale busine…
For Texas sales tax, is labor to replace or abandon a natural gas pipeline taxable real property repair, or non-taxable new construction/demolition?
It depends on depth and method, ruled across twelve fact scenarios: labor to lay a new pipeline in a new trench beside the old one, or at a depth at least one-third greater or shallower than the old p…
Does an out-of-state online seller of snack bars owe Illinois sales or use tax, and at what rate, if its products are stocked in an Illinois warehouse?
It depends: the Department declined to give a binding nexus determination and instead explained the general rules. An out-of-state seller has no Illinois collection duty unless it has physical presenc…
Are admission tickets to an exempt organizations charity softball game subject to New York sales tax?
Yes. Admission charges to places of amusement, including sporting events, are taxable. Although a registered exempt organization generally need not collect tax on admissions, that exemption does not a…
What is South Carolina's tax interest rate for underpayments and overpayments for the period ending September 30, 2017 (per SC IL #17-9)?
4%. SC Information Letter #17-9 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2016 through September 30, 2017. Interest is compounded daily, e…
What tax and fee changes take effect July 1, 2017 under South Carolina's Infrastructure and Economic Development Reform Act (per SC IL #17-8)?
SC Information Letter #17-8 summarizes the tax and fee changes under the South Carolina Infrastructure and Economic Development Reform Act (Act No. 40, enacted May 10, 2017) that become effective July…
A contractor builds a fiber-optic network for a telecom company, installing cable and conduit on leased poles and in easements. Is the lump-sum charge for that construction subject to Tennessee sales and use tax?
Yes — the whole turnkey charge is taxable, because the fiber network stays tangible personal property. The contractor handles engineering, procurement, and construction (EPC) of a fiber-to-the-home ne…
An out-of-state for-hire trucking company drives through Tennessee and sometimes picks up or delivers there. When does it owe Tennessee franchise and excise tax?
It depends on what the trucks actually DO in Tennessee, not just that they drive through. An over-the-road, for-hire trucking company based in another state — with no Tennessee office, property, or em…
What Virginia tax interest rates applied in the third quarter of 2017 to assessments, refunds, disputed assessments, estimated tax, and local taxes?
For July 1 through September 30, 2017, Virginia's ordinary interest rates were 6% on tax underpayments and assessments and 6% on overpayments and refunds. The reduced rate for qualifying disputed asse…
Did filing both part-year and nonresident returns prove that a couple abandoned Virginia domicile during a brief 2015 absence?
No. The couple's filing history showed Virginia residence before and after an absence of less than six months, creating prima facie evidence that they never abandoned Virginia domicile. Because they d…
Could a retiree obtain Virginia's previously taxed contribution subtraction without records supporting the retirement-income claim?
Not without documentation. Virginia taxes retirement income included in federal adjusted gross income unless a specific subtraction applies, and federal tax paid on that income does not itself create …
Did federally taxable lump-sum death benefits from annuity contracts qualify for Virginia's death-benefit subtraction without being life-insurance proceeds?
Yes. The statute required payments from an annuity contract with an insurance company, received by a beneficiary in a lump sum, and subject to federal income tax. The payments met all three conditions…
Does a later acquisition disqualify Virginia's long-term capital-gain subtraction when the original company qualified at the time of investment, and what proof must the investor provide?
A later merger or acquisition does not by itself defeat Virginia's long-term capital-gain subtraction if the original company was a qualified business when the investment was made. But this taxpayer h…
Could insurance-company disability pension income qualify for Virginia's disability subtraction even when reported on Form W-2?
Yes. Form W-2 reporting did not control when the insurer confirmed the payments had changed from salary continuation to disability pension income and the husband remained disabled under Social Securit…
Could a restaurant raise a new gratuities issue after the 90-day appeal period by calling it a reconsideration request?
No. The restaurant raised gratuities after the 90-day deadline and had not included that issue in its original timely appeal. Reconsideration could correct facts, apply changed law or policy, or consi…
Can Virginia hold a minority shareholder and corporate officer personally liable for unpaid company sales and withholding taxes when he knew of the delinquency but lacked responsibility and authority over tax payments?
No. Although the taxpayer was a 15% shareholder, vice president, secretary, director, and knew the company was behind on taxes, his father controlled budgeting, bills, and tax payments. Because the ta…
Did inventory owned at Virginia fulfillment centers require an out-of-state online seller to register and collect Virginia sales tax?
Yes. The seller retained ownership and control of inventory stored at Virginia fulfillment centers, which was sufficient activity under the inventory-nexus rule. Its collection and remittance duty beg…
Could an online retailer with Virginia fulfillment inventory close its registration and recover tax collected since voluntarily registering in 2015?
No. Owning goods for sale at a Virginia fulfillment center required registration under the inventory-nexus rule effective June 1, 2017. The retailer also could not recover tax collected since its Augu…
Did an out-of-state internet seller have to collect Virginia sales tax because its resale inventory was stored in a Virginia fulfillment center?
Yes. Under the 2017 inventory-nexus amendment, owning goods for sale at a Virginia fulfillment center was sufficient activity to require dealer registration. Beginning June 1, 2017, the seller had to …
My new cattle-ranching operation has lost money every year so far — can New Mexico deny my loss deductions by calling it a hobby, or can I still deduct the losses?
The rancher won — the losses were deductible because the operation was genuinely run for profit, not as a hobby. Dustin and Clarissa Ptolemy reported farm losses on their New Mexico returns for 2011-2…
What major Virginia state and local tax changes did the Department of Taxation identify in its 2017 Legislative Summary?
Virginia's 2017 Legislative Summary was a broad historical guide, not a taxpayer ruling. Major changes included a Fiscal Year 2018 tax-amnesty program, new electronic filing and payment mandates, IRC …
Can Virginia personally assess a majority shareholder and CEO for unpaid corporate income tax when he knew of the liability but continued paying operating expenses while the company wound down?
Yes. The taxpayer conceded he met Virginia's corporate-officer definition, knew of the 2014 corporate income tax liability before the return was filed, and continued paying salaries and other operatin…
Could a countertop fabricator avoid Virginia sales tax on fabrication and related service charges by claiming Department representatives gave incorrect advice, and how did a July 2017 law change affect later transactions?
No relief was available for the May 2013-April 2016 audit. The taxpayer could not document qualifying written Department advice under Va. Code § 58.1-1835, and fabrication labor plus services connecte…
Are breast pumps, nursing bras, and other breastfeeding supplies taxed at Illinois's reduced 1% rate for medical appliances?
Mostly no. The Department said the listed breastfeeding items (breast pumps and parts, shields, shells, nursing bras, lactation supplements/cookies) don't appear to directly substitute for a malfuncti…
Is machinery and equipment used primarily to harvest hay for sale exempt from Illinois Retailers' Occupation Tax and Use Tax as farm machinery and equipment?
Yes. Under 86 Ill. Adm. Code 130.305, machinery and equipment (new or used) that is used or leased primarily in production agriculture is exempt from Illinois Retailers' Occupation Tax and Use Tax, an…
Where did Illinois source local retailers' occupation tax for an industrial supplier's branch, remote-order, online, and affiliate sales?
Over-the-counter branch sales were sourced to the ordering branch. Specified phone, fax, email, eProcurement, special-branch, and affiliate sales were sourced to the Illinois headquarters after primar…
My employee misread the due date and we paid our withholding tax a few days late — can New Mexico waive the penalty and interest?
No — the company lost, and both the penalty and interest stood. Hyundai Corporation USA owed New Mexico withholding tax of $746,694 for the period ending June 30, 2016. The payment was due July 25, 20…
Under Virginia's 2017 guidelines, how did purchasers and dealers claim refunds of erroneously paid retail sales and use tax, what made a claim complete, and when did limitations and interest begin?
The purchaser generally had to seek a refund from the dealer first. If the dealer could not provide it, a direct Department claim required a complete Refund Claimant Return, transaction spreadsheet, i…
Did the Servicemembers Civil Relief Act preserve a military couple's claimed Florida domicile after they moved to Virginia under the wife's orders, bought a home, registered and voted in Virginia, and obtained Virginia licenses?
No. Military orders alone do not change domicile, but the Servicemembers Civil Relief Act also does not prevent a servicemember or spouse from acquiring a new domicile. The couple failed to show that …
I was assessed for a prior owner's unpaid tax as a successor in business — can I get the hearing officer to bar the state from collecting the penalty and interest before it happens?
No — the protest was denied as not ripe, though the underlying protection may still help later. The Local Vapory, LLC (a Las Cruces vapor-products shop, sole member Chaz Betts) was assessed about $28,…
If I lease a motor vehicle under a true lease and then buy it before the lease ends, do I get credit against the purchase tax for the sales/use tax already paid on my lease payments?
No. Under a true lease, the lessor (not the lessee) owes Use Tax on its cost price of the vehicle, and lease receipts themselves are not taxed. When a lessee later buys the leased vehicle before the l…
Did a military contractor employee's documented combat-zone service extend the Virginia refund period for 2011 and 2012 returns filed in July 2016?
Yes. IRS documentation showed that the military contractor employee qualified for the federal combat-zone postponement. Virginia extended both return due dates to June 15, 2015, so the July 29, 2016 f…
Was it double taxation for a county to use the same first full year's receipts in two BPOL license-year calculations?
No. The corrected 2015 liability and the 2016 license tax covered different periods, even though both used actual 2015 receipts. The business had not elected the final-year estimate procedure, and the…
Did the federal Internet Tax Freedom Act bar a Virginia city from including an internet provider's access-service receipts in its BPOL gross-receipts base for 2010 and 2011?
Not for the years at issue. Virginia concluded that a BPOL tax measured by internet-access receipts was a tax on internet access under the federal Internet Tax Freedom Act. But the city proved it had …
Must a business claiming Virginia's BPOL out-of-state deduction prove that each deducted gross receipt exactly equals income shown as a separate amount on another state's income tax return?
No. Once the city accepted that the taxpayer was eligible for the BPOL out-of-state deduction, the taxpayer did not have to make its sitused gross receipts equal the taxable income shown on another st…
Was a December 2014 amended return timely to recover a 2007 Virginia assessment paid through a tax lien in February 2012?
No. The taxpayers missed both the general May 1, 2011 amended-return deadline and the special two-year period after the February 2012 lien payment. Their December 2014 filing was late, so Virginia had…
How does Virginia calculate the retirement-income subtraction when pension contributions were deductible federally but taxed by another state before later distributions?
Virginia uses a pro-rata formula, not a dollar-for-dollar recovery of contributions. The taxpayers proved that the wife's 1984-1986 pension contributions were excluded federally and taxed by State A, …
Is Nebraska Revenue Ruling 22-05-3 on adopting federal life expectancy tables for the Nebraska Endowment Credit still in effect?
No -- it has been withdrawn as obsolete. Revenue Ruling 22-17-1 (issued June 9, 2017) rescinds Revenue Ruling 22-05-3, 'Adoption of Federal Life Expectancy Tables' (issued December 22, 2005). The Depa…
Does the Cook County Sweetened Beverage Tax become part of the selling price used to calculate Illinois Retailers' Occupation Tax liability?
No. Because the Cook County Sweetened Beverage Tax is imposed on the consumer (like the Cook County Liquor Gallonage Tax), it is not part of the selling price of the beverage and must be excluded when…
Could the Virginia Department of Taxation reconsider BPOL years already governed by a circuit-court order or hear later tax years when the taxpayer had not first filed the required local appeal?
No. For 2008-2012, the county had appealed the Department's earlier determination to circuit court, making assessment correctness and relief exclusively judicial matters. For 2013-2014, the taxpayer h…
Could a Virginia taxpayer's otherwise late amended refund return remain timely if it was filed within one year after another state's final determination changed the taxpayer's resident status?
Potentially. The taxpayer's second amended return was outside Virginia's ordinary three-year period, but Va. Code § 58.1-1823 A (v) allowed a refund claim within one year after another state's final d…
Must a Virginia real property contractor include separately stated shop drawings, administrative fees, custom gel coat, and tooling charges in the consumer use tax base for fabricated construction materials?
Yes. A real property contractor is the user and consumer of construction materials, and Virginia's cost-price definition does not deduct connected labor, service, or other expenses. The separately sta…
What administrative request fees did Virginia Tax Bulletin 17-5 announce effective July 1, 2017, and could taxpayers request a waiver?
Effective July 1, 2017, the bulletin announced a $50 fee for a doubtful-collectability offer in compromise, $275 for a ruling letter, $275 for a local business tax advisory opinion, and $100 for a cor…
Does having remote employees or independent contractors in Illinois create income tax or sales tax nexus?
The Department would not say. It explained that whether a taxpayer has nexus with Illinois is too fact-specific for a ruling, and instead pointed to its nexus regulation (Section 100.9720) and general…
When is South Carolina's 2017 sales tax holiday and what items are exempt (per SC IL #17-7)?
South Carolina's 2017 sales tax holiday runs from 12:01 a.m. Friday, August 4, 2017 through midnight Sunday, August 6, 2017. During that three-day weekend, the 6% state sales and use tax and any appli…
Does a company create Illinois sales-tax nexus by having a resident employee, using independent-contractor transcriptionists who work from home, and occasionally sending employees onsite to customer locations?
The Department declined to make a specific nexus determination in this GIL, saying nexus is too fact-specific for a General Information Letter and is better handled by an auditor. Instead, it explaine…
When a construction contractor buys materials and permanently installs them into real property, who owes Illinois Use Tax, and can a subcontractor's out-of-state tax payment avoid double taxation down the sales chain?
The construction contractor (or subcontractor doing the installing) that permanently affixes tangible personal property to real estate is the 'end user' of that property and owes Illinois Use Tax on i…
Does the Illinois manufacturing machinery and equipment exemption cover the welding gases (argon, helium, and O2) a metal fabricator uses in its MIG/TIG welding process?
No. The Department of Revenue advised that gases generally are not exempt under the manufacturing machinery and equipment exemption, citing 86 Ill. Adm. Code 130.330(c). This corrected an earlier 2011…
Did working and renting a home in another state establish a new domicile when the taxpayer kept a Virginia home for family, Virginia vehicles, and a Virginia driver's license?
No. The taxpayer's State A job, rental, and resident returns showed ties there, but he retained a Virginia home for his former wife and children, three Virginia-registered vehicles, and renewed his Vi…
Can Virginia personally assess a minority shareholder and senior manager for unpaid withholding tax when his work covered engineering and legal matters, not payroll or finance?
No. The taxpayer managed engineering, testing, business development, and legal matters, while other executives controlled accounting, payroll, and finance. His limited financial involvement consisted …
Could corrected fencing invoices separating materials from installation labor reduce a Virginia sales tax assessment that originally taxed lump-sum charges?
Yes, for this audit. Virginia accepted corrected invoices that separately stated fencing materials and installation labor, returned the audit for revision, and warned that future pre-July 2017 lump-su…
Were software purchases and a support renewal exempt from Virginia sales and use tax when some software was downloaded but manuals and a CD were delivered?
The two asset-software purchases were exempt because documentation showed electronic delivery. The annual support transaction was not fully exempt because manuals and a CD were physically delivered be…
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