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 late-filing penalty policy did Virginia announce for surplus-lines brokers filing annual Form 802?
For the policy announced in 2014, Virginia capped the $50-per-day Form 802 late-filing penalty at $250 for a first offense and $500 for a second offense. A third or later offense remained subject to t…
Does hemodialysis equipment qualify for Colorado's durable medical equipment or prosthetic device exemption?
Durable medical equipment — yes (apparently); prosthetic device — doubtful. Prescribed hemodialysis equipment appears to qualify for Colorado's durable medical equipment exemption: it withstands repea…
Could a Virginia resident claim an other-state tax credit for West Virginia tax paid on slot-machine winnings?
Generally no. Slot-machine winnings were not compensation for services and therefore were not earned income. They qualified as business income only if the taxpayer proved that gambling was pursued ful…
Could Virginia decide BPOL and BTPP appeals when the county omitted the required BPOL notice and the taxpayer failed to give 30 days' direct-appeal notice?
No. The county's letter omitted the mandatory BPOL appeal language, but the taxpayer also failed to give the county 30 days' advance notice before treating the local appeal as denied. Virginia lacked …
Is a diaper bundle priced over $110 still exempt if each component, sold separately, is under the $110 clothing threshold?
Yes -- the $269.95 diaper bundle is exempt from sales and use tax. Children's diapers and their components are exempt clothing when sold for less than $110 per item. Because each of the four component…
Could a Virginia corporation exclude all related-party royalties from the add-back because its affiliate filed returns in other states?
No. The exception covered only the portion of royalty expense corresponding to the affiliate's income actually apportioned and subjected to tax in other states, not every royalty shown on those return…
Did a medical-center manager paid on Forms 1099 owe gross receipts tax when she believed she should have been an employee and had no NTTC?
Yes. Joan Dewbre was paid as an independent contractor and received Forms 1099 for management and supervisory work at a medical center. Her services were taxable even if another organization also shou…
Could a nail technician avoid gross receipts tax as an employee or through a late NTTC when the salon owner had already paid tax on his services?
No. The salon owner credibly viewed Johnny Nguyen as her worker, controlled access and scheduling, issued paychecks, and paid gross receipts tax on his services. But Nguyen said he was paid commission…
Were hosted virtual call-center subscriptions and communications charges to Florida customers subject to Florida CST?
No, under the represented architecture. The package included communications services, but bridging, origination, and customer receipt occurred at data-center equipment outside Florida.
Were three tiers of leases for nursing-home and assisted-living facilities subject to Florida commercial-rent tax?
No, for the described facility areas. The first two lease tiers qualified for resale treatment, the operators used the premises for residential care rather than commercial space, and resident accommod…
Could Adecco exclude City of Albuquerque staffing receipts through a Type 9 NTTC, disclosed agency, employee leasing, or out-of-state services?
No. Adecco's timely Type 9 NTTC covered tangible personal property on its face, not staffing services, and good-faith safe harbor could not create a deduction where the City did not resell the service…
Were cable converter boxes issued to customers exempt intangible property rather than assets subject to local Virginia BTPP tax?
Yes. Virginia's 1984 legislative history expressly reclassified cable tuners and converters as intangible property. The Department rejected the city's machine classification and returned the case for …
Were cable converter boxes issued to customers exempt intangible property rather than assets subject to local Virginia BTPP tax?
Yes. Converter boxes were used in the cable-television business and Virginia's 1984 legislative history expressly reclassified tuners and converters as intangible property. The Department returned the…
Which cable-provider assets were exempt intangible property and which remained subject to local Virginia BTPP tax?
Cable converter boxes were exempt intangible property, so the city had to remove them from the 2008 BTPP assessment. The provider did not prove that headend equipment, optical electronics, modems, or …
How should someone who moved from Maryland to Virginia in November 2009 file, and could he claim credit for Maryland wage tax?
He should file 2009 Form 760PY and report only income received during the Virginia-resident period, with prorated exemptions and standard deduction. Because Virginia-Maryland reciprocity exempted a Vi…
How did Virginia apply the true-object test and resale exemptions to mixed tasks under a federal prime contract and subcontract?
Virginia applied the true-object test to each lowest-level mixed task, not the 16-task instruction as a whole. Tasks 3, 14, and 16 primarily sought tangible personal property; their services facilitat…
Did low-wage service work disqualify a disabled federal retiree from Virginia's disability-income subtraction?
No. After reconsidering the federal-annuity rules and additional evidence, Virginia found that the taxpayer's minimum-wage service work was not comparable to his prior federal-government work. He ther…
Were cellular-phone activation fees taxable communications services, and could the provider add a separate audit issue after the appeal deadline?
The phone-linked fees were not taxable communications services because they arose only with a phone purchase, were refunded with a returned phone, and were not charged when customers used their own de…
Were electronic textbooks sold or rented entirely online subject to Illinois sales or service tax?
No. IDOR treated the viewing or downloading of books and similar text over the Internet as an intangible transfer, not tangible personal property. An electronically downloaded book was outside Retaile…
Could a taxpayer challenge a 2000 Virginia assessment in 2012 by demanding that the Department first prove it was correct?
No. The assessment was issued June 6, 2003, but the taxpayer did not appeal until November 2012, long after Virginia's 90-day deadline. Department records also showed earlier notices to the same addre…
When a state university system (the exempt party) is the LANDLORD and a non-exempt LLC is the TENANT building student housing on university land -- the reverse of the usual exempt-tenant/taxable-landlord setup -- does the construction still qualify as an exempt § 151.311 contract, and who can issue the exemption certificates down the contractor chain?
Yes, exempt -- but under a different legal test than the familiar two-prong lease-term test. The Comptroller ruled that a 514-bed student-housing facility built on Texas A&M University System land und…
Under SC Revenue Ruling 14-2, were ordinary utility trailers subject to the maximum sales-tax cap?
No. The ruling said an ordinary utility trailer capable of being pulled by an automobile, minivan, or pickup truck owed the 6% state sales or use tax plus applicable local tax and did not qualify for …
How did Virginia treat unsupported affiliate classifications, corporations without Virginia nexus, and royalties paid to related companies?
Virginia removed affiliates that lacked nexus and positive apportionment factors from the audit and allowed a royalty add-back exception only for the portion tied to affiliate income taxed by other st…
Did leasing an aircraft acquired for resale stop or restart Illinois's 18-month interim-use period?
IDOR did not answer either lease-timing question and only directed the dealer to Section 150.306. The GIL's official synopsis states that when aircraft or watercraft demonstration or interim use excee…
How did Illinois tax a company installing and maintaining railroad-track lubricators, including parts, labor, delivery, and travel charges?
IDOR could not classify every charge without the contracts and invoices. If the company permanently affixed property to real estate, it was a construction contractor and end user owing Use Tax on mate…
Is separately stated U.S. postage for the delivery of direct mail subject to Nebraska sales or use tax?
It depends on whether the postage is separately stated. Revenue Ruling 01-14-1 explains that, beginning April 1, 2014, Laws 2014, LB 867 amended Neb. Rev. Stat. §§ 77-2701.11 and 77-2701.35 to exempt …
How does the Kansas tax credit for the low income students scholarship program work?
Kansas Notice 14-14 (May 1, 2014) explains that Senate Substitute for House Bill 2506 (Sections 55 through 61) created the Tax Credit for Low Income Students Scholarship Program. Beginning with tax ye…
Could mobile paper-shredding and baling equipment qualify for Illinois's manufacturing machinery exemption?
Potentially. Shredders, compactors, conveyors, and balers could qualify when used primarily to make paper into a substantially different material sold at wholesale or retail or leased. IDOR did not de…
Did changing an aircraft's N-number or moving it from a corporation to an LLC trigger Illinois Aircraft Use Tax?
Changing the N-number did not trigger Aircraft Use Tax when no transfer, gift, or purchase occurred. A transfer between separate legal entities, even related ones, generally was taxable, so a corporat…
Could Virginia reduce transferred land-preservation credits when its appraisal valued a conservation easement far below the donor's appraisals?
Yes. Virginia accepted its independent appraisal's approximately $1.6 million easement value rather than the donor's approximately $9.6 million or $12.8 million values. The Department found the donor'…
Could a Virginia corporation exclude all related-party royalties from the add-back based on other-state filings or a valid business purpose?
Not on the record presented. The corporation had to provide the affiliate's out-of-state returns so the auditor could calculate the portion of royalties actually covered by the subject-to-tax exceptio…
How did Virginia sales tax apply to ATM installation, sign replacement, repairs, and delivery for financial institutions?
Virginia treated a business primarily furnishing and installing ATMs or financial-institution security property as a retailer for post-June 2011 work, requiring it to collect tax on the property rathe…
Which Virginia dealers had to make the June 2014 accelerated sales-tax payment, and how did payment, reconciliation, and hardship relief work?
For June 2014, a dealer with at least $48.5 million of taxable sales or purchases in the prior fiscal year generally had to prepay 90% of its June 2013 sales-and-use-tax liability. Payment was due Jun…
Is the sale of an infusion pump for at-home pain management subject to Colorado sales or use tax?
It's exempt — by either of two routes. An infusion pump that delivers medication is exempt from Colorado sales and use tax as a medical/disposable 'infusion' supply when dispensed pursuant to a prescr…
Does an out-of-state S corporation that does IT consulting remotely for a Colorado client have to file a Colorado income tax return?
Probably not on these facts. An S corporation's shareholders must file Colorado returns only if the company does business in Colorado—i.e., it has substantial nexus by exceeding any one threshold ($50…
Is a 'demand charge' on a commercial electricity bill subject to Colorado sales or use tax?
It's taxed the same as the electricity it's part of. A demand charge — the higher rate a utility charges for the ability to draw a large load (here ~74,600 watts) at peak times — is simply part of the…
Are an association's membership fees taxable when membership comes with both goods (a guidebook, a magazine) and services, and is tax refundable if a member cancels?
It depends on the true object. A membership fee can be a taxable sale when the member gets tangible goods (here, an instructor's guidebook, marketing material, and a magazine subscription) for the fee…
Are intrauterine devices (IUDs) subject to Colorado sales or use tax — hormonal versus copper?
Exempt, by two different routes. A hormone-releasing IUD is treated as a prescription drug, so it's exempt from Colorado sales and use tax when dispensed pursuant to a prescription by a licensed provi…
Do tanks for a natural-gas combined-cycle power plant qualify for Colorado's renewable-energy or manufacturing-machinery sales tax exemptions?
No renewable-energy exemption, and the manufacturing question was left open. Tanks for a natural-gas combined-cycle power plant don't qualify for Colorado's exemption for components that produce AC el…
Could a multistate healthcare staffing company avoid penalty based on an earlier CPA review that concluded no New Mexico gross receipts tax was due?
No. PPR Healthcare Staffing proved that its 2006 controller was a CPA who surveyed the states where it operated and concluded that tax was due in Washington but not New Mexico. It did not prove what r…
Was solar electricity sold under a power-purchase agreement exempt while leasing the photovoltaic equipment remained taxable in Virginia?
Yes, on the facts presented. Electricity sold to host customers under a power-purchase agreement qualified for the exemption for electricity delivered through lines. An unmetered customer agreement wh…
Did a customer's later use-tax payment remove an untaxed sale from a Virginia seller's audit sample?
No. A customer's later use-tax payment did not erase the seller's duty to collect tax or remove the sale from the audit sample. Virginia kept those sales in the sample but allowed one-time credits for…
Could an acquired Florida consolidated group keep filing as a subgroup of its new parent's affiliated group?
No. The old affiliated group ceased to exist when an unrelated parent acquired it, and the acquired companies became bound by the new parent's separate-return election.
Did using hosted servers in Illinois create sales-tax nexus for an out-of-state institution that owned no hardware there?
IDOR made no nexus determination, saying the needed facts were best gathered by an auditor. Under the historical 2014 framework it described, physical presence included an Illinois agent or representa…
How could an Illinois supplier document resale when drop-shipping goods for an unregistered out-of-state purchaser to an Illinois customer?
The Illinois supplier had to collect tax or document the resale exemption with a valid Certificate of Resale from the out-of-state purchaser. A proper certificate with a registration or resale number …
When did purchased idle manufacturing equipment become taxable machinery and tools, and which owner's cost controlled its valuation?
Altered machinery was subject to M&T tax when it was necessary and actually used in the buyer's manufacturing process. Equipment bought in April 2012 but not operational until February 2013 was treate…
Were installed senior-living emergency call systems taxable property sales or real-property improvements?
It depended on each contract. Hardwired call stations and lights became real property, while consoles, pagers, radios, and other movable equipment remained tangible personal property.
When would Virginia remove disputed hardware-store transactions from an audit sample or accept a claimed nonprofit exemption?
Virginia removed a documented 44-day customer account from the sample and taxed those sales separately, while sending an unusually large truss sale for review under a larger sample. Unsupported nonpro…
Were permanently installed gas pumps fixtures to real estate or business tangible personal property subject to a Virginia city's BTPP tax?
They were fixtures to real estate, not taxable BTPP. The pumps were connected to the station's electrical wiring and underground tanks, were essential to the site's use as a gas station, and were inte…
Are portable corral panels, round-bale feeders, and livestock shelters a fabricator sells to Kansas farmers taxable?
It depends on the item and the buyer. Portable corral panels and portable round-bale livestock feeders sold to a farmer, rancher, or feedlot for production agriculture are exempt farm equipment under …
When a Kansas customer orders a custom-fabricated article billed in progress payments, when and on what amount does Kansas sales tax apply?
Sales tax applies to the full selling price of the finished article — including fabrication, materials, design, overhead, and shipping, with no deductions — but only when the completed article is deli…
Could an occupational therapist recover 2004-2009 gross receipts tax after later being told that Medicaid-waiver services might be exempt?
No. Tawanda Latham filed her June 2013 refund claim too late for all 2004-2009 periods. The ordinary three-year limit had expired, and two 2010 payments toward 2008 liability also missed the separate …
Could a couple avoid penalty after an unverified tax preparer advised that Public Health Service pay qualified for the armed-forces exemption?
No. Deborah Yellowhorse's Public Health Service wages were not exempt because Section 7-2-5.11 covered active-duty armed-forces pay, and the cited federal definition excluded PHS from the armed forces…
What counted as a small quantity of domestic-use propane, and was the Virginia rule applied per sale or by averaging transactions?
Virginia generally treated a small portable propane cylinder—such as a 20- or 34-pound tank or smaller, filled to capacity—as a small quantity. The test applied to each sale, not an average across a m…
Could a privately employed New Mexico resident avoid 2008 income tax by claiming he earned no federal wages and was only a state citizen?
No. Stephen Fingado worked for CAPS Inc. and Tempur Production USA in Bernalillo County and admitted receiving salary paychecks with benefit and Social Security deductions. The decision held that the …
How did Illinois distinguish true equipment leases from conditional sales, and could a collection agent remit the lessor's tax under its own ID?
IDOR did not classify the contracts. A true lessor was the end user, owed Use Tax on equipment cost, could not buy it for resale, and owed no tax on rental receipts. A conditional sale made all receip…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #14-7)?
Use the citator attached to SC Information Letter #14-7. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Must a company that answers calls and gives advice for healthcare providers collect Kansas sales tax on those services?
Not taxable. The company's services to Kansas healthcare providers went beyond simply receiving, transferring, and answering phone calls — it also supplied qualified staff to give advice and answer pa…
Were colocation and managed-hosting charges for bandwidth, private lines, cross-connects, and software taxable in Illinois?
IDOR did not classify the specific services on the limited facts. Under the historical 2014 rules, taxable telecommunications included private lines, qualifying Internet access was protected only duri…
Could an Illinois business add a credit-card surcharge, and was the fee part of taxable gross receipts?
As of this 2014 letter, Illinois did not prohibit the surcharge described. For a taxable retail transaction, the card fee was a cost of doing business included in taxable gross receipts even if separa…
How these rulings are useful
- See how the rule applies: A letter ruling shows how a state revenue department actually applied the tax law to a specific business and set of facts.
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