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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The Department assessed me for Virginia income tax based on IRS information, and I told them my husband didn't work in Virginia that year -- isn't that enough to get the assessment corrected?
No -- a domiciliary resident of Virginia owes Virginia tax on all their income regardless of where they actually worked, so simply asserting 'he didn't work in Virginia' doesn't address whether Virgin…
I claimed gambling losses and mortgage interest as itemized deductions, and the Department disallowed them for lack of proof -- what kind of documentation actually counts as proof of gambling losses?
Casino ATM withdrawals and direct payments to casinos count as proof of gambling losses; unrelated ATM withdrawals don't, and a Form 1098 is enough to prove mortgage interest. A taxpayer claimed medic…
I moved from Virginia to California partway through the year and paid tax to both states on my wages -- can I claim a credit on my Virginia part-year return for the California tax I paid?
No -- California is one of a handful of states with a special reciprocal-credit arrangement that flips which state grants the credit, so the Virginia credit was correctly denied. A taxpayer was a Virg…
My company pays a related entity both a merchandise-buying/procurement service fee and a software licensing fee -- are both of those 'intangible expenses' subject to Virginia's add-back requirement, or just one of them?
Merchandise buyer/procurement service fees are NOT intangible expenses subject to Virginia's add-back, but computer systems licensing fees ARE -- even though neither is specifically named on the statu…
I moved into my fiancee's home in another state years ago, but I still own a Virginia home I use as a vacation property and visit regularly, kept renewing my Virginia driver's license, and stayed registered to vote in Virginia until recently -- am I still a Virginia domiciliary resident for tax purposes?
Still a Virginia domiciliary resident -- largely because he renewed his Virginia driver's license in November 2020, five years after he says he moved out. The taxpayer had lived and worked in Virginia…
I have old Virginia income tax assessments from 2010 and 2011 that I never appealed because I didn't live in Virginia at the time -- can I appeal them now, over a decade later?
No -- far too late. A taxpayer had outstanding Virginia income tax assessments for failing to file returns for the 2007, 2008, and 2017 taxable years; after Department liens collected part of the mone…
When a jewelry retailer lets a customer trade in old jewelry toward a new purchase, can the retailer exclude the value of that trade-in from the "gross receipts" it owes Illinois sales tax on?
Yes, but only if the traded-in item is of "like kind and character" as the item being sold -- for example, a customer trading in a ring toward a bracelet purchase. When that test is met, the value of …
How does a retailer calculate Retailers' Occupation Tax when a customer pays with a discount coupon, a manufacturer's coupon, a radio-station or third-party gift certificate, or a buy-one-get-one-free deal?
Tax is based on gross receipts actually received by the retailer, including any reimbursement it gets for a discount -- an unreimbursed discount (a coupon or card the retailer isn't paid back for) red…
If my employer relocates me out of state and I later separate from my spouse who stays in Virginia, have I abandoned my Virginia domicile?
Yes, in this case the taxpayer successfully proved he'd abandoned his Virginia domicile -- even though he kept his Virginia driver's license for years and retained some Virginia property connections t…
The Department is still trying to collect Virginia income tax assessments from 2009-2013 -- doesn't the current 7-year collection statute of limitations mean these are too old to collect anymore?
No -- the current 7-year collection deadline only applies to assessments made on or after July 1, 2016, and these were older. A taxpayer's Virginia income tax assessments for 2009 through 2013 (issued…
I moved out of Virginia years ago for work, but my spouse and kids stayed in our Virginia home, I kept renewing my Virginia driver's license and voter registration, and I even teleworked from Virginia during the pandemic while still filing returns in my new state -- am I still a Virginia domiciliary resident?
Still a Virginia domiciliary resident -- his own conduct, especially teleworking from the family's Virginia home during the pandemic while still filing returns in his new state, undercut his domicile-…
I asked the Department to reconsider its ruling upholding my withholding tax assessments, saying the facts were wrong -- but I never actually sent the documentation to prove it. Can I still get reconsideration?
No -- claiming the facts were wrong isn't enough; you have to actually submit evidence proving it. A taxpayer sought reconsideration of a prior Department ruling (P.D. 23-50) that had upheld withholdi…
My irrevocable trust owns interests in pass-through entities that elect to pay Virginia's Pass-Through Entity Tax (PTET) at the entity level -- can I pass the resulting tax credit through to my trust's beneficiaries?
No -- the PTET credit belongs to the trust itself and can't be passed further down to the trust's beneficiaries. An irrevocable business trust that owns interests in several pass-through entities (PTE…
How does the South Carolina Department of Revenue decide penalties for alcohol (beer, wine, and liquor) licensing violations?
This Revenue Procedure is the Department's guideline framework for assessing penalties against alcohol (beer, wine, and liquor) license and permit holders who violate South Carolina's Title 61 alcohol…
I filed my New Mexico income tax returns by mail, but I can't prove I mailed them — can the state treat me as a non-filer and assess me years later?
Yes. Robert and Debbie Wade, New Mexico residents, protested a July 2022 personal income tax assessment for 2015, 2016, and 2018, insisting they had filed and paid every year. But they produced only c…
Can a trucking company get a Motor Fuel Tax refund for undyed diesel used to run a refrigeration unit that shares one fuel tank with the truck's engine?
No. The Illinois Department of Revenue concluded a company may not claim a Motor Fuel Tax refund for fuel used by a refrigeration unit that shares a common fuel supply tank with the truck's engine; Se…
Can a licensed Illinois cigarette distributor affix Illinois tax stamps to unstamped cigarettes that were procured by a commonly-owned affiliate directly from a permitted out-of-state manufacturer?
Yes. The Department ruled that because the distributor (COMPANY) and its procurement affiliate (PROCUREMENT AFFILIATE) are both licensed distributors under common ownership through the same parent, CO…
What South Carolina tax interest rate applies through June 30, 2024, and what rate is paid on eligible refunds?
The listed South Carolina interest rate for tax underpayments and overpayments is 8% for the period October 1, 2023 through June 30, 2024. Interest is compounded daily, except that simple interest app…
If my business isn't 'doing business' in Colorado — no location here and not soliciting sales — do I still have to send Colorado's noncollecting-retailer use tax notices to my customers?
No. A person who is not 'doing business' in Colorado — no place of business here and not soliciting sales that meet the economic-nexus thresholds — is not a 'retailer' under Colorado law. The noncolle…
Can a pastor use his church's tax-exempt (E-number) status to buy furniture for himself, tax-free, for the parsonage he lives in?
Yes, if it's done correctly: the purchase must be paid for with the church's own funds or a credit card billed directly to the church (not the pastor personally), the retailer must be given a copy of …
When a finance company charges a customer one lump-sum monthly payment covering a sale-leaseback of equipment and software, plus office build-out and training costs, is the entire monthly charge subject to Texas sales tax?
Yes. Texas ruled that a finance company's lump-sum monthly rental charge — covering an operating-lease sale-leaseback of equipment and software, plus office leasehold-improvement work and training — i…
My late father never filed Virginia income tax returns for several years going back to the 1990s, and the Department abated one assessment and then issued a brand-new one for the same year -- can his estate get all these old assessments declared uncollectable, and was that replacement assessment even valid?
Both stand -- the old assessments remain collectible, and the replacement 2007 assessment was valid. An estate sought a ruling that Virginia income tax assessments issued to a now-deceased taxpayer fo…
My company had federal net operating losses in some years, but Virginia's fixed-date-conformity adjustments turned those into positive Virginia taxable income -- does that mean I still get to carry my federal NOL forward to a later, more useful year, or does Virginia require me to use it up in the years it turned positive?
Virginia's NOL carryforward has to be used in whatever order fixed-date-conformity math actually produces positive Virginia income, even in years the company had a federal loss and even in years now o…
I lived abroad in my late spouse's home country for over a decade after we married, but I couldn't legally own property there so I stayed in hotels during part of that time, and I kept my Virginia home, car, and driver's license the whole time for when I traveled back for medical care -- did I actually establish domicile in that other country?
No -- living in hotels abroad, without a permanent place of abode there, combined with extensive retained Virginia connections, meant he never established the new domicile the law requires. A taxpayer…
My medical diagnostic lab buys reagents that meet the legal definition of a 'drug' under Virginia's Drug Control Act -- does that mean my purchases qualify for the sales tax exemption on medicines and drugs?
No -- even though the reagents meet the legal definition of a 'drug,' a diagnostic testing laboratory isn't the kind of business the medicine-and-drugs exemption is written for. A Virginia operator of…
The Department's own auditor told me over the phone to go ahead and file an appeal of my old assessments -- does that give me a fresh 90-day window to appeal, even years after the original assessments?
No -- an auditor's informal instruction to file an appeal doesn't create a new appeal right; only an actual assessment or new final determination does that. A taxpayer had Virginia income tax assessme…
Is a foreign student, intern, or trainee in Colorado on an F-1, M-1, or J-1 visa a Colorado resident for income tax purposes?
Generally no. A foreign student, intern, or trainee on a temporary F-1, M-1, or J-1 visa is not domiciled in Colorado, and ordinary student housing (dorms, hotels, or college-provided housing) is not …
I lived and worked abroad for over 30 years, married two different citizens of that country, became a permanent resident and voted there -- but I never gave up my U.S. citizenship or my Virginia driver's license, which I've held continuously since 1979. Did I actually establish domicile abroad, or does keeping my Virginia license mean I never really left?
Yes -- he successfully established domicile in Country A, and keeping his Virginia driver's license the entire time didn't change that outcome. A taxpayer moved to Country A in 1988, married a Country…
If a South Carolina resident sells an interest in a partnership that does business in several states, is the whole gain taxed by South Carolina, or only part of it?
Only part of it. When a South Carolina resident sells an interest in a partnership that does business in multiple states, the gain is treated as connected with the taxpayer's business (through the par…
I rent portable toilets and separately itemize service charges (set up, pick up, off-road delivery, extra service) from the toilet rental itself -- are those itemized service charges exempt from sales tax, and does it matter that a Department employee told me decades ago how to handle this?
No, itemizing the service charges separately doesn't make them exempt -- they're taxable right along with the toilet rental itself. A Virginia portable-toilet rental business was assessed sales and us…
My company can't locate original invoices for some equipment purchases -- including purchases from our own parent company -- will Virginia accept purchase orders and a spreadsheet instead to prove a sales tax refund claim?
Not on their own -- Virginia requires documentation that ties each specific transaction to proof of payment, and a purchase order or spreadsheet summary isn't a substitute for an actual invoice. A Vir…
The Department denied my sales/use tax refund claim as untimely because of when the package reached a regional postal facility, and separately said my power of attorney form wasn't properly signed -- do either of those actually defeat my refund claim?
Neither defeats the claim -- the taxpayer's own mailing receipt proved timely filing, and a power of attorney defect is irrelevant to whether a refund claim itself was validly filed. A taxpayer's repr…
My restaurant's sales tax audit found that our point-of-sale records didn't match our filed returns, and that we'd collected sales tax from customers but hadn't remitted some of it -- I submitted extra invoices after the audit closed, but the Department says the assessment still stands. Why?
The assessment stands, minus what the extra invoices could actually fix -- because the core problem (a sales-records gap the business never explained) was never resolved. A Virginia restaurant and bar…
For an advertising agency selling website development, third-party CRM consulting, branding, and lump-sum retainer marketing services, which of these are taxable data processing or graphic arts, and which are nontaxable consulting?
Split ruling across many service lines. Website blueprinting alone is nontaxable, but building, custom-designing, or supporting a website is taxable data processing (80% taxable after the 20% exemptio…
Can my pass-through entity still make Virginia's Pass-Through Entity Tax (PTET) election for Taxable Year 2021, even though that year is long closed -- and how would that work?
Yes -- a 2023 law change let qualifying pass-through entities make a one-time retroactive Pass-Through Entity Tax (PTET) election for Taxable Year 2021, but only by filing a special Form 502PTET for 2…
Do gates permanently set in concrete at a construction site inside an Illinois enterprise zone qualify for the enterprise zone building materials sales tax exemption?
It depends on whether the gates are permanently affixed to the real estate -- the Department's GIL says the items 'may qualify' if they are permanently incorporated into the realty (applying the same …
Is a website-analytics company's fee to install tracking JavaScript, plus its charges for processing user-behavior data and providing dashboard reports to detect bots and fraud, a nontaxable proprietary information service, or taxable software/data processing?
Taxable across the board, just under different categories. Texas ruled that a website-analytics company's one-time fee to install tracking JavaScript on a customer's site is a taxable sale/license of …
Are limited partnerships and the captive REIT groups they own — whose only Tennessee tie is mortgage loans secured by Tennessee property — subject to Tennessee franchise and excise taxes?
No. The Department ruled that three limited partnerships and the captive REIT groups they own are not subject to Tennessee franchise and excise (F&E) taxes, because they are not 'doing business in Ten…
Does an affiliate/performance-marketing company that sells merchants advertising space — plus tracking, reporting, data analytics, and platform access — have to charge Utah sales tax on what it bills the merchants?
No. The Commission ruled that an affiliate-marketing platform's charges to merchants are not subject to Utah sales and use tax. Even though the bundle includes use of the company's software, the essen…
Is a foreign-based company's subscription charge for a cloud-delivered health-coaching app (with a web portal, downloadable App, meal plans, workout videos, and personal coaching) subject to Illinois Retailers' Occupation, Use, or Service Occupation Tax?
The Department did not give a yes-or-no answer. It explained that electronically transferred information/data is not taxable tangible personal property, but canned (prewritten) computer software is ta…
New Mexico lets me deduct the rent portion of my receipts, but how do I split bundled rent-and-services charges — and what happens if I can't back up my method with records?
Gemini Las Colinas lost. The company runs Las Colinas Village, an Albuquerque senior-living community that bundles services (dining, housekeeping, transportation) into a single monthly 'rent.' New Mex…
Does Illinois's Telecommunications Excise Tax apply to dark fiber leased under an Indefeasible Right of Use (IRU) or to a non-indefeasible right to use fiber strands between two locations?
No. Dark fiber -- fiber-optic strands with no light or signal running through them -- carries no messages or information, so it doesn't meet the statutory definition of "telecommunications" in 35 ILCS…
Is the ink and solvent a steel-framing manufacturer mixes and applies inline to identify and trace parts during roll forming exempt from Illinois sales/use tax as manufacturing machinery and equipment, or as production related tangible personal property?
The Department did not say yes or no for this taxpayer's specific ink and solvent -- as a GIL, it only explained the manufacturing machinery and equipment (MM&E) exemption framework under 35 ILCS 120/…
Are reusable surgical retractor blades and handles that a manufacturer sells to hospitals and clinics exempt from Texas sales tax as therapeutic medical devices?
Taxable, with a narrow exception. Texas ruled that reusable surgical retractor blades and handles are "therapeutic devices," not orthopedic devices, and health care providers who buy them owe sales ta…
Is a canned (prewritten) computer software license, and the technical support/updates that go with it, subject to Illinois Retailers' Occupation (sales) Tax?
It depends on whether the license meets all five criteria in 86 Ill. Adm. Code 130.1935(a)(1); if it does, neither the software transfer nor later software updates are taxable, but an end user license…
If an out-of-state fuel company runs its sales office out of state but has trucks that pick up and deliver motor fuel to Illinois customers, does it owe Illinois county/municipal motor fuel tax and local sales tax on those Illinois deliveries?
There's no automatic yes-or-no answer -- Illinois local retailers' occupation tax and county/municipal motor fuel tax liability turns on a fact-specific test (86 Ill. Adm. Code 270.115) that weighs wh…
Does an online auction platform have to collect Missouri sales tax on its 10% buyer's premium, for both regular goods and titled property like vehicles and boats?
It depends on what's being sold. The 10% buyer's premium is taxable as part of the sales price for regular (non-titled) tangible personal property, but it is not subject to Missouri sales tax on title…
I rent out my farm's outdoor and indoor space as a wedding venue, with no food, drinks, or overnight stays -- is that rental subject to Missouri sales tax?
Yes -- Missouri's sales tax on 'rooms, meals and drinks' under Section 144.020.1(6), RSMo, applies to a farm's wedding-venue rentals even though no food, drinks, or overnight lodging are provided. The…
Which components of the airport's automated people-mover replacement project qualified for Florida's sales-tax exemption?
Removable signaling, telecommunications, power-distribution, platform-door, barrier-wall, blue-light, and buffer equipment qualified. Embedded wiring, concrete pads, and permanently wired building fix…
I'm a self-employed contractor who filed my federal taxes but never filed New Mexico gross receipts tax — do I still owe the tax, penalty, and interest?
Yes on the tax and penalty; the interest was partly frozen. Jimmy Lopez, a self-employed home and building inspector in Santa Teresa, filed federal Schedule C business income for 2016–2019 but never r…
Was renewable natural gas produced by processing biogas from organic decomposition subject to Florida's gas severance tax?
No. Florida's severance tax applies to natural gas extracted from geological formations. The described renewable gas was manufactured from decomposing organic material rather than severed from below t…
What authority does South Carolina Revenue Ruling #24-1 give the January 2024 Deed Recording Fee Manual?
South Carolina Revenue Ruling #24-1 incorporates the January 2024 Deed Recording Fee Manual as if the manual were published in full in the ruling, giving the manual the same effect as a Revenue Ruling…
Is selling corn oil and other non-petroleum fuel additives for use in farm tractors during off-road tractor pulls taxable under Illinois's Motor Fuel Tax Law, and does the seller need to register under that law?
It depends on how the product is sold: corn oil or other non-petroleum additives are not "motor fuel" under the Motor Fuel Tax Law merely because they're purchased and resold, but if they are sold (al…
How does Virginia's elective Pass-Through Entity Tax (PTET) work, who qualifies as an 'eligible owner' who can claim the credit, and how is the tax actually computed?
Virginia lets a qualifying partnership, LLC, or S corporation elect to pay a 5.75% income tax at the entity level (the 'PTET') instead of -- or as a supplement to -- having all of its income taxed onl…
As a contractor, I store construction supplies in my Missouri warehouse before using them at various job sites -- which local use-tax rate applies, and do I owe more once I know the installation site?
The correct use-tax rate is the rate at your warehouse location, not the rate where the supplies are eventually installed. Because a contractor is the "final consumer" of construction supplies at the …
I sell an implantable neurostimulator that treats Parkinson's and epilepsy -- does it qualify for Missouri's sales tax exemption for prosthetic devices?
No -- the Device is taxable, not exempt as a 'prosthetic device.' Missouri's prosthetic device exemption under Section 144.030.2(18), RSMo, turns on whether the item replaces the function of an intern…
I sell mobile homes in Missouri but deliver and install some of them out of state -- do I owe Missouri sales tax on those out-of-state sales?
No -- Applicant owes no Missouri sales or use tax on these out-of-state mobile home sales. Under 12 CSR 10-133.200.3(A), title to the mobile home doesn't transfer until the seller completes its delive…
My fitness studio only offers instructor-led classes, not open gym access -- are my membership fees subject to Missouri sales tax?
No -- Applicant's fitness club membership fees are not subject to Missouri sales tax. Section 144.020.1(2), RSMo, taxes fees paid for admission to places of amusement, entertainment, or recreation, bu…
I sell building materials wholesale into Missouri from out of state and my customers give me resale certificates -- do I have to register and collect Missouri use tax?
No, not unless your Missouri sales cross $100,000 in a calendar year. Missouri law defines an out-of-state seller like this as a "vendor," but a vendor only has to register and collect use tax once it…
My venue collects ticket money for touring performers who rent our space, and we agreed they'd handle the sales tax -- am I still responsible for collecting it at the point of sale?
Yes -- the venue that actually collects the money from ticket buyers is the one responsible for collecting sales tax on those sales, no matter what a private agreement says about who ultimately remits…
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