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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What Illinois tax-appeal, manufacturing-exemption, filing, and video-gaming guidance did IDOR give in response to a 2016 annual survey?
IDOR could not complete the survey format but explained that the Independent Tax Tribunal heard listed Department disputes generally exceeding $15,000 and its final decisions went to the Illinois Appe…
Could drainage culverts, pavement concrete and steel, and buried utility lines qualify for Illinois's enterprise-zone building-materials exemption?
Potentially yes, if the materials were permanently incorporated into real estate located in an enterprise zone. IDOR could not decide without more facts. For purchases on or after July 1, 2013, the co…
Were subscription SEO and marketing tools exempt from Illinois tax when subscribers might receive a downloadable toolbar or API?
Cloud software never downloaded and only accessed remotely was not taxable under IDOR's 2016 guidance. But the provider was a serviceman, and its terms and emails indicated subscribers received a down…
Were cloud-based web collaboration services exempt from Illinois tax when customers might download access software?
Cloud-only software that was never downloaded and merely accessed remotely was not taxable under IDOR's 2016 guidance. But a SaaS provider was a serviceman, and any API, applet, desktop agent, produce…
Was a cloud-based physician-records service nontaxable when its agreements appeared to provide an API or desktop client?
Cloud-only software that was never downloaded and only accessed remotely was not taxable under IDOR's 2016 guidance. But the provider was a serviceman, and its agreements appeared to transfer an API o…
Which equipment used to turn utility natural gas into vehicle-ready compressed natural gas qualified for Illinois's manufacturing exemption?
Filters, dryers, compressors, holding tanks, high-pressure piping, and programmable logic controllers qualified when used primarily to manufacture compressed natural gas. Manufacturing began with the …
Which patient and non-patient sales by a nonprofit hospital affiliate with an E-number were exempt from Illinois Retailers' Occupation Tax?
The qualifying hospital affiliate did not owe Retailers' Occupation Tax on food, medicine, or grooming and hygiene products furnished to patients as part of hospital or clinic care, or on drugs sold t…
Could a contractor recover gross receipts tax on depreciable equipment and systems incorporated into a county-owned fire station?
No. Weil Construction's remaining claimed equipment, piping, cabling, electrical systems, signage, and other items were incorporated into a county fire-station project, making them taxable constructio…
Are BNSF retirement plan pensions and Railroad Retirement Board (RRB) pensions exempt from Kansas income tax?
It depends which pension. Kansas has a subtraction modification for Railroad Retirement Board (RRB) benefits, so RRB pensions are exempt from Kansas income tax. But there is no modification for a priv…
Does Kansas charge income tax on qualified Roth IRA distributions?
No, when the distribution is a qualified (federally tax-free) Roth IRA distribution. Kansas income tax starts from your federal income and has no special modification for Roth IRAs, so the federal tre…
Are there specific requirements a corporation must meet to end its Kansas two-factor apportionment election before the 10-year period ends?
No. There are no specific requirements a taxpayer must meet before the Secretary of Revenue will consider a request to end the two-factor apportionment election before the end of the 10-year period. T…
Can Kansas employers round income tax withholding to the nearest dollar?
Yes—rounding is optional. Employers who compute Kansas income tax withholding using the percentage method may round each amount withheld and remitted to the nearest whole dollar: drop amounts under 50…
Does Kansas give a credit or deduction for unemployment benefits repaid in a later year?
No. Unemployment compensation that was included in your federal adjusted gross income is subject to Kansas income tax, and when you repay it in a later year Kansas allows neither a subtraction modific…
Are worker-safety equipment and chemicals or gases used for product quality testing exempt at a Georgia manufacturing plant?
Yes. Purchases and rentals of the listed access, lighting, hearing-protection, and barricade equipment used for worker safety at the manufacturing plant were exempt from state and local sales tax. Che…
Did a trust created by a Virginia decedent owe Virginia fiduciary income tax when its trustee, property, and beneficiaries were all outside Virginia?
No, on the stated facts. The trust was a Virginia resident trust because a Virginia domiciliary created it by will, but domicile of the deceased grantor alone was insufficient nexus. With no Virginia …
Were an auto loan note, loan check, and modification rider subject to Florida documentary stamp tax when read separately?
No, while unfiled and read separately. Each document lacked at least one required element of a taxable written obligation, and none expressly incorporated the others. Filing or recording a security do…
Were subscriptions to highly customized, electronically delivered software and related cloud services subject to Florida sales tax?
No. The customized software was delivered and accessed electronically, and the cloud services provided hosted access, storage, and backup without transferring tangible products.
When a lease invoice shows one payment, are installation, financing, freight, document, and collection charges included in Georgia's sales-tax base?
Generally, the entire non-itemized lease payment is taxable. Freight and unavoidable services such as document or collection fees remain in sales price even if itemized. Installation, interest, financ…
Would Virginia abate tax when a taxpayer reasonably relied on incorrect written Department advice about a death-benefit subtraction?
Yes. Although the taxpayer was not eligible for the subtraction on the stated facts, an authorized Department representative had approved it in writing. Virginia abated the 2012 assessment because tha…
Were vehicle diagnostic charges exempt from Virginia sales tax when billed with replacement parts?
No. Under the law and policy applied to the audit period, diagnostic services billed with replacement parts were taxable services connected with a sale. A diagnostic-only transaction with no tangible …
Are 403(b) retirement distributions taxable in Kansas for K-12 school and university employees, and does moving a 403(b) to an IRA affect the exemption?
It depends on the account. Kansas starts from federal income and exempts retirement income only when a specific state subtraction applies. There is no subtraction for 403(b) accounts held by K-12 scho…
Are a deceased employee's wages exempt from Kansas tax, and does Kansas impose an estate or inheritance tax on them?
No exemption, but no death tax either. Kansas does not impose any inheritance or estate tax on a decedent's assets, including wages. However, wages an employee earned before death are subject to Kansa…
Is a company's monthly fee for medical credentialing services — collecting documentation, preparing applications, and obtaining insurer credentials for a provider's billing staff using cloud-based software — subject to Colorado sales tax?
No, on these facts. Medical credentialing — collecting documentation, creating profiles, preparing applications, and obtaining the credentials a provider's billing staff need to bill insurers — appear…
Is the electricity and natural gas a TV news station uses to produce and broadcast its programming exempt from Colorado sales tax — as energy used in 'radio communication' or as 'industrial' use?
Only partly. Energy used to power the TV broadcast TRANSMITTER appears to be EXEMPT under the 'radio communication' energy exemption — the Department reads the 1937 'radio communication' term to inclu…
Could Virginia's other-state tax credit use a pass-through entity's full distributive income when the other state taxed a smaller amount?
No. The credit calculation could include only the pass-through income actually taxed by the other state after its conformity modification. Virginia therefore upheld the reduced credit and assessment.
Could a taxpayer overturn Virginia's 2012 nonfiler assessment without evidence that he was not a Virginia resident?
No. Virginia could use IRS information and estimate the liability when no return was filed. Because the taxpayer produced no objective evidence that he was not a Virginia resident required to file for…
How did Virginia treat restaurant gift-card sales and sales to a nonprofit customer that provided no exemption certificate?
Gift-card sales were removed because tax applies when the card is redeemed for taxable property, not when sold. Sales to the claimed nonprofit stayed taxable because the restaurant had no exemption ce…
Could a company collect Virginia sales tax only on the equipment portion of a financial lease for installed energy-efficiency upgrades?
Yes, conditionally. The itemized lease treatment was acceptable only if the installed equipment remained tangible personal property. If it became a real-property fixture, the contractor was the taxabl…
Were urgent-response medical monitoring, wireless data, and ordinary cell-phone services subject to Illinois Telecommunications Excise Tax?
IDOR would not confirm the company's specific treatment in a nonbinding GIL. It said ordinary mobile phone service incurred Telecommunications Excise Tax, while wireless data plans generally fell unde…
Which nursing-home meal supplies qualified for Medicare or Medicaid flow-through exemption treatment under Illinois service-tax rules?
Only qualifying property transferred to patients and paid for by Medicare or Medicaid received proportional exemption treatment under the serviceman's chosen tax method and proper E-number documentati…
Where did a fuel distributor source Illinois local tax on delivered fuel oil, warehouse lubricant sales, and card-lock gasoline sales?
Delivered fuel-oil sales were sourced to the city containing the sales and administrative office, even when fuel came from third-party racks or storage elsewhere. Lubricant sales from inventory at a s…
Were an online grocer's home-delivery and local-pickup charges included in taxable Illinois gross receipts?
The $2.99 pickup charge was taxable because it reimbursed the grocer's cost of moving goods between its facilities. The separately stated $5.99 home-delivery charge was excluded because customers had …
Could the university buy construction materials tax-free through owner-direct purchases for its campus project?
Yes. The proposed process qualified if the university issued purchase orders, received invoices, paid vendors directly, took title, assumed risk of loss through installation, and issued the required c…
Did a taxpayer abandon her Virginia domicile when she moved to another state for employment in 2012?
Yes. Even assuming she had established Virginia domicile earlier, her move for employment, new permanent home, and other evidence showed that she abandoned it in 2012. Virginia abated the assessment.
Could Virginia recover a refund after the taxpayer filed a second return showing fewer deductions and more tax due?
Yes. Virginia treated the second return as an amended return. Because it showed higher liability after a refund had already been issued, the excess refund became an underpayment that the Department co…
Was a husband a Virginia domiciliary resident in 2011 when the couple claimed he remained domiciled elsewhere?
Yes. The evidence tied the husband to the couple's Virginia home, while the couple provided no proof that he maintained or acquired domicile elsewhere. He had to file as a Virginia resident for 2011.
Could Virginia residents claim an out-of-state income-tax credit for New York's Metropolitan Commuter Transportation Mobility Tax?
No. Virginia found that the New York MCTMT was a targeted payroll and self-employment tax, not a tax substantially similar to Virginia's broad individual income tax. Denying the credit also did not vi…
Was an interstate motor carrier exempt from Virginia use tax or entitled to apportion the tax among the states where it operated?
No. Virginia's motor-vehicle common-carrier exemption had been repealed, and the use tax was not apportioned by operating miles. The Department did order the audit revised because its extrapolation du…
Could the seller accept digitally signed electronic exemption certificates instead of paper certificates?
Yes. The proposed electronic certificates were acceptable because the seller validated required information and digital signatures, retained reproducible records, and made its authentication process a…
Could the governmental owner use tax-exempt direct purchases when its proposed public-works contract omitted direct vendor invoicing?
Not under the contract as drafted. The exemption became available only if the contract required suppliers to invoice the governmental owner directly and they actually did so.
Are vegetable and fruit seeds or plants exempt from South Carolina sales and use tax when used to grow food?
Yes, under either of two rules described in the ruling. Vegetable and fruit seeds or plants used to grow food for personal consumption were exempt from state sales and use tax as unprepared food. Seed…
Which activities did South Carolina Revenue Ruling 16-11 analyze as creating income tax nexus for an out-of-state corporation?
The ruling provided a fact-specific yes/no matrix for income tax nexus across registration, South Carolina property, pass-through interests, licensed intangibles, employee and contractor activity, del…
When are South Carolina vacation-home or room rentals of 15 days or more subject to sales tax on accommodations?
Short-term rentals were generally taxable once the owner rented the residence or rooms for 15 or more days during the year, but two key exemptions applied: accommodations supplied to the same person o…
Was a painter exempt as an employee when he received Forms 1099 and lacked evidence of withholding, benefits, or employer control?
No. Luis Fernandez did not prove employee status; the company issued Forms 1099, and there was no evidence of withholding, FICA, workers' compensation, unemployment coverage, or control over his paint…
Could a construction subcontractor use an NTTC obtained almost two months after the audit deadline when the buyer caused the delay?
No. Gutierrez Aggregate repeatedly asked its customer for an NTTC, but the buyer did not obtain and execute the certificate until March 15, 2016, almost two months after the January 20 deadline. The m…
Could taxpayers defeat a Virginia assessment merely by saying they had submitted documents disputing the IRS adjustment?
No. Virginia used the IRS's final adjustment after the taxpayers failed to report it on an amended state return. The Department would not reexamine the federal result, and the taxpayers did not show t…
When a Texas company sells substantially all of its business assets, how does it apportion the gross receipts among tangible personal property, contract rights, and other intangibles for Texas franchise tax purposes?
It depends on the asset type — when a company sells substantially all its business assets, Texas sources the gross receipts asset-by-asset: tangible personal property (TPP) delivered/possessed in Texa…
Could an acquired corporation stop its former Florida consolidated filing after an unrelated purchaser terminated the old group?
Yes. The unrelated purchaser's acquisition caused the taxpayer's former affiliated group to cease existing under the federal rules Florida follows, eliminating the old consolidated filing requirement.
Which combined heat-and-power plant systems qualified for Florida's energy-production machinery exemption?
Most integrated production equipment was exempt through the first step-up transformer, including turbines, generators, foundations, cooling, control, and internal power systems. The steam distribution…
Should Illinois sales tax be calculated before or after applying a store reward certificate?
It depended on reimbursement. If the retailer received full or partial reimbursement for the reward coupon, taxable gross receipts included both the customer's payment and the reimbursement. If the re…
Were two Albuquerque homes rented for three-to-seven-day VRBO stays exempt as leases of three or fewer real-property units?
No. Tiller Design regularly advertised two homes for short stays with check-in and checkout dates, guest limits, amenities, maintenance help, and no transfer of exclusive property rights. The AHO trea…
Was an annual software service plan taxable in Illinois, and how were maintenance, bug fixes, and software updates treated?
IDOR could not determine the invoice's product or service and said the questioned $107.99 did not appear to be the tax charge. A maintenance agreement included in software's selling price was taxable;…
Could Virginia residents claim a credit based on all Arkansas tax paid instead of the Arkansas income actually subject to tax?
No. Virginia applied Arkansas's nonresident allocation percentage to determine the income actually taxed there, then limited the credit to the Virginia tax on that income. The assessment was upheld.
How does a Kansas taxpayer living abroad report foreign income and get credit for foreign tax?
It depends on domicile — but Kansas does credit foreign income tax. A person domiciled in Kansas first computes the tax 'as if' all income were from Kansas sources, then claims a credit for income tax…
Does a Texas cotton gin need its own individual utility (predominant-use) study to claim the sales tax exemption on the electricity it uses to run the gin?
No individual study is needed. The Comptroller ruled that a cotton gin may claim the sales and use tax exemption on 100% of the electricity it purchases through a dedicated meter to power the gin, rel…
Is Nebraska Revenue Ruling 01-10-3 on the net metering of electricity still in effect?
No -- it has been withdrawn. Revenue Ruling 01-16-2 (issued July 20, 2016) rescinds Revenue Ruling 01-10-3, 'Net Metering of Electricity' (issued August 4, 2010). The Department gives a specific reaso…
Can a Kansas partner offset the guaranteed-payments add-back with SE tax, retirement, or health deductions?
No. Kansas law does not permit deducting self-employment tax, retirement-plan contributions, or self-employed health insurance to offset the guaranteed payments a partner must add back on Kansas Sched…
Is a pension distribution from the Kansas National Education Association exempt from Kansas income tax?
Taxable, absent documentation otherwise. A pension distribution from the Kansas National Education Association has no specific subtraction modification listed in K.S.A. 79-32,117, and the Department w…
Did permanently bolted steel freezer racking qualify for Illinois' enterprise-zone building-materials exemption?
Yes. Based on the taxpayer's representation that the steel cold-storage racking would be permanently bolted into a concrete curb and incorporated into real estate in an enterprise zone, IDOR treated i…
How did South Carolina Revenue Ruling 16-9 apply the one-percentage-point state tax reduction for purchasers age 85 or older?
The ruling allowed a one-percentage-point reduction in specified South Carolina state sales, use, and casual excise tax rates when an individual age 85 or older personally bought an item for personal …
How these rulings are useful
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