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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Was Reggie Olguin's assessment protest timely when he mailed it before the deadline but used the wrong Department address and it was never received?
No. Reggie Olguin prepared and mailed a protest before the January 25, 2016 deadline, but he transposed the Department's street and post-office-box information. The Department never received the impro…
Was Linda Wasko's Type 5 NTTC untimely when it was executed one day after the deadline printed on the Department's audit notice?
Not proven. Linda Wasko obtained the correct Type 5 NTTC on August 26, 2015, one day after the deadline printed on an audit notice dated June 26. But credible testimony showed the notice might not hav…
Could a partner support Virginia credits for taxes paid through state composite returns with a per-state allocation schedule?
Yes. The schedule separately listed the partner's share of taxable income and tax paid for each state, satisfying Virginia's composite-return documentation rule. Virginia also confirmed the relevant A…
How did Virginia treat flooring strapping equipment, late resale certificates, and a challenged sales-audit sample?
The production strapping, machine, and parts were exempt. Four sales stayed taxable because the customer's later certificate was incomplete and the customer was not registered at the sale dates. Virgi…
Were end-of-line lumber strapping, the strapping tool, and repair parts exempt manufacturing property?
Yes. Lumber was not ready for sale until it was strapped at the end of the production line. The strapping, tool, and repair parts performed an immediate production and quality-control function before …
Were strapping materials and strapping-tool parts used throughout lumber production exempt from Virginia use tax?
Yes. The strapping protected and conveyed unfinished lumber between production stages and bundled finished lumber before storage or shipping. It played an immediate production and quality-control role…
Was an off-site warehouse still ancillary to manufacturing when it directed sales activity, ran vending operations, and distributed third-party goods?
No. The facility did more than store the manufacturer's finished goods: it directed employees engaged in sales-related activity, operated a vending business, and handled products made by others. It wa…
When a vacation-rental booking agent takes a commission out of what the guest pays for a Colorado short-term rental, is sales/lodging tax calculated on the full amount the guest paid, including the agent's commission?
Yes. When a booking agent collects a guest's payment for a Colorado short-term rental and keeps part of it as commission before forwarding the rest to the property manager, the lodging sales tax is ca…
Which hotel group-contract fees (early departure, room and food-and-beverage attrition, cancellation, no-show, meeting-room cancellation) are subject to Colorado sales/lodging tax, and is the tax on an online-travel-company booking figured on the lower contract rate or the higher website rate?
It depends on the fee. Early departure, no-show, and cancellation fees are cancellation charges judged by the '50% rule': if the charge is more than 50% of the daily room rate it's taxable as payment …
How did South Carolina Revenue Ruling 16-4 classify coin-operated amusement devices and their license requirements?
The ruling sorted amusement equipment into Type I, II, and III license categories based on the machine's function, slot or payment method, and free-play feature, while treating specified for-profit bi…
Did a former Virginia resident owe 2014 Virginia tax on out-of-state wages and an early retirement withdrawal from a Virginia business?
No. She had established a home and employment in another state and was neither a Virginia domiciliary nor actual resident. Her out-of-state wages and retirement withdrawal were not Virginia-source inc…
When were sales of an implantable urinary prosthetic device exempt from Virginia sales tax?
Sales were exempt when a licensed practitioner purchased the implant for a specific patient under a prescription or work order, including direct delivery, advance shipment, and consignment. Bulk purch…
Were intercompany equipment-cost allocations taxable rental charges even without cash payment or markup?
Yes. The holding company owned and depreciated equipment, transferred possession to subsidiaries, and recorded monthly cost allocations. Those accounting entries were consideration for taxable rentals…
How did Virginia treat gain from a dairy farmer's sale of milk-production quota, or milk base?
Federal law determines the amount and character of any gain case by case. Income included in federal adjusted gross income or federal taxable income flows into Virginia tax. The qualified-business cap…
Does Virginia's three-year refund limitation also apply when an individual elects an overpayment credit?
Yes. Virginia treated a refund and an elected overpayment credit as functionally equivalent under Va. Code § 58.1-499. Because the 2011 return was filed in June 2015, after the May 1 deadline, the cre…
Were prescription-only natural latex mattresses exempt durable medical equipment in Virginia?
No. The mattresses were useful even without illness or injury, so they failed a mandatory durable-medical-equipment test despite required prescriptions. Virginia also replaced the 50% fraud penalty wi…
Could a countertop seller exclude combined installation labor and profit from sales tax and reduce withholding without supporting records?
Not on the records presented. A single charge combining exempt installation labor with taxable profit remained taxable, and the seller had not substantiated its wage, profit, or independent-contractor…
Is a prescription-only implant system exempt from Georgia sales tax when it includes a single-use surgical placement tool?
Yes. The permanent implant qualified as an exempt prescription prosthetic device, and including its otherwise taxable single-use placement housing did not make the system taxable because the housing w…
Were Bogle Management's farm-management fees and payroll reimbursements excluded from New Mexico gross receipts as receipts of a disclosed agent?
No. Bogle Management was doing business in New Mexico through managers it supplied to two farms. Its management fees belonged to Bogle, and its payroll reimbursements were not excluded because it did …
Could gain from selling a small parcel to a Virginia public university qualify for a capital-gain or open-space subtraction?
No. The real estate was not an investment in a qualified technology business, and the roughly 5,000-square-foot parcel did not meet Virginia's minimum open-space acreage standards. The individual inco…
Did renting Virginia web servers create corporate-income-tax or sales-tax nexus for an online healthcare retailer?
Corporate-income-tax nexus could not be decided without more facts about how the rented Virginia servers were used. If nexus existed, the equipment belonged in the Virginia property factor. Third-part…
What happened when a medical-equipment seller supplied new documents after a Virginia sales-tax audit?
Virginia did not decide the claimed exemptions outright. Because the seller supplied additional records after the audit, the Department returned the case to audit staff for review and directed that th…
Could a road-service provider reduce an estimated sales-tax audit without records proving vendor tax and snow-clearing revenue?
No. Virginia could allow credit for verified sales tax paid to vendors on resale property, but the taxpayer supplied no proof. It also failed to document claimed snow-clearing revenue, so the estimate…
If a retailer charged sales tax on mandatory shipping and a customer returns the goods for a full refund of the item price but not the shipping, must the retailer refund the sales tax it collected on the shipping charge?
Yes. When a retailer refunds the customer the full purchase price of returned goods but keeps the mandatory shipping charge, it must also refund the sales tax it collected on that shipping charge. Man…
Could for-profit hospital HealthSouth use New Mexico's managed-care health-service gross receipts deduction despite regulations excluding hospitals?
Yes. Section 7-9-93 limited the source and nature of deductible managed-care payments, but did not restrict which taxpayer could claim them. The AHO held that regulations excluding hospitals added a l…
Did Mountain Liquors become liable as a successor when it took a defaulting tenant's inventory and continued the same grocery, liquor, and deli business?
Yes, for tax only. Mountain Liquors took Trail House Enterprises' grocery and liquor inventory after lease default, continued the same store and deli at the same property, used existing signage, and p…
Were internet-protocol television and streaming-video services taxable in Nebraska?
Yes. Sales to end users were taxable as digital audio-visual works when delivered or transferred to a server or device in Nebraska, whether the customer received permanent or temporary use. An FCC-aut…
Could construction contractors estimate Virginia consumer use tax by allocating inventory cost according to Virginia revenue?
No. Virginia use tax had to be computed from the actual cost of materials used in Virginia, not a revenue-based estimate. The contractors could use FIFO for commingled inventory and had to assign the …
Could John and Susan Grazier receive 2008-2010 income-tax refunds claimed in 2015 because hardship and Department conversations delayed their returns?
No. The Graziers filed their 2008, 2009, and 2010 personal income tax returns on November 19, 2015, after each three-year refund deadline had expired. Job loss, illness, inability to afford a preparer…
Did Sol Bookkeeping become a successor to a related accounting firm when it retained shared software, employees, goodwill, and some former clients?
Yes. The two companies had operated simultaneously and separately, but after the older accounting firm closed, Sol retained shared billing software, kept employees associated with both businesses, ser…
Was a retiree with no claimed permanent home still a Virginia domiciliary resident for 2012?
Yes. Although he spent about 120 days in Virginia and moved among several states, he used a Virginia family address for mail and his federal return and held a Virginia driver's license. With no eviden…
Were staffing services bundled with leased copying equipment taxable to a Virginia nonprofit?
The staffing was normally taxable because it directly supported the leased equipment and was part of the sale. But the nonprofit's exemption certificate covered the equipment lease and connected servi…
Did selling scrap from a Virginia research pilot line destroy the facility's sales-tax exemption?
No. The Virginia facility existed solely to improve an existing film product, and the unusable scrap was only a by-product of that research. Finding a buyer for the waste did not turn the facility int…
Were bulk prosthetic parts and patient-specific liners exempt from Virginia sales tax?
Bulk purchases were taxable even when parts were later fitted or attached to an exempt prosthetic device. Liners ordered for an identified patient were exempt as purchases on that individual's behalf,…
Is a service that collects and segments internet-user data for ad targeting a taxable information service?
Yes. The company collects and analyzes data on roughly 700 million internet users (via HTML tags and cookies), groups them into targeting 'segments' and makes those segments available to advertisers. …
Did South Carolina Revenue Ruling 16-3 require an amusement-machine license for restaurant ordering and payment tablets?
No. Under the stated facts, the tablets' purpose and intended use were to streamline restaurant ordering and bill payment, not to provide amusements or video games. Optional educational content, puzzl…
Were a photographer's service fees taxable when customers received images on flash drives or as prints?
Yes. The true object of the package was the images delivered as tangible property, so photography, editing, posting, and related service fees were taxable. Flash drives and albums transferred to custo…
Does an out-of-state franchisor have Colorado sales- or income-tax nexus, and which of its franchise revenues count toward the income-tax thresholds?
The Department wouldn't decide sales-tax nexus—too fact-intensive for a general letter. For income tax, a company has nexus if it exceeds Public Law 86-272 and meets any one threshold ($50,000 propert…
Does New York sales or use tax apply to a sculpture bought from a NY dealer but delivered abroad and later displayed in New York?
No. New York sales tax is a destination tax: it turns on where the buyer takes possession. Here the Florida buyer authorized a museum to retrieve the sculpture, and the museum's contract carrier (the …
Did an Illinois municipality owe Gas Revenue Tax when its own gas system supplied municipal buildings without billing them?
The tax measured on that distribution was zero. Gas Revenue Tax was the lower of 2.4 cents per therm or 5% of gross receipts for each customer and billing period. Because the municipality received no …
What corrections did Illinois give another state's survey about vehicle trade-ins, private sales, and long-term leases?
IDOR would not approve another agency's publication, though its chart generally appeared correct. Retail motor-vehicle sales could receive the Section 130.425 trade-in credit, but private-party vehicl…
Did an Illinois seller of gold coins and bars need tax registration, and which precious-metal sales were exempt?
A business making any taxable retail sales had to register with IDOR; one making only wholesale or exempt sales did not have to register to remit tax, though it could obtain a resale number. Sales of …
Could an Illinois nonprofit use an E-number or partial self-assessment for purchases also benefiting an individual or affiliated for-profit company?
Only direct purchases by the organization holding an active E-number were exempt, and only when made in furtherance of its organizational purpose. Individual members could not use the organization's n…
When could Virginia governments, nonprofits, and churches buy meals and catering tax-free under the 2016 policy?
For purchases on or after April 22, 2016, qualifying entities could use their exemption certificates for meals and related catering services. State and local governments and nonprofits had to meet a m…
Could a Virginia resident exclude wages by treating the value of personal labor as an offsetting cost?
No. A worker's labor did not create a tax basis that offset wages, and courts had rejected the argument that wages are not income. Because the taxpayer's Virginia income exceeded the filing threshold,…
Did a foreign service officer become a Virginia domiciliary resident before an overseas assignment?
No. His continuing driver's license and voter registration showed that he had not abandoned his original state's domicile, so Virginia abated the resident assessment. But his Virginia employment wages…
Are nonqualified deferred-compensation distributions paid to a nonresident in installments over 10 years 'retirement income' exempt from New York tax and withholding?
Yes. Distributions from a nonqualified deferred-compensation plan paid as substantially equal periodic payments over at least 10 years are 'retirement income' under the federal Pension Source Law (4 U…
Are nutritional shakes, nutrition bars, and whole-food chewable tablets taxable in Connecticut, or exempt as food products?
Exempt. Powdered nutritional shake mixes and nutrition bars sold as snacks or meal substitutes, and chewable tablets and capsules made from powdered whole fruits, vegetables and grains, are all exempt…
Could Virginia's Department of Taxation review a county's refusal to waive mobile-property-tax penalties and interest?
No. The state administrative appeal process covered disputes over the amount of local mobile property tax, while these owners accepted the tax and challenged only penalties and interest. State law lef…
Are auto repairs done out of state taxable in New York if the repaired car is delivered to the customer in New York?
Yes. Repair and maintenance of tangible personal property is a destination tax: what controls is where the repaired property is delivered to the customer. Here the dealer's body shop is in New Jersey,…
Are sales of warm, freshly baked cookies subject to New York sales tax even for take-out or delivery?
Yes. New York taxes food and drink sold by restaurants and similar establishments. Food sold for off-premises consumption can escape the tax only if it is sold in an unheated state (and is of a type c…
Are a New York City fitness studio's class entry fees and weight-loss-challenge fees subject to sales tax?
Only to New York City local tax, not State tax. The studio's class entry fees and weight-loss-challenge fees are not subject to New York State sales tax: they are not admission charges to a place of a…
Could an auto restorer deduct services sold to dealerships for resale, or rely on dealer-issued NTTCs, when the vehicles were later subject to motor vehicle excise tax?
No. The service-for-resale deduction required the dealership's resale to be subject to gross receipts tax, but vehicle sales were instead exempt and subject to motor vehicle excise tax. Hubbard Lovell…
New York Advisory Opinion TSB-A-16(2)C / (15)S: Must a kiosk operator that lets customers buy prepaid airtime, texts and data collect sales tax, and does it owe the section 186-e telecommunication excise tax?
The kiosk operator must collect sales tax on prepaid mobile calling-service top-ups sold on or after April 13, 2015, but not before, and owes no section 186-e excise tax because it merely facilitates …
Is the purchase of commercial vessels delivered in New York subject to sales tax, and on the full price?
It is taxable, but only on the first $230,000 of each vessel. Vessels are tangible personal property, and a sale is taxable where the property is delivered. Here the three sightseeing ships were bough…
I bought two adjacent properties across the road from each other -- one a $2 million house, the other a $450,000 lot I consider vacant land bought as a separate investment -- using two separate deeds and separate contracts on the same day. Do I owe New York's additional 1% 'mansion tax' only on the $2 million house, or do the two purchase prices get combined?
The two purchase prices must be aggregated, pushing the transaction over the $1 million threshold for New York's additional Real Estate Transfer Tax (the 1% 'mansion tax' under Tax Law § 1402-a). The …
How did Illinois classify and tax towers, pylons, wall and interior signs, menu boards, neon tubing, and related installation fees?
IDOR did not classify the listed signs or decide the company's transactions. It declined the requested Private Letter Ruling and said a sign vendor could owe Retailers' Occupation Tax, Service Occupat…
Does a Colorado nutritional-products seller have to charge state sales tax on aloe drinks, fiber powders, a protein bar, and soy nuts that carry a 'Nutrition Facts' label?
No. The six nutritional products here — aloe drinks, a fiber powder, a protein bar, and roasted soy nuts — are all exempt from Colorado state sales tax as food, because each carries a 'Nutrition Facts…
Could Pete's Landscaping deduct firewood sold to restaurants that used it for cooking or heat when Department employees approved Type 2 NTTCs?
Yes, for the restaurant sales backed by timely, properly executed Type 2 NTTCs. Pete's Landscaping knew the restaurants used rather than resold the firewood, but it accepted the certificates only afte…
Must a nonresident include in New York source income a lump-sum distribution from an excess-benefit nonqualified deferred-compensation plan earned while working in New York?
No. The lump-sum distribution from the excess-benefit plan to a nonresident is not subject to New York income tax under the federal Pension Source Law (4 USC § 114). The plan is a nonqualified deferre…
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