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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For Texas franchise tax, can a company include wages paid to employees at its foreign offices in its compensation deduction if those wages are reported on a foreign government form instead of an IRS Form W-2?
Yes, but only for actual employees — a company may include in its Texas franchise tax compensation deduction the wages and cash compensation it pays to employees at international offices, as long as t…
What is South Carolina's tax interest rate for underpayments and overpayments for the period April 1, 2016 through September 30, 2016 (per SC IL #16-7)?
4%. SC Information Letter #16-7 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2016 through September 30, 2016. Interest is compounded daily, e…
Could a taxpayer overturn a Virginia assessment merely by denying residence and Virginia-source income?
No. The taxpayer supplied no objective evidence supporting his denial of Virginia residence or Virginia-source income. Virginia allowed one final 30-day opportunity to provide domicile records or file…
Was an out-of-state driver's license alone enough to overturn a Virginia residency assessment?
No. An out-of-state driver's license was only one domicile factor, and the taxpayer did not answer Virginia's request for the rest of the evidence. Virginia allowed 30 days for adequate documentation …
Was a defense contractor's rebuilding work exempt manufacturing for local BPOL tax, or taxable service and repair activity?
The rebuilding processes were substantial manufacturing, but exemption also required wholesale sales. One weapon-system contract primarily paid for services, while the evidence for other contracts was…
New York Advisory Opinion TSB-A-16(5)C: Do unauthorized foreign surplus-lines (non-life) insurers compute their franchise tax under Tax Law section 1502 or section 1502-a, and does the section 1505(a)(1) limitation cap their liability?
They must compute tax under Tax Law section 1502, not section 1502-a, for years beginning on or after January 1, 2003, because section 1502-a applies only to authorized non-life insurers; the section …
New York Advisory Opinion TSB-A-16(4)C: Do unauthorized foreign surplus-lines (non-life) insurers compute their franchise tax under Tax Law section 1502 or section 1502-a, and does the section 1505(a)(1) limitation cap their liability?
They must compute tax under Tax Law section 1502, not section 1502-a, for years beginning on or after January 1, 2003, because section 1502-a applies only to authorized non-life insurers; the section …
Could a GPS-device seller accept automobile dealers' resale certificates when dealers activated and used the devices before vehicle resale?
No. The dealers exercised control by installing, activating, and using the GPS devices to track or disable vehicles, and the contracts restricted resale without written approval. The device sales were…
Were eyeglasses supplied through Medicare Advantage, Medicaid HMO, or other managed-care plans exempt from Illinois tax?
Not merely because the patient had Medicare or Medicaid coverage. Eyeglasses were medical appliances taxed at the 1% rate under the applicable retail or service method. Only payments made directly by …
An organization sells printed educational booklets — with reading passages and questions tied to school standards — almost entirely to schools, teachers, and homeschooling parents. Are those booklet sales exempt from Tennessee sales tax as textbooks?
Yes. The organization's booklet sales are exempt from Tennessee sales and use tax. Although printed materials are tangible personal property and generally taxable, Tennessee exempts sales of 'textbook…
Could a Virginia resident report zero income when S-corporation and IRS records showed pass-through and business income?
No. The S corporation filed returns, maintained Virginia employees, and reported pass-through income, while IRS records showed additional business income. Without objective corrected federal income ev…
Could a Virginia resident postpone filing until a federal return reporting a casualty loss was completed?
No. Virginia filing duties were established by Virginia law, not by when the taxpayer chose to file a federal return reporting a casualty loss. Because no Virginia return was filed, the Department cou…
Could a taxpayer prove foreign domicile for 2010 and 2011 without answering Virginia's document request?
Not on the existing record. The taxpayer had filed Virginia resident returns for 2005 and 2006 and supplied no documents supporting foreign domicile for 2010 and 2011. Virginia allowed 30 days for ade…
Could a veterinary clinic remove sampled purchases from a Virginia use-tax audit using affidavits and lease documents instead of detailed invoices?
Mostly no. Affidavits did not prove that tax had been paid or that purchases were nontaxable, and lease documents saying payments were plus applicable tax did not show tax was included. Virginia remov…
Could a communications provider delay Virginia bad-debt tax credits for 12 months to net later customer recoveries?
No. The provider had to claim the communications-tax credit on the return covering the period when an account became worthless. Any later collection had to be included on the first return after recove…
A qualified data center processes customers' data using its own and third-party software, and also charges affiliated companies for remote access to that software. Are its data-processing service charges — and its software-access charges to affiliates — subject to Tennessee sales tax?
No to both. (1) The qualified data center's charges for the services it performs are NOT taxable — they are nontaxable information and data processing services, and the fact that the center uses softw…
A serious illness caused me to fall behind on my gross receipts tax filings — can New Mexico waive the negligence penalty for a medical hardship?
No — the penalty stood, and the protest was denied. M & M Stores, Inc. runs three Albuquerque gas-station convenience stores; its manager and accountant, Murad Hijazi, handles its monthly gross receip…
Does the City of Round Rock qualify for the state's hotel-project tax rebate under Tax Code Section 351.102(b), even though it isn't a 'qualified hotel project' city like Houston?
Yes. The Comptroller ruled that the City of Round Rock qualifies under Tax Code Section 351.102(b) — a broader, separate hotel-project rebate category than the 'qualified hotel project' definition tha…
Are Nutrition-Facts-labeled food products sold through an MLM network exempt from Georgia state and local sales tax?
The products were exempt from Georgia state sales tax, but not local sales tax, because their Nutrition Facts labels and represented use showed they were food and food ingredients for off-premises con…
Could MANS Construction obtain a gross receipts tax refund after it mistakenly included separately stated tax in reported receipts?
Yes, in part. MANS Construction proved that an October 2012 White Sands billing included $66,407.66 of separately stated gross receipts tax that it mistakenly left in reported receipts. The AHO ordere…
Did limited Illinois trade-show attendance and customer referral credits give an out-of-state online retailer Illinois Use Tax collection nexus?
IDOR did not decide. It said nexus determinations were too fact-specific for a General Information Letter and were best made by auditors conducting the required factual investigation. The letter there…
Was propane delivered for rural home heating exempt from Illinois local retailers' occupation tax?
No. The Illinois Retailers' Occupation Tax Act did not exempt L.P. propane gas used to heat homes. Local retailers' occupation taxes administered by IDOR followed the State Act's exemptions, credits, …
Could a leased soybean seed treater, tanks, conveyors, and controls qualify for Illinois's farm-machinery exemption?
Potentially, but IDOR could not decide without more information. Machinery purchased for lease could qualify when the lessee used it primarily in production agriculture and the purchaser-lessor certif…
Could off-road logging and forestry equipment qualify for Illinois's farm-machinery exemption?
Yes, potentially. Off-road equipment used primarily—more than 50%—in forestry harvesting could qualify as farm machinery used in production agriculture or in a State or federal agricultural program. Q…
Could a tile subcontractor deduct 2008-2009 receipts using an NTTC submitted more than three years after the 60-day audit deadline?
No. S.J. Tile could deduct construction receipts supported by timely NTTCs, but the TAJ Construction certificate arrived more than three years after the July 6, 2012 deadline and could not be consider…
When is South Carolina's 2016 sales tax holiday and what items are exempt (per SC IL #16-6)?
South Carolina's 2016 sales tax holiday runs from 12:01 a.m. Friday, August 5, 2016 through midnight Sunday, August 7, 2016. During that three-day weekend, the 6% state sales and use tax and any appli…
How must Kansas PACT Act cigarette and tobacco reports be filed after 2016?
Kansas Notice 16-01 explains that under Senate Substitute for House Bill 2124, enacted by the 2015 Legislature, all PACT Act reports must be filed electronically in the manner prescribed by the Direct…
Were service, installation, and freight charges on two Illinois invoices taxable?
IDOR could not decide because the invoices had no highlighted lines and did not reveal what was provided. Generally, a construction contractor owed Use Tax on materials permanently incorporated into r…
Was industrial air-pollution-control equipment still generally exempt from Illinois sales tax after July 1, 2003?
No. Public Act 93-24 repealed the general pollution-control sales-tax exemption effective July 1, 2003. A narrower enterprise-zone exemption remained for tangible personal property used or consumed in…
Could a taxpayer reduce a 2012 Virginia assessment by saying she moved to Virginia in August and earned all income elsewhere?
Not without supporting records. The taxpayer acknowledged Virginia's request but did not provide enough evidence to determine her domicile or correct 2012 liability. Virginia upheld the estimate while…
Could a taxpayer establish an out-of-state move during 2012 without providing the residency and filing records Virginia requested?
No, not on the existing record. The taxpayer said she lived in another state from August 2011 until November 2012 but provided no objective residency or filing evidence. Virginia allowed 30 days for d…
Was a managing partner personally liable when 51 monthly sales-tax returns went unfiled and business bills were paid instead?
Yes. As an active manager who handled payroll, quotes, checks, and business expenses, he had a duty to ensure sales-tax filing and payment. The record showed knowledge and willfulness while 51 consecu…
Was a managing partner personally liable for a corporation's unpaid sales tax when a bookkeeper normally filed the returns?
Yes. The bookkeeper's usual filing role did not eliminate the managing partner's own duty. He had signed returns and tax documents, managed the business, knew taxes were collected and unpaid, and had …
Could self-employed contractor Jimmy Stuart have New Mexico penalty and interest removed because paying them would cause financial hardship?
No. Jimmy Stuart admitted the tax but sought relief from penalty and interest because of financial hardship. Interest was mandatory, and his failure to investigate and report CRS taxes was negligence.…
What Virginia state and local tax legislation did the 2016 General Assembly enact?
This Department guide summarizes state and local tax legislation enacted during Virginia's 2016 General Assembly session through the April 20 reconvened session. Each entry identifies the legislation,…
New York Advisory Opinion TSB-A-16(3)C: Did a bank's regular employee trips to, and computer equipment housed at, a New Jersey hosting center make it 'doing business' outside New York so it could allocate its income under Article 32?
Yes. A bank whose employees regularly traveled to a New Jersey hosting center, where it kept data-processing equipment under a 10-year license, was doing business outside New York and therefore entitl…
Are a real-estate listing website's paid agent-promotion products subject to New York sales tax?
No. The three paid products (ad-free featured listings, and buying a share of agent-list/banner views by zip code or city, on web and mobile) all enhance an agent's advertising position on the site, s…
Which of a restaurant franchisor's charges to its New York franchisees are subject to sales tax?
It splits by item. Taxable: charges for hardware (including the internet-connection device), the combined hardware-and-software installation charge (not separately stated), and ongoing IT support that…
Are web-based identity/access-control and data-messaging services subject to New York sales tax?
It depends on the service. The two 'Communicate' products - a hosted Portal and a Trusted Identity Framework - act as electronic gatekeepers that verify users and keep unauthorized people out of a cus…
Which department-store audit items could be removed when the retailer supplied transaction-level proof?
Documented items were adjusted, while unsupported claims stayed taxable. Virginia credited partial use tax, removed returned goods, separately stated alterations, and two proven out-of-state shipments…
Could Emcore Solar protest a proposed transfer of its approved advanced-energy tax credit before any sale or restructuring occurred?
No. Emcore Solar had not sold an ownership interest, merged, changed organizational form, or transferred its approved $675,444.07 advanced-energy credit. Without an actual transaction and resulting bu…
Were receipts and reasonable acquisition costs for processing and distributing human tissue to hospitals subject to Florida sales tax?
No. The hospital tissue transfers were not taxable sales, and authorized reasonable payments for acquiring tissue for processing and distribution were also outside Chapter 212 tax.
Must an out-of-state subcontractor installing floors and permanently attached flooring in Virginia pay tax on its job materials?
Yes. The subcontractor was a using-and-consuming real estate contractor for floors, subflooring, and permanently attached coverings. It had to pay Virginia sales tax to suppliers on job materials or a…
Were stretch-mark cream, anti-wrinkle cream with SPF 15, and SPF 50 sunscreen exempt nonprescription drugs?
Only the SPF 50 sunscreen was exempt. It used a nonprescription drug to prevent sunburn. Stretch-mark therapy and anti-wrinkle cream were taxable cosmetics because their primary use was improving appe…
Could former owners be personally liable for business taxes arising after they left the company?
No. A mutual exit agreement and corrected ownership returns showed that the former owners ended their association with the business on March 1, 2013, before the April 2013-March 2014 tax periods. The …
Could a Virginia wholesaler remove sampled sales from an audit using corrected resale certificates and supporting customer records?
Yes. After greater scrutiny of certificates obtained or corrected during and after audit, Virginia removed the sales for Customers 1, 2, 3, 5, 6, and 7. The Department verified the claimed resale uses…
Are replacement air-conditioning units and repair parts for exempt manufacturing cranes also exempt from Virginia sales tax?
Yes. The cranes were used directly to move in-process material and qualified as exempt manufacturing equipment. Because their air-conditioning units were integral original components, replacement unit…
Did a telecommunications provider make taxable use of broadcast equipment it paid for under an FCC relocation plan?
No. The provider reviewed purchases for FCC reimbursement and paid the invoices, but the broadcasters selected, received, inspected, and controlled the equipment. Because the provider exercised no suf…
Did a later Department review and partial abatement reopen Robert Hooper's expired 90-day deadline to protest gross receipts tax assessments?
No. Robert Hooper did not protest three February 9, 2015 assessments by the May 11 deadline. The Department's later review of additional documents and partial 2011 abatement did not restart the mandat…
What is the last year a brownfield tangible-property credit may be claimed when the Certificate of Completion issued December 31, 2008?
The tangible-property credit may be claimed for qualified property placed in service for up to ten taxable years after the year the Certificate of Completion (CoC) issued. With a December 31, 2008 CoC…
Is a cloud data-storage, backup, file-sharing and sync subscription subject to New York sales tax?
No. The service is not taxable. It is not a sale of prewritten software, because the optional app is free, is not required, and the service is fully usable through any web browser - so customers are n…
Was a lump-sum pension taxable when received after signing an out-of-state home contract but before closing and moving?
Yes. Signing a purchase contract showed intent but did not create the physical presence required for a new domicile. The couple remained Virginia residents until the February 29 closing, so the pensio…
Could a taxpayer keep lower Virginia FAGI when IRS records showed omitted wages and cancellation-of-debt income?
No. IRS information showed wages on Form W-2 and cancellation-of-debt income on Form 1099-C that were omitted from the Virginia return. Without objective contrary evidence, Virginia adjusted federal a…
Could a copy of a Virginia return overturn an assessment when IRS records showed much higher federal adjusted gross income?
Not by itself. IRS data showed significantly higher federal adjusted gross income than the return copy, and the taxpayer did not supply the requested official federal transcript. Virginia allowed 30 d…
Was software exempt when specific vendor records proved it was downloaded, despite freight for promotional materials and a guide?
Yes. A vendor certification, dated download history, and email with the product serial number proved the software itself was delivered electronically. Virginia revised the paid audit assessment and or…
Could a grocery store overturn an estimated sales-tax audit without sales records supporting its claimed exempt-sales percentage?
No. With no adequate sales records, Virginia could estimate sales from cash-flow statements and a 25% markup. A Form 1099-K did not isolate food-stamp sales or prove that 65% of sales were exempt. The…
Could a retailer obtain a 2010 Accelerated Sales Tax refund after the three-year claim deadline because it lacked notice of the limit?
No. The June 2010 payment was due July 20, 2010, but the Department did not receive the refund request until October 2014. Virginia's three-year deadline had expired, and claimed lack of notice or dif…
Are remote maintenance and alarm-code changes taxable when customers monitor the video-security systems themselves?
Yes. Because the customers—not the seller—reviewed the surveillance images, the systems were non-monitored systems and taxable sales of tangible property. Remote maintenance and alarm-code changes sup…
Are charges for advertising space in hospital display cases taxable, and who owes tax on the cases?
The advertising-space charges were not taxable retail sales. The concessionaire remained the owner and consumer of the removable display cases, so it owed Virginia use tax on them if no similar tax ha…
Did living and working in another state for 2012 end Virginia domicile when the taxpayer kept a Virginia license and voter registration?
No. The taxpayer lived and worked elsewhere and registered a vehicle there, but kept her Virginia driver's license and voter registration and returned in 2013. Virginia found no permanent abandonment …
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