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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When must a scaffolding company collect New York sales tax on charges to contractors?
It depends on whether services come with the scaffolding and what the job is. Since January 1, 2015, scaffolding provided together with erection and/or dismantling is treated as a service (even if the…
When could a Virginia restaurant accept government, nonprofit, school, or church exemption certificates for meals and catering?
Meals and catering were sales of tangible property, so a restaurant could accept a valid exemption certificate when the qualifying entity used the food for an official purpose, paid directly, and cont…
When one company collects a fee from subscribers on behalf of another company under a written agency agreement, who is responsible for charging, collecting, and remitting the Texas sales tax on that fee?
Once a written agency agreement is executed, the agent stands in the principal's shoes: the agent (not the principal) must charge and collect sales tax on the taxable fee it collects from subscribers,…
Was an October 2015 refund claim timely for Virginia income-tax assessments issued in 2005?
No. The submitted 2001 and 2003 returns did not show changes and arrived more than two years after assessment payments. The assessments were also not paid and the protective claim was not filed within…
Did exercising a testamentary power of appointment create a new Virginia resident trust?
Yes. The Virginia decedent's will exercised a power of appointment and supplied the terms for holding the assets in further trust, creating a new testamentary trust. It was therefore a Virginia reside…
Could a taxpayer limit Virginia's 2012 assessment by saying he moved to Virginia in October without supplying residency records?
Not yet. The taxpayer conceded tax on a post-move IRA distribution but did not provide the other-state return or domicile records Virginia requested. The assessment remained presumptively correct, wit…
Was a researcher a Virginia domiciliary despite claiming fewer than 90 Virginia days and residence elsewhere?
Yes. The researcher kept a Virginia apartment and vehicle, held a Virginia driver's license, and used a Virginia address on his 2011 federal return. Later out-of-state records and an unsigned lease di…
Were handling charges taxable when a truck-repair dispatcher's invoices included repair parts?
Yes. The repair invoices predominantly included tangible repair parts, so the dispatcher's handling charge was a taxable service, markup, and profit connected with those sales. A handling charge could…
Did a contractor's purchase of another company's division qualify for Virginia's occasional-sale exemption?
Possibly, but Virginia could not decide from the record. Selling one division was not automatically a sale of substantially all company assets, a liquidation, or a reorganization. The buyer did not pr…
Do donations to a fund that grants money to licensed child care centers—rather than to a child care facility directly—qualify for Colorado's child care contribution credit?
Yes, in part. Donations to an intermediary fund qualify for the § 39-22-121 child care contribution credit when the fund ultimately uses them 'for the establishment or operation of a child care facili…
Is a digital copier's 'per-click' maintenance charge — which bundles labor with toner and staples and is priced by pages printed — subject to Colorado sales tax when the customer uses the copier to make printed items it then resells?
Not on these facts. A copier 'per-click' fee that bundles maintenance labor with consumables (toner and staples) is not subject to Colorado sales tax when the customer uses the copier to make printed …
Does Georgia tax a custom closet system and the separately stated charge to install it?
Georgia treated the removable closet system as tangible personal property, not a real-property fixture. The retailer could buy it for resale and had to collect tax on the product price, but a separate…
Are licensed digital movies and the hard drives they arrive on taxable tangible personal property, and who owes the tax?
Yes. Both the digital movies/content and the computer hard drives a theater receives from film distributors are taxable tangible personal property — digital goods have a physical existence, and Colora…
Is a permanent transprostatic implant sold to hospitals exempt from Colorado sales tax as a prosthetic device or as material furnished by a provider?
Yes, it's exempt — on two independent grounds. The permanent transprostatic implant (which corrects BPH by reopening the urethra) qualifies as an exempt prosthetic device because it replaces the block…
Are e-books, self-study online courses, and instructor-critiqued virtual lessons subject to Colorado sales tax?
It splits three ways. E-books are taxable digital goods (tangible personal property you can download and print). Self-study online courses — written material and videos with no instructor interaction …
When a Colorado resident sells an interest in a multistate pass-through and another state taxes the gain, how is Colorado's credit for taxes paid to another state figured?
The resident gets a credit, but Colorado uses its own sourcing rules, not the other state's. To find the gain 'derived from sources' in the other state, the seller applies a three-year average of the …
Did a Maryland nonprofit owe Virginia withholding even without a Virginia office or property?
Potentially yes, because a Virginia resident's wages remain subject to Virginia withholding even when the work is performed in Maryland. The nonprofit had filed two returns for the quarter, so Virgini…
Did an out-of-state consultant owe Virginia income tax when he worked 105 days at a Virginia client's headquarters?
Yes, to the extent his pay came from services performed in Virginia. Working from an out-of-state home office did not erase the 105 days spent at the Virginia client's headquarters. Virginia required …
Was a military spouse protected from Virginia tax when he claimed the service member's domicile but had never been physically present in that state?
No for the husband. The service member remained domiciled in the other state, but her husband had never lived there and therefore could not have acquired that domicile. His Virginia home, employment, …
Could manufacturing equipment be real property rather than taxable machinery and tools merely because it was used directly in production?
Possibly. Direct use in manufacturing did not end the inquiry. Virginia remanded because the county had to apply the Danville Holding fixture test—annexation, adaptation, and especially the owner's in…
Which medical, charitable, home-office, travel, meal, and LLC deductions survived Virginia's review of a 2014 return?
Documented medical costs could count if they cleared the 2014 federal floor, and the church contribution was substantiated. Pre-tax health premiums, life insurance, and the husband's personal claim of…
Was a Virginia resident entitled to larger credits for New York income tax on his 2012 and 2014 Virginia returns?
No for 2014, and Virginia could not decide 2012. The 2014 credit was properly limited using Virginia's established New York nonresident-income calculation, so the refund was denied. For 2012, there wa…
Could a corporate partner include overseas intellectual-property royalties in its Virginia sales-factor denominator while treating them as foreign-source income?
No, if the corporation claimed the foreign-source-income subtraction. The joint-venture royalties kept their royalty character and qualified as foreign-source income, so the related sales were exclude…
Did individually prepackaged ice cream sold from a truck qualify for Virginia's reduced food tax rate?
No. Virginia treated ice-cream trucks as vendors of food for immediate consumption. The Department's policy did not distinguish prepackaged single servings from soft-serve cones or cups, so both were …
Were a provider's equipment and service charges for hospital and nursing-home patient-monitoring systems subject to Virginia sales tax?
Yes, unless the hospital or nursing home documented an exemption. Virginia found that the customer's true object was the cameras, boxes, monitors, and related equipment used to monitor patients—not th…
Was diesel used by ready-mix trucks exempt from Virginia sales tax after a motor-fuel-tax refund?
Yes, for the manufacturing portion. Virginia used the statutory 35% motor-fuel-tax refund ratio to measure diesel powering the mixing unit and treated that share as fuel used directly in manufacturing…
Must a self-directing participant who employs personal care workers withhold Kansas income tax?
Kansas Notice 16-03 (April 11, 2016) addresses Kansas income tax withholding on payments to personal care service (PCS) providers. Under the Kansas Department for Aging and Disability Services policy,…
Were payments for a sponsor's name or advertising on agency-controlled highway signs taxable as a license to use real property?
No. The transportation agency retained control over the signs, their locations, fabrication, installation, and advertisement placement, so the sponsor received no taxable license to use real property.
Which interest did South Carolina Revenue Ruling 16-2 treat as exempt from state income tax?
The ruling exempted qualifying interest on South Carolina and its political subdivisions, obligations protected from state tax by federal law, and qualifying direct obligations of the United States. T…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #16-5)?
Use the citator attached to SC Information Letter #16-5. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Did filing a federal return, with no IRS adjustment, satisfy a Virginia resident's separate duty to file a 2012 Virginia return?
No. Virginia filing duties arise under Virginia law, regardless of whether the IRS adjusts the federal return. Because the resident filed no Virginia return and offered no proof that the estimate was …
Could a city impose BPOL tax on a fuel wholesaler that owned and operated pumps and tanks at a local retailer?
Potentially, but only on properly sited receipts. Continuous ownership and operation of pumps, tanks, and signage appeared to create a definite city place of business, and sales to the retailer were w…
Did an unsupported claim of moving away overcome Virginia's estimated 2008 resident income-tax assessment?
No. The taxpayer provided no objective proof that he abandoned Virginia and acquired another domicile, while a Virginia driver's license was reissued during 2008. Virginia left the estimated assessmen…
Could Virginia estimate a restaurant's six-year sales-tax liability from one month of ABC records when the restaurant supplied no reliable sales records?
Yes. Because the restaurant did not provide reliable records and the other reported figures were doubtful, Virginia accepted January 2012 ABC data as the best information available. The restaurant rec…
Is a hotel's mandatory amenity fee taxable, and who collects the tax when a middleman arranges the amenities?
Yes, the guest's amenity fee is taxable — but only at the hotel level. Because the fee is mandatory and built into the room price (the true object is the room), the whole lodging charge is taxable, an…
Were Video Factory's recorded and edited presentations delivered on DVDs to the State Bar tangible personal property covered by its nonprofit NTTC?
Yes. The State Bar paid only when Video Factory delivered completed movies on DVDs, and the recording and minimal editing had no independent value without that physical product. The AHO treated the fi…
Are parchment sheets exempt packaging materials when a food business first uses them during baking and later uses them to package the food?
No. The seller had to charge Georgia sales tax because purchasers first used the parchment sheets in the baking process. Their later use to package the finished food did not qualify for the packaging-…
A company sells eleven different edible products. Which ones are taxed at Tennessee's lower 'food and food ingredients' rate, and which count as 'candy' (or dietary supplements) and are taxed at the higher general sales-tax rate?
It depends on each product. Of the eleven edible products, nine qualify as 'food and food ingredients' and are taxed at Tennessee's reduced food rate (5% state at the time of the ruling), plus local o…
Could Virginia review a city's boat valuation and overturn tax on another boat kept in the city for more than six months?
No on both issues. The Department is barred from reviewing valuation or valuation methods for local mobile property tax. It also upheld the second boat's 2015 assessment because the boat had remained …
Could a Virginia domiciliary who was also a District of Columbia actual resident claim a Virginia credit for District income tax?
Potentially yes. Because the wife was a Virginia domiciliary and a District actual resident, she filed resident returns in both jurisdictions and Virginia's usual bar for D.C. nonresidents did not app…
Did a temporary employer-required assignment outside Virginia make the employee a part-year Virginia resident for 2012?
No. The employee kept her Virginia home, driver's license, vehicle registration, and voter registration and returned when the temporary assignment ended. Virginia taxed all of her 2012 income, upheld …
Is the sale and installation of a custom closet-organizing system a nontaxable capital improvement?
No - it is taxable. Installing tangible personal property is taxable unless the result is a capital improvement, which requires all three tests: it substantially adds value or prolongs the property's …
Does Georgia tax a single-price bundle of electronically delivered software, implementation, installation, upgrades, updates, and technical support?
No, on the facts presented. Electronically delivered software was not tangible personal property, and the implementation, installation, upgrades, updates, and technical support were not taxable servic…
Were prepaid software-license fees and related monthly license and support fees exempt from Illinois Retailers' Occupation Tax?
Yes. IDOR reviewed the company's license agreements and found that they met all five requirements for a nontaxable software license under 86 Ill. Adm. Code 130.1935(a)(1). Because the license fees wer…
Were chocolate-fruit and fruit-honey bars taxed as candy or low-rate food in Illinois?
IDOR did not expressly classify the two submitted bars. It explained that qualifying food for off-premises consumption was taxed at the 1% State rate, while candy was taxed at 6.25%, plus applicable l…
Did a couple's unsupported claim of living in another state overcome Virginia's estimated 2012 resident assessment?
No. The couple offered no objective evidence that they abandoned Virginia and acquired another domicile, so they did not overcome the presumed-correct estimate. Virginia allowed 30 days to provide ade…
Could Virginia hear a BPOL classification appeal when the city claimed its own procedural rules made the local appeal invalid?
Yes. Whatever procedural objections the city raised, its letter decided the business-classification issue and included the required notice for a final local determination. The taxpayer timely appealed…
Did Virginia double-tax a fabricator's untaxed sales when its customer had already been audited for part of the same period?
No. The fabricator's sample included the customer, but the extrapolation assessed nothing for August 2011 through July 2014—the period covered by the customer's audit. Virginia taxed the fabricator's …
Could an employer avoid Virginia withholding tax, penalties, and interest because it did not know the rule and was not notified sooner?
No. Employers must self-assess and withhold Virginia tax from covered wages; ignorance of the law and the Department's inability to flag every deficiency immediately were not grounds for relief. Virgi…
Could a Virginia corporation subtract health-insurance premiums that were not federally deductible because it claimed the federal Small Business Health Care Tax Credit?
No. Virginia starts with federal taxable income and allows only the additions and subtractions authorized by state statute. Although Virginia expressly permits a subtraction for wages disallowed becau…
Could a taxpayer reverse Virginia's 2011 federal-income adjustment without providing the requested official IRS transcript?
Not on the existing record. Virginia begins with federal adjusted gross income, and the taxpayer provided no official IRS document showing that Virginia's matching adjustment was wrong. The assessment…
Is a service contract covering both computer hardware and software subject to New York sales tax?
Yes - the whole contract is taxable unless the software part is broken out. Maintaining, servicing and repairing computer hardware (tangible personal property) is a taxable service, and buying a maint…
Did a lower deed price and private appraisal require Virginia to override the county clerk's assessed-value calculation of recordation tax?
Not automatically. A recent property assessment strongly indicated fair market value, and a private appraisal plus disagreement did not by itself show the clerk's valuation was unreasonable. Virginia …
Did a lease and claimed out-of-state driver's license prove that a taxpayer had abandoned Virginia domicile for 2014?
No. The taxpayer showed some ties to another state, but Virginia records still showed a vehicle and driver's license here, and his federal return used a Virginia address. Because he bore the burden of…
Could a Virginia resident claim a Virginia credit for California tax paid on capital gain passed through from California rental property?
No, on the record presented. Because California generally lets a Virginia resident claim a reciprocal credit on the California nonresident return, Virginia does not also allow the resident to claim th…
Did paying more than 90% of Elizabeth Brower's 2014 income tax by January 2015 eliminate the penalty for short estimated installments earlier in the year?
No. Elizabeth Brower paid $4,100 of her $4,231 2014 liability by January 2015, exceeding 90%, but her April, June, and September cumulative payments did not reach the required 25%, 50%, and 75% instal…
What is South Carolina's tax interest rate for underpayments and overpayments for the period April 1, 2016 through June 30, 2016 (per SC IL #16-4)?
4%. SC Information Letter #16-4 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2016 through June 30, 2016. Interest is compounded daily, except…
Could a taxpayer avoid Virginia income-tax assessments by arguing that federal and state income-tax payment is voluntary?
No. Voluntary compliance does not make payment optional or prevent Virginia from assessing unpaid tax. The taxpayer also failed to document possible Maryland residency and reciprocity eligibility, so …
Which corporations belong on a Virginia consolidated income-tax return, and could two eligible affiliates amend prior returns to remove ineligible entities?
Only eligible affiliates that would be subject to Virginia income tax on separate returns belong in the consolidated return. Corporations without Virginia-source income, or otherwise excluded by the r…
Does a laparoscopic-surgery trocar system that delivers carbon dioxide gas (not fluids or drugs) into the abdomen qualify for Texas's sales tax exemption for intravenous (IV) systems?
No. The Comptroller ruled that a laparoscopic-surgery trocar system -- an access port, cannula, gas-pressure control device, and connecting tubing that introduces carbon dioxide gas into the abdomen t…
How these rulings are useful
- See how the rule applies: A letter ruling shows how a state revenue department actually applied the tax law to a specific business and set of facts.
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