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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Can a plumber who uses both lump-sum and time-and-material contracts just pay sales tax on materials at purchase for every job, even when billing time-and-material, if it never marks up the materials?
No. A contractor on a lump-sum contract pays tax on materials at purchase; a contractor billing time-and-material must collect tax from the customer on the materials, which requires a sales tax licens…
Were materials and equipment bought by a high-speed rail owner for incorporation into its rail system exempt from Florida sales tax?
Yes. Materials and equipment purchased by the system owner for incorporation as component parts of the high-speed rail system were exempt. Construction materials also had to satisfy the direct-purchas…
When were Illinois banquet-room, food, service, and decoration charges taxable?
The result depended on the transaction's true object. A room rental with only incidental snacks or nonalcoholic drinks could be nontaxable, but when food, alcohol, or beverages were the true object, r…
Did out-of-state liquor sellers have to collect Illinois tax on alcohol and shipping, and how could they recover tax paid in error?
IDOR did not make a seller-specific nexus determination. Under its 2015 framework, a seller without Illinois nexus did not collect, but customers self-assessed Use Tax; a direct-shipping winery licens…
For Texas franchise tax, can a farmer deduct the costs of growing crops as cost of goods sold, and does it matter whether the farmer owns the crops?
Yes, but only if the farmer owns the crops he sells — a farmer who owns and sells crops he grows is the "producer" of those crops and may deduct as cost of goods sold all allowable direct production c…
Are sales of downloadable video-game software, in-game content, access/point/subscription cards, and dollar-value gift cards subject to NY sales tax, and where is the sale taxed?
Most are taxable; dollar-value gift cards are not. Selling prewritten game software the customer downloads -- a full game or add-on content like new levels or maps -- is a taxable sale of tangible per…
Under Virginia's 2015 bulletin, when could a semiweekly employer request monthly withholding filing?
Effective July 1, 2015, an employer otherwise subject to semiweekly Virginia withholding could request monthly filing if it had no more than five employees subject to Virginia withholding. The written…
Is a nonresident's gain on redeeming S-corporation stock, and the interest on the installment note, New York source income when the corporation owns New York real estate?
The interest on the installment note is not New York source income (it is intangible personal property). But the portion of the gain attributable to the corporation's New York real property is New Yor…
New York Advisory Opinion TSB-A-15(4)C: Can a qualified New York manufacturer claim the real property tax credit for real property taxes it pays under a lease from a related party?
No. A qualified New York manufacturer cannot claim the real property tax credit for real property taxes it pays under a lease, because the credit covers leased-property taxes only when the property is…
Is a contractor's installation of permanently affixed electrical switchgear a nontaxable capital improvement, and what happens to the materials and field-service charges if it can't get a Form ST-124?
Yes, it's a capital improvement, so the charges aren't taxable -- and missing the ST-124 shifts the burden of proof, not the result. Replacing a building's medium-voltage switchgear -- bolted and hard…
Could Virginia part-year residents claim an out-of-state credit for New Hampshire Business Enterprise Tax paid on the same income?
No. Virginia held that the New Hampshire Business Enterprise Tax was based on enterprise-value expenditures such as compensation, interest, and dividends, rather than income. It therefore was not subs…
Is removing or abandoning a disused oil tank as part of an oil-to-gas heating conversion subject to NY sales tax?
It depends, and there's a one-year rule. Removing a disused oil tank, or abandoning it in place (cleaning and filling it with sand, foam, or concrete), is by default a taxable real-property maintenanc…
When a commercial airline gets a federal-excise-tax refund on aviation fuel, can it also recover the Colorado sales tax it paid on that refunded excise-tax amount?
Yes. The federal excise tax that gets refunded to a commercial airline acts more like a refundable deposit than part of the fuel's purchase price, so Colorado sales tax paid on that refunded portion s…
Is acquiring tangible personal property by foreclosing on a security interest a taxable sale, and is manufacturing machinery used in an enterprise zone exempt?
Two answers. A lender taking possession and title of property by foreclosing on its security interest is NOT a taxable sale (the statute excludes foreclosure/repossession) — but if the lender later se…
Was a nonresident former employee's lawsuit settlement Illinois-source compensation when the employment claims arose while based in Illinois?
Yes. The Department treated the settlement as wages because the claims arose from the former employer-employee relationship and entirely from acts during a period when the employee was based in Illino…
Does Texas tax an optional extended warranty or service contract sold with a motor vehicle, and are parts used for covered repairs taxable?
The separately invoiced optional warranty or service contract was not taxable whether the vehicle was sold or leased. However, repair parts used to perform work under the contract remained subject to …
Is the sale of an extended warranty or service contract on a motor vehicle taxable in Texas, and can the warranty provider buy replacement parts tax-free using a resale certificate?
No, the sale of an extended warranty or service contract on a motor vehicle isn't itself subject to Texas sales/use tax or motor vehicle tax, whether the vehicle is sold or leased -- but the used-car …
Are charges for recovering propane from old or unusable tanks and returning it to the customer subject to NY sales tax?
No. The propane-reclamation service is not subject to sales or use tax. Except for the special gas/utility tax under Tax Law sections 1105(b) and 1105-A, propane is not treated as tangible personal pr…
Does a hotel's 20% 'set-up fee' for a public room make the room rental taxable, and is the set-up fee itself taxable?
The set-up fee is part of the rent for the public room, so it is taxable only when the room rental itself is taxable. The hotel charges a 20% 'set-up fee' (sometimes called a service charge) on every …
Is a drop-shipment facilitation service that routes and translates order/inventory data between e-commerce merchants and their suppliers subject to NY sales tax?
No. The drop-shipment facilitation service is not subject to sales or use tax because its primary function is data processing, which is not a taxable service. The 'Drop Ship Master' service connects e…
Does Georgia's parent-teacher-organization sales-tax exemption cover a nonprofit school's annual fundraising auction?
No. Although the school was a Section 501(c)(3) nonprofit and parents participated in its operations, its regular and primary activities were educational. Georgia classified it as a school rather than…
When is South Carolina's 2015 sales tax holiday and what items are exempt (per SC IL #15-7)?
South Carolina's 2015 sales tax holiday runs from 12:01 a.m. Friday, August 7, 2015 through midnight Sunday, August 9, 2015. During that three-day weekend, the 6% state sales and use tax and any appli…
Was postage taxable when a seller charged one non-itemized price for an envelope with preprinted postage?
No, if the seller kept sufficient accounting records substantiating the separate postage and envelope costs. Sales tax remained due on the envelope portion of the bundled price.
Was Illinois tax computed before or after a manufacturer coupon reimbursed to the retailer?
Before the reimbursed discount. A manufacturer, distributor, or other coupon for which the retailer received full or partial reimbursement remained part of gross receipts and selling price. The retail…
How did Florida communications services tax apply to one charge bundling DSL internet access with telephone service?
The telephone portion was taxable, while the high-speed internet-access portion was not. Florida accepted the provider's allocation because its regular books and records reasonably identified the taxa…
Could Virginia extend an expired Land Preservation Tax Credit so a purchaser could claim the remaining 2006 credit in 2012?
No. A Land Preservation Tax Credit earned in 2006 could be carried only through the five following tax years, 2007-2011. Virginia had no statutory authority to add another year or permit use or transf…
Did a West Virginia resident owe Virginia income tax on wages earned while working in Virginia in 2011?
No. Virginia found that the taxpayer had established West Virginia domicile for 2011 despite renewing a Virginia driver's license. Because he was a West Virginia resident earning wages in Virginia, th…
How did Illinois tax videoconference room, bridging, and ISDN charges?
IDOR did not specifically classify the described bridging or ISDN services. A room or service transferring no tangible property avoided retail, use, and service taxes. Actual telecommunications charge…
If a retired SUNY employee does a direct trustee-to-trustee rollover of 401(a) and 403(b) tax-deferred annuities into an IRA, is the rolled-over money later taxed as New York income?
No. Because the retiree's Existing Plans were funded with contributions from the State University of New York, a New York State public employer, the portion of any future IRA distribution that represe…
My two-member LLC bought land, built a 40-story building, and plans to convert it into a two-unit condominium, distributing one unit to each member in proportion to their original ownership share. Is distributing the condo units out of the LLC to its members a taxable conveyance for New York's Real Estate Transfer Tax, given we already paid the tax when the LLC bought the land?
Yes, exempt -- but only if each member's post-conversion condominium ownership percentage matches their original ownership allocation in the LLC's Operating Agreement. A two-member LLC bought New York…
For a uniform/linen rental-and-laundry business, which items can be bought for resale, and are monogramming and lost-item fees taxable?
The company is a laundry service, so the items it launders can't be bought for resale, but the non-laundered storage items can. Renting uniforms, gowns, and linens that the company launders, maintains…
Does a retailer collect NY sales tax when it sells built-in appliances on an installed basis, or is that a capital improvement?
Selling built-in appliances installed is a capital improvement, so the retailer doesn't collect tax from the customer -- the retailer pays the tax on the appliance instead. Publication 862 classifies …
Did Virginia's mining exemption or customers' direct-payment permits protect a contractor's untaxed mine-site purchases from use tax?
No. Virginia upheld the use-tax assessments. Vegetation-control chemicals, power-transmission poles, and protective fencing were not used directly in mining, and customers' direct-payment permits did …
Could Virginia decide which printing-facility property was taxable before the city corrected its machinery-and-tools tax assessments?
Not yet. Virginia did not decide which property was taxable. It remanded the case because the city had acknowledged that some machinery-and-tools tax treatment was wrong but had not corrected the 2010…
Could Virginia residents subtract their full Kansas public-employee pension because Kansas had taxed some plan contributions?
Only in part. Virginia did not allow a subtraction for the entire Kansas pension. The taxpayers could subtract the documented portion attributable to KPERS contributions made after July 1, 1984 that h…
Were cable-television converter boxes taxable as local business tangible personal property in Virginia?
No. Virginia classified the cable-television converters, or set-top boxes, as intangible property exempt from local business tangible personal property tax under Va. Code § 58.1-1101(A)(2)(a). The cas…
Did a granulated drink mix with a Supplement Facts panel qualify for Virginia's reduced food rate, and who owed undercollected tax?
No. Virginia classified the drink mix as a dietary supplement because it carried a Supplement Facts panel, so the full sales-tax rate applied. Because the dealer had charged too little tax on Virginia…
Did nutritional shakes labeled with a Supplement Facts panel qualify for Virginia's reduced sales-tax rate for food?
No. Virginia treated the shakes as dietary supplements because their labels carried Supplement Facts panels, so they did not qualify as food for home consumption and were taxable at the full rate appl…
Could CSW deduct pond-liner sales to an industrial-revenue-bond project as government sales after buying the liners tax-free with a Type 6 construction-material NTTC?
No. CSW bought the pond liners tax-free using a Type 6 NTTC, which identified them as construction material intended to become an ingredient or component of Intrepid's solar solution mine project. Sec…
For a company that readies foreclosed properties for sale, which of its services and reimbursements are subject to NY sales tax, and what does it owe on its own purchases?
Appraisals and the management fee aren't taxable, but resold utility, protective, and repair/maintenance services are -- unless the customer is exempt. The company gets bank-owned (REO) properties int…
Were out-of-state domiciliaries who spent more than 183 days in Virginia taxable as Virginia residents in 2010 and 2011?
Yes. Virginia treated the couple as actual residents from February 4 through December 31, 2010 and for all of 2011 because they maintained a Virginia abode and spent 282 and 270 days in Virginia. Thei…
Could an electrical contractor use a city's Form ST-12 or federal energy-grant funding to buy lighting-upgrade materials tax-free?
No. Virginia held that the electrical contractor was the taxable user and consumer of materials installed in city facilities. The city's Form ST-12 could not pass through its government exemption, fed…
Was a 2014 Virginia amended return claiming credit for another state's 2009 assessment filed within the special one-year period?
Unresolved. The normal May 3, 2013 deadline had passed, but Virginia law allowed one year from another state's final determination. Because the record did not establish when that determination became …
Did a death-benefit distribution from a federal pension plan qualify for Virginia's annuity-contract subtraction?
No. Virginia's subtraction required a federally taxable lump-sum death benefit from an annuity contract between a customer and an insurance company. The taxpayer's payment came from a federal pension …
Could a taxpayer avoid Virginia's estimated-tax, extension, and late-payment penalties after filing by October 15 but paying nothing?
No. The taxpayer made no estimated payments, paid nothing by the May 1 original due date, and still paid nothing with the October 2013 return. Virginia upheld the estimated-tax addition, a 12% extensi…
Which of a credit-card fraud-management firm's services -- fraud scoring, managed review, chargeback, payment gateway, implementation, consulting, support -- are subject to NY sales tax?
The fraud-detection services are taxable protective services; the chargeback and payment-gateway services are not. Any ongoing service whose function is to detect or prevent fraud or theft is a protec…
Could a service company situs BPOL receipts outside the city based on a contract requiring work at an out-of-state facility?
Possibly. The contract strongly suggested that the services were performed at an out-of-state definite place of business, but the taxpayer still had to document which employees performed the work and …
Could an Illinois resident claim a credit for other-state tax on wages that the employer's W-2 sourced entirely to Illinois?
No, on the records presented. The W-2 sourced 100% of the compensation to Illinois, and the taxpayer showed no other income that Illinois rules would source outside the state. The credit limit was the…
Was documentary stamp tax due on an LLC-interest assignment made before the LLC bought Florida real property?
No. The LLC was not a conduit entity when the membership interest was assigned because it did not yet own Florida real property. The deed tax was also correct if the short-sale requirements were met a…
What result is verifiable from the published order in Karl Edward Beisel v. Virginia Department of Taxation?
The Chesapeake Circuit Court granted the Department's demurrer and dismissed Karl Edward Beisel's case with prejudice in a final, appealable order. The published source says the reasons were in an Apr…
Could Magnum Builders avoid negligence penalty by relying on accountants who believed later audit-document extensions also extended the expired 60-day NTTC deadline?
No. Magnum did not prioritize obtaining construction NTTCs when transactions occurred, despite its accountants' reminders. The Department hand-delivered a 60-day notice to Magnum's designated accounta…
Could an out-of-state capital loss make a Virginia nonresident's income apportionment factor equal 100%?
Yes. In the ruling's example, a $200 out-of-state capital loss reduced income from all sources but not Virginia-source income. With both the numerator and denominator at $500, the nonresident apportio…
Could Gail Stefl avoid gross-receipts penalty and interest because medical and mental-health problems, intense work stress, and a temporary tax-office closure contributed to late payment?
No. Stefl knew gross receipts tax was due but did not pay it in 2013 while focused on a complex consulting project, dealing with lingering medical and mental-health problems, and facing a temporary cl…
Could a corporation and its subsidiaries keep filing a Florida consolidated return after an unrelated parent acquired them?
No. The old affiliated group ceased to exist when the unrelated parent acquired it, and the acquired corporations became bound by the new parent's separate-filing election. Deferred items had to be re…
Were interior-design fees taxable when the designer also sold furniture and other property under the same contract?
Yes. Because the design fees were related to the designer's sale of furniture and other tangible personal property, the fees were part of the taxable sales price even when invoiced separately.
Were paid or free-trial online memberships with shipping, streaming, e-books, music, storage, and discounts taxable in Illinois?
IDOR did not specifically classify the described membership. It said membership fees generally were nontaxable intangibles when no tangible property was transferred. If membership itself entitled the …
Did nonprescription durable medical equipment receive Illinois's reduced medical-appliance tax rate?
Only if the item directly substituted for a malfunctioning body part. Prescription or medical use alone was insufficient. Qualifying appliances used the 1% State rate plus local tax described in 2015;…
Could a government contractor retroactively amend an older contract so its property purchases became purchases for resale to the city?
No retroactive effect appeared available. A contractor normally bought items for its own use unless the government contract explicitly required a sale and transfer of property to the government. An au…
How did Illinois tax equipment fabricated out of state and permanently installed by out-of-state contractors at an Illinois jobsite?
IDOR could not decide without the contracts. A contractor permanently affixing equipment to Illinois real estate was the end user and owed Use Tax on cost. Under the 2015 letter, the State rate was 6.…
Was a marital-trust remainder exempt from Virginia's postponed inheritance tax when no Virginia estate tax was actually paid?
No. Virginia held that the marital-trust remainder was not exempt from postponed inheritance tax because no Virginia estate tax was actually imposed and paid after the estate tax became effectively re…
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