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 an 18% mandatory banquet gratuity excluded from Virginia's taxable sales price even though 3% was kept as a house gratuity?
Yes. Virginia held that the entire 18% mandatory gratuity was excluded from taxable sales price because it did not exceed 20% of the meal price. The 3% house share did not make the lump-sum charge tax…
Were Sharon Ray's Usana payments taxable gross receipts when she recruited New Mexico customers who ordered products online and used her associate ID?
Yes. Ray recruited and enrolled New Mexico customers, they ordered Usana products online using her associate ID, products were shipped to them, and she received compensation tied to purchases. Those a…
When must an out-of-state investment pass-through entity file in Virginia and withhold for nonresident owners?
A pass-through with no Virginia business or source income did not file or withhold merely because its investment manager worked in Virginia but was not on its payroll. A second entity investing in an …
Did moving to another state for full-time work end a taxpayer's Virginia domicile when his family and major ties remained in Virginia?
No. Virginia held that the taxpayer had not abandoned his Virginia domicile. Although he worked, leased a home, registered a vehicle, and held a license in another state, his family and home remained …
Could Virginia residents claim an out-of-state tax credit for the District of Columbia Unincorporated Business Franchise Tax?
No. Virginia held that the District of Columbia Unincorporated Business Franchise Tax was a franchise tax, not an income tax similar to Virginia's individual income tax. The residents' 2013 credit was…
Could Virginia residents claim a Virginia credit for California tax on California wages when California law offered the reciprocal credit?
Generally no. Virginia denied the credit because California law ordinarily allows the Virginia resident to claim the reciprocal credit on the California nonresident return. The couple's California ret…
Could taxpayers apply a claimed 2008 Virginia overpayment to 2009 tax when their first 2008 return was filed in June 2014?
No. Applying an overpayment to another year's liability was subject to the same deadline as a refund. The 2008 return was due May 1, 2009 but was not filed until June 17, 2014, so Virginia denied the …
Were tumor-treating-field cancer therapy devices exempt from Virginia sales tax as durable medical equipment?
Yes, when purchased by or on behalf of a specific individual. Virginia found the tumor-treating-field devices qualified as durable medical equipment. Bulk sales or leases to for-profit hospitals, phys…
Could the Department disqualify Walt Arnold Commercial Brokerage from a managed audit based on copies of multiple nonfiler notices without evidence they were actually mailed or received?
No. The Department attached six copied nonfiler notices bearing the correct address but presented no evidence of its ordinary generation and mailing procedures. Arnold credibly testified that neither …
When were a charitable nonprofit hospital's sales of medicines, skin-care, and grooming products to patients exempt?
An E-number charitable hospital did not owe Retailers' Occupation Tax on drugs or grooming products sold to a current patient in furtherance of hospital or clinic care. After the patient left, later s…
Is a restaurant's separately stated delivery charge taxable when the customer is never told there's a delivery fee they could avoid by picking up the meal?
Taxable here. A delivery charge escapes sales tax only if it's both (1) separable from the sale and (2) separately stated in a way the customer actually knows about before buying. This restaurant's fe…
Could a Virginia county obtain reconsideration of an M&T tax decision when it filed its request after the 45-day deadline?
No. The prior determination was dated January 8, 2015, making the adjusted 45-day deadline February 23 because February 22 was a Sunday. The county did not file until March 10, so Virginia could not r…
Was a taxpayer who moved out for permanent work and returned to Virginia in May 2011 a full-year or part-year resident?
Part-year resident. Virginia found that the taxpayer had abandoned Virginia domicile before 2011 and did not become a Virginia resident again until he returned in May. His submitted part-year return w…
For Utah corporate franchise tax, does a freight-forwarder reseller of transportation services use the single sales-factor apportionment formula, and does it source its sales to the shipment's origin, its destination, or its own direct customer's location?
Two separate answers. First, NO — this freight forwarder is NOT a "sales factor weighted taxpayer" and can't use the single-sales-factor apportionment formula in § 59-7-311(3)(c), because its NAICS co…
Which dealers had to make Virginia's accelerated sales-tax payments in June 2015 and 2016, and how did payment and reconciliation work?
For June 2015 and June 2016, a dealer with at least $2.5 million of taxable sales or purchases in the prior fiscal year generally had to prepay 90% of the previous June's sales-and-use-tax liability, …
Did pilot-line equipment qualify for Virginia's R&D sales-tax exemption when it was also used for quality control and customer-specific work?
No. Although the technical center performed qualifying research, the same pilot-line equipment also supported quality control, customer-specific modifications, cost reduction, and competitor analysis.…
Could a Virginia seller reduce an audit assessment with valid customer exemption certificates obtained after the audit began?
Yes. Certificates obtained after an audit begins are not accepted as having been taken in good faith and receive greater scrutiny, but Virginia found the submitted customer certificates valid and sent…
Did installed bowling lanes, pinsetters, ball returns, and scoring equipment become real-property fixtures for Virginia sales-tax purposes?
Yes. Virginia found the bowling equipment became part of the real property after installation. It was annexed to the premises, adapted to the bowling-alley use, and intended to remain. The contractor …
Could Virginia devalue a land-preservation credit carryforward when the original 2008-2009 assessment periods had expired?
Yes, for the unused carryforward. Virginia could not assess the owners' closed 2008 and 2009 returns, but it could reduce remaining credit and assess later open years. It accepted the Department's $26…
Could a leased county residence be a property company's BPOL business location when the records instead supported the owner's city home?
No. The company did not prove that the county rental property was a definite place of business. With no evidence of another business location, Virginia upheld the owner's city residence as the company…
Did a federal extension give a taxpayer until July 2014 to file an original 2010 Virginia return claiming a refund?
No. Because the taxpayer did not file the original Virginia return by the extended due date, the Virginia extension was negated and the refund period ran from the original May 2, 2011 due date. The Ju…
Could Virginia residents subtract all CSRS pension payments because their contributions had already been taxed federally and by Delaware?
No. Virginia's subtraction required contributions that were deductible federally but taxed by another state. The husband's CSRS contributions had been taxed federally, so their basis was already recov…
Did a couple establish another-state domicile in 2011 even though they returned to Virginia that November and one retained a Virginia license?
Yes. The husband changed domicile in February 2011 and the wife in March after the couple sold their Virginia home, bought a home in another state, moved vehicles, registered to vote, and obtained lic…
Where were a service company's BPOL gross receipts sitused when its owners worked out of state but it proved no other definite place of business?
Unresolved pending more proof. Virginia gave the company 30 days to document any definite place of business outside the city. If the city office was its only definite place, all receipts belonged ther…
Was a worker entitled to refunds when her employer withheld Virginia tax after she abandoned Virginia domicile for a foreign assignment?
Yes. Virginia found that the worker abandoned her Virginia domicile and established domicile in another country before 2010. Her employer had incorrectly withheld Virginia tax, and her timely nonresid…
Was a military spouse working in Virginia in 2008 a resident, or a nonresident taxable only on Virginia-source wages?
Nonresident. Virginia found that the military spouse had not abandoned his other-state domicile and spent no more than 183 days in Virginia. He still owed Virginia tax on wages earned from Virginia em…
Is a 'bead blasting' service that removes stubborn scale build-up from swimming pool tile ordinary nontaxable pool cleaning/maintenance, or taxable real property restoration -- and does the answer change for a residential vs. a commercial pool?
Restoration, not routine cleaning -- and the tax result differs by property type. The Comptroller ruled that a 'bead blasting' service (using microscopic glass beads sprayed by an air compressor to re…
Did a motor carrier overturn a city BTPP assessment when it refused requests needed to reconcile conflicting truck-location evidence?
No. The carrier's GPS data and affidavit conflicted with information from its manager, and it did not provide the city's requested reconciliation, mileage, or alternative records. Because the local as…
Is an online employee wellness service with health education, personal tracking, and an annual biometric assessment subject to Georgia sales tax?
No. The online health-information and wellness service was not among the services Georgia specifically designated as taxable. The provider remained responsible for sales or use tax on items it used to…
Which banquet and event charges — guarantees, room setup, extra labor, off-site fees, below-minimum fees, IT/router, electricity, and audiovisual rentals — does Colorado sales tax apply to?
It depends on the charge. Fees tied to catering prepared meals — room setup, extra labor, below-minimum, and hotel-billed off-site fees — are taxable as part of the meal. Audiovisual equipment rentals…
Are a company's medical-records services — coding, abstraction, and secure online storage — subject to Colorado sales or use tax?
No. The Department reaffirmed its earlier PLR 13-005 view that retrieving and copying medical records is a service, not a sale of tangible personal property. So coding, abstraction, and secure online …
If a buyer paid sales tax on a mandatory car warranty that was later wiped out in the manufacturer's bankruptcy, can the buyer get a sales-tax refund on replacement parts they then had to pay for?
No. Sales tax is a transactional tax fixed when each deal is made. The mandatory warranty was properly taxed when the car was bought, and its later discharge in the manufacturer's bankruptcy doesn't u…
Could employees deduct internet and vehicle costs when the internet amount lacked support and the employer paid for fuel?
Partly. Virginia upheld the internet-expense adjustment because the taxpayers did not document the larger amount claimed, but restored the net mileage deduction because the standard mileage rate cover…
Could taxpayers subtract full IRA distributions when only part represented retirement contributions previously taxed by another state?
Not yet. The previously taxed contributions could qualify, but investment earnings could not. Virginia gave the taxpayers 30 days to prove the contribution balance, year-end account values, and distri…
Was a federal IT and systems contractor properly classified as a professional engineering business for local BPOL tax?
Unresolved. Virginia found evidence that the contractor performed professional engineering services, but the taxpayer had not provided the requested gross-receipts breakdown and the county had reviewe…
How should Virginia's graduated recordation-tax rates apply when a supplemental deed increases secured debt from $35.4 million to $65 million?
The taxable increase was $29.6 million, but the rate brackets had to continue from the $35.4 million existing debt rather than restart at the first bracket. Virginia taxed $4.6 million at $0.16 per $1…
Was a corporate president personally liable for old withholding tax when he helped complete audits and began a payment plan?
No. The president qualified as a corporate officer with knowledge and authority, but Virginia found no willful failure. He hired an accounting firm that helped complete the audits and directed payment…
Was an April 2014 claim timely for a corporate estimated payment deemed paid and self-assessed on September 15, 2009?
No. With no return filed, the estimated payment and self-assessment were deemed made on September 15, 2009. The protective-claim period expired September 17, 2012, so the corporation's April 2014 requ…
Could a Virginia resident subtract pension income from another state without proving that state previously taxed the plan contributions?
No. The pension was included in the Virginia resident's federal adjusted gross income, and she did not prove that the other state had previously taxed contributions that the federal government had not…
Could a federal contractor buy Army property tax-free merely because the solicitation named it purchasing agent and advanced government funds?
Not on the facts supplied. Calling the contractor a purchasing agent and advancing federal funds did not prove that the United States' credit was directly bound. Virginia could not determine who was t…
Could an office-furniture seller accept Form ST-11 after Virginia said manufacturing machinery may be bought exempt?
No. Virginia's email said machines used in manufacturing may qualify; it did not approve office furnishings. The seller knew the furniture was not used in production and directed the customer to use F…
Is a cloud-computing (infrastructure-as-a-service) product that sells scalable computing power subject to NY sales tax?
No -- selling computing power is not one of the services made taxable by the Tax Law, so the cloud product is not subject to sales tax. Customers rent 'instances' of CPU, memory, and storage to run th…
Could a Virginia resident claim credit for North Carolina tax on gain from investment land, and did the special border-state rule apply?
Yes, under the general credit. The investment land was a capital asset, so the Virginia resident could claim credit for North Carolina tax on the 2014 gain. The special border-state rule did not apply…
Could taxpayers avoid Virginia assessments while contesting IRS adjustments if they filed no amended Virginia returns or proof of a revised federal result?
No. Virginia upheld the 2009, 2010, and 2013 assessments because the taxpayers did not report the IRS changes or provide enough evidence of a revised federal determination. If the IRS later changed it…
Was a military spouse exempt from Virginia income tax when she claimed another domicile but had a home, job, voter registration, and license in Virginia?
No. Virginia found the spouse was a Virginia domiciliary because she showed no continuing connections to the claimed state and established a home, employment, voter registration, and a driver's licens…
Did visible correction fluid on a timely service-resale NTTC invalidate Joseph and Carmen Garcia's gross receipts deductions?
No. The buyer used white correction fluid to fix an address mistake before delivering the service-resale NTTC in 2008. The certificate was timely, the proper type, contained all required information a…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #15-5)?
Use the citator attached to SC Information Letter #15-5. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Were restaurant meal-delivery fees taxable when separately stated but customers were not told they could choose carryout?
Yes. A separate invoice line was insufficient. Because the restaurant did not notify customers that they could buy the meal for the stated price and choose carryout instead of delivery for an added ch…
Is a training service taxable when students receive t-shirts, notebooks, flash drives, downloadable content, and other materials without separate charges?
No. The clients' primary purpose was to obtain training, and the unitemized t-shirts, notebooks, flash drives, digital supplements, and other participation materials were inconsequential elements of t…
Could a Virginia resident use Maryland rental income and tax to claim the special border-state credit without Virginia's ordinary limitation?
No. Maryland rental income reported on Schedule E did not qualify for Virginia's special border-state rule. Virginia correctly limited each 2011-2013 credit to the Virginia tax on Maryland net income,…
Could severe illness extend Virginia's refund deadline when a 2010 joint return claiming a refund was filed in June 2014?
No. The 2010 return had to be filed by May 2, 2014 to preserve the refund, but the wife and husband's estate filed it in June. Virginia law required a fiduciary or authorized agent to file for a disab…
Could taxpayers deduct long-term care premiums paid in 2009 and 2010 on their 2011 Virginia return after the earlier refund periods expired?
No. Under the taxpayers' cash method, long-term care premiums were deductible only in the year paid. Their 2011 return could include the 2011 premium, not premiums paid in 2009 or 2010, and the three-…
Could late 2005-2009 overpayments be credited to 2012-2013 assessments when disability prevented the taxpayer from filing until March 2014?
No. Applying an overpayment to later tax is still subject to the refund deadline. The taxpayer filed the 2005-2009 returns in March 2014, after every limitation period had expired, and disability did …
Could a taxpayer overturn a Virginia assessment based only on saying it was larger than taxes owed in other years when no 2010 Virginia return had been filed?
No. Virginia's best-information assessment was presumed correct, and comparing it with other years did not prove the 2010 liability was wrong. The taxpayer had 30 days to file a 2010 Virginia return s…
Could taxpayers subtract a 2011 long-term gain from selling real property under Virginia's qualified-technology-business subtraction?
No. Virginia's subtraction required gain attributable to an investment in a qualifying Virginia technology business. The taxpayers' gain came from selling real property, and they had no qualifying wri…
Could Virginia residents subtract foreign salary, foreign investment gains, and the 2011 portion of a 2010 Roth IRA conversion from federal adjusted gross income?
No. The amounts were included in the taxpayers' 2011 federal adjusted gross income while they were Virginia residents, and Virginia law supplied no applicable modification. That included foreign earni…
Did a taxpayer remain a Virginia domiciliary in 2011 despite owning a Virginia home and maintaining family and business connections there?
No. Although the taxpayer still owned a Virginia home and had family, business, and vehicle connections there, his long-running State A home, license, vehicle registration, voter registration, nonresi…
Could a married couple avoid the $4,000-per-contract Virginia prepaid-tuition deduction limit because the nonowner spouse was over age 70?
No. Only the listed purchaser-owner could claim the prepaid-tuition deduction. Because the husband owned both contracts and was under 70, each deduction was limited to $4,000 per year despite the wife…
Could preparing a 2011 Virginia return in tax software prove it was filed when the Department had no return, confirmation number, or payment record?
No. Tax software preparation did not prove that the Virginia return was transmitted or received. With no return, confirmation number, or payment proof, Virginia could assess from the IRS transcript at…
Did a taxable lump-sum death payment qualify for Virginia's annuity death-benefit subtraction when it came from a § 403(b) retirement plan?
No. Even though an insurance company issued a taxable lump-sum death payment, the documents showed it came from an IRC § 403(b) retirement plan. Virginia's subtraction applied to qualifying annuity-co…
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