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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A financial institution files a combined Tennessee franchise and excise return with its unitary affiliates, and some of those affiliates are tax-exempt securitization trusts. Does it still include the exempt trusts in the group, and do their income, net worth, and receipts count?
Include them in the group, but leave their numbers out. The taxpayer is a savings association that files a combined Tennessee franchise & excise (F&E) return with its unitary financial-institution aff…
How did Florida source this service provider's receipts for the corporate-income-tax sales factor?
For the disclosed services, Florida treated the income-producing activity as occurring where the customer or service recipient was physically located. A separate, heavily redacted product-related stre…
Were Christopher Roche and Nguyen Park liable for penalty and interest when they timely mailed their 2015 return and check but USPS never delivered them?
Penalty no; interest yes. The AHO believed the taxpayers mailed their return and check before the deadline and found they exercised ordinary care. USPS's delivery failure was a third-party error, not …
Could an oncology practice recover gross receipts tax on medication receipts when its refund records combined authentic FDA-approved drugs with counterfeit nonapproved drugs?
No. Section 7-9-73.2 did not cover counterfeit, non-FDA-approved drugs, and the practice did not separate receipts for authentic qualifying medications from receipts for counterfeits. Although the rec…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #17-6)?
Use the citator attached to SC Information Letter #17-6. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Were cable converter boxes taxable as business tangible personal property by a Virginia city for 2015?
No. Virginia held the customer converter boxes were intangible property exempt from local business tangible personal property tax under Va. Code § 58.1-1101 A 2a. The Department remanded the case and …
Are Poise pads for bladder leakage covered by Illinois's sales-tax exemption for feminine hygiene products?
No. Illinois's Retailers' Occupation Tax exemption effective January 1, 2017 covers only menstrual pads, tampons, and menstrual cups. Poise pads are designed for bladder leakage, not menstruation, so …
When a sale happens in a home-rule area with state, county, and city sales taxes, do you add all the individual tax rates together to get the total rate charged on the sale?
Yes. The Illinois Department of Revenue confirmed that in a home-rule jurisdiction like Jacksonville (Morgan County), you simply add each applicable tax rate together — state (6.25%), county (1.00%), …
Were corporate refund claims timely when Virginia amended returns were filed more than one year after IRS closing agreements became final?
No. The IRS closing agreements became final when the taxpayer received notice that the Commissioner of Internal Revenue had signed them. Both Virginia amended returns were filed more than one year lat…
Could a Virginia resident who moved during the year claim a credit for tax paid to the new state on income earned before the move?
Yes, for qualifying income earned in the other state while the taxpayer was still a Virginia resident and taxed by both states, subject to Virginia's statutory limits. But income earned while working …
Did working and leasing homes in Maryland establish Maryland domicile for 2011-2013 when the taxpayer filed Maryland nonresident returns naming Virginia as home?
No. The taxpayer worked and leased residences in Maryland but kept a Virginia license and vehicles and filed Maryland nonresident returns identifying Virginia as his residence. He did not prove a perm…
Did prescribed 100% natural latex mattresses qualify for Virginia's durable-medical-equipment sales-tax exemption?
No. The mattresses failed Virginia's durable-medical-equipment test because they were useful even without illness or injury and were not specifically manufactured for medical purposes. A prescription …
Could a contractor reduce a Virginia consumer-use-tax audit by showing that a vendor charged tax on only some invoices?
Only for transactions supported by adequate documentation. A few invoices justified limited audit adjustments, but proof that a vendor charged tax on some purchases did not establish that tax was paid…
Did federal gain from a deemed sale of Virginia land-preservation tax credits remain taxable for Virginia income tax?
No. Although the IRS treated the transaction as a disguised sale producing federal adjusted gross income, Va. Code § 58.1-513 E barred Virginia gain or loss from transferring the land-preservation cre…
Could a Virginia resident overturn income-tax assessments by claiming no duty to pay, tendering a hand-drawn Treasury check, and objecting to wage garnishment?
No. Most older appeals and refund claims were time-barred, and Virginia upheld the 2012 assessment because its information showed the taxpayer was a Virginia resident with taxable income. A hand-drawn…
Did a former service member who lived abroad prove that he had abandoned Virginia domicile for 2012?
No. The taxpayer did not establish a permanent domicile in another state or country and retained Virginia ties, including a driver's license for much of the period and use of a Virginia family address…
Were a horse-boarding facility's feed and supply purchases exempt as agricultural production, and was a six-year audit proper?
No exemption applied. The facility provided nontaxable horse-boarding services but did not raise horses for breeding or sale, so it was the taxable consumer of feed and supplies used in that service. …
What did Virginia's 2017 guidelines require for the Recyclable Materials Processing Equipment Tax Credit?
For taxable years beginning in 2015 or later, the guidelines described a credit equal to 20% of qualifying equipment purchase costs, subject to a $2 million statewide annual cap and proration. Equipme…
Is a company's charge for designing, printing, and distributing door-hanger marketing materials subject to Colorado sales tax?
Largely yes. A company that designs, prints, and distributes door-hanger marketing material is selling tangible goods — the printed material is the 'true object' — so a lump-sum charge is taxable. Eve…
Did a corporation prove that county vehicle-property-tax assessments should be abated because it was domiciled and taxed in another state?
Not yet. The corporation supplied out-of-state tax bills and insurance information but did not prove the bills were paid or establish where its commercial domicile and vehicles were located. Virginia …
Were Affordable Cellular's Verizon commissions for procuring wireless service agreements subject to New Mexico gross receipts tax?
Yes. Verizon paid Affordable Cellular nonemployee commissions for procuring wireless service agreements, a service performed in New Mexico. The commissions were not employee wages, tangible-property c…
Did Mosaic earn interest from the date it filed a $1.7 million compensating-tax refund form without explaining the factual and legal basis or providing invoices?
No. Mosaic's July 2015 filing stated only that compensating tax had been overreported and supplied amended returns plus a summary spreadsheet. It did not explain why the payments were erroneous or pro…
Did stock acquired in 2006 qualify for Virginia's long-term-capital-gain subtraction because it did not vest until 2011?
No. Virginia treated the stock as an investment when the taxpayer acquired it in 2006, even though it was then nontransferable and did not vest until 2011. Because the statute required the investment …
Were sales and rentals of required college textbooks by a private online retailer exempt from Virginia sales tax?
Yes. Both sales and rentals by a private retailer qualified when the textbook was certified by a college department or instructor as required for the student's course. The exemption applied to student…
Did a skid loader and mulching head used to clear land qualify for Virginia's forest-products harvesting sales-tax exemption?
No. The contractor cut and ground vegetation into mulch that stayed on the property, so it provided a land-clearing service and did not harvest forest products for sale or for use in a product to be s…
When is an adjustable bed and its special mattress exempt from Georgia sales tax as prescribed durable medical equipment?
A qualifying adjustable bed and its required special mattress are exempt when sold to an individual with an illness or injury under a prescription issued to that person. The bed must meet the durable-…
Two companies under a common corporate parent want to move internally developed software — and software-repair services — from one to the other. Is that transfer subject to Tennessee sales and use tax?
No — both are exempt. Tennessee has a specific exemption for intercompany software dealings between affiliated companies. (1) One affiliate's transfer of title to software it developed in-house, to an…
Could Virginia expand a contractor's use-tax audit from three years to six when it found untaxed purchases and no filed returns?
Yes. The contractor failed to accrue and remit use tax on untaxed purchases and filed no sales-and-use-tax returns, giving Virginia reasonable cause under Va. Code § 58.1-634 to examine six years. A h…
Were optional consulting services that gave customers instructions for modifying taxable canned software also subject to Virginia sales tax?
No. Although the canned software delivered in tangible form was taxable, the optional consulting contained no software or other tangible property and could be bought separately or not at all. Virginia…
Are fencing materials and services to repair wildfire-damaged agricultural fences exempt from Kansas sales tax?
Kansas Notice 17-01 explains that House Bill 2387 (2017) amended K.S.A. 79-3606d to exempt from Kansas retailers' sales tax the purchase of fencing materials and services during calendar years 2017 an…
Does an out-of-state seller of a hardware device and a cloud-based software subscription have to collect Illinois sales tax, and does the Illinois customer owe use tax if it doesn't?
It depends on whether the out-of-state business has nexus with Illinois. If it is an 'Illinois Retailer' or a 'retailer maintaining a place of business in Illinois' (which can include an in-state agen…
How did Virginia treat cable-franchise fees after the Communications Sales and Use Tax began in 2007?
New or renewed cable franchises entered on or after January 1, 2007 could not include a franchise fee while cable service remained subject to the communications tax. Fees under agreements already in f…
Did living abroad and filing a prior part-year return prove that this taxpayer was no longer domiciled in Virginia in 2013?
Not on the evidence provided. Living abroad and filing a prior part-year return did not by themselves prove abandonment of Virginia domicile, especially with a Virginia address and driver's license st…
Must married federal or state employees combine their salaries when testing Virginia's $15,000 employee-salary subtraction?
No. Virginia applied the salary limit separately to each employee-spouse. Because the wife was a federal employee whose total annual salary was below $15,000, the couple could subtract her qualifying …
Did temporary work in two other states end this taxpayer's Virginia domicile for 2012 income-tax purposes?
No. The taxpayer did not show a permanent home or intent to remain in either other state, while continuing to use a Virginia family address and driver's license. Virginia treated him as a domiciliary …
When a subsidiary is sold out of an Illinois combined unitary group, does the federal consolidated-return limit on using the sold subsidiary's losses (Treas. Reg. 1.1502-11(b)) also cap how much of that subsidiary's Illinois net loss carryover the group can use?
No. Illinois follows the federal consolidated-return rules (including Treas. Reg. 1.1502-11(b) and 1.1502-32) to compute combined base income and stock basis on the sale itself, but Illinois's own reg…
Are fluoride varnish and oral-health kits sold to dental and medical providers exempt from Colorado sales tax?
Likely yes — but not as a prescription drug. The FDA classifies fluoride varnish as a Class II medical device, not a drug, so it doesn't qualify for Colorado's prescription-drug exemption. It does, ho…
Is an optional maintenance agreement bought with a vehicle lease subject to Colorado sales tax?
No, not if it is truly optional and separately stated. A maintenance agreement sold with a vehicle lease is normally taxable unless it is separable from the lease — and it is separable when (1) the cu…
Does Illinois Use Tax apply when someone brings a vehicle bought overseas into Illinois after living there as a nonresident?
It depends on residency: Illinois Use Tax does not apply to a vehicle acquired outside Illinois by a nonresident individual who used it outside Illinois for at least 3 months before bringing it into t…
Does an employer's failure to withhold Virginia income tax relieve the employee from paying tax on the wages?
No. Even if the employer should have classified the worker as an employee and withheld Virginia tax, the worker remained responsible for reporting the income and paying the full tax. Without withholdi…
Can an employee claim Virginia withholding credit when the employer's reported payment cannot be verified?
Yes, if the employee proves the employer actually deducted Virginia tax from wages. Va. Code § 58.1-468 protects an employee when withheld tax was not remitted, but the taxpayer had not supplied verif…
Did moving to New Jersey for work establish a new domicile when the taxpayer kept Virginia licenses and described the move as temporary?
No. The taxpayer's New Jersey home, job, and resident return favored a move, but she kept Virginia driver's, vehicle, and voter registrations and described New Jersey as temporary while pursuing New Y…
Did a married couple abandon Virginia domicile by living and working in a U.S. territory for several years?
No. Although the couple leased a home and the husband worked in the territory, they retained their Virginia house, obtained Virginia driver's licenses and vehicle registration before returning, and th…
What Virginia tax interest rates applied during the second quarter of 2017?
Virginia's second-quarter 2017 rates were 6% for tax underpayments and 6% for tax overpayments. The reduced rate for qualifying assessments under administrative appeal was 1%. Certain local delinquenc…
Could Virginia refund 2011 and 2012 overpayments when the original returns were filed after the three-year deadline?
No. Both returns were filed after the three-year refund period expired, and Va. Code § 58.1-499 D gave the Department no discretion to extend it. Disability did not suspend the deadline, and caring fo…
How should a Virginia city classify and measure a used-car dealer's BPOL receipts from fees, warranties, special orders, and trade-ins?
Processing fees and warranty or insurance commissions connected to vehicle sales were ancillary to the dealer's retail business, not a separate service business. Virginia remanded the special-order, w…
I ran my business as a sole proprietor, then converted it to an LLC and used 'LLC' on my returns. Can the state still hold me personally liable for the gross receipts tax and put a lien on me?
Yes, the owner stayed personally liable and the liens stood — the protest was denied. Richard Casias registered two businesses (R. Casias Trucking and Stars & Stripes Paving) as sole proprietorships t…
How do South Carolina sales tax and the motor fuel user fee apply to compressed or liquefied natural gas used in motor vehicles?
Qualifying compressed and liquefied natural gas used as motor fuel is exempt from sales and use tax but subject to the motor fuel user fee. A fueling station buys raw gas for resale without either tax…
Which communication and online services does South Carolina treat as taxable transmissions, and which services are exempt or nontaxable?
South Carolina taxes charges for access to or use of systems that transmit voice or messages, including many telephone, programming, streaming, email, and individual-website services. Internet access …
Were new RVs financed by a bank still the dealer's taxable inventory for Virginia merchants' capital tax?
Yes. RVs titled in the dealer's name and held by the bank only as collateral were dealer-owned inventory; true consignments would not be. Virginia upheld the county's rate but remanded because the cou…
Can a Virginia locality tax a nursery's inventory as merchants' capital and its other business property under BTPP rules?
Yes. Merchants' capital and business tangible personal property are separate property classes, so both taxes can apply. A locality may not impose both BPOL and merchants' capital tax on the same merch…
For Virginia BPOL tax, is a company that buys defaulted debt for its own account a collection agency or a financial-services business?
It was a financial-services business. The company bought discounted debt for its own account, kept any collections, and bore the loss risk. A collection agency instead collects for a client and remits…
Could a city buy construction materials tax-free for a public project through an owner-direct-purchase arrangement?
Yes, conditionally. The city could make exempt direct purchases if it executed the amended contract, ordered, was invoiced for, and paid vendors directly, took title, and retained risk of loss until t…
Could an acquired corporation stop filing its former Florida consolidated return after the old affiliated group terminated?
Yes. The unrelated stock acquisition caused the taxpayer's former affiliated group to cease existing under the federal group rules Florida follows, so the old consolidated filing could not continue.
When does Georgia sales tax apply to a rental-car reservation fee, a full advance payment, or a retained cancellation charge?
A partial reservation fee is not taxed when paid because it only preserves the chance to rent, not possession or control of a specific car. If the rental occurs, the fee becomes part of the final taxa…
Were mobile point-of-sale devices amusement machines, and how were the device and premium-content charges taxed?
The devices were not coin-operated amusement machines because their predominant use was point-of-sale functionality. But the provider's device charges and patrons' premium-content fees were both taxab…
Are vitamins, dietary supplements, and similar products taxed at Illinois's low 1% food/drug rate or the general 6.25% sales-tax rate?
Vitamins, food supplements, and meal-replacement drink mixes are generally taxed as food at Illinois's low 1% rate (plus local taxes), because they are consumed for human internal consumption. They ar…
What is South Carolina's tax interest rate for underpayments and overpayments for the period ending June 30, 2017 (per SC IL #17-5)?
4%. SC Information Letter #17-5 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2016 through June 30, 2017. Interest is compounded daily, except…
Could D-Trix exclude claimed private oilfield-road miles and report only loaded government-road miles for New Mexico weight-distance tax?
No further reduction was allowed. Weight-distance tax required reporting all New Mexico highway miles, loaded or empty; qualifying one-way haulers received a reduced rate rather than omitting empty mi…
Could a new owner of a pass-through entity use distributed Nebraska Historic Tax Credits for a year before becoming an owner?
No. Type B historic credits distributed through a pass-through entity could not offset tax for a year before the recipient became a member, partner, or shareholder. The Act allowed unused credits to c…
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