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 Virginia tax interest rates applied during the second quarter of 2011?
Virginia's second-quarter 2011 rates were 6% for tax underpayments and assessments and 6% for overpayments and refunds. Calendar-year 2010 estimated-tax additions kept the first-quarter 5% rate throug…
Could Illinois individuals separately subtract prior-year net operating losses and a pass-through Section 179 expense already deducted federally?
No. An individual's Illinois base-income computation began with properly computed federal adjusted gross income, and Section 203 allowed only express modifications. The taxpayers had already deducted …
Could Promoco avoid tax and interest on airport advertising leases because of oral Department advice and years of agency delay?
No. Promoco's re-leasing of airport display boxes and kiosks was taxable leasing and advertising activity, leaving $4,294.32 of gross receipts tax due for 1995-1997. The owner's undocumented conversat…
Did a couple operate their short-lived 2007 import business for profit despite losses and closing before year-end?
Yes. Virginia found the couple organized and operated a new import business with registrations, online sales accounts, supplier and reseller agreements, relevant experience, and a website. Unexpected …
Did Virginia's manufacturing exemption cover machinery used to fabricate custom countertops that the business also installed in real property?
No for the 2003-June 2009 audit period. Virginia treated the taxpayer's primary business as fabricating and installing countertops as a real-property contractor, not industrial manufacturing, so its m…
Could City 1 impose 2009 BTPP tax on a business aircraft that used its hangar more than any other location but stayed there less than six months?
No. Although the aircraft was registered and based at City 1's airport and spent more time there than anywhere else, it was hangared there for less than six months in 2009. Virginia found it was not n…
Did Florida documentary stamp tax apply to interest that a borrower could not avoid during a loan's first 36 months?
Yes. Tax was measured on principal plus the first 36 months of required interest because the borrower had no prepayment right during that period, making the interest a fixed sum certain rather than a …
Could a bookseller use its customer's billing address to source tax when the books' delivery locations were unknown at invoicing?
The GIL did not approve billing address as a general substitute for an unknown delivery address. It said that when a retailer sells property to someone in Illinois and does not know where it will be d…
Could buyers of devalued Virginia land-preservation tax credits claim additional credits that the sellers had retained instead of transferring?
No. Virginia held that only taxpayers who earn or purchase land-preservation credits may claim them. The buyers could claim only the devalued amount of the credits actually transferred in 2005 and 200…
Could recipients claim Virginia's disability-income subtraction when neither spouse was the permanently disabled individual for whom the payments were approved?
No. Virginia did not dispute that the payments were disability income under the cited federal definition, but the state subtraction also required the claimant to be absent from work because of permane…
Could an Illinois S corporation redirect its 2009 overpayment to its 2010 estimated tax after not making the election on its original return?
No. Under the cited regulation, a taxpayer could elect on a timely original return to apply an overpayment to estimated tax for the immediately following taxable year, and that election was irrevocabl…
Were conference-bridging services run on equipment outside Florida subject to state or local communications services tax?
No, if the bridging service neither originated and terminated in Florida nor originated or terminated in Florida and was charged to a Florida service address. The provider represented that its bridge …
New York Advisory Opinion TSB-A-11(4)C: After the Empire Zone program sunset, can a certified business claim EZ credits for operations in a newly acquired building that can no longer be added to its Certificate of Eligibility?
Yes. A business certified before the Empire Zone program sunset stays deemed-certified through its benefit period and may claim EZ credits for qualifying operations in both its existing and a newly ac…
Did Illinois's enterprise-zone pollution-control exemption cover the pollution-control facility itself and its repair parts?
No under the Section 1e interpretation in ST 11-0008-GIL. The exemption was limited to tangible personal property used or consumed in operating a pollution-control facility within an enterprise zone. …
How did Illinois classify baking sprinkles, flour-containing salad toppings, and nicotine-treatment gum for the food tax rate?
Under the 2011 rules described, baking sprinkles were candy and used the general-merchandise State rate; a preparation containing flour was not candy; and gum intended by its manufacturer to treat nic…
What did the Frederick County final order published as P.D. 11-55 decide about the corporation-income-tax case?
The court recorded that the company and the Virginia Department of Taxation had settled, dismissed the action with prejudice, and ordered it removed from the active docket. The published order does no…
Did notices of intent and information requests preserve appeals of Virginia nonfiler assessments without complete appeals filed within 90 days?
No. Virginia had not received complete appeals stating the taxpayer's grounds and relevant facts within 90 days of either assessment, so both appeals were barred. The taxpayer also provided no objecti…
Could a late Virginia appeal defeat assessments by arguing that wages were not taxable and no federal return meant no federal adjusted gross income?
No. The appeal was filed after the 90-day deadline, and Virginia also rejected the wage-tax and no-return arguments as having no basis in fact or state law. The 2002-2006 assessments remained due. The…
Could Virginia assess additional 2005 and 2006 income tax after the ordinary three-year period when taxpayers did not report IRS changes?
Yes. Virginia's ordinary three-year assessment limit did not protect the taxpayers because they failed to file amended Virginia returns within one year after the IRS made final changes. Under Va. Code…
Could a taxpayer reverse a paid Virginia assessment without providing records substantiating the itemized deductions claimed?
Not yet. Virginia upheld the assessment because the taxpayer supplied no records supporting the itemized deductions despite repeated requests, and the assessment was presumed correct. The Department a…
For Virginia BPOL purposes, did converting a sole proprietorship into a single-member LLC create a new business owing a full-year license fee?
Yes. Virginia treated the single-member LLC as a legal entity different from the owner's former sole proprietorship, so it was a new business for 2009 and the city properly charged the license fee. Th…
What Virginia tax rate applied when a grocery store removed food from resale inventory and gave it away as customer samples?
Eligible food products used as samples were subject to Virginia's reduced food tax rate regardless of whether they were served as-is, needed utensils, were heated, or were combined with other foods. I…
Did a letter filed on the adjusted 90th-day deadline preserve a Virginia sales-tax appeal when it omitted the grounds and relevant facts?
No. Although February 7, 2011 was the adjusted deadline, the taxpayer's letter did not constitute a complete appeal because it omitted the grounds and relevant facts required by Va. Code § 58.1-1821. …
Did Virginia treat a children's birthday-party package as a taxable sale of property or an exempt service?
Historically, Virginia treated the package as an exempt service because the party experience was the true object, so the taxpayer did not collect sales tax on the package price but owed tax or use tax…
What proof did a Virginia homeowner need to claim same-lender recordation-tax treatment on a mortgage refinance?
The homeowner had to show that the refinancing lender was the mortgage company then holding the existing deed-of-trust debt. Because she had not supplied the original and refinanced deeds of trust, Vi…
Are lifeguard services and pool maintenance services subject to NY sales tax, including when bundled as a 'total pool service'?
Yes, both are taxable. Lifeguard services are protective services subject to tax under Tax Law 1105(c)(8): a lifeguard's job is to monitor the pool to keep swimmers safe and rescue anyone in trouble, …
New York Advisory Opinion TSB-A-11(5)C: Could a foreign corporation that is a general partner (with an indirect interest in a New York LLC) make the foreign corporate limited-partner separate-accounting election?
No. The foreign corporation could not make the limited-partner separate-accounting election, because it was not subject to New York tax solely as a result of the limited-partner provision (20 NYCRR 1-…
Two separately-owned residential housing cooperative corporations, each owning one tower of a two-tower building complex, want to legally merge under the Business Corporation Law so they can make joint decisions. After the merger, shareholders of the dissolving co-op will get equivalent new shares in the surviving co-op and keep occupying the same apartments under the same proprietary leases. Does this merger, or the resulting stock conveyance to the dissolving co-op's shareholders, trigger New York's Real Estate Transfer Tax?
Yes, RETT applies -- potentially twice, though a credit limits the overlap. Two residential housing cooperative corporations, each owning one of two interdependent apartment towers built on a shared s…
How are South Carolina counties ranked for the job tax credit for 2011, and which counties qualify for the fee-in-lieu and tax moratorium (per SC IL #11-4)?
SC Information Letter #11-4 publishes South Carolina's county rankings for the job tax credit for 2011, together with the counties that qualify for a reduced minimum investment under the fee in lieu o…
On a layaway or partial-payment plan, when is Colorado sales tax due — as each installment is paid, or only when the customer finishes paying and takes the item?
Sales tax is due only at the final payment. Because Colorado taxes a 'sale' — the transfer of title or possession of goods — and on both layaway and partial-payment plans the store keeps title and pos…
How is the 2010 federal credit for prior year minimum tax recomputed to determine the Nebraska minimum tax credit on a 2010 estate or trust (fiduciary) return?
Recompute the federal prior-year minimum tax credit for Nebraska, then take 29.6% of it. Revenue Ruling 23-10-2 tells 2010 estate and trust (fiduciary) filers to recalculate the federal credit for pri…
How is the 2010 federal alternative minimum tax for an estate or trust recomputed to determine the Nebraska minimum tax on a 2010 fiduciary return?
Recompute the federal fiduciary AMT using Nebraska's adjustments. Revenue Ruling 23-10-1 tells 2010 estate and trust (fiduciary) filers to recalculate the alternative minimum tax from Schedule I of th…
How is the 2010 federal credit for prior year minimum tax recomputed to determine the Nebraska minimum tax credit on a 2010 individual income tax return?
Recompute the federal prior-year minimum tax credit for Nebraska, then take 29.6% of it. Revenue Ruling 22-10-3 tells 2010 individual filers to recalculate the federal credit for prior year minimum ta…
Are quercetin-based dietary-supplement beverages, concentrates, powders, and chews exempt from NY sales tax as dietary foods/health supplements?
Yes, they're exempt. Tax Law 1115(a)(1) exempts food, dietary foods, and health supplements sold for human consumption, and the regulation (528.2(c)) covers products that supplement or substitute for …
New York Advisory Opinion TSB-A-11(3)C: Does a parent corporation succeed to a target's investment tax credit carryover when it acquires the target's stock with a joint IRC section 338(h)(10) election?
Yes. A parent may succeed to the target's investment tax credit carryover where it acquires the target's stock with a joint IRC section 338(h)(10) election: the deemed asset sale and deemed IRC sectio…
If a surviving spouse who is not yet 59 1/2 elects to treat his late wife's IRA as his own, can he still claim New York's $20,000 pension and annuity income subtraction as her beneficiary?
No. Once the surviving spouse elects to roll over and own the IRA as his own account under IRC § 408(d), he stops being a 'beneficiary' of his late wife's IRA, so the regulation that lets a beneficiar…
What is South Carolina's tax interest rate for the period ending June 30, 2011 (per SC IL #11-3)?
4%. SC Information Letter #11-3 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2011 through June 30, 2011. Interest is compounded daily, except…
How did Virginia's move to December 31, 2010 federal conformity affect 2010 Virginia income tax returns?
Virginia generally advanced its Internal Revenue Code conformity date from January 22 to December 31, 2010 for tax years beginning in 2010. Taxpayers still had to make Virginia adjustments for specifi…
Did a timely notice of intent preserve a Virginia sales-tax appeal or avoid the 20% post-amnesty penalty when no complete appeal followed?
No. A notice of intent did not satisfy or extend the 90-day deadline for a complete appeal stating the grounds and relevant facts. Because no complete appeal was filed, Virginia treated the liability …
Could an estate beneficiary transfer unused Virginia Land Preservation Tax Credits after both donor-credit holders died?
No. The donors could claim the credit on their final income tax returns, but any unused carryover was extinguished at death. Virginia read Va. Code § 58.1-513(C) to require lifetime acts by the credit…
Did a mortgage refinance qualify for Virginia's same-lender recordation-tax rule when the old lender was a limited-partnership subsidiary of the new lender?
No. The original lender was a limited-partnership subsidiary of the refinancing lender. Virginia treated the two companies as separate legal entities, so the new loan was not made by the lender then h…
Does the Kansas agricultural exemption cover oil and dyed diesel sold to an excavation company doing farm work?
No — the agricultural exemption does not cover fuel and oil bought by an excavation company, even one doing 'agricultural' excavation. Kansas's farm exemption turns on how an item is used, not on the …
Can S corporation shareholders increase their stock basis for New York tax purposes to offset the built-in gains tax that gets added back to income under Tax Law section 612(b)(18)?
No. New York's Tax Law has no provision letting shareholders increase their basis in S corporation stock to offset the section 1374 built-in gains tax add-back required by Tax Law § 612(b)(18). Becaus…
Did Virginia waive late-filing penalties for a retailer that filed omitted sales-tax returns during amnesty but could not fully pay them?
No. Filing the omitted returns eliminated the original audit assessment and left no audit penalty to waive, but returns placed on a payment agreement remained late and were properly assessed late-fili…
Did a motel operator prove that a city's business-property assessments included its parent's assets or exceeded fair market value?
Not on the existing record. The city relied on a fixed-asset list supplied by the motel's accountant, and the taxpayer did not prove that the assessment included parent-owned property or used incorrec…
Did the military-spouse income-tax exemption apply when the spouse moved to Virginia before marriage and had a different domicile from the service member?
No. Virginia found that the spouse established Virginia domicile when she moved there in June 2007, before marrying the service member in January 2009. The service member retained State A domicile. Be…
Could a Virginia seller remove assessed sales by providing exemption certificates during its appeal after the audit?
Yes for the six contested lines addressed. Although certificates obtained during or after an audit were accepted only when valid for the specific transactions, the seller's appeal certificates were co…
Is interest from a Build America Bond issued by Kansas or a Kansas political subdivision subject to Kansas individual income tax?
No. Although Build America Bonds were federally taxable municipal bonds, Kansas treated bonds issued by Kansas or its political subdivisions like other Kansas obligations. Under K.S.A. 79-32,117(b)(i)…
New York Advisory Opinion TSB-A-11(2)C: Is an electronic OTC commodities and derivatives market operator a banking corporation under Article 32, and does pass-through income from an affiliated partnership make a corporate partner one?
No. An electronic over-the-counter commodities and derivatives market operator is not a banking corporation under Article 32, because its trading, confirmation, and data fees are not a banking busines…
Could a New Jersey resident S corporation shareholder claim a credit for another state's tax on S corporation income allocated to New Jersey?
No credit was allowed on the resident NJ-1040 for another jurisdiction's tax on S corporation income allocated to New Jersey. A shareholder could receive relief only for income properly treated as all…
Did New Mexico tax Joy Odom's Texas retirement distributions after she became a New Mexico resident?
Yes. Odom was a New Mexico resident when she received the 2005-2006 distributions, so the state could tax them regardless of where she worked, where the plan was maintained, or whether she lived in Ne…
Did New Jersey permit a partnership's federal I.R.C. § 754 basis adjustment for Gross Income Tax purposes, and how was it reported?
Yes. New Jersey permitted a partnership's federal I.R.C. § 754 basis adjustment, whether an increase or decrease and whether related to depreciable or other partnership property. The partnership made …
Did the statutory transfer of assets to a surviving corporation in a merger trigger Illinois sales or use tax?
No for the merger transfer described by the Department. ST 11-0006-GIL says property, debts, liabilities, and obligations vesting in the surviving corporation by operation of 805 ILCS 5/11.50 were not…
Can a title insurance company buy a title abstract for resale, and is tax still owed if the closing is later cancelled?
No to both relief points. A title insurance company that buys a title abstract to prepare a title insurance policy cannot give the abstract vendor a resale certificate (ST-120), because the purchase d…
Did stored-value card and paper credits from game trade-ins reduce the taxable price of a later purchase in Florida?
Yes. Credits from one trade-in or a series of trade-ins reduced the taxable sales price when applied to buy a new or used article, because the retailer accepted the used items for resale.
How should an out-of-state LLC report Illinois business income and nonbusiness rental loss passed through by lower-tier partnerships?
The LLC had to preserve the character and Illinois sourcing shown on the lower-tier Schedules K-1-P. Its $2,091,233 share of business income apportioned 100% to Illinois by one partnership belonged on…
Could a corporate partner use alternative Florida apportionment because tiered partnerships did not provide property, payroll, and sales data?
No. Florida required the corporation to include its share of partnership property, payroll, and sales. Missing lower-tier data did not prove that the standard formula was arbitrary, unreasonable, or g…
Did transferring unencumbered Florida real property from a trust to an LLC with identical proportional owners trigger value-based documentary stamp tax?
No. With unchanged proportional beneficial ownership and no other consideration, only the $0.70 minimum tax applied. The LLC became a conduit entity, so a membership-interest transfer within three yea…
Were equipment-rental payments due after an out-of-state dealer removed the equipment from Florida for re-rental subject to Florida sales tax?
No, for payments attributable to the period after removal, if the dealer gave the Florida lessor a signed certificate identifying the property and removal date. Rental amounts charged or paid while th…
Did Florida documentary stamp tax apply to a promissory note signed and delivered outside Florida or to an unsigned extension notice sent into Florida?
No. The note was signed, executed, and delivered outside Florida. The extension notice renewed the maturity date but was also nontaxable because neither the borrower nor lender signed it.
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