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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Is equipment a repair shop buys to perform taxable repairs itself subject to sales tax?
Yes. A car dealer's purchase of a wheel-alignment machine is a taxable retail sale of tangible personal property. The machine is used to perform the dealer's repair and alignment work, which is a taxa…
Could an Illinois utility charge Gas Revenue Tax for delivering out-of-state natural gas to a church exempt from Gas Use Tax?
Yes. The church's religious-organization exemption from Gas Use Tax on the gas purchase did not exempt the utility's Illinois delivery and related service charges from Gas Revenue Tax. The delivery ta…
What Virginia tax interest rates applied during the second quarter of 2016?
For April 1 through June 30, 2016, Virginia's ordinary state interest rates were 6% on tax underpayments and assessments and 6% on noncorporate overpayments and refunds. The reduced rate for qualifyin…
Can a planned Convention Center Annex more than 1,000 feet from the City of Arlington's existing convention center still make a nearby hotel project eligible for the state hotel-project tax rebate, and does a ground lease to a private developer break the required city-ownership link?
Yes to both. The Comptroller ruled that a newly built Convention Center Annex -- located separately from, and more than 1,000 feet away from, the City of Arlington's existing convention center -- will…
Can the City of Nacogdoches get a rebate of state hotel occupancy and sales taxes for a rehabilitated downtown hotel/convention center project, and does it matter whether the city or the developer owns the convention center building?
Yes, but ownership structure controls. The Comptroller ruled the City of Nacogdoches -- as a smaller city qualifying as an 'eligible central municipality' because it hosts a general academic teaching …
Is a tablet-based remote health-monitoring product, and the devices sold with it, subject to sales tax?
It splits. The monthly fee for the product is taxable prewritten software: caregivers log in to the provider's web portal and gain constructive possession of the software (the right to use and direct …
Is a lump-sum payment from a former employer's 401(k) restoration plan, distributed after the taxpayer retired and left New York, exempt from New York State and City tax?
Yes. The lump sum from the nonqualified 401(k) restoration plan is exempt under the federal Pension Source Law (4 USC § 114) because the taxpayer was a nonresident when paid. It also did not accrue to…
When did Illinois tax refundable and nonrefundable advance payments for short-term automobile rentals?
A nonrefundable reservation fee was subject to the 5% Automobile Renting Tax when received because the customer was irrevocably liable for the right to possess the car, including when the customer lat…
Who owed Illinois tax when an out-of-state company leased semi-trailers for use in Illinois under true leases?
The lessor owed Illinois Use Tax on its cost price when true-leased trailers were brought into Illinois; rental receipts were not taxed and the lessee owed no tax. Tax properly due and paid to another…
Did a dissolving, steroid-releasing sinus implant qualify for Illinois' reduced tax rate for medicine or drugs?
Yes. Based on its instructions for use and sustained release of mometasone furoate through a bioabsorbable sinus implant, IDOR treated the product as a medicine or drug taxable at the 1% state rate pl…
After an asset acquisition, can the buyer continue the seller's Georgia Quality Jobs Tax Credit and Jobs Tax Credit carryforwards?
The two credits receive different treatment. The buyer could not claim or use the acquired taxpayer's Quality Jobs Tax Credit or carryforward because the governing statute contained no transfer provis…
Were Love Tree Builders' cash receipts from Minnesota storm cleanup subject to New Mexico gross receipts tax because they appeared on the owner's federal Schedule C?
No. A Schedule C match showed $24,201 not reported on New Mexico CRS returns, but Love Tree Builders credibly proved the cash came from emergency cleanup and repair services performed in Minnesota aft…
Is the fee an amusement park guest pays to use an electronic storage locker a taxable rental of tangible personal property, or a nontaxable storage service -- and did the Comptroller's answer change from an earlier ruling to the same taxpayer?
Nontaxable, but only going forward. The Comptroller ruled that fees amusement park guests pay to use an electronic storage locker are a nontaxable storage service, not a taxable rental of tangible per…
Are outsourced paper and electronic billing services subject to Colorado sales tax, even though a paper bill changes hands?
No. Outsourced paper and electronic billing services are a nontaxable service in Colorado, and the paper bill that changes hands is just an incidental transfer of property tied to that service — so th…
Could a nonfiler overturn a Virginia income-tax assessment merely by saying he lived in another state and then attended out-of-state graduate school?
No. The taxpayer did not answer Virginia's documentation request or prove that he had abandoned Virginia domicile and acquired another one. Because the assessment was presumed correct, Virginia upheld…
Could a taxpayer appeal a county's local real-property tax assessments to the Virginia Department of Taxation?
No. Virginia law did not authorize the Department of Taxation to review local real-property tax assessments or decide whether the county commissioner properly declined the taxpayer's appeal. Those dis…
Could a taxpayer reverse Virginia's W-2-based corrections to federal adjusted gross income and withholding without objective contrary evidence?
No. The return apparently reported Virginia withholding as federal adjusted gross income. Virginia corrected income and withholding to the amounts on the taxpayer's W-2 and allowed a personal exemptio…
Could Virginia residents claim an out-of-state tax credit for District of Columbia Unincorporated Business Franchise Tax paid on sole-proprietor income?
No. The District of Columbia Unincorporated Business Franchise Tax is a franchise tax that does not tax all of an individual's income, so it is not the kind of individual income tax eligible for Virgi…
Could a fixed-date conformity subtraction create a Virginia corporate net operating loss even when the corporation reported no federal loss?
Yes. Virginia federal taxable income equals federal taxable income plus fixed-date conformity additions minus fixed-date conformity subtractions. Because the 2014 subtraction exceeded the other two am…
Did saying that a married couple paid income tax in Virginia and another state prove that they had changed domicile for 2012?
No. The couple did not provide objective evidence that they abandoned Virginia domicile and acquired another one, and paying tax in two states did not establish the change. Virginia kept the best-info…
Did claiming an out-of-state residence from 2011 through 2015 overturn a Virginia best-information assessment for 2012 without supporting records?
No. Although the taxpayer said he lived elsewhere from July 2011 until February 2015, he ignored Virginia's documentation request and supplied no substantial evidence about his domicile. The 2012 asse…
Did saying she moved out of Virginia in March 2013 prove that a nonfiler was not subject to Virginia income tax for 2012?
No. The claimed March 2013 move did not document the taxpayer's 2012 status, and she did not answer Virginia's records request. The assessment remained presumed correct, but Virginia allowed one final…
Could a nonfiler overturn a 2012 Virginia assessment merely by claiming residence in another state without supplying the requested records?
No. A bare claim of residence elsewhere did not prove abandonment of Virginia domicile, and the taxpayer ignored Virginia's documentation request. The best-information assessment remained presumed cor…
Did Virginia sales tax apply to a provider's charges for furnishing medical records in print, by fax, or electronically along with coding and related services?
No. The true object was the provider's medical-record and information services, not the paper or other property transferred, so charges to healthcare providers and requesting parties were not subject …
A company delivers electronically generated products for its clients and gives them a web-based interface (with a layout-design tool) to manage orders and view reports. Are its 'Basic Package' charges subject to Tennessee sales tax when the whole service runs on the company's software?
No. The company's 'Basic Package' charges are NOT subject to Tennessee sales tax. The package runs on the company's software — including a web-based interface clients access from Tennessee — and softw…
Could the Greigs recover a $1,610 income-tax overpayment when their timely 2010 refund claims went unanswered but they waited until 2015 to act again?
No. The Greigs timely filed two 2010 claims for a $1,610 2008 income-tax overpayment, but the Department neither granted nor denied them. After 120 days, they had 90 more days to protest or sue, or th…
Is the sale of a Guaranteed Asset Protection (GAP) waiver contract taxable as part of the price of a motor vehicle in Nebraska?
Yes -- it is taxable. Revenue Ruling 01-16-1 concludes that when a motor vehicle purchaser (borrower) buys a Guaranteed Asset Protection (GAP) waiver contract from the retail seller of the vehicle (cr…
Must an owner collect Georgia's $5-per-night hotel-motel fee when three condominiums are separate buildings rented only as whole units?
No. The property consisted of three separate condominium buildings, and each condominium was rented as one accommodation rather than by bedroom. Neither the property nor any individual building had fi…
Were fees charged to play in bridge games taxable when spectators could watch without paying admission?
Yes. Because only players paid and spectators entered free, the bridge participation fee was a taxable admission. If spectators had paid a taxable admission, the players' participation fee would have …
Did an out-of-state S corporation create Virginia income-tax nexus through one remote employee handling accounting, HR, payroll, legal, and customer support?
Yes, apparently. The Virginia employee's bookkeeping, accounting, HR, payroll, legal consultation, and customer support were not protected solicitation under P.L. 86-272 and were sufficient to create …
Was an out-of-state college student a Virginia resident for tax purposes after maintaining a Virginia abode for more than 183 days in 2012?
Likely yes. The student could retain domicile in another state, but Virginia's separate actual-resident rule applies when a person maintains a Virginia abode for more than 183 days. Her spring and fal…
Could a leasehold owner appeal a county's local real-property tax assessment to the Virginia Department of Taxation?
No. The Department of Taxation had no statutory jurisdiction over a local real-property assessment appeal, including the taxpayer's claim that the county insufficiently discounted a leasehold interest…
Are college bookstore textbooks exempt from Georgia sales tax when the U.S. Department of Veterans Affairs pays the college directly?
Yes. Textbooks received by eligible students were exempt when the U.S. Department of Veterans Affairs paid the college directly. The ruling's footnote states that the sale would instead be taxable if …
How did Florida tax the operator's vessel leases and its customers' crewed charters between Florida and Cuba?
The operator's own bareboat vessel lease was taxable only to the extent of Florida use. Its subsequent crewed charters to customers were nontaxable, while supplies used and charges incurred in Florida…
Did a divorce property-settlement agreement assigning tax liability to one spouse prevent Virginia from collecting a joint-return assessment from the other spouse?
No. Spouses who filed a joint Virginia return were jointly and individually liable for the full tax. Their divorce agreement could allocate responsibility between them, but it could not bind the Depar…
Was a foreign citizen who lived and worked abroad in 2012 exempt from Virginia resident tax even though he retained a Virginia house, vehicles, and license?
He was not taxable as a Virginia resident for 2012, but he still owed Virginia tax as a nonresident on rent from his Virginia house. The federal substantial-presence test did not control Virginia resi…
Did 90 days of full-time National Guard duty qualify for Virginia's subtraction for basic military pay received during extended active duty?
No. The husband's orders placed him on full-time National Guard duty, which the cited federal definitions distinguish from active duty. He therefore did not qualify for Virginia's extended-active-duty…
Are Internet-based large-file transfer subscription plans subject to New York sales tax?
No. The plans are a nontaxable bridging service. Their primary function is letting a customer send large files to recipients over the Internet: the customer uploads a file to the provider's server and…
Does building a manufacturing plant inside a federal Foreign Trade Zone let a company defer Texas sales and use tax on the equipment and materials it imports to build it?
No deferral. The Comptroller ruled that a company building a manufacturing plant inside a federal Foreign Trade Zone (FTZ) still owes Texas use tax on the equipment, machinery, and other goods it impo…
Can an IT-services LLC qualify for Georgia's high-technology computer-equipment exemption when it serves only affiliated member companies?
Yes, if the new LLC was created and operated as represented. A single Georgia facility operating under qualifying NAICS code 541512 could be a high-technology company facility, and it did not have to …
Can a foreign company buying materials delivered to a New York affiliate use resale certificates, and must it register?
It must register, and it may buy for resale only on materials it truly resells without using. The Canadian company has its suppliers drop-ship raw materials to its New York affiliate; because possessi…
Is a real-time web-analytics product that reports a customer's own website traffic subject to sales tax?
No. The product is an information service, but it qualifies for the 'personal or individual' exclusion and is not taxable. The company embeds tracking code on a customer's website, gathers data about …
Does a planned web-hosting data center qualify for New York's internet data center equipment exemption?
Yes, on the facts presented. New York exempts machinery, equipment and other property (servers, routers, storage racks, software, interior fiber/cables, and the like) bought by an operator of an inter…
Does converting customer-owned natural gas into liquefied natural gas (LNG) under a tolling arrangement -- where the processor never owns the gas -- still qualify as exempt 'processing' for Texas's manufacturing exemption?
Yes. The Comptroller ruled that liquefying natural gas into LNG for export is 'processing' that qualifies for the Texas manufacturing exemption whether the company sells the LNG itself (an F.O.B. arra…
Is converting natural gas into liquefied natural gas (LNG) for overseas shipment 'processing' eligible for Texas's manufacturing exemption, or is it just a taxable transportation-related activity?
Processing, not transportation. The Comptroller ruled that converting natural gas into liquefied natural gas (LNG) -- by changing its chemical composition and compressing/cooling it into a liquid -- i…
Could new real estate appraiser Ricardo Romero avoid penalty because he did not know he had to file CRS returns and pay gross receipts tax?
No. Ricardo Romero began a real estate appraisal sole proprietorship in 2012 but did not consult a tax professional or Department employee about CRS duties, file returns, or pay gross receipts tax tha…
Did Frank's Electric avoid negligence penalties by voluntarily finding and correcting gross receipts and withholding underpayments caused by its accounting system?
No. Frank's Electric hired a new bookkeeper who found that its accountant-developed system had underreported gross receipts and withholding tax, and the company voluntarily amended the returns. But in…
Are interior lighting design services taxable if the plans are delivered to the client electronically?
Yes. New York taxes interior decorating and design services - which include lighting design - whether or not any tangible property changes hands. Delivering the design plans electronically rather than…
Is an extensive building facade restoration a nontaxable capital improvement or a taxable repair?
It is a capital improvement, so the work is not subject to sales tax. New York taxes services that maintain, service or repair real property, but not work that adds to or improves real property as a c…
Was a large transaction fee required to enter a Florida sub-sublease taxable as rental consideration?
Yes. The transaction fee was consideration for the privilege of entering into and occupying the sub-sublease, so it was taxable as real-property rent rather than treated as a property purchase price.
Is an optional delivery fee taxable when a Georgia seller arranges third-party delivery of taxable goods and passes the full fee to the carrier?
Yes. A seller's delivery charge for taxable tangible personal property was part of the taxable sales price even when delivery was optional, separately stated, performed by a third party, and passed th…
Are compressed-gas cylinders and tanks exempt when sold or leased for qualifying use at a Georgia manufacturing plant, and what documentation must the seller keep?
Yes, when the cylinders, dewars, micro-bulk tanks, or bulk tanks held exempt gas necessary and integral to manufacturing at a Georgia plant. The seller could meet its proof burden by accepting a fully…
Could locksmith That’s the Key avoid penalty and interest because it honestly believed re-keying receipts from Fannie Mae and Freddie Mac were tax-exempt?
No. That's the Key conceded and paid gross receipts tax on re-keying services for Fannie Mae and Freddie Mac but sought removal of penalty and interest. Its belief that the entities were exempt was ho…
How should the royalty income earned by nonresident members of a musical band (organized as a partnership) be sourced to Illinois for income tax purposes?
A nonresident partner in a partnership (like a band) must include in Illinois net income his or her distributive share of the partnership's business income that is apportioned to Illinois under IITA S…
Was a medically supervised protein powder prescribed by a doctor of oriental medicine a prescription drug deductible from New Mexico gross receipts?
No. The obesity-treatment protein powder was distributed through licensed medical professionals and required monitoring for ketoacidosis, but its ingredients were food substances and it could legally …
Could Sandia Development deduct construction materials sold to LANL when it had letters referring to an NTTC but obtained the actual Type 6 certificate after the audit deadline?
No. Sandia Development had emails and a letter suggesting LANL intended to furnish an NTTC, but neither party could produce a timely executed certificate and the NTTC database showed only a Type 6 cer…
Were payroll fees and gross receipts tax reimbursements paid through an actor loan-out company subject to the film credit's $5 million performing-artist cap?
Yes. Evolutionary Pictures' $255,166.52 payroll-processing fee and $1,025,000 gross receipts tax reimbursement to EPPSLO existed only because it paid out-of-state actors through that loan-out company.…
When did progressive payments for a custom pressure vessel become taxable, and were crane and site-inspection reimbursements taxable?
Purchase-price payments became taxable gross receipts when the vessel was identified to the sales contract. Without a contrary agreement for future goods, identification generally occurred when the se…
How did Virginia Tax Bulletin 16-1 change fixed-date conformity and 2015 income-tax return adjustments?
Virginia advanced its fixed-date conformity from December 31, 2014 to December 31, 2015 for taxable years beginning in 2015. That generally adopted 2015 federal changes, including PATH Act extensions …
Could IDOR decide how municipal gas taxes applied to third-party natural-gas suppliers?
No. IDOR administered the statewide Gas Revenue Tax and Gas Use Tax but had no authority or jurisdiction over municipal gas occupation taxes imposed and administered by municipalities under 65 ILCS 5/…
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