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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What vendor discount applied to Kansas and Oklahoma retailers under the reciprocal use-tax agreement?
For transactions on or after July 1, 2010, Kansas and Oklahoma retailers received a reciprocal 1% discount on timely remitted use tax, capped at $2,500 per month. The revised notice also states that, …
What Kansas compensating-use-tax discount applied to Colorado retailers after July 1, 2009?
Colorado retailers received no Kansas compensating-use-tax vendor discount on Form CT-9U returns filed on or after July 1, 2009. The revised notice also lists later reciprocal rates for Nebraska, Miss…
Did alarm equipment left at customer sites qualify for Illinois's replacement-tax investment credit when the company kept ownership and charged for monitoring?
Not if the company's only ordinary-course receipts came from alarm-monitoring services and equipment leases. Illinois treated a lessor as the equipment's end user rather than a retailer selling tangib…
Did purchases of self-service key-cutting kiosks qualify for Florida's new-business machinery exemption?
No. Although the kiosks appeared to meet the machinery definition, placing one in a big-box store was not opening a new fixed facility, and customers—not the taxpayer—operated the machines to produce …
Are a Georgia colocation center's separately stated cross-connect and electrical-power charges subject to sales tax?
No. Cross-connect access to dark fiber was a nontaxable service rather than a cable lease, and the operator's power charge was not a retail electricity sale because it was not acting as a regulated el…
Could a retired pastor subtract the federally taxable remainder of a Section 403(b) distribution from Illinois income after using part as a housing allowance?
Yes, if the payments originated from a Section 403(b) plan. The portion properly used as a clergy housing allowance was excluded from federal gross income under Section 107 and therefore was not part …
Did a protective claim preserve disputed Land Preservation Tax Credits and transferees' ability to amend 2011 returns beyond the normal deadlines?
Yes. Virginia found undue hardship and treated the protective claim as tolling the five-year carryover while the easement-credit dispute remained pending. The donor and known or future transferees rec…
Did conservation easements qualify for Virginia land-preservation credits when the tracts had already been proffered as open space for residential developments?
No. The tracts had already been set aside as open space through rezoning proffers within residential developments, making the later easements nonqualified donations. Their development value had alread…
Was a Virginia corporate refund return timely when filed within one year after an IRS adjustment to NOL carrybacks, despite the ordinary three-year period?
Yes. The IRS finalized adjustments to 2001-2002 NOL carrybacks in August 2012, and the corporation filed its amended 2000 Virginia return in March 2013. That was within the special one-year period for…
Which in-state activities did SC Revenue Ruling 14-4 identify as creating sales-and-use-tax nexus?
RR 14-4 is a detailed physical-presence nexus checklist covering South Carolina property, inventory, offices, representatives, installation and repair work, affiliates, delivery, printers, advertising…
Could a taxpayer carry underclaimed 2008-2009 Virginia prepaid-tuition deductions into 2010 when each year's contributions were already fully deductible?
No for the prior-year amounts, but Virginia allowed $6,000 for 2010. The taxpayer had two contracts with $3,300 and $2,700 annual contributions, both below the $4,000-per-contract limit. Because the o…
Must a Kansas school collect sales tax on t-shirts it buys and resells to students at cost, even with no profit?
Taxable. A Kansas school is a registered retailer under K.S.A. 79-3602(ii) and must collect sales tax on the goods, admissions, and enumerated services it sells at retail — including t-shirts it buys …
Did Illinois's Telecommunications Excise Tax exempt all interstate calls?
No. The interstate-commerce entry was not a blanket deduction. Illinois taxed an interstate call originating or received in Illinois when the charge went to an Illinois service address, subject only t…
Could Virginia attribute another LLC's sales to the taxpayers' business and treat financed piano inventory as personal withdrawals?
No. Evidence showed the taxpayers' LLC and the manager's LLC were separate legal entities, so the other LLC's sales could not be attributed to the taxpayers. Third-party financing was a normal way to …
Did a Maryland piano seller have to collect Virginia tax merely because a separate Virginia store used the same name?
No. Virginia found no evidence that the Maryland seller and same-named Virginia store were affiliated or the same legal entity, and the seller did not meet the then-applicable sufficient-activity test…
Could Virginia assess one piano retailer for untaxed sales made by a separate Maryland company using the same name?
No. The evidence showed the Virginia LLC and the Maryland piano company were separate legal entities with different owners, despite using the same name and sharing connections to a management company.…
Does Colorado sales tax apply to a separately stated prepaid-fuel charge or to freight/transportation charges on a vehicle?
It depends. A prepaid-gasoline charge is likely NOT taxable as long as it's optional and separately stated, because gasoline itself is exempt from state sales tax — but if the customer is required to …
How did Nebraska sales tax apply to an initial equipment purchase followed by a sale and immediate leaseback?
With contemporaneous, specific financing documents, the user could pay tax on the initial purchase and the later sale and leaseback were not taxed. Without proof that the property was intended for the…
Could a California domiciliary who was an actual Virginia resident claim a Virginia credit for California tax on income earned outside both states?
No. Virginia treated the taxpayer as a California domiciliary and Virginia actual resident, and did not allow a Virginia credit for California tax on income from outside Virginia. She could amend with…
Did a Florida contractor have to charge sales tax for cleaning and repairing commercial kitchen exhaust hoods?
No. The Department found exhaust hood cleaning outside the taxable NAICS cleaning classification and treated hood repairs as real-property improvements; the contractor instead owed tax on taxable repa…
Were admissions to a public-university festival held at public beach venues subject to Florida sales tax?
No. The Department treated the public university as a governmental sponsor and the beach venues as publicly owned recreational facilities, so the specified festival admissions qualified for the exempt…
What is South Carolina's tax interest rate for the period ending December 31, 2014 (per SC IL #14-13)?
3%. SC Information Letter #14-13 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through December 31, 2014. Interest is compounded daily,…
Could an acquired Florida corporate group stop consolidated filing, and who kept deferred depreciation subtractions?
Yes. The old affiliated group ceased to exist when an unrelated parent acquired it, so the former subgroup could not keep filing consolidated returns; each original asset purchaser retained its remain…
Did a proposed mortgage-loan master repurchase agreement owe Florida documentary stamp or nonrecurring intangible tax?
Generally no at signing because the agreement contained only contingent, not unconditional, sums certain. Recording its pledged collateral could trigger documentary stamp tax, but not intangible tax a…
Could an off-airport parking operator use audited effective tax rates when it separately stated tax on receipts?
No. Because the operator separately stated sales tax, it had to remit the tax collected and calculate tax at the statutory county rate, using the bracket system for fractional-dollar charges.
Could an Illinois-only leg count as an interstate trip for the rolling-stock exemption?
Generally yes. A carrier-for-hire trip solely between Illinois points could count when the passenger's journey or property's shipment originated or terminated outside Illinois. The carrier had to docu…
Does South Carolina follow the federal final 'tangible property' regulations on capitalizing or deducting property costs (per SC IL #14-11)?
Yes. SC Information Letter #14-11 confirms that for income tax purposes South Carolina will follow the IRS's final 'tangible property' regulations under I.R.C. §§ 162(a) and 263(a) — the rules on when…
Did a military spouse remain a Virginia domiciliary in 2009 after selling her Virginia home and moving abroad with the service member's orders?
No. The spouse sold her Virginia home and vehicles, moved to the foreign duty station, established a home there, used the foreign address on her federal return, and let her Virginia driver's license e…
Were airline ground-support equipment, repair parts, labor, and maintenance contracts exempt from Virginia sales tax?
Yes when sold to a qualifying scheduled common-carrier airline for direct use in its service. Ground-support equipment and repair parts were exempt, separately stated installation and repair labor was…
What were the significant South Carolina tax-law changes from the 2014 legislative session, as summarized by the Department (per SC IL #14-12)?
SC Information Letter #14-12 is the Department's brief summary of the significant tax and regulatory law changes enacted in South Carolina's 2014 legislative session, organized into categories: (1) in…
Were naval-equipment sales Virginia sales when the equipment was built and first tested elsewhere but delivered to Virginia warehouses and a vessel?
Yes. Virginia used destination, not title passage or acceptance testing. Equipment delivered to a federal warehouse was received in Virginia; contractor warehouses were transportation stops, but deliv…
A Tennessee retailer sells trail mixes, glucose tablets, electrolyte drinks, non-alcoholic beer, coupon books, hearing aid batteries, and propane. Which are taxed at the lower 5% food rate, which at the full 7% rate, and which are exempt?
It depends on the item. Most of the retailer's edible products — non-alcoholic cocktail mixes and beer, all three trail mixes, fiber drink mix, food thickener, all the oral electrolyte solutions/powde…
Was an adult whose parents moved to Virginia still a Virginia domiciliary after a permanent foreign transfer, marriage, home purchase, and residence visa?
No. The taxpayer was already an adult when her parents moved to Virginia, and by 2008 her permanent foreign job, home, marriage, and residence process established a new domicile. She had never lived, …
Did wages of a Virginia-resident employee who traveled nationwide belong in an out-of-state company's Virginia payroll-factor numerator?
It depended. If the employee performed no services in Virginia, the wages were not Virginia compensation. If some work occurred in Virginia, wages stayed outside the numerator when State A directed th…
Could a taxpayer overturn a late-penalty assessment and IRS-based estimated assessments after missing the appeal deadline and failing to file returns or records?
Not on the existing record. The 2008 appeal was filed well after Virginia's 90-day deadline, and the 2009-2011 estimates remained presumed correct because returns and supporting records were missing. …
Could a Virginia part-year resident claim credit for New York tax on wages earned after moving to Virginia while continuing to work in New York?
Only if she could prove she was not also a New York resident while domiciled in Virginia. A Virginia part-year resident may receive the credit for tax paid to another state where she was a nonresident…
Could Virginia adjust federal itemized deductions when the taxpayer's Schedule A amounts and supporting records did not substantiate the claimed deductions?
Yes. Virginia matched the state-and-local-tax reduction to Schedule A, recalculated overstated job mileage, and disallowed unsupported property-tax and charitable deductions. The taxpayer received one…
Could an advertising firm remove allegedly isolated printing, software, and asset purchases from Virginia's audit samples without transaction records?
No. Printing-related services were taxable with the printed property, and the firm did not document that software and other purchases were electronically delivered, isolated, or unusual. As a service …
Did Virginia's industrial-processing exemption cover a waste collector's bins, trucks, and equipment used to sort and bale recyclable paper and metal?
No, on the facts presented. The bins and collection trucks were taxable property used in a waste-disposal service. The sorting and baling operation also failed the industrial-processing test because t…
How did Virginia tax furnished apartment rentals shorter or longer than 90 days, and who paid tax on the furniture?
The provider had to register and collect sales tax on furnished accommodations rented for less than 90 continuous days. Stays of 90 days or more were not taxable; month-to-month stays required collect…
Did Virginia's agricultural sales-tax exemption cover rented water-treatment equipment and salt used to irrigate greenhouse plants for sale?
Yes. The greenhouse grew plants for wholesale and retail sale, and the equipment treated irrigation water to prevent iron from yellowing the plants. Virginia found the rented treatment units and the s…
If one company sells the food and a separate subsidiary provides the cooking and serving labor, are the labor charges taxable catering in NY?
No, the subsidiary's food-preparation labor isn't taxable catering -- provided the two companies stay genuinely separate. Food-preparation services alone aren't a taxable service under section 1105(c)…
What physical, numbering, sales, and recordkeeping standards does SC Revenue Ruling 14-3 set for bingo paper?
Bingo paper used in South Carolina must meet DOR standards for durable and legible paper, statutory card design, random numbers, printed face value, manufacturer identification, serial and permutation…
Were a hotel's mandatory banquet gratuities of 20% taxable when part was retained by the house and the hotel was not treated as a conventional restaurant?
No. Virginia's statute excluded mandatory gratuities up to 20% of the meal price without requiring the full amount to be distributed to employees, and the exemption covered hotels and other places ser…
Was a September 2013 refund claim for tax year 2009 timely when the taxpayers paid by the original due date and filed within Virginia's extension period?
Yes. Because the taxpayers paid the full estimated balance by the May 2010 due date and filed their original return before the six-month extended due date, the three-year refund period ran from that e…
Could an S corporation holding company subtract gain from distributing portfolio-company stock because it lacked a unitary relationship with that company?
No. The company had employees and property, so it was not a passive investment pass-through entity. Managing and disposing of investments was its normal business, and it did not provide clear and coge…
Are single-use osmolarity test cards used to diagnose dry eye disease subject to NY sales tax when sold to eye-care practitioners?
Yes, when sold to providers who use them for compensated care. The osmolarity test cards qualify as medical equipment or supplies under section 1115(a)(3) because they are used to diagnose a medical c…
Does the operator of a coin-operated game room with no admission fee and no other sales need a NY sales tax Certificate of Authority?
No -- the operator is not required to obtain a Certificate of Authority, because he isn't a 'person required to collect tax.' Receipts from coin-operated amusement devices (here a pinball machine, juk…
If a social or athletic club opens membership to the public on a first-come basis, do its dues, initiation fees, and assessments stop being subject to NY sales tax?
No -- the club's dues, initiation fees, and assessments stay taxable. Removing the exclusivity-of-membership clause and admitting the general public does not change the club's status as a 'social or a…
Could Florida hotels treat rooms for nongovernmental exempt organizations as tax-exempt using the proposed documentation?
Yes, if accepted in good faith. The hotels recorded the exempt entity on the folio, kept its valid Florida exemption certificate and a signed guest declaration, and required direct entity payment.
Were the requesting taxpayer's cloud computing, data storage, and related data-transfer usage fees taxable in South Carolina?
No for the specific services described. DOR concluded that the taxpayer's scalable virtual computing service, cloud data-storage service, and associated upload, download, and internal data-movement fe…
Did an economic-obsolescence appraisal prove that a county's percentage-of-original-cost machinery valuation exceeded fair market value?
No. The county uniformly used a statutory percentage-of-original-capitalized-cost method and thoroughly considered the appraisal. The appraisal did not adequately support its economic-obsolescence and…
Were dollar-for-dollar warehouse operating-expense reimbursements excluded from BPOL gross receipts as agency funds or loan repayments?
No. The reimbursements were part of the operator's cost-plus warehouse-management receipts. The operator lacked stated client-vendor contracts and segregated accounting required to show agency, and th…
Did pharmaceutical salespeople, Virginia clinical trials, and employee recruiting and lobbying create Virginia corporate-income-tax nexus?
The ordinary sales solicitation appeared protected by P.L. 86-272, but Virginia could not decide the overall nexus question on the submitted facts. The company had to test whether clinical-trial provi…
How did a vending operator with machines at both nonprofit schools and for-profit businesses have to report Virginia sales tax?
The nonprofit-only rule did not apply because some machines were at for-profit businesses. Under the historical rates in the ruling, the operator generally had to remit 7% on the wholesale cost of all…
Did documentation support refunds for Virginia sales tax allegedly paid in error to two vendors during an audit period?
Only in part. Virginia found the records sufficient for Vendor A and allowed a refund with interest, but denied the Vendor B claim because the taxpayer did not prove that tax had been paid erroneously…
Are Kansas charges for internet access taxable, and does it matter if the federal ITFA moratorium expires?
Not taxable — and that won't change even if the federal moratorium lapses. Kansas sales tax applies to telecommunication services under K.S.A. 79-3603(b), but K.S.A. 79-3602(aaa)(6) defines 'telecommu…
In a stack of affiliated REITs and LLCs, which entities are 'captive REITs,' which are 'public REITs,' and who has to add back the dividends-paid deduction and file a combined Tennessee franchise and excise tax return?
It depends on each entity's ownership and how its shares trade. A REIT is a 'captive REIT' if it has a federal REIT election, is at least 80% owned (directly or indirectly) by one entity or individual…
A company's stock was bought in a deal where the parties made a federal § 338(h)(10) election, so the company was 'deemed' to acquire its own manufacturing assets. Can it claim Tennessee's franchise & excise industrial-machinery credit on those assets?
No. A company whose stock was bought in a deal where the buyer and seller jointly made a federal I.R.C. § 338(h)(10) election cannot claim Tennessee's franchise & excise industrial-machinery credit on…
A company sells a hosted 'cloud collaboration' service that instructs and augments a customer's phone equipment for voice, video, messaging, presence, and conferencing, keeping all hardware and software on its own out-of-state servers. Is that service subject to Tennessee sales and use tax, and how is it sourced and rated?
Yes — it's taxable, but as telecommunications, not software. The company's Cloud Collaboration Service (hosted voice, video, messaging, presence, and conferencing that instructs and augments a custome…
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