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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Could a corporate group end its grandfathered Florida nexus-group consolidated filing election after major business and structural changes?
Yes. Florida nullified the grandfathered election because the group had become substantially larger and more diverse. For later years it could file separately or elect a full consolidated return match…
Did Illinois decide whether hosted call-automation software, phone-number charges, and a regulatory recovery fee were taxable telecommunications?
No specific result was issued. The Department said the request lacked the taxpayer identity, power of attorney, and enough detail about the carrier services and their use. It gave only general rules: …
Did years of losses show that a Virginia couple's horse-breeding and hippotherapy operation was not conducted for profit?
No. After weighing the federal profit-motive factors, Virginia found that the couple operated the horse and hippotherapy venture for profit during 2002 through 2006. The wife's expertise and full-time…
Were charges for coordinating drayage, rentals, and other vendor services for customer-owned trade-show exhibits subject to Virginia sales tax?
No. For customer-owned exhibits, the customer's true object was the company's expertise in coordinating third-party support services, so the drayage and rental charges assessed in the audit were remov…
Do manufacturer or third-party 'instant' rebates reduce the Kansas sales tax base on a purchase?
Tax is charged on the full price, before the rebate. Manufacturer and third-party rebates assigned to the retailer at the time of sale do not reduce the Kansas sales tax base. Under K.S.A. 79-3602(ll)…
How did Illinois distinguish taxable conditional-sale payments from rent under a true equipment lease?
A $1 or other nominal buyout generally makes the arrangement a conditional sale, so all lessor receipts are taxable. A fair-market-value option can preserve a true lease; the lessor then owes Use Tax …
When does a business renting an Illinois hotel room block for at least 30 days qualify as a permanent resident?
A business qualified for the permanent-resident exclusion when it was unconditionally obligated to pay for a specific number of rooms for at least 30 consecutive days, even if rooms were empty or used…
Does making a federal IRC § 338(h)(10) election disqualify a stock sale from Nebraska's special capital gains exclusion, and which gains still qualify?
Making a federal IRC § 338(h)(10) election does not disqualify the sale from Nebraska's special capital gains exclusion -- but only the capital gains attributable to the stock qualify. Revenue Ruling …
If someone is a UK citizen who files a federal Form 1040NR as a nonresident alien, but qualifies as a New York State and City statutory resident because they're present here more than 183 days, what income does New York tax?
New York taxes the individual as a statutory resident under Tax Law § 612(a), meaning New York adjusted gross income equals whatever amount is includable in his federal adjusted gross income - here, t…
Could a couple deduct losses from a horse farm that trained and sold horses for fox hunting despite losses and no separate bank account?
Yes. Virginia found the farm was conducted for profit based on the wife's horse expertise, the couple's 139 to 152 monthly work hours, advertising and sales efforts, adequate books, cost reductions, a…
Did attending college and living in student housing outside Virginia prove that a taxpayer changed domicile for 2006?
No, not on the evidence provided. Virginia generally did not treat a dorm or college apartment, or temporary student employment, as proof of a permanent new domicile. The taxpayer asserted ties to ano…
Could a North Carolina resident claim a Virginia nonresident credit for North Carolina tax on Virginia S-corporation income?
No. Virginia's nonresident credit depended on the taxpayer's home state granting Virginia residents a substantially similar credit. North Carolina did not allow an income-tax credit to nonresidents, s…
Did delivering appliances into an Illinois county make an out-of-state retailer owe that county's local school sales tax?
Not merely because of delivery. The GIL said local tax was sourced to where the sale occurred, unless an out-of-state sale involved inventory located in an Illinois taxing jurisdiction. When both the …
Did a W-2, an exchange agreement, and an unsigned letter faxed by the deadline count as a timely Virginia refund return?
No. The May 1, 2008 fax did not request a stated refund, lacked the taxpayer's signature, omitted a completed prescribed return and deduction information, and did not disclose the amount of the Sectio…
Did a Florida-based employee performing online administrative duties create corporate income-tax nexus beyond Public Law 86-272 protection?
Yes. The employee performed administrative accreditation work rather than soliciting tangible-property sales, so the corporation's Florida activities exceeded Public Law 86-272 and required a Florida …
Did ten years of indefinite foreign residence establish a new domicile despite a Virginia home, license, and absentee voting?
Yes. The taxpayer had lived and worked abroad since 1997, maintained a family home there, held indefinite employment, became an official resident, and planned citizenship. Those facts outweighed retai…
Did a paint manufacturer make a taxable Virginia use of color cards shipped with paint to a retailer for customer selection?
No. The cards were bundled with paint outside Virginia, delivered by common carrier, and unpacked and placed in display racks by the retailer. The manufacturer's representatives were not responsible f…
Could a newly certified Florida renewable-energy technologies investment tax credit be transferred to another taxpayer?
Yes. Because every open tax year at the time began on or after January 1, 2009, a credit certificate then issued by the Florida Energy and Climate Commission was eligible for transfer under the stated…
Which audited sales could an industrial supplier remove using exemption certificates obtained or corrected after the transactions?
Only some sales. Certificates obtained after the transactions received closer scrutiny and had to match each customer's actual use. Virginia allowed removal of two packaging sales to one customer for …
Were banquet rooms, equipment, and setup charges taxable when a Virginia caterer served nonprofit customers?
Generally yes. Nonprofit status did not exempt room accommodations, and no qualifying written Department advice supported abatement. Audio/visual and similar equipment rentals were taxable unless the …
Could a Virginia resident claim all dependent exemptions when filing separately from a nonresident military spouse?
Yes. A Virginia resident and nonresident military spouse who filed jointly for federal purposes but separately in Virginia could allocate dependent exemptions as they mutually agreed. Proportional all…
Were chemicals used directly to purify, disinfect, stabilize, and protect water sold by a Virginia utility exempt from sales and use tax?
Yes, based on the described uses. Virginia treated the water utility as an industrial processor and found every listed chemical appeared to be used directly in treatment, to preserve the water's integ…
Did brewed coffee and frozen food heated by customers in a store microwave receive Illinois's lower food-tax rate?
Brewed coffee was taxed at the higher general-merchandise rate because retailer-prepared coffee is food for immediate consumption. A frozen item such as a burrito generally kept the lower food rate ev…
Did a hotel's purchase of assets from a special-purpose affiliated LLC qualify for Virginia's occasional-sale exemption?
Undetermined. The LLC was a separate legal entity, so its parent's regular hotel-development business did not automatically defeat the exemption. But the record did not show whether the parent or LLC …
Could Virginia residents claim an other-state credit for Kentucky income tax paid at the partnership level on a member's behalf?
Yes. Kentucky temporarily taxed partnerships and LLCs as corporations but gave individual members a credit for their proportionate entity tax. The professional LLC reported the husband's share, and th…
Who had to collect Virginia sales tax when the supplier billed and collected from large retailers but paid distributors to service the accounts?
The supplier did. Although independent distributors delivered and serviced the accounts, the Pennsylvania supplier recorded the large-retailer sale, collected the retailer's receivable, reduced the di…
Did prepackaged ice cream sold from an Illinois ice cream truck qualify for the lower food-tax rate?
Generally no. The Department said an ice cream truck generally sells ice cream for immediate consumption, so the sales incurred the higher 2010 state rate of 6.25% plus applicable local taxes rather t…
Was a nonresident servicemember's active-duty pay exempt after the couple elected to file a joint Virginia resident return for 2008?
No. By filing a joint Virginia resident return, the Virginia spouse and nonresident servicemember elected to compute joint income as if both were residents, so the Servicemembers Civil Relief Act did …
Could a town receive communications-tax trust-fund distributions after failing to report its 2006 cable franchise fees by the original deadline?
Yes. Later amendments allowed a locality to prove previously unreported fiscal-year 2006 communications taxes and fees and request an adjusted fund share. Independent accountant and provider correspon…
Which Virginia tax applied to an unlimited 30-day cellular plan funded directly or with retail-taxed prepaid calling cards?
An unlimited 30-day voice and text plan was generally subject to the Communications Sales and Use Tax because it was not sold in predetermined units or dollars that decreased with use. Retail sales ta…
Could parents deduct contributions to custodial Virginia college-savings accounts when the children, not the parents, owned the accounts?
No. Virginia's deduction required the contributor to be listed as the savings-account owner. The applications created UGMA/UTMA custodial accounts with the children as beneficiaries and the wife only …
Which charges were taxable when a wholesaler rented beverage-gas tanks and sold carbon dioxide or nitrogen for drinks?
Tank and container rentals were taxable. Carbon dioxide and nitrogen that became part of fountain drinks or beer could be sold exempt with a valid resale certificate. If rental and gas charges were no…
How did Virginia sales tax apply to automotive core charges, later core returns, exchanges, and partial refunds?
All core charges were taxable when imposed because they were part of the sales price. Tax was refundable when the part and core charge were fully refunded, proportionally refundable with a partial par…
What is South Carolina's tax interest rate for the period ending December 31, 2010 (per SC IL #10-8)?
4%. SC Information Letter #10-8 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2009 through December 31, 2010. Interest is compounded daily, ex…
Did Virginia use tax apply to equipment rentals when a Tennessee vendor charged tax but the contractor took possession in Virginia?
Yes. Each rental agreement was taxed where the contractor took possession when that agreement was made. Seven agreements identified Virginia pickup locations, so Virginia tax applied despite Tennessee…
When did Virginia retail sales and use tax apply to dyed diesel and other fuel not subject to the Virginia Fuels Tax?
Retail sales and use tax generally applied to fuel not subject to the Virginia Fuels Tax, including dyed diesel and other nonhighway fuel, unless a specific exemption and valid certificate applied. De…
Did Illinois decide whether a remotely accessed hosted email-marketing platform and its setup, messaging, and consulting fees were taxable?
No. The Department said hosted software and application-service-provider taxation belonged in formal rulemaking, not a case-by-case GIL. It supplied general rules: canned software was taxable even ele…
Is an online-advertising analytics/management platform a taxable information service in NY?
No -- it qualifies for the personal/individual exclusion. The platform lets clients monitor, manage, and optimize their online advertising across third-party ad networks; it retrieves, analyzes, and p…
New York Advisory Opinion TSB-A-10(10)C: Is a provider of one-way and two-way paging services subject to the section 184 franchise tax on local telephone business?
No. A provider of one-way and two-way paging services is not subject to the section 184 franchise tax, because it is not principally engaged in local telephone business: its paging is a telecommunicat…
Did an insurer qualify for Florida's annuity premium-tax waiver by passing the tax savings to annuity holders?
Yes, subject to audit verification. The insurer's actuary stated that rates reflected premium tax in taxing states but not Florida, and annuity holders were otherwise treated identically, satisfying t…
Are data-conversion services and data-conversion software subject to Kansas sales tax?
It depends on who runs the conversion. If your business loads the data-conversion software and runs the conversion for the customer — monitoring it and ensuring success — the charge is not subject to …
Were lump-sum contracts to furnish and install granite countertops, built-in cabinets, and knobs taxable retail sales to the customer?
No. The installed items became real-property improvements, so the contractors should not charge the customer sales tax and instead owed use tax on their fabricated cost. Any customer refund had to com…
Were catheter securements, arterial bandages, and disposable or reusable blood-pressure cuffs exempt from Florida sales tax?
Yes. The securements and arterial bandages qualified as exempt bandages or adhesive materials, and both disposable and reusable cuffs qualified as parts of blood-pressure monitors. Resale certificates…
Does a church's conversion from an unincorporated nonprofit association to a corporation sole create Colorado sales or use tax liability on the personal property it already owns?
No tax. A church's conversion from an unincorporated nonprofit association to a corporation sole does NOT create Colorado sales or use tax liability on the personal property it owns. Even assuming the…
Is a single-use medical catheter exempt from Colorado sales and use tax when the manufacturer sells it to a healthcare provider who uses it on a patient?
Taxable. A single-use catheter that a healthcare provider buys from the manufacturer and uses to treat a patient is NOT exempt from Colorado sales or use tax. The therapeutic-device exemption only app…
Could Illinois residents claim a Schedule CR credit for Wisconsin income tax paid on employee wages?
No. Illinois taxed its residents' wages, but the Illinois-Wisconsin reciprocal agreement exempted an Illinois resident's employee compensation from Wisconsin income tax. If Wisconsin tax was withheld …
Was rent paid to a city for land used solely for a cellular tower, equipment cabinets, generators, and related equipment subject to Florida sales tax?
No. The property was leased solely for a communications center providing mobile communications services, so the rent qualified for the real-property exemption in section 212.031(1)(a)5.
Is Illinois sales tax computed before or after an instant appliance rebate that a manufacturer or utility reimburses to the retailer?
Before the reimbursed rebate. If a third party reimbursed the retailer for the instant discount, that reimbursement remained part of taxable gross receipts—so the example used the full $1,000 price, n…
Can Illinois body shops buy sandpaper, masking tape, paint guns, and other repair supplies tax-free for resale?
No, not when the shop uses or consumes the item instead of physically transferring it to the customer. Sandpaper, masking tape, thinners, brushes, paint guns, wrenches, and shop tools were taxable whe…
Could an affiliated corporate group elect combined Virginia returns beginning with its first full taxable year in 2009?
Yes. The taxpayer and its Virginia affiliate became an affiliated group in May 2008, but 2009 was the first full taxable year in which the group was subject to Virginia income tax. They could elect co…
Could a corporate officer avoid personal tax liability because an accountant incorrectly advised that the dissolving corporation owed no tax?
No. The president and sole shareholder knew a final return was required, paid other creditors and himself, reserved no funds for tax, and wound up the corporation. Virginia found the nonpayment volunt…
Was a 1996 Virginia refund claim timely when the amended return was filed in 2000 but the IRS accepted the NOL carryback in 2007?
Yes, on the specific facts. The taxpayers filed the federal and Virginia amended returns in January 2000. Virginia delayed processing while the IRS reviewed the net-operating-loss carryback; the IRS u…
Could a Virginia resident claim credit for New York tax on salary earned while telecommuting from Virginia for a New York employer?
Yes. New York taxed the salary under its convenience-of-the-employer rule and did not credit Virginia tax, while Virginia law did not prohibit its own resident credit. Virginia allowed a credit for th…
Was a taxpayer domiciled in Virginia for 2005 because he had obtained a Virginia driver's license and registered to vote?
No. The taxpayer had lived abroad since 2003, his child lived and attended school there, he owned no Virginia property, and he reported self-employment income as foreign earned income using the foreig…
Did spouses establish domicile outside Virginia for 2005 despite keeping Virginia licenses, vehicle registrations, and withholding?
Yes. After their Virginia employer failed, the spouses filed bankruptcy, lost their Virginia home, rented a permanent home in another state, received financial documents there, and sought work there a…
Were dental crowns, cements, sealants, resins, and similar products exempt as prescription or nonprescription drugs?
Generally no. Virginia relied on FDA classification: items classified as medical devices did not qualify for the prescription or nonprescription drug exemptions merely because they contained drugs or …
Was a custom digital orthophotograph taxable because the completed image was delivered on a CD?
No. The true object was the professional photogrammetric work—flight, photography, triangulation, scanning, geometric correction, and production of the digital image—not the CD used to deliver it. Vir…
Did a real-property contractor owe use tax when vendors failed to separately charge tax on materials, pumping, countertops, and government-job purchases?
Yes. A real-property contractor was the user and consumer of materials used in its contracts and had to accrue use tax when vendors did not collect it. Unsupported statements that tax was included or …
Were club equity-membership contributions and later transfers exempt from Florida admissions tax as ownership interests?
Yes. The memberships carried certificates, voting rights, transferable ownership, and proportional liquidation rights, so all five described issuances, sales, redemptions, and resales were transfers o…
Should an Illinois telecommunications carrier charge Telecommunications Excise Tax to a consular official who holds a federal diplomatic tax exemption?
No, to the extent the consular official actually enjoyed the federal exemption. Illinois said section 4 barred the tax where federal law prevented state taxation, so carriers otherwise required to col…
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