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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How did Virginia classify a vertically integrated manufacturer's city assets for local personal-property tax?
Virginia classified the single integrated business as a manufacturer. Machinery and tools directly used to transform soybeans into oil and feed were subject to city M&T tax; most other qualifying capi…
Was a home-infusion pharmacy a retailer of IV drugs and medical supplies when an affiliate separately provided nursing services?
Yes. The pharmacy sold IV medications and medical supplies for home use, while a separate legal entity provided nursing and therapy services. Its purchases of the drugs and supplies were therefore exe…
When were controlled drugs bought in bulk by a Virginia cardiac center exempt from sales tax?
The exemption depended on invoice proof. Purchases naming a licensed physician or the physician's DEA number were removed from the audit; purchases billed only to the cardiac center remained taxable.
Could a taxpayer limit Virginia's audit extrapolation to 2003-2004 because its purchasing practices allegedly changed?
No. Virginia upheld the sample across the full audit period because government-contract purchases were part of normal business activity and the taxpayer did not show that the sampled transactions were…
Did Virginia sales tax apply to a nonprofit's event tickets when the ticket price included a catered meal?
Yes. Although admission alone was exempt, the ticket entitled the buyer to a taxable catered meal, making the full ticket price taxable. Documented tax paid to vendors could receive limited audit cred…
Did a notice of intent preserve a Virginia tax appeal when the taxpayer did not file a complete appeal within 90 days?
No. A notice of intent was not a complete appeal. Because the taxpayer did not file the required grounds and relevant facts within 90 days of assessment, the appeal was time-barred and collection resu…
Could vendor documentation reduce Virginia use tax on invoices that combined shipping and handling into one charge?
Yes, in part. Combined shipping and handling was generally taxable, but written vendor breakdowns or confirmation that a fee was shipping only supported adjustments. Remaining sampled errors were stil…
How did Virginia resolve an audit appeal challenging the purchase sample, software transactions, fixed assets, and compliance penalty in P.D. 08-73?
Virginia upheld the audit sample and most challenged purchases, but ordered several adjustments: electronically delivered software was removed, jellybeans were recalculated at the lower food-tax rate,…
What is South Carolina's tax interest rate for the period July 1, 2008 through September 30, 2008 (per SC IL #08-9)?
5%. SC Information Letter #08-9 sets South Carolina's interest rate on tax underpayments and overpayments at 5% for the period July 1, 2008 through September 30, 2008. Interest is compounded daily, ex…
Would Florida use tax apply when a yacht was bought and titled outside Florida, then used in other states for more than six months before entering Florida?
No, under the represented facts. The purchase and title transfer occurred outside Florida, and the yacht would be used under other states' taxing jurisdiction for more than six months before entering …
What Virginia state and local tax legislation did the Department summarize for the 2008 General Assembly session?
This was a broad historical guide, not a taxpayer-specific ruling. It summarized 2008 legislation through March 13, including federal conformity, income-tax credits and administration, sales-tax exemp…
Did manufacturing prototype cellular phones and circuit boards for a customer qualify for Virginia's production exemption?
Yes. New agreement and facility evidence showed that the prototypes were industrially manufactured products made for sale to the customer, not merely preproduction work, so Virginia removed the relate…
Could Virginia residents claim a 2006 credit for another state's tax on partnership income that was taxable there in 2005?
No. The credit belongs to the year when the income was taxed by both states, not the later year when the other state's tax was paid. Virginia correctly denied the credit on the 2006 return, but the co…
Did 22 work areas in a cement-plant expansion qualify for Florida sales-tax exemptions, and could the manufacturer recover $50,000 paid early?
Yes, based on the submitted documentation and stated conditions. The 22 work areas qualified as expanding-business machinery and equipment, pollution-control property, or nontaxable professional servi…
How did Florida tax peering, cross-connect, managed-router, colocation, equipment, and managed-maintenance services?
Peering, cross-connect, and managed-router services were not subject to Chapter 212 sales and use tax because they only transmitted data and did not sell or rent property. They were, however, communic…
Did taking a permanent job and leasing a home in another state end a taxpayer's Virginia domicile when his family, home, licenses, and registrations remained in Virginia?
No. Employment and a leased residence in State A showed some intent to relocate, but the taxpayer kept a Virginia home with his wife, renewed his Virginia driver's license, registered vehicles and rem…
Could an individual appeal a Virginia converted assessment more than a year after the 90-day deadline because he learned of the tax lien later?
No. The individual had 90 days from the April 6, 2006 assessment date, making July 5, 2006 the deadline. His June 29, 2007 appeal was untimely, and neither the statute nor the appeal guidelines create…
Could Virginia extend a contractor's consumer-use-tax audit to six years and tax separately stated mileage and road-service charges on vehicle repairs?
Yes. Because the contractor had not filed consumer use tax returns and could not document tax paid on purchases, Virginia properly used a six-year audit period. Mileage and road-service charges incurr…
Who could claim a Virginia land preservation credit when estate executors donated an easement over land specifically devised to a beneficiary?
The beneficiary. Virginia title to specifically devised real estate passed to him at the decedent's death, while the executors held only power to convey the easement. If he met Va. Code § 58.1-512, he…
Were a Virginia wholesaler's purchases of fuel-grade ethanol exempt from retail sales and use tax when customers would blend it into motor fuel subject to the Fuels Tax?
Yes. Because the wholesaler's customers would pay Virginia Fuels Tax when the ethanol was blended with motor fuel, the ethanol was fuel subject to that tax and qualified for the retail sales-and-use-t…
How did Virginia's communications tax apply to long-distance service, cellular content, permanent digital downloads, and qualifying prepaid calling services?
Long-distance and per-minute cellular content were communications services subject to tax unless an exclusion or exemption applied. Qualifying digital products downloaded for permanent reuse were excl…
Did an out-of-state credit-card issuer owe Virginia corporate income tax when it marketed to Virginians but had no Virginia property, payroll, employees, or agents?
No for the prior years presented. Virginia said the company's marketing contacts made the nexus question unclear, but the issuer was a financial corporation with no Virginia property, payroll, employe…
Could Virginia uphold estimated income-tax assessments when resident nonfilers ignored information requests and did not prove the IRS data wrong?
Yes. Virginia could estimate the tax, assess at any time for unfiled returns, and presume its assessments correct. Because the taxpayers did not respond or prove the IRS information wrong, the assessm…
Was a nonresident baseball player's signing bonus Virginia-source income when the bonus was earned by signing, not by performing services in Virginia?
No. Virginia correctly rejected the player's claimed subtraction from federal adjusted gross income, but the bonus was not Virginia-source income for the nonresident apportionment factor because it wa…
Did a screen-printing and embroidery retailer qualify for Virginia's industrial manufacturing exemption or avoid tax because the Department audited it years after opening?
No. The business primarily sold custom apparel to end users and was classified as retail, not industrial manufacturing, so its equipment purchases were taxable. Most of the assessment also involved un…
Did a Virginia flower-bulb seller owe use tax when it removed unsalable bulbs from resale inventory and donated them to charities?
Yes. Removing bulbs from tax-free resale inventory and donating them was a taxable use, measured by the bulbs' cost price, unless another exemption applied. The separate exemption for qualifying catal…
Did Virginia's research-and-development exemption cover a missile contractor's JP-10 fuel valve, insulation rings, and rocket-motor casting tooling?
Yes. Each item was integral to experimental missile or rocket-motor work and used exclusively in the specified project: the valve regulated test fuel, the rings held rockets during static firing, and …
What happened to Kansas inheritance-tax liability for pre-July 1998 estates that had not filed a return by July 1, 2008?
Kansas inheritance tax ended July 1, 2008, except for matters already pending before the Department. For an estate of a person who died before July 1, 1998, if no inheritance-tax return had been filed…
What tax base applied when $29 million of out-of-state notes were secured by a Florida mortgage that capped recovery at $6.125 million?
Florida documentary stamp and nonrecurring intangible tax were due once on $6.125 million, the mortgage's express maximum recovery amount, rather than the full $29 million debt. The notes were execute…
Did deeds for hotel-condominium units owe Florida's documentary stamp discretionary surtax when the units could only be rented to transients?
No. The prospectus classified each condominium as a single residence unit, so each deed qualified for the single-family-residence exemption from the discretionary surtax. The result applied even thoug…
What are South Carolina's latest state and county per capita income figures used for tax incentives (per SC IL #08-8)?
$31,013 statewide. SC Information Letter #08-8 publishes the most recently available per capita personal income figures for South Carolina — $31,013 for the state, plus a figure for every county — whi…
Under South Carolina's 2008 guidance, who owed use tax on untaxed out-of-state purchases brought into the state?
The South Carolina purchaser owed use tax when taxable property bought from an out-of-state retailer was used, stored, or consumed in the state and sufficient tax had not already been paid. Tax paid t…
Is downloading a video from a website, whether paid or free, subject to New York sales tax?
No. Videos downloaded electronically over the Internet to a customer's computer or device are intangible property, not taxable prewritten software or a taxable information/entertainment service, so th…
Did a city's public-works direct-purchase procedure qualify for exemption when the contract did not require vendors to invoice the city directly?
No. Although the city issued purchase orders, paid vendors, retained title, and insured the materials, the controlling contract documents did not require vendors to invoice the city directly and inste…
Did leasing a small Texas apartment for work make a New Mexico homeowner a Texas resident whose wages escaped New Mexico income tax?
No. Joseph Mailander kept his permanent Las Cruces home, where his wife lived and operated a business, along with his New Mexico driver's license, voter registration, and vehicle registrations. His El…
Under a lump-sum sale-and-installation contract, were plantation shutters taxable to the customer as tangible property or to the installer as real-property materials?
The installer was the taxable consumer. Plantation-shutter frames were permanently screwed or bolted to the wall or window jamb, so a lump-sum furnishing-and-installation contract improved real proper…
If a Florida sign manufacturer pays Florida use tax on materials it later installs as a capital improvement in New York, can it get a credit against the New York use tax it owes on the same materials?
Yes, but only for materials installed as an actual New York capital improvement, only if the tax was legally due and actually paid to Florida (not merely assessed), and only up to the amount of New Yo…
What Virginia filing and payment relief applied to taxpayers affected by the April 28, 2008 tornadoes?
Virginia automatically gave qualifying individuals and businesses in nine listed localities 30 additional days to file returns and pay taxes due from April 28 through June 2, 2008 when tornado damage …
Did keeping a Virginia house and mailing address prevent former residents from proving they changed domicile to another state?
No. Despite retaining a Virginia home and receiving financial mail there, the taxpayers proved by the preponderance of the evidence that they abandoned Virginia domicile and established domicile in an…
Were Virginia income-tax assessments barred when the taxpayer appealed 1997-1999 late and had never filed a 2000 return?
No. The 1997-1999 appeal missed the former three-year administrative window. The 2000 appeal was timely, but because no 2000 return was filed Virginia could assess at any time, and the taxpayer suppli…
Could an auto-body-supply seller remove audited sales when it accepted resale certificates for paint, thinner, equipment, and shop supplies?
Mostly yes. Virginia removed sales supported by valid resale certificates that the seller accepted in good faith at the time of sale. It kept two sampled sales because the certificate was obtained mor…
Were separately stated fuel surcharges, offloading fees, and demurrage all exempt Virginia transportation charges?
No. Separately stated fuel surcharges supplemented freight and were exempt transportation charges. Offloading was taxable handling after delivery, and demurrage for driver wait time caused by delayed …
Could a corporation abate a late-filing assessment by proving its return was postmarked on the extended due date?
Yes. The corporation proved that its return was postmarked February 15, 2006, the extended due date, so Virginia treated it as timely filed under Va. Code § 58.1-9. Because the return and corporate ta…
How should spouses file when they ended their Virginia domiciles on different dates during 2005?
They had to file an amended Virginia part-year resident return, not treat the entire year as nonresidents. Virginia taxed each spouse as a domiciliary resident through the date that spouse's Virginia …
Is a foreign life insurance corporation with no New York premiums subject to New York tax because it holds a limited partnership interest with a basis over $1 million in a partnership doing business in New York?
Yes, with an exception. A foreign life insurer with no New York premiums is subject to Article 33 tax because its limited-partner basis in a New York partnership exceeded $1 million (deeming it to par…
If a company leases an aircraft and uses it mostly for charter flights to the public and its owners, with the rest for its own affiliates' business travel, does the lease qualify for New York's commercial aircraft sales-tax exemption?
Yes -- because at least 50% of the aircraft's use is transporting people for compensation at market-reflective rates, it qualifies as a commercial aircraft, so the lease payments, related maintenance …
My bank offers a specialized real estate financing product: the seller deeds the property directly to us (not the client), we lease the property back to the client at payments equivalent to mortgage principal and interest, and we deed the property to the client once the loan is paid off. Is real estate transfer tax due only once -- on the seller-to-bank deed -- or does it also apply to the lease and to our later deed back to the client at the end of the financing term?
RETT is due only once, on the initial seller-to-bank conveyance -- not on the lease or the bank's later deed back to the client. A UK bank offered specialized real estate financing: a client contracts…
Is a private investigation firm's charges for detective and surveillance work taxable, whether billed to an individual, directly to an insurance company, or to an insurance adjusting company?
Yes in all three scenarios -- charges for licensed private-investigator detective and surveillance services are taxable whether billed to an individual, directly to an insurance company, or to an insu…
What purchases and retailer procedures qualified under Virginia's historical Hurricane Preparedness Sales Tax Holiday guidelines?
Under these expired guidelines, listed hurricane supplies priced at $60 or less per item and portable generators, generator cords, inverters, and inverter cables priced at $1,000 or less per item were…
What was Virginia's statewide Land Preservation Income Tax Credit cap for calendar year 2008?
Virginia set the calendar-year 2008 Land Preservation Income Tax Credit cap at $102,287,000. The Department calculated that the relevant CPI-U average had increased about 2.29% from the statutory 2006…
Did permanently installed conveyors and automated handling equipment in a food distribution center become tax-treated real-property improvements?
No. The conveyors, cranes, lifts, caddy picks, racking, and related handling system remained machinery and equipment because they moved or handled goods for commercial use and retained their identity.…
How did South Carolina's one-percentage-point state sales-tax reduction work for purchasers age 85 or older under the 2008 guidance?
A purchaser age 85 or older could receive a one-percentage-point reduction in the state tax on qualifying personal-use purchases by buying the item personally, requesting the reduction at the sale, an…
Did a city's direct-purchase documents make construction materials for a fire-station project exempt from Florida sales tax?
No. The controlling contract established only that the city would issue its own purchase orders. Its insurance ended when materials reached the jobsite, and the contract did not establish direct invoi…
Did a city's direct-purchase documents make construction materials for a road-extension project exempt from Florida sales tax?
No. The controlling contract established only that the city would issue its own purchase orders. Its insurance ended when materials reached the jobsite, and the contract did not establish direct invoi…
Was an employee of Virginia's land-preservation foundation a state employee for the historical $15,000 salary subtraction?
Yes. Virginia found that the foundation performed administrative, executive, and regulatory functions for the Commonwealth, so its employee was a state employee for Va. Code § 58.1-322(C)(24). The his…
Could a sole proprietor challenge 1990-1995 converted tax assessments through an administrative appeal filed in 2007?
No. The latest assessment was issued March 9, 1995, and under Virginia's policy then in effect the administrative appeal was due by March 9, 1998. The 2007 filing was untimely, so Virginia denied abat…
Did a nonresident owe Virginia tax on pass-through income from an S corporation doing business in Virginia?
Yes. The federal S election controlled Virginia treatment, so the corporation's Virginia-source income passed through to its nonresident shareholders. The corporation's improper C-corporation return a…
Could Virginia keep a wife's share of joint refunds for her husband's business tax liabilities from before their marriage?
No. Although Virginia did not adopt the federal innocent-spouse rule, Department policy did not hold one spouse liable for the other's tax debts from years before they filed jointly. The wife was enti…
Were digital-jukebox music packages, song access, downloads, and support services subject to Virginia sales tax?
The music packages, extra song downloads, per-play fees, database access, and background music were nontaxable services because no tangible property changed hands. But one-half of the separately bille…
Did Virginia salespeople create collection nexus for an out-of-state modular-home manufacturer before it registered for sales tax?
Yes. Traveling sales representatives, including one living in Virginia, actively solicited customers and created sufficient statutory and constitutional nexus. The pre-registration assessment was corr…
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