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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Could a service company use direct labor to situs city BPOL receipts and deduct receipts from out-of-state customers?
Potentially yes, but the city had to review the evidence. The company's contract-level direct-labor method appeared capable of situsing receipts where services were performed, so payroll apportionment…
Are a Kansas utility's late-payment fees and returned-check fees subject to sales tax?
Late fees yes; bounced-check fees no. A Kansas utility's late-payment fees ARE subject to sales tax and must be included in the tax base along with the other taxable utility charges (K.A.R. 92-19-3a(j…
Do Kansas composite returns recognize the 2012 income modifications for nonresident owners?
Kansas Notice 13-17 (September 12, 2013) addresses whether the 2012 modifications that exempt certain income from Kansas income tax are recognized on a composite return. Composite income tax returns f…
Does Tennessee charge sales or use tax on cloud-computing services — remote online data storage, virtual computing capacity, and the usage fees for moving data — when the provider's servers are all located outside Tennessee?
No, not on these facts. The Department ruled that none of this out-of-state provider's cloud-computing offerings are subject to Tennessee sales or use tax: (1) its Remote Storage Service (online data …
Could a building-products wholesaler keep a gross receipts deduction when its buyer went out of business before providing the missing NTTC?
No. Apex New Mexico Distributer obtained an NTTC supporting part of its 2009 wholesale receipts, and the Department partially abated the audit assessment. But Apex never obtained the certificate for t…
Did prepaid home-phone packages qualify as prepaid telephone calling arrangements taxed as tangible personal property rather than telecommunications?
Generally yes. A package paid in advance that enables calls through an access or authorization code and stops service when the purchased amount is consumed generally qualifies as a prepaid telephone c…
Could a corporation omit full officer Social Security numbers from Illinois sales-tax registration forms and provide only the last four digits or its FEIN?
No. Section 2a required a corporate registration applicant to provide each officer's name, title, and Social Security number, and IDOR said it had no administrative authority to waive that statutory r…
Could an LLC use its sole owner's Illinois registration number on the LLC's certificate of resale?
IDOR did not answer whether the sole owner's registration number was valid for the LLC's purchase. It explained that the seller should obtain a signed certificate of resale containing the purchaser's …
Was a web-only information service with no software download taxable as software as a service in Illinois?
IDOR did not decide whether the described web-only service was taxable. In 2013, it said application-service-provider, software-hosting, and web-software transactions varied too much for individual le…
Were charges for web-based meetings, webinars, and training subject to Illinois Telecommunications Excise Tax when users supplied their own connectivity?
Generally no. Customers used their own internet, telephone, or conferencing services, and toll-free voice service was separate rather than included in the web-service charge. IDOR said the described o…
What is South Carolina's tax interest rate for the period ending December 31, 2013 (per SC IL #13-14)?
3%. SC Information Letter #13-14 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through December 31, 2013. Interest is compounded daily,…
If a New Jersey resident enrolled in a long-term disability plan while working in New York, are the disability benefits he now receives New York source income subject to New York State personal income tax?
Yes, the long-term disability benefits are New York source income because Petitioner enrolled in the plan while actively working in New York. Whether they are actually taxed depends on whether they en…
New York Advisory Opinion TSB-A-13(9)C: May the shareholders of an S corporation claim the investment tax credit for a CNC machine used to cut and shape raw stone slabs into countertops?
Yes. Because the CNC machine is principally used (over 50% of its operating time) to convert raw stone slabs into finished countertops by manufacturing or processing, it is qualified property, so the …
Is a bottled puree drink of vegetables, fruits, nuts, and seeds subject to NY sales tax, or is it exempt food?
It's exempt. A thick bottled puree of water, vegetables, nuts, fruits, seeds, and spices is exempt food and beverage under the general food exemption. It isn't one of the taxable carve-outs -- it's no…
Does an electronic-only investing journal qualify for NY's electronic periodical exemption instead of being a taxable information service?
Yes. An electronic-only investing journal qualifies for the electronic periodical exemption, so the publisher need not collect sales tax. It meets the statutory tests: its predominant purpose is prese…
Is a license to access hosted law-office practice-management software subject to NY sales tax, and how is it sourced?
Yes. A monthly license to access the developer's hosted practice-management software is a taxable sale of prewritten computer software -- taxable even though nothing is downloaded or copied to the cus…
Is a used-car dealer's standalone 'Transfer Fee' to ship a vehicle to another location for inspection subject to NY sales tax?
No. A standalone fee to transport a used vehicle to a more convenient location so the customer can inspect and test-drive it isn't taxable. Transporting property, by itself, isn't a taxable service, a…
Is an online assessment software tool taxable, and are the custom reports it generates from a customer's own data taxable?
Two different answers. Licensing the online assessment tool to third-party consultants is a taxable sale of prewritten computer software (sourced to where it's accessed), and the developer's own use o…
New York Advisory Opinion TSB-A-13(10)C: For the brownfield redevelopment tax credit, can a buyer claim the site-preparation credit after five years, and how is the tangible-property credit allocated for property partly on and off a qualified site?
No site-preparation credit is allowed because more than five years passed since the certificate of completion; the tangible-property credit runs up to ten years after the COC year, and property partly…
Were alcohol sales by an Illinois park district at its annual community festival exempt from Retailers' Occupation Tax?
No. The limited retail-sale exceptions for qualifying charitable, religious, and educational organizations did not apply to the park district because it was a governmental body. IDOR said a government…
Had Illinois decided whether each series within a series LLC would be treated as a separate sales-tax and lease-tax reporting entity?
No determination had been made. In this 2013 survey response, IDOR said Illinois had not decided whether to follow the proposed federal series-LLC rules for sales tax or whether each series would be a…
When is solar energy equipment considered 'placed in service' for New York's residential solar energy credit if the equipment is installed while a new home is still under construction?
The equipment is treated as placed in service when its installation in the new home is complete and the home is ready for occupancy as the taxpayer's principal residence - not simply when the panels a…
Can a tax-exempt PTA sell school supplies to students without collecting NY sales tax, and under what conditions?
Mostly no -- but there's a narrow exception. An exempt organization's exemption doesn't cover retail sales it makes from a 'shop or store,' meaning sales of goods from display with regularity, frequen…
Is a travel-club membership fee taxable in NY when it only covers out-of-state hotel stays and a cruise, and does the customer's NY residency matter?
No. The membership fee isn't subject to New York sales tax, and the customer's New York residency doesn't matter. New York's hotel-occupancy tax applies only to stays that occur in New York, and none …
Is a credit rating service subject to NY State sales tax or NYC sales tax, and where is it sourced?
It's not a State-taxable information service, but it is taxable under New York City's credit-rating-services tax. Because the firm rates the client's own financial products rather than furnishing info…
Are synthetic bone-graft drug-device products exempt in NY as prosthetic aids or as products for the preservation of health?
They're exempt -- but as preservation-of-health products, not prosthetic aids. Two synthetic bone-graft products that promote bone regeneration after surgery don't qualify as prosthetic aids because t…
Are incidental repairs during a capital improvement taxable, and does a good-faith capital improvement certificate protect the contractor?
It depends on whether the repair is integral to the capital improvement. Repairs that are part of the improvement -- fixing masonry so a new facade attaches, prepping a subfloor for new flooring, or r…
Is a service that processes and submits a medical provider's own Medicare quality-reporting data to CMS a taxable NY information service?
No. Validating, analyzing, and submitting a provider's own Medicare quality-reporting data to CMS is an information service, but it's excluded from sales tax because it's personal or individual in nat…
When does a NYC livery company collect sales tax -- on its own affiliated-livery trips or when it refers a job to a black car?
A livery base doesn't collect sales tax on trips its own affiliated livery vehicles provide in New York City -- those are excluded from taxable transportation service, even if the base was formerly a …
Did small Virginia limited-partnership interests create apportionment or income-tax consequences for a corporation and pension trust?
The corporation's interests met Virginia's four-part standard for avoiding attribution of the partnerships' property, payroll, and sales factors because the interests were 10% or less, general partner…
Are admissions to a nonprofit university's basketball games, held at a rented venue, exempt from Connecticut admissions tax?
Exempt. Admissions to a 501(c)(3) university's basketball games, held at a rented venue, are exempt from Connecticut's admissions tax under Conn. Gen. Stat. § 12-541(a)(3), because all of the event pr…
New York Advisory Opinion TSB-A-13(8)C: Must a taxpayer forfeit Empire Zone tax credits it already earned and is carrying forward if it enters the Excelsior Jobs Program?
No. The taxpayer may continue to carry forward and claim the Empire Zone tax credits it earned before entering the Excelsior Jobs Program, because the program's disqualification rule only prevents rec…
I'm the sponsor of a luxury Manhattan condo-hotel, where buyers own their units in fee simple but are legally restricted (by NYC zoning and a Restrictive Declaration) to using them as transient hotel rooms for no more than 120 days a year, with the hotel operator controlling access, furnishing, and rental the rest of the time. When I sell a unit for $1 million or more, does New York's additional 'Mansion Tax' apply, the way it would to an ordinary condo?
No, the Mansion Tax does not apply to these units. New York's additional 'Mansion Tax' (Tax Law §1402-a) applies on top of the basic Real Estate Transfer Tax when a conveyance of 'residential real pro…
Should a monument company charge a customer sales tax on a cemetery monument installed at the designated gravesite?
No. The installed monument was exempt at the customer level. The monument or burial-service provider instead had to pay tax when purchasing the items used to provide the service or install the monumen…
Were a telecommunications company's 2004 and 2005 protective refund claims timely filed or eligible for reconsideration?
No. Virginia had denied the original protective claims on May 4, 2009, so an addendum filed seven days later was a new claim, not an amendment to a pending one, and it met none of the reconsideration …
Were mandatory dealer advertising and training fees taxable as part of an HVAC manufacturer's product sales price?
Yes. The 2% marketing-group fees were mandatory until each dealer reached a $10,000 annual cap, were calculated from product sales, shared invoice discounts, and funded advertising and training that p…
When an auto dealer gets a factory-to-dealer incentive payment from the manufacturer to discount a car for an eligible buyer, is that payment part of the taxable sales price — and does the buyer end up paying sales tax on it?
Both: the incentive payment is included in the taxable sales price, but a special credit cancels the tax on it, so the buyer effectively pays no sales tax on the incentive amount. When a dealer discou…
At an FDA-regulated manufacturing plant, which process items — water-treatment, HVAC, boiler, pigging, RF guns, antifoam, labels, printers — are exempt as industrial machinery, and which are taxable?
It varies item by item. At this FDA-regulated manufacturing plant, the Water Treatment System, HVAC System, Boiler System, Pigging System, RF Guns, and Antifoam Treatment are all EXEMPT from Tennessee…
Did an Illinois-headquartered employer have to withhold Illinois tax when its nonresident truck drivers performed all services in another state?
No, if the drivers truly performed all services outside Illinois. Section 304(a)(2)(B) required some Illinois service before compensation could be treated as paid in Illinois. The employer's claim tha…
What must a South Carolina datacenter do to qualify computers, equipment, software, and electricity for the sales-tax exemption?
A certified South Carolina datacenter can exempt qualifying computers, equipment, hardware, software, electricity, and electrical infrastructure if it meets the statute's facility design, notice, inve…
Were regularly mailed envelopes containing coupons and advertisements from multiple vendors subject to Florida sales and use tax?
No. The mail-outs qualified for the exemption for advertising materials distributed free by mail in an envelope because they contained only ads from at least 10 vendors and were mailed regularly.
Did an independent contractor that improved real property and resold furniture to a related company have to register as a Florida dealer?
Yes. The company was an independent contractor, not the related company's agent. It owed use tax on materials consumed in real-property work and had to collect sales tax on furniture and furnishings s…
How should an Illinois propane delivery truck using a propane-diesel conversion system calculate tax on propane burned for highway travel?
Propane bought for off-highway use was not subject to Motor Fuel Tax, but any amount later burned to propel a vehicle on Illinois public highways became taxable. IDOR said the best calculation general…
Could an Illinois delivery leg carrying a mix of out-of-state-origin and Illinois-origin freight count toward the rolling-stock exemption?
Yes, in both scenarios presented. Whether 90% or only 10% of the commingled freight originated outside Illinois, the trips or miles could count toward qualifying rolling-stock use if the carrier docum…
Did an Illinois hotel owe Hotel Operators' Occupation Tax when a guest redeemed loyalty points for a complimentary room?
Generally no, when Hotel Operators' Occupation Tax was remitted on the original paid stays and the reimbursement fund was wholly owned by the hotel franchisor. The answer could change if a third party…
Did an Illinois end user's factory pickup make a drop shipment taxable when the manufacturer had adequate resale proof from the out-of-state distributor?
No. If the Illinois manufacturer obtained adequate resale documentation from the out-of-state distributor, IDOR would treat the manufacturer's sale as a sale for resale and would not require it to col…
Were colocation rack-space rent and a percentage pass-through of the provider's electricity bill taxable in Illinois?
The GIL did not expressly decide whether rack-space rent was a real-property charge or a tangible-property lease. It gave Illinois's general true-lease and conditional-sale rules. On electricity, it s…
Were sweetened protein drinks containing milk and protein bars containing flour taxed as food rather than soft drinks or candy in Illinois?
Yes under the definitions explained in the 2013 GIL. A sweetened beverage containing milk or milk products was excluded from “soft drinks” and treated as food. A bar containing flour was excluded from…
Were fees for cashing payroll, government, or tax-refund checks subject to Illinois sales or service tax?
No. The described customer received cash equal to the check's face value minus a fee, and no tangible personal property was transferred as part of the service. IDOR said Illinois sales and use taxes d…
Which commonly controlled out-of-state dealers had to begin collecting Virginia sales tax on September 1, 2013?
Historical rule: an out-of-state dealer was presumed required to collect Virginia sales and use tax when a commonly controlled person maintained a Virginia distribution center, warehouse, fulfillment …
How much of related-party royalties escaped Virginia's add-back when affiliates paid tax elsewhere or licensed third parties?
The taxpayer received a full exception for royalties paid to IHCA and IHCB because their substantial unrelated-party licensing met the statutory third-party exception. For IHCC, only the portion corre…
Are a medical-records company's retrieval and copying fees taxable in Colorado, and must the company collect tax?
Not taxable, and the company doesn't have to collect tax. The Department ruled that a company's charges for retrieving and copying medical records aren't subject to Colorado sales tax no matter how de…
Could a temporary-housing company lease furniture tax-free from suppliers when it acquired each item solely to re-lease to a customer?
Yes. Supplier leases were exempt resale transactions because each furniture package was acquired solely for a specific customer's re-lease. The company still had to collect sales tax on the rental cha…
Does an out-of-state wholesaler lose Public Law 86-272 protection in Colorado when its in-state employee supervises a sales team, oversees major-account contracts, and develops sales strategy?
It depends — possibly. Public Law 86-272 still protects an out-of-state seller of tangible personal property even if its in-state employee does things closely related to soliciting orders, but protect…
After Colorado reinstated the exemption for electronically delivered software on July 1, 2012, are digital e-books, music, and movies also exempt, and how is tax applied to ASPs and software accessed over the internet?
It depends on what's delivered. Effective July 1, 2012, Colorado exempts electronically delivered computer SOFTWARE from sales and use tax — but digital BOOKS, MUSIC, and MOVIES remain taxable tangibl…
A company leases equipment to contractors and bundles in services (training, bookkeeping, advertising) and a trade-name license under one contract. Are the services and license taxable, or only the equipment lease?
Yes — the services and the license are taxable, because they are bundled into a single, indivisible lease of taxable equipment. Tennessee taxes the full 'sales price' of a lease or rental of tangible …
Could a geotechnical testing company deduct all claimed construction services and avoid interest by treating an ordinary field audit as a managed audit?
No. Grandin Testing Lab did not prove its remaining construction-service deductions. Services sold to government agencies were not deductible under the cited construction rule; church services remaine…
For Nebraska Advantage incentives, when must a taxpayer use E-Verify for new employees, and can employees be verified after the fact or counted if transferred in?
You must use E-Verify starting at the application date, and you cannot fix it later. Revenue Ruling 29-13-3 explains that for the Nebraska Advantage incentive acts (applications filed on or after Octo…
Which related-entity management fees qualified for Virginia's BPOL intercompany-receipts exemption?
Only fees from ASC and VALP7 qualified. The taxpayer and ASC had identical 100% ownership, while three common owners held about 95% identical interests in the taxpayer and VALP7, satisfying both broth…
Was a sale between an out-of-state distributor and out-of-state dealer taxable when goods were drop-shipped to the dealer's Florida customer?
No. The seller-to-dealer transaction occurred outside Florida's jurisdiction. The Florida recipient instead had resale-collection or consumer use-tax duties, and the seller had to retain invoices and …
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