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 inbound freight taxable when a distributor separately billed customers for moving inventory to the selling branch before the sale?
Yes. Illinois treated freight paid to acquire inventory, or to move it to the point from which it would later be sold and delivered, as the seller's cost of doing business. The seller could not deduct…
When merchandise was returned for less than the original price because of a restocking policy, did Illinois require a full sales-tax refund?
Yes. When merchandise was returned, Illinois said the retailer should refund all sales tax from the original purchase even if a restocking or reshelving fee meant the customer received only a partial …
Did refrigeration equipment used by a wholesale food or produce distributor qualify for Illinois's manufacturing machinery exemption?
No. Refrigeration used by a nonmanufacturer, such as a wholesale food or produce distributor, merely to maintain products purchased for resale did not qualify. Refrigeration required to maintain a saf…
Could an equipment lessor claim Illinois's manufacturing exemption when its lessee subleased the equipment to the manufacturer using it?
Yes. The rule did not bar the exemption merely because the lessee subleased the machinery to the manufacturer. The lessor's purchase was exempt if the sublessee-manufacturer used the equipment in a qu…
Did leasing manufacturing equipment to an Illinois manufacturer preserve the machinery exemption, and who owed tax on a true lease?
Qualifying manufacturer use could preserve the exemption if the purchaser-lessor gave its supplier a complete exemption certificate. Otherwise, under a true lease the lessor was the end user and owed …
Did a retailer owe Illinois Use Tax when it withdrew products from resale inventory and donated them to an exempt charity?
Yes. A retailer that withdrew an item from resale inventory and gave it away became the end user and owed Use Tax on its cost price. The result did not change because the recipient was an exempt organ…
Which livestock-handling products could qualify for Illinois's farm machinery exemption, and did permanently affixed fencing qualify?
Permanently affixed fences and ordinary real-estate improvements did not qualify as exempt farm machinery. Portable confinement panels, cattle chutes, and crowding tubs could qualify when used primari…
Did mold-release lubricant used in automotive-spring production qualify for Illinois's manufacturing machinery exemption?
Generally no. Illinois treated mold-release or mold-parting substances as taxable consumable supplies rather than exempt manufacturing machinery and equipment. A portion that physically became part of…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #10-3)?
Use the citator attached to SC Information Letter #10-3. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Could a Virginia taxpayer exclude qualified dividends from 2005 federal adjusted gross income after the IRS included them?
No. Qualified dividends remained part of federal adjusted gross income even though federal law taxed them at capital-gain rates. Virginia began with the IRS-corrected federal amount and offered neithe…
Could a Virginia resident claim all mortgage deductions from a joint federal return when her spouse was a nonresident?
Yes. When the Virginia resident filed separately from her nonresident military spouse, deductions had to be separately accounted for or otherwise divided by income. Bank statements showed their wages …
Did a Virginia LLC owner remain domiciled in Virginia, and how much of his salary was Virginia-source income?
Virginia found he had abandoned Commonwealth domicile despite owning half of a Virginia LLC, working there at peak times, and retaining a Virginia house and registered vehicles. His out-of-state home,…
How should a semi-retired nonresident allocate salary and management fees for days worked in Virginia?
Both income streams were allocated by where the husband actually performed services. For this semi-retired owner who worked 140 days per year, Virginia accepted documentation supporting 10 Virginia wo…
Could a federal contractor buy hardware under a mixed task order for resale and transfer it tax-free to the federal government?
Yes, on the facts presented. Although CLIN 14 listed hardware as other direct costs and required no separate true-object analysis, Virginia examined the mixed task order as a whole. Its primary object…
Were computerized printing presses and related equipment subject to Virginia local machinery-and-tools tax?
Yes. Built-in computers operating high-speed presses, cutters, plate makers, and pocket folders were integral to and directly used in the printing process, so the combined equipment was machinery and …
Could a Virginia city collect consumer utility tax assessments after the five-year local-tax collection period expired during the appeal?
No. Virginia's general local-tax collection statute allowed enforcement for five years after December 31 of the assessment year, and the consumer utility tax appeal statute did not extend that deadlin…
How did Illinois treat children's salon parties and spa packages that bundled services with small giveaways, retail add-ons, and invitations?
The Department said the salon's analysis appeared to conform to Illinois procedures: service packages transferring low-cost property could use the registered de minimis serviceman method, while separa…
Did Illinois treat prescribed speech-generating devices as medical appliances eligible for the reduced sales-tax rate?
No. Illinois said speech-generating devices could assist people with physical disabilities but did not directly substitute for a malfunctioning body part. They therefore did not meet the medical-appli…
Could an Illinois IFTA licensee destroy original paper fuel receipts and retain electronic images for audit records?
Generally yes. Electronic imaging was acceptable if the records were complete, supported the quarterly report, remained accessible, and could produce a legible hard copy during audit. If the business …
How did Virginia Tax Bulletin 10-4 change 2009 returns when the Commonwealth advanced federal conformity to January 22, 2010?
The historical bulletin generally conformed 2009 Virginia income tax returns to federal law through January 22, 2010, but kept exceptions for five-year NOL carrybacks, most bonus depreciation, applica…
Are admission charges to haunted houses -- and a combined concert/haunted-house ticket -- subject to NY sales tax?
Yes. A haunted house is a place of amusement, so admission charges to it are taxable under Tax Law 1105(f)(1). And a single ticket that admits a patron to a concert and also lets them enter the haunte…
Could Virginia allocate itemized deductions by income when a resident spouse filed separately from a nonresident service member?
Yes. A resident and nonresident spouse filing separately had to account individually for income, deductions, and exemptions. When the resident spouse could not show which deductions she paid from her …
Was a 0.5% community-development facilities charge collected with taxable retail sales itself subject to Virginia sales tax?
Yes. Retailers in the development district collected a 0.5% facilities charge from customers on transactions already subject to Virginia sales tax. Because Virginia's sales-price definition included e…
What exemption documents protected a Virginia seller of used semiconductor tools from collecting sales tax?
For a buyer claiming semiconductor-manufacturing use, a properly completed Form ST-11B accepted in good faith relieved the seller of collection liability; a buyer without a Virginia registration numbe…
Was a business that fabricated and installed most granite countertops a retailer or a real-property contractor for Virginia sales tax?
It was a using-and-consuming real-property contractor for installed countertops. The sealed countertops became residential fixtures, and more than half of receipts came from sale-and-installation jobs…
Is Kansas sales tax due when a construction company hires a private trucker to pick up rock at a Kansas quarry for delivery to an Oklahoma jobsite?
Yes. The buyer's hired trucking company was its agent, so delivery occurred when the trucker took the rock at the Kansas quarry, making the rock price subject to Kansas state and local sales tax even …
Were CYFD payments to Kimberly Flores for caring for her grandchildren at home subject to New Mexico gross receipts tax?
Yes. Payments from CYFD for child care provided in Kimberly Flores's home were taxable gross receipts even though no tax was withheld. The Department could apply a $200 income tax rebate against the l…
Did qualifying low-speed vehicles receive South Carolina's former $300 maximum sales tax as motor vehicles?
Yes, under the former law. A low-speed vehicle meeting South Carolina's highway, title, registration, licensing, insurance, and safety requirements qualified for 5% tax capped at $300 with no local ta…
Did a rebate paid under South Carolina's 2010 Energy Star appliance program reduce the amount subject to sales tax?
No. The 2010 rebate did not reduce taxable gross proceeds because the retailer received the discounted customer payment plus reimbursement from the State Energy Office program. A separately stated tra…
Are a supplier's transportation/delivery charges included in Colorado sales or use tax on the goods — and does billing freight on a separate invoice change the answer?
Generally not taxable, and a separate freight invoice is fine. A supplier's transportation charge is excluded from Colorado sales/use tax when it's separable (the buyer could use its own or another ca…
Was an English cruise-ship officer domiciled in New Mexico and taxable on all wages even though he spent fewer than 185 days there each year?
Yes. David Galloway was domiciled in New Mexico because it was the home he shared with his wife and returned to between voyages, supported by his green card, New Mexico driver's license, vehicles, add…
How was a certified project's Florida taxable income to be calculated for the Capital Investment Tax Credit?
The project had to keep separate divisional books, compute pro forma federal and adjusted income from GAAP records, account for all direct and indirect items, and apply its Florida apportionment fract…
Are pet massage, pet sitting, dog walking, and pet taxi services subject to Kansas sales tax?
Mostly not taxable. The Department ruled that therapeutic massage of a dog or horse is a nontaxable service — unlike grooming, haircuts, nail trimming, flea dips, and bathing, which are taxable pet se…
A CUNY law school is buying a condominium unit and financing the purchase with bond proceeds through a wholly-owned nonprofit financing subsidiary -- the school will convey the property to the subsidiary, lease it back, and both entities will assign the lease and rents to a bond trustee as security. Since both the school and its subsidiary are New York State instrumentalities, are any of these conveyances or the mortgage-recording-tax-triggering rent assignment taxable?
Exempt from both taxes. A CUNY unit planned to buy a commercial condominium as a law school's new home, financed with taxable Build America Bonds and/or tax-exempt governmental bonds issued through a …
When a grocery purchase used both a reimbursed manufacturer coupon and food stamps, which part was subject to Illinois tax?
The reimbursed manufacturer-coupon value was taxable gross receipts, while the portion paid with food stamps was not taxable. If the retailer received no reimbursement for its coupon, that coupon valu…
Could an exempt private school's student coffee shop sell only to students and faculty without Illinois Retailers' Occupation Tax?
Possibly. An Illinois exemption number did not generally exempt an organization's own retail sales, but the Department said a school selling only to students and faculty appeared potentially within th…
Could an Illinois-only delivery leg count as interstate use for the rolling-stock exemption when goods first stopped at an Illinois warehouse?
Only if the initial shipment documentation showed that the property was destined beyond the Illinois warehouse to the later Illinois endpoint. If the initial documents named the warehouse as the desti…
Was a restaurant group's chief accounting officer personally liable for subsidiaries' unpaid withholding tax because he controlled payroll payments?
Yes. Bryan Templeton was an employer under New Mexico's Withholding Tax Act because he was the chief accounting officer of the entity holding the restaurant subsidiaries' bank accounts, had signing au…
Were qualifying foreign-source dividends from a foreign subsidiary included in Florida adjusted federal income?
No. Dividends treated as foreign-source amounts under the cited federal provisions were subtracted from adjusted federal income, regardless of whether they were business or nonbusiness income.
Are sales of an automated speech-application program -- delivered as licensed, hosted, or managed-on-premise -- subject to New York sales and use tax?
Yes. The company's automated speech applications (used by clients to handle phone calls -- routing, self-service, product/warranty support) are sold under three models: licensed for the client's inter…
Did Illinois law require a lessee to pay four years of tax upfront on a true equipment lease?
Not as an Illinois tax on true-lease rental receipts. For a true lease, the lessor was the end user and owed Use Tax on its cost; Illinois imposed no tax on the lessee's rent. A lease could privately …
Were equipment purchases for an assigned state radio-system contract taxable to the company acquiring and continuing the contract?
No. The contract was a sale or lease of tangible radio equipment to the state, not a public-works project or communications service. Equipment bought for resale or re-lease to the state could be purch…
Was a medical-device seller exempt when it supplied orthopedic instrument kits at no extra charge to nonprofit hospitals?
The Department could not decide because the contracts did not clearly show whether the instrument kits were sold, loaned with ownership retained, included in the implant resale, or donated. If truly d…
What is South Carolina's tax interest rate for the period ending June 30, 2010 (per SC IL #10-2)?
4%. SC Information Letter #10-2 sets South Carolina's interest rate on tax underpayments and overpayments at 4% for the period April 1, 2009 through June 30, 2010. Interest is compounded daily, except…
What is the difference between a Kansas private letter ruling and an Opinion Letter, and when may a taxpayer rely on either one?
An Opinion Letter explains how the Department interprets Kansas tax law but does not bind the Department, override statutes or cases, or create an exemption. A Private Letter Ruling addresses a named …
Could a service corporation claim the replacement-tax investment credit for equipment used only by its separate manufacturing division?
No. The primarily-engaged test applied to all operations of the taxpayer, not separately to each division. IDOR looked to gross receipts earned in the corporation's ordinary course of business. Becaus…
New York Advisory Opinion TSB-A-10(2)C: Does an out-of-state RV maker (Jayco) owe Article 9-A franchise tax when it only solicits New York sales and uses independent dealers for warranty repairs?
Mostly no, but it depends on the facts. An out-of-state recreational-vehicle manufacturer whose only New York activity is soliciting orders (approved out of state) and whose authorized dealers perform…
Under the Nebraska Advantage Act, what counts as 'investment in qualified property' for a data center operator and for its customers?
A data center operator's qualified investment covers the parts of the facility and equipment it uses for its own qualified activities -- but not space or gear it rents to customers; a customer's quali…
Are sales of the Mirena intrauterine contraceptive to healthcare providers exempt from New York sales tax?
Yes. Mirena is a levonorgestrel-releasing intrauterine system used for contraception and to treat heavy menstrual bleeding; it releases a hormone (a drug) gradually into the body. Because Mirena and l…
What Virginia tax assessment and refund interest rates applied during the second quarter of 2010?
Both Virginia tax underpayments and overpayments carried a 6% annual interest rate from April 1 through June 30, 2010. The corresponding federal rates remained 4%, and Virginia law added two percentag…
New York Advisory Opinion TSB-A-10(1)C: Are distributions from a charitable remainder unitrust to its corporate beneficiary business income or investment income under Article 9-A?
They are business income. A corporation that receives distributions from a charitable remainder unitrust it set up is taxed on those distributions as Article 9-A business income, not investment income…
What documentation protected an Illinois drop shipper treating a delivery to the purchaser's Illinois customer as a sale for resale?
The Illinois-registered drop shipper had to collect tax or document the resale exemption. A complete certificate with a registration or resale number valid when given ended the seller's liability if t…
Were executive-education fees taxable when they included course materials, lodging, and meals?
No Virginia retail sales tax applied. The true object of the three-to-30-day open-enrollment and custom programs was professional executive education, so the full course charge—including materials, lo…
Did Illinois Watercraft Use Tax apply to a privately purchased used sailboat brought to Illinois after an occasional sale?
Yes. Even if the seller's private sale qualified as an occasional sale exempt from ordinary Retailers' Occupation and Use Tax, Illinois Watercraft Use Tax separately applied to a watercraft acquired b…
Was a mandatory convenience fee for buying a show-and-meal ticket online included in Illinois taxable gross receipts?
Yes. The seller's mandatory online convenience fee was inseparably linked to purchasing the ticket through the website and became part of the selling price. Calling it a separately stated fee for reco…
How did Illinois treat custom printed bills and notices, electronic billing data, and software used in those services?
Custom print items that could not be sold to another buyer at substantially the same price generally fell under Service Occupation or Use Tax rather than Retailers' Occupation Tax. Electronically tran…
May a Nebraska keno lottery stop printing pay tickets, and what does the Department require to authorize it?
Yes -- a keno sponsor, lottery operator, or sales outlet may stop printing pay tickets, but only with the Department's written authorization. Revenue Ruling 35-10-1 explains that there is no statutory…
Were prescription drugs paid through Medicare Part D exempt as direct government purchases, and could tax be added to the copay?
No government-purchase exemption applied to Medicare Part D drug sales because private prescription drug plan providers, not the government, bought the drugs. Tax was due, but the GIL said it could no…
Does adding a single Utah-resident co-trustee turn an out-of-state family trust into a Utah resident trust subject to Utah income tax?
No. The Utah State Tax Commission ruled that adding a single Utah-resident individual as one of seven co-trustees would not turn the trusts into Utah resident trusts, because the trusts were not creat…
Did an out-of-state national bank owe Virginia bank franchise tax because it maintained a mortgage-loan office in the Commonwealth?
No. The nationally chartered bank had no Virginia principal-office charter, and its mortgage-loan office did not accept customer deposits. Virginia held that making loans without regular deposit-takin…
How these rulings are useful
- See how the rule applies: A letter ruling shows how a state revenue department actually applied the tax law to a specific business and set of facts.
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