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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Was software downloaded electronically at the customer's location subject to South Carolina sales and use tax?
No. Software transferred from the seller's laptop to the buyer's computer through a wired or wireless electronic connection was not taxable when no tape, disk, flash drive, backup, or other tangible c…
How does NY sales and use tax apply to a stair and railing manufacturer that also installs its products?
As a fabricator that installs its own product, the company is a contractor. Installing or entirely replacing stairs is generally a nontaxable capital improvement, so its charges to sell-and-install st…
Was a well-drilling truck rated at 26,001 pounds or more subject to Virginia retail sales and use tax?
No. Virginia held that a truck, tractor trailer, or semitrailer with a GVWR or GCWR of at least 26,001 pounds remained exempt from retail sales and use tax even though the motor vehicle sales and use …
Did a Florida county's direct-purchase procedures qualify port construction materials for the governmental sales-tax exemption?
Yes, if the county truly ordered, paid, took title, bore risk of loss, received invoices, and issued certificates itself. Earlier nonqualifying purchases could not be repaired retroactively; a control…
Were prescription drugs paid through Medicare Part D exempt from Illinois tax, and how did a pharmacy calculate and collect Service Occupation Tax?
Medicare Part D drug sales were not government-exempt because private prescription drug providers, not the government, purchased the drugs. The pharmacy had to use one of four serviceman methods. IDOR…
Could a manufacturer replace a city's original-cost machinery valuation with the price paid in a bankruptcy sale?
Not automatically. Virginia held that the city's percentage-of-original-cost method complied with the machinery-and-tools statute, and a bankruptcy purchase price did not necessarily establish fair ma…
Could retired U.S. citizens abandon Virginia domicile by moving permanently to a foreign country?
Yes. U.S. citizenship did not prevent the couple from abandoning Virginia domicile and establishing domicile in a foreign country. Virginia found that the wife changed domicile when she moved there in…
Did regularly arranging Illinois repair services through local independent contractors create Illinois income-tax nexus for an out-of-state LLC?
IDOR did not make a definitive nexus determination because the issue was highly fact-dependent and normally resolved in an audit. It warned, however, that regularly arranging and controlling Illinois …
Did an Illinois E number exempt a customer from tax on wireline service billed monthly in advance, as though it were a prepaid calling arrangement?
No. Billing recurring subscription charges in advance did not convert wireline service into a prepaid telephone calling arrangement. Ordinary telecommunications remained subject to Telecommunications …
How did Virginia allocate deductions and treat another state's National Guard pay when resident and nonresident spouses filed separately?
Virginia returned the itemized-deduction allocation for correction because the audit had included the nonresident spouse's combat pay in its proportional calculation. But the Virginia resident's State…
Could a taxpayer reduce Illinois asset-sale gain because old losses that reduced basis had expired before they could be used as Illinois carryovers?
No. Illinois began with properly computed federal taxable income, including the federally determined sale gain, and Section 203 contained no basis adjustment or equivalent subtraction for losses that …
Did a Minnesota resident owe Illinois income tax on compensation earned entirely from Illinois work?
Yes. Illinois taxed a nonresident's compensation earned from work in Illinois. The taxpayer could not use Illinois's resident credit to shift the tax to Minnesota because that credit was available onl…
In a points-based rewards program, is the 'per point' fee the operator charges its client companies taxable, and does Tennessee sales tax apply to the reward merchandise shipped to participants — and on what amount?
It splits two ways: the program fee is NOT taxable, but the reward merchandise IS. The Department ruled on a points-based incentive/rewards program run for client companies — participants earn 'Points…
Could a taxpayer amend old Bright Start contribution years instead of adding a nonqualified 2011 withdrawal back at the higher 2011 rate?
No. The 2008–2010 returns were correct when filed because the taxpayer actually made qualifying Bright Start contributions and properly claimed the subtraction. The nonqualified withdrawal occurred in…
Did certification as a pollution-control facility exempt a Virginia landfill business from city BPOL tax?
No. Virginia held that Va. Code § 58.1-3660 exempts certified pollution-control real and tangible personal property from local property tax; it does not exempt the privilege of operating a business fr…
What Virginia tax interest rates applied during the second quarter of 2012?
Virginia's second-quarter 2012 rates were 5% for tax underpayments and 5% for overpayments. The reduced rate for qualifying assessments under administrative appeal was 0% after nine months until the D…
Could a concrete subcontractor deduct 2002 receipts without timely, correctly issued NTTCs, and was its reliance on accountants enough to abate the penalty?
The deductions were denied because the required NTTCs were not timely obtained in the sole proprietor's name, but the penalty was abated because the owner proved reasonable reliance on his accountants…
Must Virginia deed and grantor's tax use assessed value when it exceeds the sale consideration?
Not always. Recordation and grantor's tax use the greater of consideration or actual value, and assessed value carries a strong presumption of accuracy. But a circuit-court clerk may consider clear an…
Are cardiac ventricular-assist devices, their components, supplies, service, and training exempt from NY sales tax?
Yes, essentially all of it is exempt. The heart devices assist permanently malfunctioning heart ventricles, so they qualify as prosthetic aids and are exempt under Tax Law 1115(a)(4); their external c…
Someone pledges their house as collateral for a bail bond, signing a contingent mortgage that only becomes payable if the bond is forfeited. Is recording that contingent mortgage subject to New York's mortgage recording tax even though no money changes hands unless forfeiture happens?
Yes, mortgage recording tax is due. A bail bond insurance company/agency posts a bond to secure a criminal defendant's release; as collateral, the person putting up the bond (the mortgagor) pledges re…
An LLC acquired a shopping-center site as a nominee/agent for its two members, who are each solely responsible for developing and funding their own separate future condominium unit. Once construction and the condominium declaration are complete, the LLC will distribute each member's designated unit to that member. Is this distribution exempt from New York's Real Estate Transfer Tax as a mere change of form, since each member always had the sole economic interest in its own unit?
Yes, exempt. An LLC ('the Company') acquired a shopping-center site as nominee/agent for its two corporate members, each of which funded the acquisition with its own money and would independently deve…
Was a Florida warranty deed taxable when it transferred only a life estate to the owner's parents and returned the remainder to the grantor?
No. The proposed deed conveyed only the right to possess and use the property for the life tenants' lives, while the grantor retained fee-simple ownership subject to that life estate. The Department t…
Was a university's purchase of a billing server exempt when the server also held records and generated bills for a taxable nonprofit subsidiary?
IDOR did not decide the shared server's exemption. It explained that an organization with an active E number could buy tangible personal property tax-free only when the purchase furthered that exempt …
How was the de minimis serviceman cost ratio computed, and when could a service provider treat transfers to a nonprofit customer as tax-exempt?
The cost ratio used only the annual cost of tangible personal property actually transferred to service customers—not equipment, maintenance, repairs, or supplies that were merely business costs. A 501…
Who qualified for Virginia's original Port Volume Increase Tax Credit, how was it calculated, and how did taxpayers apply?
Under these superseded 2012 guidelines, a manufacturer or distributor of manufactured goods generally had to own the cargo, use a Virginia port, and increase cargo volume at least 5% over its base yea…
When do disability-plan payments stop qualifying for Virginia's disability-income subtraction?
At mandatory retirement age. Before then, qualifying employer-plan payments for absence caused by permanent and total disability could support Virginia's disability-income subtraction, up to the statu…
Did a supplier have to collect Virginia retail sales tax on installed components included in a manufactured home's taxable sale price?
No, if the home remained tangible personal property on a temporary foundation, the components were included in its sales price subject to motor vehicle sales and use tax, and the supplier held a valid…
Were bidis cigarettes for Virginia tax purposes, and could an unlisted brand trigger the 500% contraband penalty?
Yes. Virginia found that bidis contained nicotine and functional tobacco, were burned in ordinary use, and looked and were packaged like cigarettes, so they met the cigarette-tax definition. Because t…
Could a Virginia resident exclude New York wages from Virginia income or claim credit without supplying the New York return?
The wages were not excluded. Virginia could tax all income of its resident, including New York earnings. The taxpayer could potentially claim an other-state credit, limited to the lesser of New York t…
Did a military spouse have to marry or live with the servicemember in their domicile state to receive Virginia's 2009 spouse exemption?
No. The marriage location and the fact that the couple had not lived together in their domicile state did not control. The spouse proved she shared and maintained the servicemember's State A domicile …
Are an independent real-estate consultant's services -- analysis, recommendations, and oversight for clients -- subject to NY sales tax?
No. Consulting services aren't among the enumerated services taxed under New York's sales tax. The consultant locates and analyzes properties, builds custom cash-flow projections, makes purchase recom…
New York Advisory Opinion TSB-A-12(2)C: How should an out-of-state company apportion to New York its receipts from educational travel programs, some of which are conducted in New York?
Source them to where the tours happen. A company that runs educational travel programs is selling a service, so its receipts are apportioned to New York based on where the tour is performed: tours con…
Did an Arlington County court hold that the Gardiners were entitled to Virginia's other-state income-tax credit?
Yes. The Arlington County Circuit Court granted the Gardiners' motion for summary judgment, denied the Virginia Department of Taxation's cross-motion, and declared that the Gardiners were entitled to …
Could a couple defeat a 1999 Virginia assessment by asserting that they had filed a return when the Department had no record of it?
Not without evidence. Virginia had the couple's federal transcript and Forms W-2 but no record of a 1999 Virginia return, so their assertion that they had filed did not justify abatement. The Departme…
Were a Virginia telephone cooperative and its taxable subsidiary exempt from Virginia corporate income tax?
Not on the submitted record. A Virginia-chartered telephone company operating exclusively as a local mutual association without accumulating profits or paying dividends could qualify for the statutory…
Did owning and renting residential property make a Virginia taxpayer liable for litter tax?
No. Virginia's litter tax applied to manufacturers, wholesalers, distributors, and retailers of listed products. The taxpayer only owned and rented residential property and did not produce or sell tho…
What annual cap applied to Virginia Land Preservation Income Tax Credits issued during calendar year 2012?
Virginia set the calendar-year 2012 Land Preservation Income Tax Credit cap at $111,054,000. The Department calculated that the relevant CPI-U average was about 11.05% above the 2006 base period. This…
Was a supplier's charge for a website taxable in Illinois when the work was delivered electronically?
The GIL did not classify the particular website invoice. It explained that electronically transferred information or data was not tangible personal property, and a service without a property transfer …
Could an unregistered Illinois printer buy newsprint paper tax-free, and what proof did the paper supplier need?
Potentially, through either of two paths. Paper bought by a graphic-arts producer could be a resale purchase, ordinarily documented by an active registration or resale number and certification; withou…
Did an online deal-of-the-day business owe Illinois sales tax when it sold restaurant vouchers, and what amount was taxed at redemption?
The deal-site's sale of the voucher itself was an intangible sale and was not subject to Retailers' Occupation Tax. The restaurant's later sale of food or drink at redemption was taxable. If the resta…
Is a subscription to a hosted product-data-synchronization data pool taxable as prewritten software in NY?
Yes. The product is a certified data pool (CDP) that lets supply-chain trading partners upload, synchronize, request, and view standardized product data through the operator's hosted software, which r…
If a professional gambler relocated to New York and continued placing full-time, systematic bets on horse races as his sole livelihood, would that activity count as a trade or business for New York income tax purposes?
Yes. Based on the facts presented - near-daily, high-volume pari-mutuel wagering conducted with a statistical betting model as the petitioner's sole source of livelihood - the Department concluded thi…
Could an ice cream shop use Virginia's reduced food tax rate for food sold for immediate consumption?
No. Ice cream shops could use the reduced rate for eligible food for home consumption, regardless of retailer type, but food and beverages sold for immediate consumption remained fully taxable. Virgin…
Could a military spouse claim the servicemember's State A domicile when her own records showed State B domicile?
No. The spouse's State B home, homestead exemption, vehicle registrations, and prior federal and Virginia filings showed that she established State B domicile before the marriage. She did not prove St…
Was filling a scuba tank with compressed air a taxable sale of property or a nontaxable service in Virginia?
It was a taxable sale of tangible personal property. Filtering and compressing air with specialized machinery made it measurable and perceptible, and the customer's true object was obtaining compresse…
Did a floor-shotblasting company owe gross receipts tax when customers refused to reimburse the tax and the owner faced medical and financial hardship?
Yes. The company owed gross receipts tax because shotblasting and floor coating were taxable services, and the seller remained liable even when customers refused to reimburse the tax. Financial hardsh…
Was a printing broker exempt from tax because it sold custom-designed printed items as a service and subcontracted the physical printing?
No blanket exemption applied. Custom or special-order printed items were generally sales of service subject to Service Occupation Tax on the tangible property transferred. The printing broker had to u…
What is South Carolina's tax interest rate for the period ending June 30, 2012 (per SC IL #12-3)?
3%. SC Information Letter #12-3 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through June 30, 2012. Interest is compounded daily, exce…
Were missionaries domiciled abroad Virginia residents for 2007 because they kept Virginia ties?
No. Considering all the evidence, Virginia found the couple had established domicile in the foreign country in 1993 and had not abandoned it, despite a Virginia house, family address, voter registrati…
Did buying and using another state's transferable tax credit count as tax actually paid for Virginia's other-state credit?
No. Virginia treated both earned and purchased credits as reductions of another state's liability, not actual tax payments. Even if the transferable credit was property, its use was limited to the tax…
When were Virginia software-license renewals and electronically delivered upgrades taxable?
A renewal of prewritten software originally delivered by CD, DVD, or other tangible media was taxable. A custom-program renewal was exempt, and a prewritten-program renewal was exempt when the origina…
How does Kansas sales tax apply to brine-impacted soil remediation and disposal services, and to the materials a remediation provider buys?
The services are nontaxable, but not all the materials are. The Department ruled that soil excavation is not taxable when its charge isn't lumped into a taxable installation charge, and that disposal …
When a customer returned a used battery and received the lead-acid battery core fee back, was that a trade-in and did sales tax also have to be refunded?
Yes. Requiring the original receipt linked the used-battery return to the original sale, so the core-fee refund was a trade-in allowance and selling-price adjustment rather than a separate sale. The r…
How is a utility's outdoor 'dusk-to-dawn' area lighting service taxed for homes, farms, and businesses in Kansas?
Taxable as electric utility service — at different rates by use. A utility's outdoor 'dusk-to-dawn' Private Area Lighting Service is a charge for electricity under K.S.A. 79-3603(c). For commercial or…
Are copies of medical records taxable in Connecticut, and does it matter whether they're delivered on paper, by online access, by fax, or by email?
It depends on how the records are delivered. Paper (hard-copy) medical records sold by a records-retrieval vendor are taxable sales of tangible personal property, and giving Requesting Parties access …
Did Indian-law preemption prevent New Mexico from taxing a non-Indian contractor's receipts from an Army project on Pueblo land?
No. Indian-law preemption did not bar the tax because the non-Indian contractor contracted solely with and was paid by the Department of the Army. The Pueblo's 25% project contribution did not make it…
Would New Jersey accept an IRS advance pricing agreement or third-party transfer-pricing study for Corporation Business Tax purposes?
Yes. The Division said an IRS advance pricing agreement or third-party pricing study would be accepted as proper documentation and evidence in evaluating intercompany transfer pricing. It generally ex…
Is a custom 'bio-engineered' orthotic shoe insert exempt from Colorado sales and use tax as a prosthetic device or durable medical equipment?
The Department wouldn't decide, and it signaled skepticism. A custom 'bio-engineered' orthotic shoe insert might be exempt as a prosthetic device — an artificial device that aids or replaces a bodily …
Were penalty and interest due when a business proved it mailed its gross-receipts and withholding returns and payments before the deadline?
No. The hearing officer abated all penalty and interest because the business proved it properly mailed the returns and full payment before the due date, and the Department offered no evidence that the…
Could a postal-services business reduce its gross receipts tax with NTTCs it still had not produced years after the audit?
No. The claimed NTTC deductions were denied because the certificates were never produced within the statutory deadline and, even if obtained, the described Type 9 certificates would cover tangible pro…
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