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 enforcement rules and penalties did Virginia's 2010 cigarette-tax guidelines establish for unstamped and contraband cigarettes?
The guidelines required stamping agents to stamp cigarettes before shipping them to Virginia wholesalers or retailers and set escalating unstamped-pack penalties for agents and other persons: $2.50 pe…
Could a fiscal agent file Virginia income-tax withholding in aggregate for thousands of consumer-directed home-care employers?
Yes, conditionally. Virginia allowed the fiscal agent to file one aggregate withholding return only if it was also permitted to file aggregate federal withholding and the unified Virginia filing cover…
Did a city's owner direct-purchase manual satisfy Florida's public-works exemption for construction materials?
Yes. The city would issue purchase orders, receive invoices, pay vendors, retain title, and bear insured risk of loss. The ruling did not cover materials manufactured or fabricated by contractors.
When must an Illinois retailer report later customer payments, and when does temporary storage avoid Use Tax?
A retailer filing on the gross-receipts basis reported later payments in the period received; gross-sales filers paid upfront and had to notify the Department to change methods. Temporary-storage reli…
Can an Illinois retailer exclude used gaming hardware or software traded toward a new item?
Only if the traded item was of like kind and character to the item sold. The retailer could accept multiple trade-ins and needed sufficient records, but no special certification was required. The GIL …
Does donating medical instruments to an Illinois nonprofit hospital avoid Use Tax because a direct sale to the hospital might be exempt?
No. The donor was the end user and made a taxable use by giving the instruments away, regardless of the donee's entity type. Illinois said a donation differs from an exempt sale to an organization and…
Could taxpayers obtain refunds for long-term-care premium deductions claimed on late 2003 and 2004 amended returns and a missing 2006 return?
The 2003 and 2004 refunds were barred because the amended returns were filed after Virginia's three-year deadline, and a later policy change did not extend that period. The Department lacked authority…
Is installing window film a taxable service or a nontaxable capital improvement in NY?
It depends on whether it's part of a new/replacement window or applied to an existing one. Applying window film in connection with the original installation or complete replacement of a window is a ca…
Are a yacht-club member's mooring fees subject to NY sales tax as club dues?
Yes -- they're taxable dues. Tax Law 1105(f)(2) taxes dues paid to a social or athletic club. The yacht club is a 'club' because its members control elections, the selection of new members, and manage…
Are comic books, graphic novels, and trade paperbacks exempt from NY sales tax as periodicals?
It depends on the format. Comic books published serially under the same title at least four times a year are exempt periodicals under Tax Law 1115(a)(5). That includes back issues -- but only if the b…
When may an Illinois nonprofit with an E number hold a public fundraiser sale without Retailers' Occupation Tax?
Only within narrow exceptions for member sales, noncompetitive sales, or occasional dinners and similar activities. An Illinois E number was required, federal 501(c)(3) status alone was insufficient, …
How did Illinois treat call-tracking services that electronically delivered reports and used toll-free numbers?
If no tangible property was transferred, the service produced no Retailers' Occupation or Use Tax under the general rule, and electronic data was not tangible property. A provider using—but not resell…
Did Illinois decide whether an out-of-state seller of prostate immobilization devices had to register and collect tax, or whether the devices qualified for the medical-appliance rate?
No specific determination was made. Illinois declined to decide the seller's nexus and only outlined the 2010 nexus rules. It also explained that a medical appliance received the reduced rate only whe…
When did Illinois treat electronically delivered canned software, software licenses, and maintenance agreements as taxable?
Electronically delivered canned software was generally taxable, but a software license and its updates were not taxable if the license met every requirement in 86 Ill. Adm. Code 130.1935(a)(1), includ…
When should an Illinois appliance or home-theater installer collect sales tax from the customer, and when is it a construction contractor owing Use Tax on cost?
A retail sale of an appliance or other item remained taxable when installation was separately contracted; the separate installation charge was not subject to Retailers' Occupation Tax. A single contra…
Could a Virginia prime contractor deduct payments to an independent subcontractor from gross receipts subject to local BPOL tax?
No. Virginia held that the prime contractor could not deduct payments to its independent subcontractor from BPOL gross receipts, even though the subcontractor was separately taxable and received 98% o…
Did a North Carolina contractor have to withhold Virginia income tax from North Carolina employees performing construction work in Virginia?
Yes. Virginia required the North Carolina contractor to withhold Virginia income tax from wages paid to employees for services performed in Virginia. North Carolina had no reciprocity agreement with V…
Did retired spouses establish domicile outside Virginia despite lengthy return visits and a Virginia-registered automobile?
Yes. The spouses sold their Virginia home, established a permanent home in another state, registered and voted there, moved or disposed of their vehicles, obtained that state's driver's licenses, and …
Could Virginia proportionally allocate deductions and a dependent exemption between a resident spouse and a nonresident servicemember?
Virginia had to restore the dependent exemption because the spouses had mutually assigned it to the resident spouse, so it was separately accounted for. But Virginia correctly allocated untraced itemi…
Did a taxpayer establish foreign domicile by 2006 despite retaining an unrenewed Virginia driver's license and automobile?
Yes. The taxpayer moved abroad in 2002, pursued an advanced degree as part of obtaining permanent status, secured permanent employment, leased a home, bought a local car, sold her Virginia rental prop…
Did a taxpayer remain domiciled in Virginia while living abroad on a renewable temporary work permit during 2006?
No. The taxpayer sold his Virginia home and cars, moved his family and property abroad, held a renewed apartment lease and work permit, obtained foreign licenses and a vehicle, joined local organizati…
Did nonresident partners have Virginia-source income from a Virginia limited partnership, and could prior losses offset the 2005 income?
Yes, the husband had Virginia-source pass-through income because the limited partnership held assets and conducted business in Virginia, and partnership items retained their source and character when …
Were a nonprofit children's museum's birthday-party packages taxable sales of property or exempt service transactions?
They were exempt service transactions. Under the true-object test, customers bought the facilitated museum birthday experience, not the decorations, craft supplies, goodie bags, or other property incl…
Could a sheet-metal contractor overturn an audit sample, obtain credits, or limit the audit period based on alleged Department advice?
No. The contractor did not prove that the audit sample was unrepresentative, that it was entitled to credits for tax paid on items later sold, or that it had received qualifying erroneous written advi…
Did a communications-equipment seller prove that Virginia's three-month audit sample was flawed or that a detailed audit and more customer-use-tax credits were required?
No. The taxpayer selected a block sample instead of the Department's broader Invoice Capture Tool procedure and did not prove that the three-month sample was unrepresentative or flawed. A detailed aud…
Could Virginia recover a refund created when federal refund offsets were credited to a taxpayer and later reversed?
Yes. Federal refund offsets were temporarily credited to the taxpayer after his older Virginia assessments had been abated, producing refund checks that he cashed. The federal government later reverse…
Did affiliated bankruptcy-remote receivables companies have Virginia corporate-income-tax nexus or Virginia-source income?
On the stated facts, the bankruptcy-remote receivables companies did not appear to have Virginia nexus. Under Virginia's regulatory cost-of-performance method, they also had no Virginia property, payr…
Was a computer fee taxable when computers were supplied with online tutorial services, and who owed tax on the computers?
The fee charged to educational institutions was not taxable because the true object was online tutorial service and students could use another computer. But the provider was the taxable user and consu…
Did Virginia tax apply when vendors shipped goods directly to a company's franchisees outside Virginia under out-of-state delivery contracts?
No. The contracts required delivery to recipients outside Virginia, and the transactions were not completed until the goods were physically delivered there. Virginia agreed that those sales qualified …
Were exemption certificates alone enough to support a retailer's exempt sales, and were cardboard roof protectors exempt packaging?
No on both issues. Properly completed exemption certificates did not eliminate the retailer's duty to provide transaction records showing that the purchases qualified, including whether exempt-organiz…
Were hotel free-to-guest and pay-per-view programs delivered by satellite taxed as direct-to-home satellite service?
Yes. Both services used the direct-to-home satellite rates—then 10.8% state plus 2.37% gross receipts, with no local rate. The TAA could not certify the provider's database, but a 0.75% collection all…
How did Illinois tax a truck-stop service package combining climate control, television, internet access, electricity, and a separately sold window adapter?
Services with no transfer of tangible property, including television programming, were not subject to Illinois sales and service occupation taxes under the stated rules, while the separately sold plas…
Does an Illinois seller avoid tax when an out-of-state buyer or its representative picks up goods in Illinois for immediate removal, or when the buyer claims resale?
No interstate-commerce exemption applied when the buyer or its agent took possession in Illinois, even if the goods were immediately carried out of state. The Illinois seller therefore owed tax unless…
Did an Illinois public university owe Retailers' Occupation Tax when it sold its own educational publications to the public?
Illinois gave no specific determination. It said the university's sale of the submitted educational materials appeared likely to further its governmental function and therefore would not incur Retaile…
Could an out-of-state administrative-services company have Illinois income-tax nexus through an affiliate's Illinois employees?
IDOR did not decide nexus because the determination was fact-specific. It explained that a taxpayer generally had Illinois nexus when its agents were physically present in the state providing services…
Was the complete prescription catheter-and-clip system used in a mitral-valve repair procedure exempt from Florida sales tax?
Yes. The interdependent catheter and clip-delivery components were sold for one procedure and were prescribed medical devices temporarily or permanently incorporated into a patient by a licensed pract…
What 2010 Illinois tax rules did the Department give for cloud computing, travel charges, scaffolding rentals, and fuel, tobacco, and alcohol excise taxes?
There was no single yes-or-no answer. Illinois said cloud transactions with no canned software or tangible property transferred incurred no Retailers' Occupation or Use Tax, but said ASP and software-…
How can a landlord allocate a lump-sum lease between taxable equipment and nontaxable real property for NY sales tax?
Only with a reasonable, documented allocation -- otherwise the whole rent is taxable. When real property and taxable tangible personal property (here a hotel's furniture, fixtures, and equipment) are …
Did Illinois approve a service-company tax matrix, and how did it explain tax on property transferred with services, electronic data, software, and equipment leases?
No. Illinois would not approve the private tax matrix. It explained that services with no tangible-property transfer generally produced no Retailers' Occupation or Use Tax, while property transferred …
Did Illinois approve a seller's export affidavit, and what documents supported exemptions for foreign shipments through freight forwarders or sales for resale?
Illinois did not approve the proposed Statement of Goods for Export. It said an interstate or foreign-commerce exemption could apply when the seller was obligated to deliver the property out of state …
Could Illinois municipalities tax satellite television, and did satellite programming trigger Illinois Telecommunications Excise Tax?
Satellite television programming was generally not subject to Illinois Telecommunications Excise Tax, although retail software sold to access the service could incur Retailers' Occupation Tax. The Dep…
Which purchases qualified for Virginia's manufacturing exemption in a furniture manufacturer's use-tax audit?
Virginia granted limited adjustments but upheld most contested tax. Items merely essential, facilitative, used for maintenance, or used after production were not directly used in manufacturing; in-hou…
Did a Section 501(c)(3) dog-rescue charity funded only by contributions have to file Illinois Form IL-990-T?
No, on the facts stated. For a federally exempt organization, Illinois base income was unrelated business taxable income determined under IRC Section 512, without deducting Illinois income tax. The ch…
When did Illinois exempt farm machinery and equipment, and how were farm real-estate improvements taxed?
Machinery, equipment, and replacement parts used primarily in production agriculture could be exempt when the purchaser certified the qualifying use. Ordinary real-estate improvements such as fences, …
Could reservation residents subtract the husband's interest, dividends, and pension when the sources were outside the reservation?
No. Virginia protected income earned solely from pursuits on the reservation, not investment income from outside banks, funds, and corporations or a pension generated by off-reservation employment. Wr…
Could reservation residents subtract the wife's wages, investment income, and pension from Virginia income?
The investment and pension subtractions were denied: outside banks and investment providers produced off-reservation income, and the pension arose from off-reservation employment. The wife's temporary…
Could a Virginia reservation resident subtract interest, dividends, and a pension tied to off-reservation employment?
No. Virginia's policy protected income earned by a reservation resident solely from pursuits on that reservation, but not income from outside institutions or off-reservation employment. The taxpayer's…
Can an Empire Zone business claim QEZE sales-tax exemptions for purchases made before it got its QEZE certification?
No. Being certified as an Empire Zone business under the General Municipal Law isn't enough -- to claim the QEZE sales-tax benefits, the business must also apply for and receive a QEZE Sales Tax Certi…
Did Illinois County School Facility Occupation Tax apply to wholesale oil sales made for resale?
No, when the wholesale oil sale was a validly documented sale for resale. The County School Facility Occupation Tax incorporated the state occupation-tax exemptions, so an item exempt from state Retai…
When was a custom bridge-control system treated as special-order property subject to Service Occupation Tax rather than a taxable retail sale?
A special-order machine was treated as a service transaction only if all three tests were met: the buyer primarily hired the seller's engineering or scientific skill; the property had value only for i…
Are hosted business-collaboration and electronic-messaging subscription services subject to South Carolina sales and use tax?
Yes. The Department treated the described hosted collaboration and messaging subscriptions as taxable communications services, taxed all associated fees, and sourced them to each end user's primary bu…
When did the Fairfax County Circuit Court say a dealer acted in good faith when accepting a sales-tax exemption certificate?
The court said a dealer could establish good faith and reasonable care if the certificate facially covered a potentially exempt use, or if the dealer's actual knowledge reasonably supported the purcha…
Were spouses who moved out of Virginia in February 2007 full-year residents, and how did they report income before and after the move?
No. The couple proved they spent fewer than 183 days in Virginia and established a new domicile when they bought and moved into an out-of-state condominium in February 2007, followed by other abandonm…
Did one executive's Virginia home office create a definite place of business and BPOL-taxable receipts for a foreign online-game company?
Apparently not on the facts presented. Although an executive continuously worked from a Virginia home office, the foreign online-game company did not hold itself out as operating there, and most busin…
Could a surviving annuitant claim Virginia's disability-income subtraction when the recipient was not permanently and totally disabled?
No. Although the husband received payments reported as disability income after his disabled former spouse died, Virginia required the taxpayer claiming the subtraction to be absent from work because o…
Did Virginia's forest-products harvester exemption cover equipment and supplies used by a woodland-renovation land-clearing business?
No. Virginia's agricultural statute did not create a general exemption for farming-related work. The forest-products provision covered persons engaged in severing forest products for sale or for use i…
Did Virginia's occasional-sale exemption apply when equipment moved from a liquidated company through an owner to a successor business?
Mostly. Virginia treated the transfers as sales, but the owner's transfer of four documented pieces of equipment to the successor business qualified as an occasional sale because the owner did not use…
Was a communications provider the taxable user of customer-premises equipment even though it separately charged customers tax on equipment leases?
Yes. The customers' true object was communications service, not the equipment, so the provider was the taxable user of equipment capitalized and used to deliver that service. The separate communicatio…
New York Advisory Opinion TSB-A-10(9)C: How may a taxpayer measure whether a building (including shared conference rooms) is principally used in qualifying activities for the Article 9-A investment tax credit?
By measuring qualifying use of the space. For the investment tax credit, a building is principally used in qualifying activities if more than 50 percent of its usable business space is so used; tracki…
What happened to Illinois GIL ST 10-0039-GIL on the air-carrier fuel exemption for flights involving a United States possession?
Illinois rescinded ST 10-0039-GIL effective July 27, 2010. The Department was reconsidering whether a United States possession counted as a location outside the United States for the air-carrier fuel …
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