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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How could an Illinois drop-shipper document a sale for resale to an unregistered out-of-state purchaser?
The Illinois seller had to collect tax or document an exemption when delivering to the purchaser's Illinois customer. A valid resale certificate from the out-of-state purchaser could establish resale …
What gallon-equivalent conversion factors did South Carolina Revenue Ruling 16-1 establish for CNG, LNG, and propane?
RR 16-1 treated 126.67 cubic feet of compressed natural gas, or 5.66 pounds through a mass-flow meter, as one gallon of motor fuel; 6.06 pounds of liquefied natural gas as one diesel gallon equivalent…
Did Virginia's related-party royalty add-back safe harbor exclude every royalty reported by Kohl's affiliate in other states, even portions not actually taxed there?
No. The Richmond Circuit Court held that the safe harbor applies only to the portion of related-member royalty income on which another state actually imposed a qualifying tax. Merely including royalti…
Could a telecommunications carrier remove software, maintenance, labor, and asset-gross-up purchases from a Virginia use-tax audit without invoices or contracts?
No, not on the existing record. The carrier supplied no invoices, contracts, or other evidence proving electronic software delivery, labor-only service, or another exemption. Every contested line and …
Could a telecommunications company reduce an Invoice Capture Tool asset gross-up when the supporting records for related contested assets had not been provided?
Not yet. The taxpayer did not dispute a specific item, and the related entity had not supplied the invoices and other records needed to remove assets feeding the Invoice Capture Tool calculation. Virg…
If a homeowner later receives a refund of property taxes (for example, from a certificate of error), does that refund reduce or require repayment of the Illinois property tax credit already claimed for the year the taxes were originally paid?
No amended return is required. The property tax credit for a prior year is based on the property taxes actually paid that year and is not redetermined when a refund is later received. Instead, the ref…
How did Illinois tax a security-system contract that included permanently installed components and movable clip-on cameras?
When the complete security system was sold and installed for one specified contract price, the installer could treat the work as a construction contract and pay Use Tax to suppliers on all related equ…
How did IDOR answer a 2016 survey about sales-tax nexus, software, digital goods, services, drop shipments, and refunds?
IDOR declined to give yes-or-no nexus answers because nexus was fact-specific, but supplied its 2016 general rules. It also said canned software was generally taxable, qualifying signed software licen…
Could a business bypass the county BPOL appeal process by asking Virginia for an advisory opinion during an active assessment dispute?
No. Virginia would not use an advisory opinion to decide the substance of an active county BPOL assessment dispute when the county had not joined the request. The taxpayer first had to appeal to the l…
Could Virginia consider an administrative appeal filed December 10 when the 90-day deadline expired November 23?
No. The August 25 assessment had to be appealed by November 23, 2015, but the taxpayer filed on December 10, so the administrative appeal was time-barred. Virginia still allowed 30 days to file a 2012…
How did Virginia treat grocery food sold in decorative tins, late or defective resale certificates, and repairs to built-in versus standalone refrigeration?
The result was mixed. Decorative tins were packaging, so qualifying food inside received the reduced rate; food bundled with separate ineligible items did not. Verified resale certificates removed som…
Can an Illinois retailer deduct part of its gross receipts from sales of E15 fuel as gasohol or majority blended ethanol fuel?
No. IDOR said E15—85% gasoline and 15% ethanol—fit neither statutory fuel category, so every dollar of gross receipts from E15 sales was subject to Retailers' Occupation Tax without the requested dedu…
A Tennessee company gives customers free web access to their account information, separately sells access to a rebranded third-party online platform, and uses remotely accessed software to run its own operations. Which of these are subject to Tennessee sales tax, and how does it handle software its employees use both inside and outside Tennessee?
It depends on which charge. (1) FREE website access the company bundles with its services is NOT taxable — the website is software, but its true object is the underlying nontaxable service, so the com…
Does Kansas sales tax apply to electricity a homeowner buys from a third-party solar developer under a solar power purchase agreement (PPA)?
The Department declined to answer, because a third-party residential solar power purchase agreement (PPA) is not lawful in Kansas. Under the Retail Electric Suppliers Act, only the certified public ut…
Is a lab's testing of medical marijuana for safety and potency subject to Connecticut sales and use tax?
No. A lab's services testing medical marijuana for safety and potency are not subject to Connecticut sales and use tax, because testing services are not among the enumerated taxable services in Conn. …
Which over-the-counter homeopathic remedies qualified for Florida's common-household-remedy sales-tax exemption?
Products recommended and generally sold to cure, mitigate, treat, or prevent human illness were exempt when they matched an approved DR-46NT common-household-remedy category. The ruling's product sche…
Is a hotel's service charge on a customer's high-speed internet access subject to Illinois sales or service tax?
Generally no, if the internet-access transaction transfers no tangible personal property to the customer. IDOR said a service-only transaction without such a transfer generally is not subject to Retai…
Did Illinois Hotel Operators' Occupation Tax apply when a condominium resident rented a second bedroom through an online platform?
Yes. IDOR treated the payments for stays under 30 days as taxable rent for living quarters. The lack of a bed did not matter, and platform registration and host screening did not make the room exclusi…
Is the electricity a company produces and consumes at its own facilities subject to Colorado sales or use tax?
No. The electricity this company produces and consumes at its own facilities is not subject to Colorado sales or use tax, because there is no 'sale.' Colorado taxes electric service only when it is fu…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #16-2)?
Use the citator attached to SC Information Letter #16-2. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Are annual software-update fees and software maintenance agreements taxable in Colorado when the software is delivered electronically — even if the underlying software was taxable when it was bought before July 1, 2012?
No. Software updates and maintenance agreements that are delivered electronically and bought after July 1, 2012 are not subject to Colorado sales or use tax, because electronically delivered software …
New York Advisory Opinion TSB-A-16(1)C: May a corporate partner aggregate the activities and employees of two majority-owned broker-dealer partnerships to meet the Investment Tax Credit's 'principally used' and employment tests?
Yes. Using the aggregate method, a corporate partner deemed a registered broker-dealer through disregarded SMLLCs may combine the qualifying uses and employees of its two majority-owned partnerships t…
Who owed Illinois tax when a company leased computer and audiovisual equipment and then re-leased it to customers?
For a true lease, the original lessor was the end user and owed Use Tax on its cost; Illinois imposed no tax on rental receipts, so the lessee and sublessee incurred no tax liability. A conditional sa…
Were distributor renewal fees and bundled online dashboard and personal-website fees subject to Illinois sales or service taxes?
Membership fees were generally nontaxable intangibles when they transferred no tangible personal property. A fee that included property or property incident to a service could create tax, while online…
How does Georgia sales tax apply to warranty repair parts, deductibles, and separately stated repair labor?
For a manufacturer warranty included in the taxable product price, repair parts were not taxed again but the deductible was taxable. For a separately sold optional warranty whose price was not taxed, …
Is Cobb County's $3 Recreational and Sports Tourism Service Fee included in a hotel's Georgia sales-tax base?
No, if the fee was separately stated on the guest's invoice. Cobb County imposed the $3-per-room-night fee directly on the hotel guest, so Georgia excluded it from the taxable sales price when separat…
Was a restaurant tabletop device used mainly for ordering and paying a coin-operated amusement device or redemption machine?
No, based on IDOR's understanding. The device was used primarily to buy food, place orders, pay bills, and complete surveys—not primarily for amusement—and it did not meet the redemption-machine defin…
What is South Carolina's tax interest rate for underpayments and overpayments for the period ending March 31, 2016 (per SC IL #16-1)?
3%. SC Information Letter #16-1 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through March 31, 2016. Interest is compounded daily, exc…
How does Georgia sales tax apply to home plans, materials workbooks, marketing products, architectural modifications, custom design, and builder consulting?
Tax treatment depended on the product and delivery. Tangible home plans, workbooks, marketing materials, construction signs, and related shipping were taxable; electronically delivered workbooks and m…
Does an out-of-state company owe Colorado income tax just because one of its sales representatives lives in Colorado?
Not necessarily. The company is an LLC taxed as an S corporation, so the entity itself owes no Colorado income tax, but its shareholders must file Colorado returns if the company does business here—me…
Which data-center colocation charges - cross connects, cage rentals, equipment service, power - are subject to New York sales tax?
It splits across the five services. (1) Cross Connect access to the provider's 'dark' fiber is not taxable telephony/telegraphy - the provider does not transmit signals (the customer lights the fiber …
Did a nine-year delay in referring Precision Eye Center's protest eliminate or reduce interest after the parties agreed the original tax assessment was too high?
No additional interest relief was available for delay. The parties agreed that NTTC-backed receipts, insurance payments, postage reimbursements, credits, and a 2005 eyeglass deduction substantially re…
Did Archaeological Support Services owe two $5 late-filing penalties when it mailed zero-liability CRS returns in envelopes shared with another business?
Only one. Archaeological Support Services had no taxable receipts but kept its CRS number and mailed quarterly zero returns in the same envelopes as the owner's wife's business returns. Because the De…
Were a public-school employee's 1099 payments for gym monitoring and one annual student trip taxable independent-contractor business receipts?
No. Larry Gonzales monitored Albuquerque Public Schools gym use at his principal's direction to protect school property, so the AYBL payments were wages for activity within his APS employment despite …
Could buyers use a transferred 2006 Virginia Land Preservation Tax Credit on their 2012 return after its five-year carryover expired?
No. A Land Preservation Tax Credit earned in 2006 could be carried only through 2007-2011. The later 10-year carryover applied only to property conveyed on or after January 1, 2007. The Department had…
Can a taxpayer bypass Virginia's refund deadline by carrying a late-claimed overpayment forward as a credit to the next year?
No. Virginia treated a request to credit an overpayment to another tax year as subject to the same three-year limitation as a cash refund. The 2011 return was due May 1, 2012, so the taxpayer had to f…
Did IDOR determine whether a steroid-releasing sinus implant qualified for Illinois' 1% rate as a drug or medical appliance?
No. IDOR lacked enough information about the implant's use and label claims to decide. It explained that qualifying drugs and medical appliances received the 1% state rate plus local tax, then directe…
Did federal Tax Court allocation or a divorce agreement relieve a husband from Virginia liability on a joint 2010 return?
No. Virginia adjusted the 2010 joint return to match federal income changes that the couple had not reported. State law made each spouse liable for the entire joint-return tax. The federal Tax Court's…
Could a taxpayer receive Virginia's 2009 amnesty benefits for old liabilities when the required returns were not filed by December 5, 2009?
No. Virginia's 2009 amnesty required all relevant returns and supporting documents to be filed, and the qualifying liability paid, by December 5, 2009. The taxpayer did not file several old returns un…
Could a Virginia resident claim an out-of-state tax credit for wage withholding that the other state fully refunded?
No. The other state's return showed a full refund of the wage withholding, so no tax remained actually paid there. Allowing the same amount as a Virginia credit would create a double benefit. If the o…
Did a temporary State Department assignment abroad make a Virginia couple nonresidents and allow them to exclude the husband's overseas income?
No. The couple kept their permanent Virginia home, voter registrations, vehicles, licenses, and intent to return, so the temporary overseas posting did not end domicile. Virginia taxed the husband's f…
Did Virginia have to allow a conservation-contribution deduction equal to all federal adjusted gross income when the IRS allowed only 50%?
No. Virginia itemized deductions followed the amount accepted federally, and the IRS record showed the qualified conservation deduction was reduced from 100% to 50% of federal adjusted gross income. T…
Did a Virginia partner's Maryland Schedule E professional income and interest qualify for Virginia's full border-state tax credit?
No. The husband's distributive partnership income reported on Schedule E was business income, not earned income or Schedule C business income for the special border-state rule. His Maryland-source int…
Could a taxpayer obtain full Virginia refunds for 2009-2013 by claiming foreign domicile after filing 2009 late and retaining strong Virginia ties?
No. The 2009 full-refund claim was filed after the three-year deadline, and the two-year assessment-payment exception did not apply because the domicile claim went beyond the IRS-income adjustment ass…
Did an overseas assignment establish foreign domicile when the taxpayer kept a Virginia license, voting and vehicle ties, and intended to return?
No. Although the taxpayer leased a home, licensed vehicles, and obtained a driver's license abroad, he retained Virginia voter and vehicle ties, renewed his Virginia license, claimed he filed Virginia…
Could Virginia consider a dental-practice sales-tax appeal faxed November 25 when the 90-day filing period expired November 20?
No. The August 21 assessments had to be appealed by November 20, 2015 under Virginia's 90-day rules, but the dental practice faxed its challenge on November 25. The Tax Commissioner therefore could no…
Did a for-profit family medical practice need each controlled-drug invoice to name a licensed physician or DEA number to claim Virginia's medical-entity exemption?
No. The physician-name or DEA-number invoice requirement applied to a separate exemption for controlled drugs purchased by an individual licensed practitioner. After the 2006 amendment, a qualifying f…
Must Kansas income tax be withheld on Medicaid waiver payments to a home care provider?
Kansas Notice 15-16 (December 23, 2015) addresses whether Kansas withholding is required on certain Medicaid waiver payments. Under IRS Notice 2014-7, payments to individual care providers for caring …
What did Virginia's 2015 pass-through entity withholding guidelines require for nonresident owners, exemptions, composite returns, filing, and payment?
For taxable years beginning on or after January 1, 2015, a pass-through entity with Virginia-source taxable income generally had to pay withholding equal to 5% of each nonresident owner's allocable sh…
Did timely protective claims produce additional Virginia refunds for the taxpayer's 2010 and 2011 overpayments?
No. The protective claim itself was timely, but the underlying 2010 original return was filed after the three-year refund deadline, so that overpayment could not be refunded. The 2011 refund had alrea…
Did a Virginia LLC with one rental property have to withhold 5% for its nonresident members after fully disclosing every owner?
No. Although Virginia generally requires 5% pass-through withholding on Virginia-source income allocated to nonresident owners, the LLC qualified for the rental exception. It had one Virginia rental p…
Could a military spouse avoid Virginia income tax for 2009 and 2010 by claiming the servicemember's out-of-state domicile?
No. The Department found that the spouse had established Virginia domicile after moving there in 2008. The Servicemembers Civil Relief Act did not let her simply elect her spouse's domicile, and the r…
Who determines a property's value for Virginia recordation tax when an auction price, assessment, and appraisal disagree?
The county circuit-court clerk had to determine the property's actual value after considering the taxpayer's appraisal and other reliable evidence. A recent assessment carried a strong presumption of …
Did buying an out-of-state home and changing a driver's license and voter registration prove that a taxpayer abandoned Virginia domicile?
No. Although the taxpayer bought a home and changed a license, vehicle registration, and voter registration in another state, he retained a jointly owned Virginia home where he stayed, operated his bu…
Did a fourth appraisal and conditional purchase offers justify increasing the claimed value of a Virginia conservation easement?
No. The Tax Commissioner upheld the Department's appraisal and the resulting assessments. The taxpayer's appraisals emphasized physical development potential but did not adequately account for weak co…
Is a Farm Credit System agricultural credit association exempt from Kansas sales tax as a federal land bank or federal instrumentality?
No. The Department concluded that an agricultural credit association (ACA) is neither a federal land bank nor otherwise immune from Kansas tax. Congress did not expressly exempt ACAs, and the associat…
How is Kansas sales tax applied to direct mail advertising — what is taxable, how is it sourced, and which charges are in the tax base?
Direct mail delivered to a Kansas address is taxed as a sale of tangible personal property. The tax base is the total charged for the direct mail minus separately stated delivery charges (postage, pac…
A company uses software in three ways — licensed from foreign affiliates and hosted abroad, subscribed from third-party vendors and hosted out of state, and bought and installed on its own servers in and out of Tennessee. Which of those charges are subject to Tennessee sales and use tax?
It depends on where the software lives and where it's used. (1) Affiliate-hosted software — licensed from foreign affiliates and bundled with hosting, support, and backup for one price — is taxable on…
A company sells data-processing, storage, document, and payment services delivered through web portals, and also sells and buys remotely accessed software used by people in several states. Which of these charges are subject to Tennessee sales and use tax, and how is the multi-state software portion figured?
It depends on what's being sold. The company's six Service Offerings — information management, remote storage, electronic delivery, payment management, and two web-based information services — are all…
Could the Kuriyans recover a $14,957 income-tax refund after two timely claims went unanswered when they did not protest or sue within 210 days of either filing?
No. The Kuriyans timely requested a $14,957 refund on their October 2010 return and again on a December 2013 application the Department sent them. The Department acted on neither claim within 120 days…
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