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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Did Illinois treat a noninvasive electrical bone-growth stimulator as a medical appliance eligible for the reduced sales-tax rate?
Apparently not. After refusing to issue a binding PLR, the Department said the described bone-growth stimulator appeared not to qualify for the reduced medical-appliance rate. The appliance itself had…
What is South Carolina's latest statewide per capita income figure used for tax incentives (per SC IL #10-12)?
$32,338. SC Information Letter #10-12 publishes the updated statewide per capita personal income figure for South Carolina — $32,338 — which the Department uses to test qualification for various South…
Did Illinois decide whether subscriptions to remotely hosted application-service-provider platforms were taxable software or nontaxable information services?
Unresolved. The Department refused to classify application-service-provider subscriptions through a letter ruling and said the subject belonged in formal rulemaking. Until that review was complete, ea…
Which Virginia software, support, training, and hosted-access charges were taxable when some software was delivered on CD and some electronically?
The initial CD-delivered software package was taxable in full, including bundled training and support, because its true object was tangible software. Electronically activated add-on modules, electroni…
How did Virginia apply its per-account college-savings deduction to multiple VEST portfolios, CollegeAmerica funds, rollovers, and a missed prior-year deduction?
Virginia allowed up to $4,000 per qualifying savings trust account each year, with excess contributions carried forward. Separate VEST portfolios could be separate accounts, but multiple funds inside …
Are Red Bull Energy Shot and Sugar Free Shot drinks exempt from NY sales tax as dietary supplements?
No -- they're taxable. Tax Law 1115(a)(1) exempts food, dietary foods, and health supplements, but expressly excludes soft drinks and sodas (which include non-carbonated and dietetic beverages). Red B…
Did Illinois decide whether an out-of-state mail-order medical-supply seller using a drop-ship distributor had nexus or qualified for reduced tax rates?
Unresolved. The Department did not determine the seller's nexus, drop-shipment obligations, or the classification of its medical supplies. It directed the seller to the general drop-shipment rule and …
Did Illinois decide whether an out-of-state eye-monitoring service with devices in patients' homes had nexus or owed tax on its monthly service fees?
Unresolved. The Department did not decide nexus, registration, or the taxability of the monthly eye-monitoring service. It outlined four Service Occupation Tax or Use Tax methods for property transfer…
Did Illinois decide whether nonprescription sales of the Plan B morning-after pill qualified for the reduced drug tax rate?
Unresolved. The Department did not expressly classify Plan B. It explained that a pill or other preparation for human use qualified as a drug when its label claimed medicinal qualities, including trea…
Could Illinois trade-in credit apply to property bought or titled outside Illinois, and could a buyer add a trade-in after the vehicle sale closed?
Like-kind property could qualify as a trade-in even if it was bought, titled, or taxed outside Illinois. But a completed sale could not later be amended to invent a trade-in that was not offered at th…
Which grain-bin materials and components qualified for Illinois's farm machinery and equipment exemption?
Grain bins themselves and building materials such as concrete, steel panels, and roof vents did not qualify. Dryers, blowers, augers, temperature monitors, grain spreaders, and level indicators could …
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #10-11)?
Use the citator attached to SC Information Letter #10-11. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified,…
Were safety supplies sold to Virginia manufacturers exempt merely because production workers used them?
No. Most listed safety, first-aid, lighting, spill-control, and accident-prevention items were taxable because they were not an immediate part of production. Reflective vests used by forklift drivers …
Did a federal extension preserve Virginia refund claims when the taxpayers filed their 2005 return after Virginia's six-month extended due date?
No. For tax year 2005, Virginia's six-month extension required the original return to be filed within the extended period. Filing after that date negated the extension, so the three-year refund period…
Did a service member remain domiciled outside Virginia after registering to vote, obtaining a driver's license, and registering a car in Virginia?
No. The Department found that the service member's Virginia voter registration, driver's license, and vehicle registration, combined with little evidence of continuing ties to his former state, showed…
Did a poultry processor prove it was a vertically integrated manufacturer for Virginia local property-tax classification?
Not yet. Virginia agreed that a vertically integrated business may be classified by its substantial manufacturing activity as a whole, rather than only by activity at one county facility. But the poul…
Is buying and leasing an aircraft interest through a fractional-style program a taxable property purchase or a nontaxable transportation service?
It's a taxable purchase of tangible personal property, not a nontaxable transportation service. Whether a program like this is taxable property or an exempt transportation service turns on whether dom…
Are a financial data provider's options taxable -- aggregated investor info versus an optional analytics software tool?
Mostly not, but the optional software tool is. The provider gathers and normalizes investor-level portfolio and advisor information from many institutions and delivers it to financial institutions and…
How did Virginia estimate a cash restaurant's taxable sales when it lacked guest checks, Z-tapes, and other supporting records?
Virginia could reconstruct sales because the restaurant did not keep adequate records, and bank deposits plus cash-paid expenses could not verify all cash receipts. The auditor's 15% gross-profit-marg…
Could Virginia estimate a restaurant's underreported sales from ABC cash-register records and projections?
Yes. Virginia used sales calculated by Alcoholic Beverage Control from the restaurant's cash-register receipts and worksheets, then projected results for other audit months. Because the taxpayer provi…
Could Virginia estimate a restaurant's sales from ABC records when returns were missing or underreported?
Yes. Virginia relied on sales calculated by Alcoholic Beverage Control from the restaurant's cash-register receipts and worksheets, then used comparisons and projections for the audit periods. The tax…
Were a motel's through-the-wall heating and cooling units fixtures taxed as real estate or business tangible personal property?
Virginia did not make the final fixture classification. It found the units were not double taxed, but the city had improperly focused only on how easily they could be removed. The city had to reconsid…
Could one Virginia city tax all 2006 receipts from a call center, fulfillment center, and IT center located in three localities?
No. Virginia found the fulfillment and IT centers were definite places of business separate from the call center. One city could tax only receipts attributable to services performed or otherwise situs…
Were a fulfillment center and IT center separate definite places of business, and how should 2005 BPOL receipts be assigned among them and a call center?
Yes. Virginia found the fulfillment and IT centers were definite places of business in their own localities, so not all Virginia receipts automatically belonged to the call-center city. But the record…
How could a multistate business prove Virginia's BPOL deduction for out-of-state receipts when payroll apportionment was used to situs gross receipts?
The business first had to use payroll apportionment to assign receipts to the county, then show some evidence that employees at that Virginia office earned or helped earn receipts from customers in st…
What evidence supported Virginia's BPOL deduction for out-of-state receipts when payroll apportionment was used?
The taxpayer first had to apportion gross receipts to the city, then show evidence that employees at that office earned or helped earn receipts from customers in states where it filed an income tax re…
Could individual taxpayers claim a 2005 recyclable-materials equipment credit, or use certified unused credit amounts in later years?
The Department upheld disallowance of the credit claimed on the taxpayers' 2005 individual return. It nevertheless said unused credit tied to the recycler's certified 2005 equipment purchase could be …
Are an independent personal trainer's services subject to NY State or NYC sales tax?
No. Personal training -- cardiovascular and isometric exercise, weight and resistance training -- is not among the services enumerated as taxable under Tax Law 1105(c), so it isn't subject to New York…
We're financing an airport terminal expansion through the Port Authority. A leasehold mortgage we have to record is 'supplemental' to a governmental instrumentality's tax-exempt mortgage and secures the exact same bond debt -- does it get to piggyback on that exemption even though neither party to OUR mortgage is a government entity?
Yes, exempt -- but not because either party is a government entity. Recording of the Supplemental Leasehold Mortgage is exempt from New York's mortgage recording tax under Tax Law § 255.1(a), which ex…
Was the entire 29,156-square-foot lease of an assisted living facility exempt from Florida real-property rental tax?
Yes. All leased space served residential units for aged residents or their care, including common and recreational areas also used by nearby condominium residents, so the tenant's entire rent was nont…
Did erroneous oral advice from a New Mexico tax employee excuse Adobe Rose Bed and Breakfast from tax and interest on guests staying more than 30 days?
No. Guests staying more than 30 days at the bed and breakfast did not become real-property tenants under the lodging statute, so their payments remained taxable. Although a Department employee had ora…
Are 'peer group' market-share analysis services for financial firms taxable in NY?
Yes -- they're taxable information services, and tax must be collected from September 1, 2010. The provider pools data contributed by a consortium of financial firms and gives each customer a report c…
What purchases and transaction rules qualified under Virginia's historical 2010 Energy Star and WaterSense sales-tax holiday guidelines?
Under these historical guidelines, specified Energy Star appliances and WaterSense-labeled products costing $2,500 or less per item were exempt during Virginia's four-day October holiday when purchase…
Is a software license taxed in full because the buyer's NY office is the bill-to address, or only on the NY users?
Only on the portion attributable to users located in New York. Prewritten software is tangible personal property (Tax Law 1101(b)(6)), and a license to use it is taxed where possession is transferred …
Are receipts from printing and mailing patient billing statements subject to NY sales tax?
Yes, the printed statements and envelopes are taxable -- but with carve-outs. Producing patient bills from a customer's electronic file and supplying the envelopes is a sale of printed material, which…
How is a custom window fabricator that also installs taxed on materials, fabrication, and installation?
As a contractor. A fabricator that installs its own product is a contractor, and installing complete windows is a capital improvement -- so the charge to furnish and install windows isn't taxable. The…
New York Advisory Opinion TSB-A-10(11)C / 10(41)S: Are video switching services taxable telecommunication services, can the inputs be bought for resale, and is a rented control panel taxable equipment a broadcaster can buy exempt?
Yes. A video switching service is a telecommunication service subject to State and local sales tax and the section 186-e excise tax; the provider may buy the transmission services and equipment it res…
Could single-use sinus catheter systems be sold tax-free to licensed physicians in Virginia?
Yes, but only for patient-specific purchases. Virginia allowed the catheter systems to be sold exempt to a licensed physician when the physician provided documentation showing the system was purchased…
Were boom lifts, welders, and similar tools rented by contractors to install manufacturing equipment exempt from Virginia sales tax?
No. The contractors' lifts, welders, and similar tools were used before production could begin and were not an immediate part of manufacturing, so their rentals or purchases were taxable. Contractors …
Did a Virginia franchise-store operator prove that certain food sales qualified for the reduced sales-tax rate?
Not yet. The operator's studies and appeal documents did not reconcile with its returns or prove that the assessed food sales qualified for Virginia's reduced rate under the 80% prepared-food rule. Th…
Did Virginia sales tax apply to rentals of pools, a gymnasium, and outdoor sports facilities when no tangible property was included?
No. The pools, indoor gymnasium, and outdoor sports facilities were real property rather than tangible personal property. Because the rentals for camps and team practices included no tangible property…
Which alcohol-server training programs does South Carolina recognize as a mitigating circumstance for beverage-license penalties (per SC IL #10-10)?
SC Information Letter #10-10 lists the alcohol-server training programs the Department recognizes as a mitigating circumstance when it assesses penalties for beer, wine, and distilled-spirits violatio…
Does a contractor owe Colorado use tax on goods it tests in Colorado before reselling them, and on materials it builds into products it manufactures partly in Colorado and finishes out of state?
No use tax in either case. A contractor that buys computers, performs compliance/acceptance testing on them in Colorado, then resells and delivers them is NOT liable for use tax on that testing—the te…
Was an overseas worker a Virginia domiciliary in 2006 despite having a Virginia driver's license, voter registration, and mailing address?
No. The taxpayer's indefinite overseas employment, long-term residence from 1995 through 2009, permanent home, and foreign driver's license established domicile in Country A for 2006. Virginia licensi…
Did a military spouse who moved to Virginia solely to accompany an active-duty spouse remain domiciled in their shared prior state for 2009?
Yes. Virginia found that the service member had established domicile in State A through legal-residence certificates, a driver's license, and the absence of meaningful continuing ties to the home-of-r…
Could a corporate group created by a merger of equals elect a new Virginia filing status for the 2008 tax year?
Yes. The two groups had no prior substantial ownership in each other, and the target represented about 54% of their combined value—above the Department's 45% merger-of-equals threshold. The new affili…
Did interest on obligations issued directly by a Federal Home Loan Bank qualify for Virginia's U.S.-obligation subtraction?
Yes. After reconciling the taxpayers' partial Forms 1099 and federal-return schedules, Virginia found that interest on notes, bonds, and other obligations issued directly by a Federal Home Loan Bank q…
Did an out-of-state mobile-content services company owe Virginia corporate income tax when it had Virginia users but no property, employees, or costs here?
No Virginia corporate income tax was due on the stated facts. The Department could not determine whether electronically connecting marketers to Virginia users created nexus or only a de minimis contac…
Were mastectomy bras sold for use with prosthetic breasts exempt from Virginia sales tax as durable medical equipment or related supplies?
No. The mastectomy bras did not qualify as durable medical equipment because they did not serve the medical purpose required by the statute. They also were not exempt supplies for a breast prosthesis …
Which fees of a professional-networking site are taxable -- subscriptions, in-network email, job ads, and surveys?
It splits. Premium subscriptions and paid in-network email are taxable information services: they let a customer search the site's member database and contact targeted members -- essentially buying us…
Did an electrical contractor owe Virginia use tax on materials delivered in Virginia after its vendor charged another state's 7% sales tax?
Yes. The materials were delivered in Virginia for use in real-property contracts, so the contractor owed Virginia's 5% use tax even though the vendor had charged and remitted another state's 7% sales …
Could a Virginia resident subtract an entire IRC § 457 plan distribution because Pennsylvania had taxed his employee contributions to the plan?
Not the entire distribution. Virginia allowed a subtraction for the portion attributable to employee contributions that Pennsylvania had already taxed, but investment income remained taxable when dist…
Could the Virginia Tax Commissioner waive a city's penalty when a business's accountant filed its machinery and tools tax return one day late?
No. The Tax Commissioner could review certain local business tax assessments, but a locally imposed late-filing penalty was not an assessment of tax under the governing appeal statute. Virginia law le…
Were loyalty-program membership fees taxable when members received future purchase discounts but no free merchandise?
No. New documentation showed that the loyalty membership transferred no merchandise when sold and promised only future discounts: $10 during the member's birthday month, $15 after four points, and $25…
Can a car dealer buy oil and filters tax-free for 'free' oil changes promised to vehicle buyers?
Yes -- if the deal documents say the oil changes are included in the price. When the dealer's sales invoice (or the sale/lease contract or another writing given at the time of sale) states that oil ch…
What were the significant South Carolina tax-law changes from the 2010 legislative session, as summarized by the Department (per SC IL #10-9)?
SC Information Letter #10-9 is the Department's brief summary of the significant tax and regulatory law changes enacted in South Carolina's 2010 legislative session, organized into five categories: (1…
What Virginia tax interest rates applied during the fourth quarter of 2010?
Virginia's fourth-quarter 2010 rates were 6% for tax underpayments and 6% for tax overpayments. The corresponding federal underpayment and noncorporate overpayment rates were 4%. For taxpayers with ye…
Which lost-pet recovery products and service packages were taxable under Virginia sales and use tax?
Pet-recovery service fees were nontaxable, including lump-sum packages with an incidental microchip or implantation, because customers' true object was database and recovery assistance. Stand-alone sa…
Is labor to install new range-land fencing subject to Kansas sales tax?
Taxable. Labor to install new range-land fencing is subject to Kansas sales tax. The exemption for labor performed in the 'original construction' of a building or facility under K.S.A. 79-3603(p) cove…
Could Western Disposal recover a duplicate 2004 tax payment in 2009 after the Department had misapplied its original payment and lost the report?
No. Western Disposal timely filed and paid for December 2003, but the Department misapplied the payment and lost the report. Unable to prove the first filing in 2004, the company filed and paid again.…
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