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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Were paid and free-trial memberships bundling shipping, streaming video, and e-books subject to Florida sales tax or CST?
The membership owed no sales tax, but its streaming-video portion owed CST when sourced to Florida. Free-trial video cost was taxable to the retailer because no resale occurred.
Did paying an independent Illinois business to teach a remote seller's customers create Illinois sales-tax nexus?
IDOR did not decide, saying nexus facts were best gathered by an auditor. Under the historical 2014 framework it described, physical presence was not limited to employees, offices, or buildings and co…
How did IDOR answer a 2014 survey on sales-tax nexus, digital products, drop shipments, services, and SSUTA?
IDOR refused activity-by-activity nexus answers because nexus was fact-specific. Under its historical framework, Illinois presence included agents and repetitive delivery or installation. Canned softw…
Could a corporate cafeteria with limited seating charge Illinois's reduced food rate on grocery items sold for takeout?
Potentially, but IDOR made no fact-specific determination. Any on-premises seating created a presumption that all food sales used the high rate. Qualifying grocery items could use the reduced rate onl…
Are separately listed delivery and installation charges subject to Illinois sales tax?
Not automatically exempt. Under Illinois' Retailers' Occupation Tax, delivery and installation charges are generally part of taxable gross receipts even when listed separately on the invoice. They are…
When is Illinois sales tax due on computer software licenses and software maintenance agreements?
Canned (prewritten) computer software is taxable tangible personal property in Illinois, whatever the medium; genuinely custom software may not be. A software license is not a taxable retail sale if t…
Do two whole-food snack bars qualify for Illinois's 1% state food rate or the 6.25% general-merchandise rate?
The letter did not classify the two bars because it lacked facts about how the seller conducted sales. It gave the general rule: qualifying food for off-premises consumption was taxed at the 1% state …
When are Illinois trailer sales or leases taxable, and when can the rolling stock exemption apply?
A trailer sale or conditional lease-sale generally triggers Retailers' Occupation Tax. Under a true lease, the lessor is the user and owes Use Tax on its cost, while rental receipts are not taxed. The…
Are fruit trees, nut trees, shrubs, vines, and other nursery stock exempt as Illinois farm machinery or equipment?
No. IDOR said nursery stock and seedlings are not farm machinery or equipment under 86 Ill. Adm. Code 130.305, even when bought for agricultural production. A separate sale for resale can be nontaxabl…
Does cooking wine sold as a food ingredient qualify for Illinois's 1% state food rate?
The GIL did not specifically classify the cooking wine. It explained that food sold for off-premises consumption generally received the 1% state rate plus local taxes, but alcoholic beverages, candy, …
Did improved systems and business changes justify waiving a second-audit Virginia use-tax penalty when compliance was only 30%?
Not by themselves. Virginia removed documented purchases and transfer entries from the audit and would recompute the use-tax compliance ratio. A second-audit penalty would be fully waived if the revis…
Were separately stated shipping and handling fees on F.O.B.-origin online sales subject to Florida sales tax?
No. The retailer separately stated every shipping and handling charge and sold F.O.B. origin, so title and risk passed when the goods were delivered to the carrier.
Are Illinois membership fees taxable when members also receive guides, magazines, and marketing materials?
A pure membership fee is generally an intangible and is not subject to Retailers' Occupation Tax or Use Tax when no tangible personal property is transferred. But this association also described guide…
Which electricity-bill charges enter an Illinois self-assessing purchaser's Electricity Excise Tax base?
The 5.1% Electricity Excise Tax applied to the broad aggregate purchase price paid for nonresidential electricity, including supply, distribution, transmission, delivery, and directly related services…
Which server-training programs does South Carolina recognize as a mitigating factor for alcohol-licensing penalties (per SC IL #14-6)?
SC Information Letter #14-6 lists the alcohol server/seller training programs the Department recognizes as a mitigating circumstance when it assesses penalties for beer, wine, and distilled-spirits vi…
Could an excellent filing and payment history excuse penalties for one missed electronic return and one payment made a day late?
No. Tent Rock timely paid its February 2013 combined reporting system taxes but forgot to submit the electronic return. For July, it timely filed the return but forgot payment until August 27, one day…
Would appointing a Virginia resident to a limited co-trustee committee make three out-of-state trusts Virginia resident trusts?
No. The trusts were created outside Virginia by non-Virginia grantors, owned no Virginia property, and were administered in another state. The Virginia co-trustee could not act individually and would …
Did an out-of-state engineering LLC have to file a Virginia pass-through return when occasional site visits created no positive apportionment factor?
No, on the stated facts. The LLC had no Virginia property or payroll, and its service-sales factor was outside Virginia because more than half of the service costs were incurred at its out-of-state of…
Could a nonresident carry forward Virginia pass-through losses when no corresponding federal net-operating-loss deduction remained?
No. Virginia allowed a net-operating-loss deduction only to the extent a corresponding deduction was available federally. Because the prior losses had been absorbed by other federal income and no fede…
Was a husband who owned a Virginia home, license, vehicles, and voter registration still a nonresident when his permanent ties remained elsewhere?
Yes, he remained a nonresident for 2009. Although he owned a Virginia home and held a Virginia driver's license, voter registration, and vehicles, he spent fewer than 183 days in Virginia and had not …
Did buying Illinois-hosted data services, while owning software but no server hardware, create Illinois income-tax nexus for an out-of-state corporation?
The GIL did not decide. The corporation bought hosting from a commercial provider, owned no server hardware, and owned or licensed software used on the hosted systems. IDOR said nexus was extremely fa…
Were software and credit-data receipts sourced to Illinois because the servers and programmers were there, or to the states where lender customers received the product or service?
The GIL could not give one sourcing answer without knowing what each company transferred. A copyright transfer followed the copyright-utilization rule; another software license followed the intangible…
Could a counseling contractor deduct services passed through to an insurer when the buyer paid no gross receipts tax and delivered a late NTTC?
No. Healing Through Hypnosis performed counseling as an independent contractor for Martin Klehn, who resold the services under an insurer contract but paid no gross receipts tax because he treated his…
What income method did Florida approve for a CITC project spanning a new facility and a renovated facility?
Florida approved all income from the new facility plus reasonably allocated incremental growth from services remaining at the renovated facility, supported by a project pro forma return.
Did a merchant mariner abandon Virginia domicile by taking an indefinite out-of-state job and using motels or a training center between voyages?
No. Although the mariner had indefinite employment and a post-office box in another state, he never established a permanent abode there and retained major Virginia ties: his wife, voter registration, …
What documentary stamp tax applied when a partnership deeded unencumbered property to its wholly owned LLC before selling LLC interests?
Only nominal deed tax applied when beneficial ownership stayed identical and no consideration was paid. The later 51 percent LLC-interest transfer was taxable under the conduit-entity rules.
Could existing leasehold interests reduce the property value used for Virginia grantor tax when the fee and leases were sold together?
Yes. Because the purchase documents and deed preserved the leasehold interests instead of merging them into the purchaser's fee ownership, the leases remained encumbrances whose value was excluded fro…
What base-year method did Florida approve for measuring income from a two-location headquarters CITC project?
Florida approved the increase in consolidated Florida income over a representative base year, after adding back acquisition transaction costs in both the base and comparison years.
Was a Tennessee installer of blinds, drapes, shades, valances, and cubicle curtains a retailer or a consuming contractor on Virginia jobs?
It was a consuming real-property contractor, not a retailer, because it did not maintain enough inventory of window treatments or component materials to meet Virginia's retailer definition. It owed us…
Were monthly and per-class charges for coach-led group personal training subject to Florida sales tax?
No. Members had access only during scheduled, supervised classes and could not use the studio independently, so the charges were for instruction rather than taxable club admission.
When were software sold to manufacturers, electronically delivered programs, custom software, modifications, and cloud services exempt in Virginia?
Software used primarily to direct or control production or quality control could qualify for the manufacturing exemption, while administrative monitoring software was taxable. Custom programs and sepa…
Was the full price of an amusement-center party package taxable when it bundled attraction admissions, a room, hosting, and food?
Yes. A single-priced party package that included attraction admissions and taxable food was taxable in full, even if customers primarily wanted the party experience. Virginia nevertheless removed pack…
What Virginia tax interest rates applied during the second quarter of 2014?
Virginia's second-quarter 2014 rates were 5% for tax underpayments and assessments and 5% for tax overpayments and refunds. The reduced rate for qualifying assessments under administrative appeal was …
Could Virginia abate pass-through withholding assessments when the LLC had paid enough tax into the wrong employer-withholding account?
Yes. The LLC had remitted enough employer withholding to cover its 2008-2011 pass-through withholding, so Virginia abated the assessments and refunded the 2011 overpayment with interest. But partners …
Did Virginia's railroad-rolling-stock exemption apply when a bank bought rail cars from the manufacturer and leased them to the user?
No. The statute exempted railroad rolling stock only when sold or leased by its manufacturer. Once a financial institution bought the cars and became the lessor, the exemption did not apply—even thoug…
Which equipment at a nonutility Virginia solar facility qualified for the manufacturing sales-tax exemption?
The non-public-service company qualified as a manufacturer because it produced electricity for sale. Solar panels, inverters, wires and cables carrying electricity, and step-up transformers were direc…
Was a Virginia tax appeal filed by fax two days after the 90-day deadline considered timely?
No. The assessment was dated November 5, 2013, so a complete administrative appeal was due February 3, 2014. The taxpayer's fax arrived February 5—two days late—and Virginia treated the application as…
Were LLC members liable for their shares of unreported partnership income even if another member controlled the books and they received no benefit?
Yes. Because the LLC was taxed as a partnership, each member was responsible for tax on the member's distributive share of increased income, regardless of who controlled bookkeeping or whether the mem…
A buyer and seller will make a federal I.R.C. § 338(h)(10) election treating a stock sale as a deemed asset sale, after the target pre-distributes assets to the seller in a tax-free liquidation. How do the resulting federal gains (and non-gains) flow into net earnings for Tennessee excise tax?
Tennessee excise-tax 'net earnings' start from federal taxable income, so the federal election's results flow straight through. (1) The gain the target recognizes on the deemed asset sale under the fe…
What is South Carolina's tax interest rate for the period ending June 30, 2014 (per SC IL #14-3)?
3%. SC Information Letter #14-3 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through June 30, 2014. Interest is compounded daily, exce…
Was a traveling psychiatrist still a New Mexico resident when he spent fewer than 185 days here and worked entirely in other states?
Yes. Rohana Calnaido spent at most 40 days a year in New Mexico and worked only in Washington, Texas, and North Carolina, so he did not satisfy the 185-day physical-presence test. But New Mexico resid…
Were fees for mobile painting parties with instruction and provided supplies subject to Florida sales tax?
No. The business sold two hours of step-by-step painting instruction rather than tangible personal property and paid tax when purchasing the reusable and consumable supplies.
Were remote cloud storage, virtual compute instances, and related data-transfer fees subject to Florida sales tax or CST?
No. Remote storage, virtual compute instances using open-source or third-party operating systems, and incidental data-transfer fees were information services rather than taxable property or communicat…
Did Robert Wiles's oral discussions about a payment plan prevent New Mexico from levying his bank accounts for unpaid gross receipts tax?
No. Wiles was delinquent on unpaid 2005 and 2006 gross receipts tax, and his conversations with Department employees did not create the written installment agreement required to stop levy enforcement.…
How do Illinois sales and service taxes apply to foodservice arrangements with exempt hospitals and nursing homes?
IDOR declined to decide the eight hypothetical arrangements without contracts and clearer facts. It explained that resale transactions require a valid certificate; qualifying charitable hospitals and …
When are custom-designed precast concrete components treated as a service rather than a taxable retail sale in Illinois?
A custom component can be treated as special-order property produced in a service occupation only if the purchaser primarily hires the seller for engineering or scientific skill, the item has use or v…
How should Virginia taxpayers report a 2008 NOL that was used under the federal five-year carryback but remained available under Virginia's shorter rule?
They could not subtract the NOL directly from 2010 federal adjusted gross income or make FAGI negative. The Virginia-available carryover had to be claimed as a fixed-date conformity subtraction, limit…
Can an Illinois intermediary use a general contractor's resale number or a minority-participation program to buy HVAC equipment tax-free?
No Illinois sales-tax exemption existed merely because a transaction involved a minority-participation program. If the intermediary bought equipment for resale, it had to give the seller a valid Certi…
When do Illinois construction contractors owe use tax, and what documentation supports exempt-entity or enterprise-zone purchases?
Construction contractors were end users and owed Use Tax on the cost of property permanently incorporated into Illinois real estate. Audiovisual and telecommunications systems sold and installed for o…
What general Illinois exemptions and credits applied to manufacturers and exempt organizations in 2014?
IDOR could not answer the broad questions specifically. It explained that machinery used more than 50% of the time in qualifying manufacturing or assembly could be exempt; exempt machinery purchases a…
Could a Virginia resident avoid a 2010 income-tax assessment by claiming wages were exempt and IRS information lacked federal paperwork approval?
No. Employment income was taxable, the resident's income exceeded Virginia's filing threshold, and the Department could use IRS information to estimate liability when she did not provide adequate reco…
Could buyers of a transferred land-preservation credit avoid interest because Virginia later reduced the easement value or the seller promised indemnity?
No. Virginia timely assessed the couple after the donor and Department agreed to a lower easement value, and statutory interest on the resulting underpayment was mandatory. The donor's private indemni…
Is an unused landlord-funded tenant improvement allowance taxable when the lease permits it only as a credit against rent?
No. The unused landlord-funded allowance was not taxable when the lease permitted only a rent reduction and gave the tenant no cash, property, reimbursement, or other benefit.
Could a Virginia locality deny the BPOL out-of-state deduction merely because the contractor used payroll apportionment to situs receipts?
No. A government contractor using payroll apportionment could still deduct the portion of Virginia-sitused receipts attributable to business in states or countries where it owed an income or income-li…
Could a government contractor recover BPOL tax and claim a current deduction for out-of-state receipts when it used payroll situs?
Yes. Virginia held that payroll apportionment did not eliminate the deduction for qualifying business where the contractor owed income-based tax. It remanded the 2008-2011 refund claims and 2012 deduc…
Could a business-service provider using payroll situs claim BPOL deductions and refunds for qualifying out-of-state receipts?
Yes. Payroll apportionment did not bar the out-of-state deduction. Virginia remanded the 2008-2012 refund and assessment dispute so the county could identify qualifying receipts from states where the …
Did Illinois's 1% rate apply to a motorcycle hand-brake system designed for disabled riders?
Generally yes. Illinois imposed a 1% rate on motor-vehicle modifications that enable a disabled person to drive or assist in transporting disabled persons. IDOR said systems allowing a disabled rider …
When are separately stated furniture delivery or merchandise shipping charges excluded from Illinois sales tax?
A delivery charge was outside the taxable selling price only when the buyer and seller separately agreed to it and the amount reflected actual transportation cost. Merely listing 'shipping' or 'additi…
Were LLC members liable for underreported partnership income when another member kept the books and employees were paid cash?
Yes. Partnership treatment made each LLC member responsible for the member's distributive share of increased income, despite another member's bookkeeping control or the absence of an economic benefit.…
Who owes Illinois use tax when a subcontractor buys and installs drainage tile as part of a pipeline project?
The party contractually required to buy drainage tile for permanent incorporation into real estate was the construction contractor and owed Use Tax on its cost. If the subcontractor bought and install…
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