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 a nonresident limited partner owe Virginia tax on income from a Virginia family partnership holding land and tangible assets?
Yes. The partnership did not qualify as a passive intangible-investment entity because it held Virginia land, coins, and interests in land-owning LLCs. It was headquartered and operated in Virginia, s…
Did a MERS mortgage assignment prevent Virginia's same-lender recordation-tax exemption on a later refinancing?
No. The exemption depended on refinancing with the lender that actually held the deed of trust, not on whether the assignment appeared in county land records or the MERS database. Tax was exempt up to…
Were nonexclusive software-license fees exempt from Virginia use tax when the taxpayer accessed the software electronically and received no tangible copy?
Yes, but not under the custom-software exemption. The nonexclusive license allowed the dealer to license the program to other customers, so it was not designed and developed only for one customer. Sti…
How should a Virginia HVAC business tax installed equipment, resale inventory, customer tax refunds, and installer transactions?
Installed HVAC made the business the taxable consumer, so it owed tax on purchases and should not charge customers sales tax. Bulk resale inventory could be bought exempt, with use tax due when withdr…
Did a satellite provider with a cable franchise and fiber crossing public rights-of-way owe Virginia's Public Rights-of-Way Use Fee?
Yes. The cable franchise and fiber crossing public rights-of-way made the provider a cable operator subject to the fee. Its ordinary appeal was late, and the protective refund claim failed because the…
Was medical equipment sold with one segment of a combined practice exempt as an occasional sale or business reorganization?
No. The transaction was a sale of one business segment, not a qualifying stock reorganization, and the medical practice lacked separate books, bank accounts, and pre-sale premises needed to establish …
Could an insurer claim old use-tax overpayments as return credits and exempt agent-incentive brochures and annual reports?
Only with proper proof and reporting. The insurer had to document overpayments, claim them on the correct return line within three years, and support printed-material exemptions. Internal agent brochu…
Could a federal museum contractor buy exhibits and installation materials exempt using the agency's government exemption certificate?
It depended on the contract. Property resold to the agency could be bought for resale, while materials consumed in services or real-property work were taxable. Exemption also applied when the contract…
How did Virginia treat facility-service sales, exemption certificates, missing invoices, and penalties when the taxpayer supplied mixed documentation?
Virginia allowed line-item adjustments supported by valid certificates, permits, invoices, or proof of tax payment, but unsupported exemptions and credits remained taxable. Penalties stayed because fi…
Could a correctional-services vendor use government certificates for food sold to staff and remove unsupported purchases and audit penalties?
Mostly no. Government certificates did not exempt food and coffee consumed by correctional employees. Virginia removed documented tax-paid assets and purchases, but unsupported exemptions and credits …
Which university food-service sales, reimbursements, and purchase claims survived a Virginia audit when documentation was mixed?
Virginia allowed documented line-item adjustments but kept tax on sales lacking valid exemption proof, meals consumed by government employees, reimbursed operating expenses, and numerous unsupported p…
Could a Virginia refreshment-service company reduce its sales-and-use-tax audit by showing that tax was paid or that transactions were exempt?
Only in part. Virginia adjusted the audit where the company supplied adequate supporting documents, but sustained numerous sales and purchase exceptions when returns contradicted the claim that tax wa…
Was Virginia's petroleum storage-tank fee part of taxable off-road-fuel sales price, and how could the seller recover other tax overpayments?
Yes. The storage-tank fee was a separate statutory charge directly connected with the fuel sale, not part of the motor-fuel excise tax, so it entered taxable sales price. Other recovery required vendo…
May an implement dealer sell a lawnmower tax-free to a dairy farmer who says it will be used only around the farm?
No. The agricultural machinery exemption required exclusive use in agriculture to produce products for resale. Mowing weeds or grass around a farm home, barn, storage building, or other area for fire …
Which Internet-service-provider charges were exempt or taxable in Kansas under the extended Internet Tax Freedom Act moratorium?
Kansas treated Internet access and telecommunications used to provide it, including qualifying DSL, as exempt under the federal moratorium. Home-page, email, messaging, video-clip, and personal-storag…
Is a Texas economic development corporation exempt from motor vehicle sales tax because it has other state sales-tax exemptions?
No. The economic development corporation's limited sales-tax exemption did not make it a political subdivision or exempt it from every state tax, and the motor vehicle tax chapter contained no compara…
Could a school board buy roofing materials tax-exempt under its construction contract's direct-purchase procedures?
Yes, for materials purchased under the reviewed procedures. The school board issued purchase orders with its exemption number, received vendor invoices, paid vendors directly, took title and liability…
How did the June 2008 South Carolina Supreme Court one-subject-rule decision affect the 2007 tax legislation summarized in SC IL #07-16 (per SC IL #08-12)?
SC Information Letter #08-12 reports the effect of the South Carolina Supreme Court's June 23, 2008 opinion in The South Carolina Public Interest Foundation v. Harrell (Opinion No. 26506), which revie…
Which document-management fees, copier purchases, resale items, and printing materials were exempt in Virginia?
Qualifying copy-center management contracts were exempt services, good-faith resale-certificate sales were removed, and high-speed copiers and copy ingredients qualified. Other resale and intracompany…
Could Virginia residents claim a foreign-source-income subtraction passed through from an S corporation in 2005?
No. Virginia had repealed the individual foreign-source-income subtraction for taxable years beginning in 2003. Only modifications allowed under the individual statute could pass through from an S cor…
Were a mechanical contractor's purchases exempt merely because its work was performed at a Virginia semiconductor plant?
Not automatically. Virginia returned the purchases for item-by-item audit review because the contractor had not explained how each item was used directly in manufacturing. Future exempt contractor pur…
Could a Virginia resident defeat IRS-based assessments by filing self-created corrected 1099s and claiming the income was not constitutional income?
No. Virginia began with federal adjusted gross income and relied on IRS information. The taxpayer needed IRS documents confirming the original information returns were wrong and the corrected forms we…
How did Virginia's modular-home guidance address dealer registration, tax responsibility, the 60% base, and installed buildings?
Retail modular buildings were taxed on 60% of the final sales price, with registered sellers collecting tax and consumers owing use tax if they did not. A manufacturer or retailer that furnished and i…
Who owed Virginia sales or use tax when modular-home manufacturers, retailers, customers, or contractors handled the sale and installation?
Responsibility depended on who made the retail sale and who permanently installed the home. Under the rules stated in 2008, retail sales used a 60% taxable base, while the installing party was general…
How would a consolidated Florida corporation calculate income and tax attributable to its qualified headquarters project for the Capital Investment Tax Credit?
The taxpayer had to attach a separate pro forma calculation of the qualified project's annual taxable income, listing all direct and indirect revenue and expenses under GAAP and Florida law. It then a…
Was a private golf club's membership termination fee taxable when departing members could choose continued facility access?
It depended on the departing member's choice. A member who paid the fee and requested up to six more months of facility access purchased a taxable admission. A member who paid the fee but declined all…
Could a Virginia printer reduce an untaxed-sales audit sample because customers self-assessed tax or later shipped goods outside Virginia?
No. Virginia upheld the sample because customer self-assessment and large-dollar sales did not make it unrepresentative. Delivery to Virginia distribution centers was a taxable first use even when goo…
Was a Virginia countertop fabricator-installer a retailer or a using-and-consuming real-property contractor?
Virginia treated the business as a using-and-consuming real-property contractor, not a retailer. Countertops were not comparable to cabinets under the listed-item rule, and fabrication mainly for inst…
Which machine-shop sales and purchases qualified for Virginia sales-tax exemptions in P.D. 08-97?
Virginia treated the job-shop machine shop as an industrial manufacturer and removed its router and manufacturing supplies from the audit. Sales to government contractors and software lacking proof of…
Could a Virginia taxpayer replace a sample audit with a detailed audit because it expected a lower liability?
No. Virginia upheld the sample-based assessment because the taxpayer did not prove the sampling method invalid; unsupported exempt sales and improperly taxed maintenance contracts remained in the samp…
Were equipment invoices labeled as low-rate-program fees taxable handling charges or excluded interest?
They were excluded interest charges. After reviewing the invoices and finance contracts, Virginia removed the low-rate-program fees from the sales-and-use-tax audit.
How did Virginia tax lump-sum medical-equipment repair bills and combined shipping-and-handling charges?
Lump-sum parts-and-labor repair charges were taxable, but Virginia conditionally removed labor from this first audit after verified corrected invoices separately stated it. Combined shipping and handl…
Were a cancelled log-home sale and a fee for changing the delivery date subject to Virginia sales tax?
The cancelled contract was removed from the assessment, but the delivery-date change fee remained taxable. It paid for administrative rescheduling work, not delivery from seller to buyer, so it was pa…
Could Virginia use a locality's meals-tax audit to assess a restaurant for underreported alcoholic-beverage sales?
Yes. Virginia upheld the assessment because the locality's two-year sample accounted for prices, waste, breakage, spillage, and mixers, and a Department review of the restaurant's records produced con…
Did Virginia sales tax apply to a repair shop's marked-up fee for nontransferable shop supplies?
No. The repairer was the taxable user of shop supplies and paid tax when buying them. Because the supplies were not transferred to customers, the separately listed cost-recovery fee was not a sale, ev…
Did Virginia sales tax apply to a lump-sum equestrian package that included horseback riding, lodging, meals, and other activities?
No. Virginia found that customers' true object was horseback riding, making the lump-sum package an exempt service. The retreat owed tax on food, restaurant meals, lodging, and other inputs used to pr…
Could a Virginia nonfiler invalidate an income-tax assessment by challenging the IRS information behind it?
No, not on the record presented. Virginia upheld the 2004 assessment because the taxpayer provided no objective evidence that the income information lawfully obtained from the IRS was incorrect.
Could a Virginia resident subtract Canadian and German income after the foreign-source subtraction was repealed?
No. Virginia denied the 2006 subtraction and refund because the foreign-source-income subtraction had been repealed, and the cited federal treaties did not limit Virginia's tax on resident income.
Could Virginia individuals subtract foreign-source income passed through from an S corporation after the individual subtraction was repealed?
No. Although the income met Virginia's foreign-source definition and corporations had a subtraction, individuals could receive only pass-through modifications authorized for them. Their subtraction ha…
When do CDs, videos, and photography qualify for Virginia's advertising sales-tax exemption?
Virginia denied the exemption. A sales-presentation CD was not disseminated to the public, and the taxpayer did not show that the video or photography was created for a specific advertising campaign.
Were a catalog stand and company-logo planner guides exempt Virginia advertising materials?
No. The bound catalogs could be displayed without the stand, so the stand did not qualify as necessary support for printed materials. The planner guides remained taxable administrative tools because n…
Our Mitchell-Lama co-op board originally planned to privatize by transferring the building to a brand-new corporation -- but got private letter rulings from both the state and NYC saying that transfer would trigger about $14 million in combined transfer taxes. So instead we restructured the plan to simply AMEND OUR EXISTING CERTIFICATE OF INCORPORATION to convert from a nonprofit Mitchell-Lama entity into a for-profit private cooperative, with no separate transferee corporation at all. Does avoiding a literal transfer to a new legal entity get us out of New York's Real Estate Transfer Tax?
No -- restructuring the plan as a certificate-of-incorporation amendment (instead of a transfer to a newly formed corporation) does NOT avoid RETT; the Department taxes it the same way. East Midtown P…
Does a technology company's purchase of computers and hardware used to build and improve its own ad-serving software platform qualify for New York's sales-tax research and development exemption?
No. Building and improving software for the company's own use in delivering services -- even highly technical, years-long development work -- is not "research and development in the experimental or la…
Did Virginia conform to federal GO Zone bonus depreciation and the special five-year net-operating-loss carryback?
Yes. Virginia conformed to IRC § 1400N, so the 50% GO Zone depreciation deduction flowed through without a Virginia fixed-date adjustment and the special five-year GO Zone loss carryback was allowed.
Which manufacturing assets were subject to a Virginia city's machinery-and-tools tax in P.D. 08-88?
Virginia treated pollution-control equipment, shipping sealers, and qualifying offsite autopackers as intangible property outside the machinery-and-tools tax. The shared storage rack remained fully ta…
Who counted as a classroom teacher for Louisiana's temporary $1,000 deduction under Act 351 of 2007?
A person had to meet the Department of Education's Object Code 112 definition: staff assigned professional instruction of pupils in classroom courses for which daily attendance was kept. That category…
Did Louisiana's tax exemption for Teachers' Retirement System benefits continue after the money was transferred into an IRA?
No. A disbursement from a Teachers' Retirement System of Louisiana account was exempt from Louisiana income tax under La. R.S. 11:704. After the funds moved into an IRA, later IRA payments were not be…
What Virginia tax assessment and refund interest rates applied during the third quarter of 2008?
Virginia's rates were 7% for both tax underpayments and assessments and tax overpayments and refunds from July 1 through September 30, 2008. The corresponding federal rates were 5%.
If a company buys a concrete pump truck solely to lease it to an affiliate, is the purchase exempt from sales tax, and are the affiliate's lease payments taxable?
The purchase itself is exempt as a purchase for resale, but the lease payments the affiliate pays are subject to sales tax unless the affiliate re-rents the truck to its own customers without retainin…
Are different types of commercial signs — monument signs, pylon signs, channel letters, backlit letters, electronic displays, banners, and window graphics — taxable installations of tangible personal property, or exempt capital improvements to real property?
It depends on the sign: a monument sign set in a concrete foundation can qualify as a tax-exempt capital improvement, but pylon signs bolted to piers, channel letters, backlit letters, electronic disp…
If a New York government agency owns a building that will have both public (school) and private (residential/retail) uses, is the developer's construction still exempt from sales tax on materials?
Yes. Because the exempt government agency keeps ownership of the whole building, materials that become a permanent part of the structure are sales-tax exempt for both the public-school and private-use…
If a company sells point-of-sale equipment and bills staging, software installation, testing, and setup as one lump-sum 'project management' line item, is the whole charge taxable, or can the software-related part be carved out as exempt?
The entire lump-sum charge is taxable, because the normally tax-exempt software installation/modification services were bundled into one line item with the taxable hardware sale and setup rather than …
When a company buys a fractional ownership interest in a private jet through a trust, and an aircraft management company keeps control over pilots, maintenance, and scheduling, is that purchase a taxable rental of the aircraft or an exempt transportation service?
It's an exempt transportation service, not a taxable purchase or rental of tangible personal property, because the aircraft management company -- not the fractional owner -- retains dominion and contr…
Which South Carolina Department of Revenue regulations did the General Assembly approve in June 2008 (per SC IL #08-10)?
SC Information Letter #08-10 announces the Department of Revenue regulations the General Assembly approved on June 4, 2008, which became official upon publication in the State Register on June 27, 200…
Could a Virginia county use a corporation's state income-tax sales factor to measure BPOL receipts and deny its out-of-state deduction?
No. The corporate income-tax sales factor was an unreliable measure of BPOL gross receipts. The company could deduct receipts from customers in states where it owed and filed income or income-like tax…
Which startup, repair, computer, and software costs belonged in a manufacturer's local machinery-and-tools tax base?
Test-run materials were part of machinery's capitalized cost, and unsupported capitalized repair costs stayed included. Computers and software were taxable only when used directly in manufacturing; th…
Could a Virginia city impose BPOL tax on a cable provider's receipts from services performed at its city office?
Yes. The staffed city office was a definite place of business and directly handled orders, payments, equipment, repairs, and local-access functions. Receipts tied to those services were sitused to the…
Could a Virginia county impose gross-receipts BPOL tax on an ancillary plan room for an out-of-state subscription publisher?
No gross-receipts tax applied. The plan room was a definite place of business but only an ancillary subscriber convenience; the publishing, information, and sales services were performed and controlle…
Was an LLC owned by two nonprofit utility-notification centers exempt from Virginia local BPOL tax?
Yes, on these specific facts. The LLC was exclusively owned and operated by two federally exempt business leagues to perform their mandated notification-center work, and no profit inured to the LLC or…
Were a federal Medicare Part B carrier's service revenues exempt from Virginia local BPOL tax?
Yes. Virginia found the Medicare Part B carrier so closely connected to the federal government's administration of the program that it was a federal instrumentality immune from local BPOL tax on those…
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