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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How does Kansas sales tax apply to pallets manufacturers buy or lease to store and ship their products?
It depends on the pallet and the exemption claimed. 'Nonreturnable' pallets and packing materials a manufacturer buys are exempt as an 'ingredient or component part' (a sale for resale) under K.S.A. 7…
Could a consolidated group exclude nonallocable expenses tied to Subpart F and gross-up income from Virginia's foreign-source subtraction formula?
No for 2008-2010. Virginia required the subtraction formula to include all deductions not definitely allocable from the relevant Forms 1118, even when some related income—Subpart F dividends or foreig…
Did the Servicemembers Civil Relief Act preserve a husband's out-of-state domicile for Virginia tax in 2009 and 2011?
No. Military orders alone did not preserve the husband's former domicile after his conduct showed a Virginia change: he filed resident returns, obtained and renewed a Virginia driver's license, regist…
Could an employer reduce its withholding audit for snow-removal contractors while avoiding employer and fraud liability?
Only in part. Virginia removed three in-period snow-removal invoices that documented payments to subcontractors, but the employer's incomplete records could not establish that other individual payees …
Could an employer reduce a withholding assessment or shift all liability and fraud penalties to its former officer?
No. Later payroll documents did not prove a lower withholding rate for July 2006-September 2010 because the employer could not identify the employees or supply period records. The corporation remained…
Did New Mexico's active-duty military pay exemption cover a commissioned U.S. Public Health Service officer because PHS is part of the uniformed services?
No. The U.S. Public Health Service Commissioned Corps is part of the broader uniformed services, but New Mexico's exemption covered active-duty service in the armed forces. The federal definition of a…
Did an FDA-regulated cold-and-compression system qualify for Illinois's reduced medical-appliance tax rate?
No. IDOR said a qualifying medical appliance must directly substitute for a malfunctioning part of the human body. Although the cold-and-compression system was described as FDA-regulated and used for …
When a company installs fire sprinkler/alarm systems into buildings through subcontractors and bills clients time-and-material, who owes Colorado sales tax?
The company's time-and-material charges to clients are taxable; its payments to subcontractors are not. A company that installs, repairs, and inspects fire sprinkler and alarm systems built into build…
Did a pass-through telecommunications company owe Virginia's 2008 minimum tax after Virginia Cellular?
Yes. Although Virginia Cellular had held the earlier statute insufficient to impose the minimum tax on pass-through telecommunications companies, the 2009 General Assembly enacted House Bill 2378 retr…
Were certified pit liners, storage tanks, and silt fence bought after July 1, 2006 still exempt pollution-control equipment?
Yes. Virginia reversed its earlier view that the DMME-certified pollution-control exemption expired July 1, 2006. A later Department ruling and 2013 legislation clarified that the exemption continued …
Are a sign company's entry towers installed at car dealerships taxed as real-property fixtures, and does lump-sum vs. time-and-material billing change who pays?
If the entry towers are FIXTURES — tangible personal property so affixed to a building that it can't be removed without substantial damage (Reg 39-26-102.15) — then Colorado's CONTRACTOR rules govern,…
How did South Carolina source an engineering firm's service receipts when employees and contractors worked in multiple states?
The engineering firm had to apportion its service income using a gross-receipts factor based on where the engineering work was performed. Work performed in South Carolina counted in the South Carolina…
Is the electronic renewal of a software license taxable when the original prewritten software was delivered on a CD but the renewal involves no new tangible delivery?
Yes — the renewal is taxable. For software sold on or after July 1, 2012, Colorado taxes prewritten 'canned' software only if it's (1) pre-packaged for repeated sale/license, (2) governed by a tear-op…
Did a corporation substantiate 2006-2008 charitable carryovers and related-party interest and factoring deductions?
Not yet. Virginia upheld the auditor's partial add-back of related-party factoring fees and would not consider a valid-business-purpose exception because the corporation had not followed the statutory…
Was a corporation formed under tribal law automatically exempt from Virginia corporate income tax and filing?
No automatic exemption was established. Virginia treated the tribally chartered entity as a corporation subject to state income tax because it was unclear whether the IRS considered it an integral par…
Did cold deli trays and party platters packaged with lids qualify for Virginia's reduced food-tax rate?
Yes. Virginia Tax Bulletins 05-7 and 99-11 treated cold deli trays and party platters packaged in containers with lids or tops as food for home consumption, whether sold in single or multiple serving …
For New Mexico's alternative-energy manufacturers credit, did the employee lookback run from the date Emcore signed its application or the later date it mailed it?
The mailing date controlled. Emcore signed its alternative-energy manufacturers credit application on July 24, 2011, when it had added at least one employee over the prior year, but delayed submission…
Could a convenience store overturn a sales-tax assessment by disputing the audit sample without producing supporting records?
No. The auditor compared returns, cash-register receipts, and sales spreadsheets over a three-month sample and found the store's spreadsheets did not reconcile to gross sales reported on its returns. …
Did federal Medicare Part D premium-tax preemption exempt prescription-drug sales to private Part D plans from Illinois sales and service taxes?
No. IDOR said Medicare Part D plans operated as private insurers, not government purchasers, so drug sales to them did not qualify for Illinois's government exemption. The Department also said Service…
Could a cable wholesaler claim the manufacturing exemption for machinery used by its separately incorporated sister company?
No. The wholesaler bought and owned the machinery, but its separately incorporated sister company used it to manufacture specialized products. The purchaser itself performed no manufacturing and could…
Was a Virginia sales-tax appeal timely when postmarked nine days after the 90-day deadline?
No. The assessment was dated July 24, 2012, making October 22 the last day to file a complete administrative appeal. The taxpayer's October 31 postmark was nine days late. Virginia strictly enforced t…
Did Maryland-Virginia reciprocity exempt a Maryland resident's Virginia wages when she also had Virginia S-corporation income?
Yes. Maryland-Virginia reciprocity kept the taxpayer's Virginia wages exempt even though she also had Virginia-source S-corporation income. She could not claim a Virginia credit for Maryland tax, but …
What did Illinois's 2013 annual survey say about nexus, BOGO and coupon discounts, and seminar or webinar charges?
For promotions, unreimbursed discounts reduced taxable gross receipts, manufacturer-reimbursed coupons did not, and a BOGO sale was taxed only on the amount actually received when no one reimbursed th…
How did Illinois tax data-center cabling installation, termination, testing, labeling, and inventory services?
IDOR did not classify the described cabling tasks or state which tax method applied. It explained that pure services without tangible-property transfer are outside retail tax, while property transferr…
Which restaurant-franchise charges for hosting, software, hardware, faxing, online ordering, and shipping were taxable in Illinois?
IDOR did not provide an item-by-item answer. Pure services without tangible-property transfers generally were outside retail tax, while transferred property followed Service Occupation or Use Tax rule…
Could a beneficiary subtract monthly survivor-annuity payments as Virginia annuity death benefits for 2007-2009?
No. Virginia limited the historical subtraction to federally taxable death benefits paid in a lump sum under an annuity contract between a customer and an insurance company. The beneficiary received m…
Could a Virginia locality issue one group BPOL license to itinerant merchants and exempt merchants at sponsored events?
Yes, conditionally. A locality could create an umbrella subclassification for itinerant merchants operating together for five or fewer days and divide the $500 fee, because no merchant's charge exceed…
Could Virginia hear county BPOL and BTPP appeals when the county gave incomplete appeal notice and the taxpayer skipped required notice?
No. The county's letter omitted the required appeal and collection notice, so it was not a proper final local determination. The taxpayer also had not given the county the required 30-day notice befor…
Could a film worker exclude unexplained Schedule C income from New Mexico gross receipts tax by saying he had mixed W-2 wages into the business-income figure?
No. Kevin St. John reported $23,630 of 2006 Schedule C business income but no New Mexico gross receipts tax. He proved that $16,607 of contractor receipts were covered by timely NTTCs, and employee wa…
Did an RV traveler change his domicile from New Mexico to Nevada for personal income-tax purposes, and did reliance on an attorney excuse penalties?
No domicile change was proved. New Mexico remained the taxpayer's center of daily life despite his Nevada RV lot and declarations of intent. He owed income tax and interest, but penalties were abated …
Could a required intermediary be ignored so a one-time sale of business equipment qualified for Illinois's occasional-sale exemption?
IDOR did not decide. The buyer argued that the intermediary was only a conduit and should be ignored under J1 Aviation, leaving a nontaxable occasional sale between non-retailers. The Department said …
How did Virginia's annual withholding option work for employers whose workers performed only household service?
Beginning with wages paid on or after January 1, 2013, a qualifying household employer could elect annual Virginia income-tax withholding without the former $5,000 quarterly-payroll cap. The employer …
Could Virginia estimate a grocery store's taxable nonfood sales when the store had no records for most of the audit period?
Yes. With no records for 2009-2011, Virginia could use the best information available. Auditors reasonably projected nonfood sales from two agreed observation days, a 6% barcode-error test, and untaxe…
Is selling customers online access to fill-in forms templates on my web site -- with no software copy delivered -- subject to NY sales tax?
Yes. Charging customers to access forms templates on your server, fill them in with their own data, and download the populated forms is a sale of prewritten computer software, which NY treats as taxab…
Did a timely $2,801.96 income-tax refund claim survive when the Department did nothing for 120 days and the taxpayers did not protest or sue within the next 90 days?
No. Henry and Krystyna Kalka timely filed a $2,801.96 refund claim on December 21, 2011 after the Department itself identified their 2007 overpayment and said a check would be mailed. The Department t…
Were free promotional tobacco products and early-payment cash discounts included in the manufacturer's sales price for Virginia's 2010 tax?
No for the 2010 assessment. Free promotional products had no sale for consideration and therefore no manufacturer's sales price on which to calculate the tax. Cash discounts allowed and taken for earl…
Was an LLC's sole officer personally liable for sales-and-use-tax and litter-tax liabilities discovered after the business closed?
No. Although the taxpayer was the LLC's sole officer and owner, the audit did not identify the sales-and-use-tax and litter-tax liabilities until 18 months after the business had closed and its debts …
Could an individual challenge Virginia's 2008-2009 estimated income-tax assessments after the 90-day appeal deadlines?
No. The taxpayer appealed the 2008 assessment more than a year after its April 4, 2012 deadline and appealed the 2009 assessment after its November 27, 2012 deadline, so both applications were barred.…
Can a taxpayer with a signed Nebraska Advantage Act agreement under one tier amend it to a different tier?
Yes, but only downward and only along set paths. Revenue Ruling 29-13-1 explains that a signed Nebraska Advantage Act agreement can be amended to a different tier, but -- under Neb. Rev. Stat. § 77-57…
Are a mobile medical company's charges for imaging/treatment equipment it brings to a facility and operates a tax-exempt medical service, or a taxable equipment rental?
The equipment charges are taxable. Although the company delivers, sets up, operates, and maintains its own equipment, the attending physician at the customer's site directs the company's technician on…
How did Florida tax custom signs and awnings sold, installed, or repaired by an out-of-state dealer using local contractors?
Permanently attached signs and awnings were real-property improvements: the dealer owed use tax on costs and did not charge customer sales tax. Removable signs were tangible personal property, making …
Could a Virginia resident avoid 2008-2009 income tax by claiming income earned outside a federal enclave was not taxable?
No. A Virginia resident's federal adjusted gross income was the starting point for Virginia taxable income, subject to statutory modifications, and a state may tax its residents' income even when earn…
Could a corporation deduct related-parent franchise fees and exclude all related-party royalties from Virginia's intangible add-back?
Partly. Virginia allowed the franchise-fee deduction because the parent and transactions had economic substance and independent transfer-pricing studies supported arm's-length rates. But the royalty a…
Which cable and Internet devices were exempt, and could audit penalties be waived, for a provider's mixed-use equipment?
Virginia exempted DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters used to deliver the provider's cable or Internet services. Mixed-use equipment…
Which fleet charges and cable, Internet, and phone equipment qualified for Virginia sales-and-use-tax relief in a cable-provider audit?
Virginia ordered a mixed result. DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters received the transmission or Internet-service exemption. Most r…
Which cable and Internet devices were exempt, and could penalties be waived, in a provider's Virginia consumer-use-tax audit?
Virginia exempted DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters used to deliver the provider's cable or Internet services. Mixed-use equipment…
Which cable and Internet devices were exempt, and could penalties be waived, in a provider's Virginia consumer-use-tax audit?
Virginia exempted DVR set-top boxes and decryption devices, qualifying VOD equipment, wireless gateways, and USB adapters used to deliver the provider's cable or Internet services. Mixed-use equipment…
What did the 2013 legislation change for Kansas motor fuel taxes and fees?
Kansas Notice 13-16 (approved July 17, 2013) summarizes three 2013 bills affecting motor fuel. Senate Bill 83 (effective April 25, 2013) raises the installment payment plan agreement fee to $25, adds …
Was a nonresident retiree entitled to interest after Virginia refunded tax that his former employer had wrongly withheld from retirement pay?
No. Virginia refunded all wrongly withheld tax, but the withholding was legally deemed paid only when the retiree filed each return. The Department issued the 2007-2010 paper-return refunds within 60 …
Are separately billed set-up and pick-up charges on a taxable equipment rental subject to Kansas sales tax?
Yes, if the rental itself is taxable. Separately billed set-up, pick-up, delivery, and take-down charges on an equipment rental are part of the taxable lease price under K.S.A. 79-3602(ll)(1) and K.A.…
We took out one mortgage covering both our existing condo and an adjacent unit we bought to combine into a single home. Does the NYC mortgage recording tax apply at the higher commercial-property rate because the mortgage covers two separate condo units?
The lower residential rate applies, not the higher commercial rate. New York City's mortgage recording tax (Tax Law § 253-a; NYC Admin. Code § 11-2601.d) taxes mortgages on "individual residential con…
Is an equipment agreement that requires the customer to buy the property for $1 at the end a lease (tax each month) or a conditional sale (tax all up front)?
It is a conditional sale, not a lease. Because the customer takes possession at the start, must make payments over 36 months, and is then REQUIRED (not merely given an option) to purchase the equipmen…
I bought a foreclosed, partially-completed condo project and recorded a new declaration and new construction financing. When I sell the unsold units, do I get the mortgage recording tax credit under RPL 339-ee even though the ORIGINAL sponsor's declaration was recorded more than two years before my purchase money mortgages are recorded?
Yes, the credit is allowed. Real Property Law § 339-ee lets a condominium developer credit mortgage recording tax already paid on a construction or blanket mortgage against the tax otherwise due on pu…
Is renting sophisticated temporary event structures taxable, and can the company accept a resale certificate from an event planner?
Yes, the charges are a taxable rental of tangible personal property -- the customer gets possession because the host controls the event, can direct (within limits) where the structure goes, and bears …
Does a company have to collect NY sales tax on the electricity it sells at an electric vehicle charging station?
Yes. The per-kilowatt-hour charge -- and any fee -- a company charges customers for electricity delivered to their electric vehicles at a charging station is subject to NY sales tax under Tax Law 1105…
Must a general contractor pay sales tax on required security/guard monitoring services it buys as part of a capital improvement construction project?
Yes. A general contractor must pay sales tax on protective and detective services -- here, mandated security/building-engineer monitoring of high-risk overnight work -- that it purchases for a capital…
Are printed signs and displays a franchise advertising fund provides to its member restaurants exempt promotional materials under Tax Law 1115(n)(4)?
No. Although the signs and displays are 'promotional materials' as defined in the Tax Law, they do not qualify for the 1115(n)(4) exemption because they fail its conditions: (1) the materials go to th…
If a concessioner collects and remits sales tax on a food vendor's behalf at a stadium, is the food vendor still liable, and can it buy prepared food for resale?
Yes, the vendor remains liable. A person required to collect tax cannot assign that duty to another. By agreeing to let the concessioner collect and remit tax on its behalf, the petitioner and the con…
Did launch-pad environmental-control and piping equipment become taxable real-property fixtures, or remain exempt spaceport equipment?
The equipment remained tangible personal property and qualified for Virginia's spaceport exemption. Although a refrigeration contractor installed environmental-control systems and piping around a laun…
An IC-DISC exporter's shareholder-officers take their pay as dividends rather than salary, as the federal rules require. Can the company deduct those dividends from its Tennessee excise-tax net earnings?
No. Dividends an Interest Charge Domestic International Sales Corporation (IC-DISC) pays to its shareholders — even when those dividends stand in for the shareholders' compensation, as the federal IC-…
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