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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Are one-time customer account setup fees subject to Illinois Telecommunications Excise Tax?
Generally yes. IDOR said one-time account setup fees were necessary for and directly related to providing telecommunications, so they were included in gross charges subject to the 7% Illinois Telecomm…
Is a purchase exempt from Illinois tax merely because the buyer takes the goods to Canada, and can the buyer claim a refund directly?
Not merely because the goods were destined for Canada. A buyer that takes possession in Illinois generally owes tax even if it immediately carries the goods out of state. A seller-delivered shipment m…
Did third-party shopping-cart servers located in Illinois create sales-tax nexus for an otherwise out-of-state online business?
IDOR did not decide the server question. It said fact-specific nexus determinations generally require an audit and supplied only 2013 guidelines based on Quill's physical-presence rule. That rule is n…
Is a Tennessee technology consultant's work taxable — setting up a temporary 'virtual lab' to test software, and backing up a customer's data — when no software is sold to the customer?
No, none of these are taxable. A Tennessee technology-consulting firm sets up new software and hardware for customers, and the Department ruled that three parts of its work are NOT subject to Tennesse…
Does operating in a Tennessee foreign trade zone exempt a contractor from Tennessee sales, use, and business tax — and how are goods imported only to re-export, or sold to and used for the federal government, taxed?
Operating in a foreign trade zone (FTZ) does NOT change a Tennessee contractor's sales, use, or business tax. FTZ status only affects AD VALOREM (property) taxes; Tennessee's sales, use, and business …
Was leasing and possibly operating a commercial tractor a Virginia BPOL contractor business?
No contractor classification applied. Leasing the commercial tractor was a BPOL business service, and operating it to haul goods would also be a business service. Virginia remanded the assessment beca…
When did revenue from a data-and-analytics company's Buy and Watch services count as Florida sales-factor receipts?
Revenue was a Florida receipt when the customer was located in Florida, because each sale of the finished service was the income-producing transaction. Direct database-access charges to Florida custom…
Could a corporation and its subsidiaries stop filing a Florida consolidated return after acquisition ended their former affiliated group?
Yes—and the former group was required to stop. The unrelated acquisition ended the old affiliated group, and the acquired companies could not file a Florida consolidated return as a subgroup of the ne…
Can a luxury movie-theater chain with dine-in food and bar service use the reduced retail/wholesale franchise tax rate for years when most of its revenue comes from food and beverage sales, and does it have to reclassify as a "dinner theater"?
ALERT: This ruling's specific Tax Rates, Compensation Deduction Limits, No Tax Due Thresholds, and Total Revenue Thresholds may be outdated -- see STAR Accession No. 202112002L or 202308006L for curre…
Are the materials and equipment a contractor buys to build an electricity-generating plant for a Tennessee city, on city-owned land, exempt from Tennessee sales and use tax?
Yes. The Department ruled that the materials and equipment a contractor (and its suppliers and subcontractors) buys or uses to construct or install an electricity-generating facility for a Tennessee c…
Which Virginia corporate audit adjustments survived review for a group with intercompany loans and merchandise sales?
Virginia could examine and correct older net-operating-loss carryforwards when computing taxable income for open years, but most disputed intercompany adjustments had to be reversed. The documented le…
Did a Virginia historic venue owe sales tax on space rented for weddings and other events?
Yes. Because the historic plantation regularly rented rooms, facilities, and other spaces to transients for events, Virginia treated the charges as taxable accommodations. The full rental charge was t…
Did Illinois confirm that every aircraft spare sold from a manufacturer's Illinois warehouse qualified for the Class IV aircraft exemption?
No fact-specific answer was given. IDOR declined to issue the requested private letter ruling. It explained only that qualifying aircraft materials, parts, equipment, components, and furnishings are e…
May an Illinois water utility buy treatment chemicals tax-free when the chemicals remain in pipe-delivered water sold to customers?
Yes, for chemicals transferred as component parts of pipe-delivered water. Public Act 98-583 excludes that water from Illinois sales and use taxes, so the utility may buy component chemicals tax-free …
Could a Virginia corporation net a related entity's bad debts and cash discounts against its factoring-expense add-back?
Not on the return and appeal presented. Virginia treated factoring losses as related-party intangible expenses and found no exception allowing the corporation to net the related entity's bad debts and…
Could a Virginia widow subtract monthly FERS survivor-annuity death benefits from taxable income?
No. The Virginia subtraction required federally taxable death benefits from an annuity contract between a customer and an insurance company, awarded as a lump sum. The widow's 36 monthly FERS survivor…
What filing rules did Virginia Tax Bulletin 13-13 impose on same-sex married couples in 2013?
Historical only. Tax Bulletin 13-13 required same-sex spouses to file separate Virginia returns as single individuals, using pro forma federal returns and separate deductions, exemptions, credits, and…
Were a hotel's bank transfers, loans, and real-property rent all taxable BPOL gross receipts?
Not all of them. Virginia found that the hotel had sufficiently shown most disputed deposits were transfers between its own bank accounts, and its real-property rental receipts could be excluded from …
Should a Florida contractor separately charge a homeowner sales tax on plantation shutters sold and installed under a lump-sum contract?
No. The installed shutters became fixtures under a lump-sum real-property contract. The contractor owed tax on its materials and could include that cost in the contract price, but should not separatel…
How did Virginia tax mortgage-fraud-related deposits when the taxpayer documented some payments to a business partner?
Virginia removed from taxable income the deposits the taxpayer documented as later paid to her husband's business partner, but treated the undistributed balance as her income. Dismissal of criminal ch…
Did dismissal of criminal tax charges require Virginia to erase the related income-tax assessment and refund garnished amounts?
No. Dismissal of the criminal charges did not by itself invalidate the civil income-tax assessment. Because the taxpayer supplied no documentation showing how the mortgage-fraud-related bank deposits …
Was a Virginia resort's lump-sum corporate membership fee subject to sales tax?
Yes. The resort's single three-year membership charge bundled taxable lodging and accommodations with taxable golf-cart use and other benefits. Virginia required sales tax on the entire lump-sum membe…
Could a nonfiler recover penalty and interest taken by levy because he asked about 2010 tax amnesty but an employee never followed up?
No. Alan Uffenheimer's mistaken belief that no additional gross receipts tax was due counted as negligence, and interest was mandatory on the unpaid tax. He also never applied for the 2010 New Mexico …
Could a nonprofit recover an electronic-filing penalty because its finance director ignored notices and kept submitting paper monthly returns?
No. Easter Seals El Mirador was required to file monthly returns electronically beginning in 2011, received several notices and a grace period, but continued filing paper returns through about Septemb…
Under the 2013 Illinois rules, could a resident include nonprofessional gambling winnings in Schedule CR's out-of-state-income column?
No under the law described in the 2013 GIL. Illinois limited the resident credit using income that would be sourced outside Illinois if every state used Illinois rules. Nonprofessional gambling winnin…
How did Illinois source receipts from online counseling, eBooks, and audio or DVD courses sold by an out-of-state internet business?
The receipt type controlled. Online counseling followed the service rule based on where the service was received. eBook receipts followed the intangible-property rule based on the taxpayer's income-pr…
Could a welder deduct services resold by his customer when the correct Type 5 NTTC was executed more than three months after the extended deadline?
No. Madron Services resold K and N Welding's services and taxed the resale, and the certificate eventually obtained was the correct Type 5 NTTC. But K and N did not possess it by the Department's exte…
Did a governmental owner's contract qualify direct material purchases for an infrastructure public-works project for sales-tax exemption?
Yes. The owner could purchase materials tax-exempt because it would order directly, receive invoices, pay suppliers from public funds, take title and risk at delivery, insure the materials, and issue …
Was a company that sold and permanently installed made-to-order shelving and cabinets a retailer or a contractor?
It was a contractor. Temporarily storing made-to-order shelving and cabinets for particular jobs did not constitute retail inventory, and a small supply of trim and modification parts did not contain …
Did one employee providing legal services from a Virginia home create withholding and corporate-income-tax duties?
Yes on the presented facts. The out-of-state employer had to withhold Virginia income tax because its employee worked in Virginia. Her legal services also appeared to exceed Public Law 86-272's solici…
Could a Navy contractor buy office equipment tax-free for task orders whose true object was renting temporary office facilities?
Yes. The task orders principally rented temporary office trailers, furnishings, and equipment to the Navy. Janitorial, sewage, utility, maintenance, and a minor administrative-assistant service made t…
Did Virginia decide whether a former CEO met the responsible-officer test for a company's unpaid meal tax?
No responsible-officer ruling was necessary. The company, its former CEO, the bankruptcy trustee, Virginia, and other parties entered a court-approved settlement releasing pre-agreement claims once th…
Was a restaurant LLC member personally liable for the companies' unpaid Virginia sales and withholding taxes?
Yes. Virginia found the taxpayer signed checks and tax returns, identified himself as president and managing owner, had authority over tax payment, and later operated the restaurant. He did not prove …
Did removing one floor-repair transaction from a Virginia restaurant audit eliminate the whole sales-tax assessment?
No. Virginia had already removed the floor-repair service because the contractor, not the restaurant, was the consumer of the repair materials. The Department issued the tax-and-interest refund for th…
Which Virginia audit items and penalties were removed for a meal-service provider?
Virginia removed four documented sales to exempt clients. That revision raised the fifth-audit sales-tax compliance ratio from 62% to 99.9%, so the ordinary sales-tax audit penalty was waived. The wai…
Did a subcontract stating that the subcontractor would pay tax prove Virginia tax was paid on a contractor's purchases?
No. A quote and subcontract assigning tax responsibility did not prove the tax was actually paid. The contractor could not reconcile tax amounts to the purchases and supplied no original invoices. Bec…
Could a taxpayer obtain a 2006 personal-income-tax refund when her claim was filed in May 2011, after the December 31, 2010 statutory deadline?
No. The 2006 tax payment was due April 15, 2007, so Section 7-1-26 required a refund claim by December 31, 2010. Yvonne Gomez filed in May 2011—five months late. The hearing officer recognized her arg…
Could a tent-rental company estimate that 5% to 10% of government and nonprofit receipts were deductible sales of direct, damaged, or lost property?
Only for one documented sale. Albuquerque Tents had timely Type 9 NTTCs, but government and 501(c)(3) deductions covered sales of tangible property—not its ordinary tent and event-equipment leases. Th…
Was a tenant's reimbursement of improvement costs above the landlord's allowances taxable as commercial rent?
No. The reimbursements paid improvement costs above the landlord's allowances, and the work was optional, intended to make the space usable, not required in a minimum amount, and not rent or a substit…
Could vehicle washers deduct receipts when their truck-rental-company customer gave them a timely service-resale NTTC but withheld its customer invoices?
Yes. The taxpayers washed oversized trucks as a subcontractor for a truck-rental company that resold the washing service. They timely held a properly executed service-resale NTTC, believed the buyer c…
Are fees an S corporation collects for an ordained minister's services (weddings, funerals, sermons, counseling) subject to NY sales tax?
No. New York taxes only specific, listed services, and ministerial services -- conducting religious services, sermons and public speaking, weddings, blessings, funerals, and spiritual counseling -- ar…
How were timeshare membership, exchange, occupancy, and service fees sourced in Florida's corporate sales factor?
Membership fees followed the customer's state of residence; exchange and occupancy charges followed the location of the resort rights used or stay; and service fees were Florida sales because the inco…
Did substantial growth and changed business circumstances justify ending a group's Florida consolidated-return election?
Yes. The Department found the group's substantial growth was good cause and allowed separate filing beginning in 2012, subject to four conditions governing timing, unrecognized items, deferred gains, …
How did Florida source twelve categories of printed-product, licensing, online-data, conversion, and administration receipts?
Printed-material revenue was Florida revenue when delivered to a Florida purchaser. The other listed licensing, online, email, data-conversion, and administration receipts generally were Florida sales…
Was a safe provided with armored transportation and cash-management services taxable to the customer?
No customer sales tax applied to the bundled service. The true object was secure transportation and cash management, and the customer's use of the safe merely extended that exempt service. The armored…
Are juice chewables and nutrition bars with Nutrition Facts labels exempt from Georgia sales tax as food?
Yes for state tax, but not local tax. The juice chewables and nutrition bars were food and food ingredients for off-premises consumption, not prepared food or dietary supplements, based on the represe…
Could a manufacturer replace an unusually high nine-day Illinois sales factor with its lower prior-year factor because the short period was unrepresentative?
No on the evidence submitted. The statutory factor measured Illinois's share of the market for the particular nine-day taxable year, and an unusually high concentration of Illinois sales in that perio…
Could a corporate group deduct factoring losses from receivables sold to a related bankruptcy-remote entity?
Yes. The group proved by clear and convincing evidence that third-party lenders required the bankruptcy-remote receivables structure to obtain financing and comply with a revolving-credit covenant. Vi…
Could a Virginia manufacturer include executive pay when testing the wage requirement for single-sales-factor apportionment?
Yes. Because Virginia Employment Commission wage data included executive compensation reported by many employers, a manufacturer could include executive wages in its own average-wage calculation when …
Are a NY company's R&D services for its out-of-state parent taxable when the resulting reports or samples are delivered outside New York?
No NY sales or use tax is due. The Department didn't need to decide whether the work is a taxable information service or nontaxable research and development, because sales tax is a destination tax: th…
Does Illinois sales or service tax apply to a paid program when no tangible personal property is transferred to the customer?
Generally no. Retailers' Occupation and Use Taxes do not apply to sales of service, and Service Occupation and Service Use Taxes apply only when tangible personal property is transferred incident to t…
May an equipment lessor use a motor carrier's authority number on Illinois Form RUT-7 when the lessee operates under that carrier's authority?
Yes, when the lessee has an agreement with the interstate carrier under 49 C.F.R. Part 376 and operates under that carrier's Certificate of Authority. The purchaser-lessor may identify that carrier an…
For goods sent to an Illinois consolidator or warehouse before a final store, is tax based on the interim ship-to location or the ultimate destination?
IDOR did not determine which location controlled because the facts were insufficient. It said a registered seller must collect Illinois Use Tax on an Illinois delivery unless it documents an exemption…
In an Illinois drop shipment, may the supplier omit tax when the out-of-state reseller lacks an Illinois number but the end customer promises to self-assess?
The supplier must collect Illinois tax unless it documents that its sale to the out-of-state purchaser is for resale. The preferred proof is a signed certificate carrying an Illinois registration or r…
Which Illinois food-tax rate applied to ice-cream cakes, bulk novelty packages, individual bars, and drive-through prepared food?
Prepared food, drive-through food, and individual ice-cream bars were subject to the high rate described in the 2013 GIL. Ice-cream cakes and qualifying bulk packages could receive the low 1% state ra…
Could a logistics company buy automobiles from Illinois dealers tax-free for resale and later export, and what proof should it provide?
IDOR did not determine the tax result for the proposed automobile-export chain because the transaction facts were insufficient. It said the logistics company appeared to be buying the vehicles for res…
Could a corporation exclude all royalties and interest paid to an affiliate because the affiliate filed income-tax returns elsewhere?
No. Filing an affiliate's gross royalty and interest income in other states did not exempt 100% of the payments. Virginia limited the exception to the portion corresponding to the affiliate's income a…
Were an airport duty-free store's international-traveler sales exempt from county BPOL tax?
No. Federal law protected bonded duty-free merchandise from specified duties, sales taxes, and property taxes, but did not preempt a local privilege tax measured by the store's gross receipts. The cou…
Were an airport duty-free store's international-traveler sales exempt from county BPOL tax?
No. Federal law protected bonded duty-free merchandise from specified duties, sales taxes, and property taxes, but did not preempt a local privilege tax measured by the store's gross receipts. The cou…
Is the charge to install a large water slide at an amusement park a tax-exempt capital improvement, even on leased land?
Yes. The water slide is a capital improvement, so the charge to install it is exempt from sales and use tax. It substantially adds value, is permanently affixed (bolted to concrete piers, with in-grou…
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