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 2012 estimated-tax penalty relief did Virginia give qualifying farmers, fishermen, and merchant seamen?
Qualifying farmers, fishermen, and merchant seamen received an automatic waiver of the 2012 estimated-tax underpayment penalty if they filed their Virginia return and paid the entire tax due by April …
Which manufacturing, R&D, out-of-state, and sampled purchases had to be removed, upheld, or reexamined in a Virginia audit?
The appeal produced mixed relief. Virginia removed documented out-of-state exhibit and tie purchases, reduced a mixed software-maintenance charge by 50%, and corrected several audit lines, but upheld …
Could a 2005 Virginia assessment be overturned by arguing that IRS information was obtained unlawfully, without evidence of nonresidency?
No. Virginia held that IRC § 6103(d) authorized the Department to obtain IRS information for a resident nonfiler and that state law allowed an estimated assessment. Because the taxpayer offered no obj…
Would IDOR give yes-or-no answers to a 2013 nexus survey, and what historical guidance did it provide instead?
No. IDOR said nexus was too fact-specific for the survey's yes-or-no format. It instead summarized the law it applied as of December 31, 2012: accepting Illinois orders or filling them from Illinois i…
Can a company that runs its operations through several affiliated partnerships, LLCs, and corporations at one location combine all of their employees to meet the 250-employee threshold for Tennessee's call-center telecommunications exemption?
No. A company cannot combine its own employees with those of its affiliated entities to qualify for Tennessee's call-center exemption from sales tax on telecommunication services (Tenn. Code Ann. § 67…
Is a $1-option equipment agreement a purchase, and may unstated interest and installation costs be excluded from Georgia sales tax?
The agreement was a purchase rather than a lease because title had to transfer after the required payments and the option price was only $1. Sales tax applied to the full nonitemized payment stream wi…
Does a vehicle's net trade-in value reduce the taxable price of a standard or one-pay lease, and how may an overpayment be refunded?
Yes. Because a lease was a sale for sales-tax purposes, the net trade-in allowance reduced the taxable sales price of both standard and one-pay leases. Within three years, the dealer could refund an o…
Are prescription-only bone-graft and bone-regeneration implants sold to Georgia hospitals exempt as prosthetic devices?
The approved Class II bone-graft product was exempt because it was a prescribed prosthetic device permanently implanted in the patient. The second product also met the prosthetic-device definition, bu…
What receipts must a Louisiana electrical cooperative include when calculating inspection and supervision fees?
All revenue from the utility's Louisiana intrastate business, including non-jurisdictional business, entered the fee base. The ordinary three-year prescriptive period also applied.
Could an Illinois tire retailer deduct a tire-disposal fee or the statutory tire user fee from taxable gross receipts?
A retailer's tire-disposal fee was a cost of doing business and could not be deducted from taxable gross receipts. This letter originally said the statutory tire user fee received similar treatment, b…
What Land Preservation Income Tax Credit cap did Virginia Tax Bulletin 13-1 originally announce for 2013?
Tax Bulletin 13-1 originally announced a $113,909,000 statewide cap for calendar year 2013. It applied the statutory CPI-U formula and measured a 13.91% increase over the 2006 base period. This guidan…
Is an irrevocable equipment lease ending in a $1 buyout a true lease or an outright sale for NY sales tax?
It is an outright sale. Under either of the lessor's termination provisions -- the lessee may buy the equipment for $1 or return it, OR the lessee must buy it for $1 -- the standard lease is a securit…
Were separate closed-end loan disclosure and loan-agreement forms subject to documentary stamp tax when neither contained every required element?
No. The disclosure statement had the amount but no signed promise, while the loan agreement had a signed promise but no sum certain. A reference between them was not express incorporation, so their el…
Can a financial institution use an alternative, deposits-based apportionment instead of the financial-institution rule that sources investment income to where decisions are made?
Yes. The financial-institution special regulation (Special Regulation 7A) sources receipts from investment and trading assets to the location of the day-to-day decisions—a cost-of-performance approach…
Can a Colorado retailer sell items at an even, tax-included price instead of adding sales tax separately at the register?
Generally no — not silently. Colorado law makes it unlawful for a retailer to advertise or hold out that it will absorb the sales tax or won't add it to the selling price, and the regulation requires …
Could a federal IT contractor pursue sales-tax refunds after missing Virginia's appeal and reconsideration deadlines?
Not through another appeal or reconsideration request: both deadlines had expired. But because the taxpayer paid the assessment on February 16, 2012, Va. Code § 58.1-1823(A)(iv) still allowed amended …
Could Unique Dental Laboratory recover gross receipts tax it said it overpaid when it did not respond to the Department's request for invoices, did not protest or sue after 120 days of inaction, and filed a new refund claim after the three-year limit?
No. Unique Dental Laboratory filed a February 2008 claim it described as seeking $31,525.38 but did not supply the requested invoices. When the Department took no action within 120 days, the laborator…
Did a captive support subsidiary owe communications and gross-receipts tax on services used only to support its affiliated communications group?
No. The subsidiary used the purchased communications only to provide accounting, tax, audit, legal, and similar support for its affiliated communications dealers, so the purchases qualified as the gro…
Did Illinois sales tax apply to application-monitoring and consulting services delivered without tangible property?
Pure professional or consulting services without a transfer of tangible personal property did not create Service Occupation Tax or Use Tax liability. Electronically transferred information or data was…
Did diesel exhaust fluid qualify for Illinois's rolling-stock sales-tax exemption?
No, based on the facts provided. IDOR said diesel exhaust fluid was a consumable that did not become a physical component of qualifying rolling stock, so it did not qualify for the exemption. The exem…
Did Kansas waive the estimated tax penalty for farmers and fishers who filed by April 15, 2013?
Kansas Notice 13-01 explains that, because the IRS moved the March 1 filing deadline for farmers who do not pay estimated taxes back to April 15 for the 2012 return (IRS Announcement IR 2013-7, made J…
Could multiple colors of paint on one invoice be aggregated so Florida's $5,000 discretionary surtax cap applied once to the whole invoice?
No. Different paint colors bought for inventory were separate items, not a single bulk item or integrated working unit. The $5,000 discretionary sales surtax limitation applied separately to each invo…
Does Tennessee sales and use tax apply to an out-of-state company's online banner ads, database advertising subscriptions, separately stated photography and set-up fees, hosted (ASP) database access, and wholesale reseller receipts?
No to all five — none of the company's charges are subject to Tennessee sales and use tax on these facts. Tennessee taxes retail sales of tangible personal property (including prewritten software) and…
Could a support-services CITC project calculate project income using a jobs-change factor applied to consolidated Florida tax?
Yes. Florida accepted the project's proposed jobs-change factor applied to tax due on the consolidated return because project support served the affiliated group, but the approval depended on the repr…
Were a captive subsidiary's accounting, tax, audit, legal, and finance support services to its parent group subject to sales tax?
No. The work was professional or personal service, and the financial documents delivered to the parent group carried no separate charge and were only inconsequential elements of those services.
Must Virginia subtract federal savings-bond income again when calculating the income limit for its Age Deduction?
No. Virginia already subtracted tax-exempt income from United States obligations when computing Virginia taxable income. The Age Deduction's separate income test reduced federal adjusted gross income …
Could Virginia retailers refund sales tax when they later paid high-volume customers a monthly rebate?
No. A month-end rebate paid to reward a high-volume customer did not qualify as a returned-goods adjustment. Because the customer returned no tangible personal property, the retailer could not deduct …
Were a resort's separately stated purchasing fees and combined shipping-and-handling charges taxable in Virginia?
Yes. A 10% purchasing fee charged only with the sale of specified tangible personal property was part of the taxable sales price even when separately stated. Separately stated transportation charges c…
Did DMME-certified pit liners and storage tanks remain exempt from Virginia sales and use tax after July 1, 2006?
Yes. Virginia changed its policy effective immediately and retroactive to July 1, 2006: DMME-certified pollution-control equipment for coal, oil, and gas production remained exempt under Va. Code § 58…
Was a percentage-of-sales fee remitted to a shopping-complex landlord for advertising and promotion taxable as rent?
Yes. The lease required the retailer to remit the percentage-of-sales fee to the landlord, the funds promoted the shopping complex, and nonpayment was a lease default, making the fee taxable percentag…
How did Illinois tax a farmer's sales of live cattle to restaurants and households for processing into meat?
A sale to a restaurant that resold the resulting meat was generally a sale for resale, supported by a resale certificate. A sale to a household was a retail sale and did not become an exempt occasiona…
A Tennessee food producer bolted storage racks into its freezer to freeze and hold its own packaged food before shipping. Are the freezer racks exempt from sales and use tax as 'industrial machinery'?
Yes. The freezer racks a food producer bolted into its freezer qualify as exempt 'industrial machinery' (Tenn. Code Ann. § 67-6-206(a)), so no Tennessee sales or use tax is due on them. The exemption …
Are a contractor's charges to update a kitchen (new cabinet doors, countertop, sink, molding) a tax-exempt capital improvement?
Yes, when sold as a complete package. A kitchen-update package -- new cabinet doors and drawer fronts, new hardware, new countertop, new sink and faucet, new molding, and painting the cabinet surfaces…
After a lessee defaults, is money an equipment lessor recovers by judgment or from a guarantor subject to NY sales tax?
It depends on the type of lease. For a TRUE lease, where the lessor collected tax on each monthly payment, any amount it later recovers on the default -- a court judgment against the lessee, or a paym…
Is the payroll a managing agent passes through for cleaning and maintenance workers subject to NY sales tax?
No. Building cleaning and maintenance services are generally taxable, but wages and other compensation an employer pays its own employees for those services are excluded from sales tax under Tax Law 1…
New York Advisory Opinion TSB-A-13(2)C: Does an S corporation keep its Empire Zone certification and tax benefits after transferring non-voting shares to grantor trusts treated as disregarded entities?
Yes. The Empire Zone certification and tax benefits survive the restructuring. Transferring non-voting shares to grantor trusts that are disregarded entities does not by itself break eligibility, prov…
Is an online driver-safety / point-reduction course subject to NY sales tax as prewritten software?
No. A DMV-regulated online accident-prevention course (an Internet Point and Insurance Reduction Program, or IPIRP) is a nontaxable educational service, not a sale of taxable software. Although the co…
If I install solar panels at my home in two separate stages, does each stage qualify for its own $5,000 tax credit, or is the credit capped in total per residence?
The $5,000 solar energy system equipment credit under Tax Law § 606(g-1) is a single aggregate cap per principal residence, not a separate cap for each installation stage. A taxpayer who installs sola…
New York Advisory Opinion TSB-A-13(1)C / 13(2)I: Does an LLC keep its Empire Zone certification and benefits after a foreign corporate member exits and the remaining member gifts a majority interest to a spouse?
Yes. The Empire Zone certification and tax benefits survive the change in the LLC's ownership. After the foreign corporate member transfers its interest (and recaptures its own credits) and the remain…
How did Virginia's elective single-sales-factor method work for qualifying manufacturing companies?
A qualifying manufacturing company could elect a modified apportionment method that used triple-weighted sales for taxable years beginning July 1, 2011 through June 30, 2013, quadruple-weighted sales …
Were fragranced antibacterial products with skin-softening claims exempt as nonprescription drugs in Virginia?
No. Even if the FDA treated the products as antiseptic hand washes, Virginia strictly construed the exemption and treated products with fragrance plus advertised skin-nourishing and softening effects …
What operational requirements and playing limits apply to keno player access devices (self-service kiosks) in Nebraska?
Revenue Ruling 35-13-1 sets the operating rules for keno 'player access devices' -- self-service kiosks that let a player place a keno wager and print their own outside ticket. After the Nebraska Coun…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #12-21)?
Use the citator attached to SC Information Letter #12-21. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified,…
Can the members of a Colorado LLC claim the Colorado source capital gain subtraction on the gain from selling all the LLC's business assets, mostly goodwill?
No. The members cannot use the Colorado source capital gain subtraction (§ 39-22-518) for gain on the sale of all of the LLC's business assets. The subtraction covers gain on (A) real or tangible pers…
Is a subscription fee for an online financial newspaper, and for interactive online stock screens and performance ratings, subject to Colorado sales or use tax?
Neither is taxable. The subscription fee for an online version of a daily financial newspaper is NOT subject to Colorado sales or use tax: Colorado excludes qualifying daily 'newspapers' from taxable …
Are Braille devices, electronic magnifiers, adapted phones, and other products that help blind and legally blind people exempt from Colorado sales and use tax?
Probably not exempt, though the Department made no determination. Three Colorado exemptions might seem to apply — optical sales, prosthetic devices, and durable medical equipment — but the optical exe…
Does a full-service truck wash owe Colorado sales tax on the wash, and use tax on the soaps, wax, water, electricity, gas, and equipment it uses?
Likely a non-taxable service — but with use tax on the supplies. A full-service wash where the company's own employees run the equipment is treated as a non-taxable service, not a taxable equipment re…
When a company buys parts out of state, has them assembled in Colorado into a finished unit, and then exports that unit out of the country, must it pay Colorado tax on the parts, or are they exempt wholesale purchases?
The parts are likely exempt as components of a manufactured product, though the Department made no determination. Colorado exempts tangible personal property bought by a manufacturer that becomes an I…
Which alarm-system sales and monitoring services could Home Security Systems and Industrial & Commercial Security Systems deduct when some transactions lacked timely or correct NTTCs or did not meet the claimed construction, resale, interstate, leasing, or government-sales rules?
Only selected transactions qualified. HSS received its T.C. Building & Realty construction-service deduction. ICSS received deductions for both Northrop Grumman interstate sales and three Jaycor/L3 se…
Could a cash-management company pay tax on customer safes and then bill one untaxed charge for the safe, armored transport, and cash services?
IDOR said the company appeared to be the end user of the safe and therefore owed Use Tax on it. But it would not confirm that the single customer charge was untaxed without reviewing the customer agre…
Which catheters and cardiovascular products qualified for Illinois's reduced medical-appliance tax rate?
The reduced rate applied only when the item was intended by its manufacturer to directly substitute for a malfunctioning body part. Catheters that introduced or removed fluids as a substitute for a bo…
Was electricity passed through salt brine during a Georgia manufacturing process exempt as an industrial material beginning in 2013?
Yes, beginning January 1, 2013, for electricity passed through salt brine in electrochemical cells and impregnated into the manufactured industrial salt. That electricity qualified as an exempt indust…
How did Florida require an online advertising company to source receipts when ordinary cost-of-performance sourcing distorted Florida activity?
Florida required alternative apportionment. For the advertising stream connected to Florida activity, the company had to use a ratio based on Florida users compared with users across the jurisdictions…
When did an Illinois gift basket containing coffee, candy, and other food qualify for the lower food tax rate?
Under the assumptions in the letter, the whole gift basket qualified for the lower 1% state food rate plus local tax when more than 50% of its value came from qualifying food. If more than 50% of the …
Was a farm winery's separately charged wedding and event rental activity a separate business for county BPOL tax?
Possibly. The separately charged facility rentals could exist independently of the winery even though events promoted wine and required a minimum wine purchase. Virginia remanded the case because the …
Did Virginia properly shift all income from a nonresident owner's LLC to Virginia because its only client was his Virginia S corporation?
Not entirely. Virginia overturned the auditor's related-party adjustment because the out-of-state LLC had economic substance and charged fees comparable to an unrelated provider. But the owner spent s…
Could a holding-company S corporation subtract gain from distributing portfolio-company stock because the companies were not unitary?
No. Virginia agreed that the S corporation and the 7%-owned company were not unitary, but that did not end the analysis. Holding and managing operating-company investments, reorganizations, and stock …
Could a mechanical contractor remove fabrication, labor, and real-property charges from a Virginia sales-tax audit without transaction records?
Not without proof. Process-piping and exhaust-system contracts generally had tangible property as their true object, fabrication labor was taxable, and exempt installation or repair labor became taxab…
Did a retailer's spreadsheets prove that sampled untaxed deductions were gift-certificate sales rather than taxable sales?
No. The retailer's spreadsheets lacked detailed deduction descriptions and did not reconcile to the sample month's reported gross sales or total deductions. A later spreadsheet also showed gift-certif…
Were a Virginia medical practice's out-of-state software license, remote hosting, and training travel charges taxable?
No, on the stated facts. Tangible software and updates were delivered to an out-of-state hosting company, title or possession passed outside Virginia, and no use occurred in Virginia. Remote hosting w…
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