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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Were payments to a nonresident member from Virginia franchise LLCs treated as Virginia-source income?
Yes, on the available record. The taxpayer signed a loan agreement as an LLC member, and the return information and agreement indicated payments tied to the Virginia partnerships' income or net sales …
When did a Virginia shareholder change domicile, and how were a lump-sum payment and S corporation income taxed?
The taxpayer changed domicile on December 1, 2003, when the out-of-state lease became effective—not September 30. Virginia found the December related-party lump sum was not an arm's-length prepayment …
We're a section 1411 not-for-profit local development corporation administering a federally-seeded revolving loan fund for Albany County businesses. Are the mortgages we take as collateral on our loans exempt from New York's mortgage recording tax?
Exempt. The Albany County Business Development Corporation is a not-for-profit local development corporation (LDC) incorporated under section 1411 of the Not-For-Profit Corporation Law, administering …
For an event-production company that rents AV/staging equipment and provides setup labor, planning, and decor services for corporate events, which charges are subject to New York sales tax?
Equipment rentals delivered in New York, and the labor to set up (install) that equipment, are taxable; a single combined setup-and-teardown charge is fully taxable too. But separately-priced equipmen…
Are tarps bought by a farmer or rancher to cover harvested hay exempt from Kansas sales and compensating use tax as farm machinery or equipment?
Yes. The Kansas Department of Revenue concluded that a tarp purchased by a farmer or rancher and used to cover harvested hay qualifies for the farm machinery or equipment exemption from Kansas sales a…
For a company that licenses proprietary hardware/software to religious organizations, sells consulting, design, and web services, and lets the public download audio/video content, which parts of the business are taxable in New York?
The proprietary hardware/software package's monthly license fee is taxable prewritten software, and a bundled setup fee is taxable unless split from its nontaxable custom-programming portion; but genu…
When is South Carolina's 2007 sales tax holiday and what is exempt (per SC IL #07-12)?
August 3-5, 2007. SC Information Letter #07-12 sets South Carolina's 2007 sales tax holiday for the weekend beginning Friday, August 3, 2007 at 12:01 a.m. and ending Sunday, August 5, 2007 at midnight…
What Virginia tax underpayment and refund interest rates applied during the third quarter of 2007?
Virginia's third-quarter 2007 rate remained 10% for tax underpayments and 10% for overpayments. The federal rates were 8%, and Virginia added two percentage points. For taxpayers whose year ended June…
Does an airline's baggage-handling-system renovation at its leased airport terminal, which becomes city property upon completion, qualify as a tax-exempt capital improvement, and how are the government's own security screening machines treated?
Yes, the baggage-handling system renovation is a doubly-exempt capital improvement (both as a capital improvement and as work on government-owned real property), so its labor and materials escape sale…
Could a Florida dealer sell components tax-free to a nonresident when it delivered them to another Florida dealer for assembly before export?
No. The selling dealer had to collect Florida sales tax because it delivered the parachute canopies to another Florida dealer acting as the nonresident customer's representative for assembly. The good…
Does the 1,820-hour employment requirement in the Texas Enterprise Zone Program include paid leave?
Yes. The Governor's Office of Economic Development and Tourism advised the Comptroller that the 1,820-hours requirement in Government Code Section 2303.401 for the Texas Enterprise Zone Program is inc…
Which fuel-wholesale, tank, testing, retrieval, delivery, and travel charges did Kansas treat as taxable sales or services?
Kansas treated tank filtration and maintenance, equipment cleaning, tank repair, most tank installation, tank delivery with a sale, tank leases, product delivery, and travel charges tied to taxable se…
Could a Kansas-registered drop shipper accept a resale certificate from an out-of-state seller that was not registered in Kansas?
Yes, beginning July 1, 2007. A Kansas-registered drop shipper could accept an out-of-state seller's home-state resale certificate or a multijurisdictional certificate even if the seller had no Kansas …
Could New Mexico use IRS information reports to assess unreported income when the federal reports were unsigned and the taxpayer disputed only the procedure?
Yes. The IRS properly disclosed information about Salomon Rael's unreported wages and nonemployee compensation under its coordination agreement with New Mexico. The transmitted reports did not need an…
Could a New Mexico resident avoid personal income tax on wages by arguing that federal income tax is invalid or voluntary?
No. James Avant did not deny receiving compensation for services in New Mexico or challenge the Department's calculation. Courts had repeatedly rejected his claims that wages are not income, individua…
Could New Mexico reject a successor-liability protest as late when it did not prove when the assessment was actually mailed?
No. The Department had to prove that it mailed the assessment more than 90 days before the August 7, 2006 protest. A GenTax copy dated April 3 and testimony from a protest auditor who had no mailroom …
Did a purchaser owe Virginia use tax on barter transactions when invoices did not separately show sales tax?
Yes. Virginia's definition of a sale includes barter, and sales tax is the purchaser's legal debt even though the dealer must collect it. The barter records showed no separately stated tax and no evid…
Could Virginia consider a corporate tax appeal filed one day after the 90-day deadline?
No. The assessments were dated October 19, 2006, and Virginia counted 90 consecutive calendar days beginning the next day, including weekends and holidays. The deadline was January 17, 2007. Because t…
Which software implementation, support, and maintenance charges could Virginia remove from a sales-tax audit?
Virginia revised the audit transaction by transaction. It kept charges where the vendor could not credibly separate exempt custom-software modification or installation from taxable testing, training, …
Could a dealer remove audited sales by obtaining customer resale certificates after the audit began?
No. Certificates obtained after an audit begins are not accepted in good faith automatically and must withstand greater scrutiny. The submitted resale certificates involved unregistered customers, inv…
Can proceeds from selling an old vehicle to a relative reduce Texas motor vehicle sales tax on a new vehicle bought from a dealer?
No. Only a vehicle transferred directly to the seller of the new vehicle as part of that purchase can reduce taxable consideration. Cash proceeds from a separate sale to a relative or other third part…
Are the various fees a jukebox company charges its jukebox operators for music downloads, database access, background music, and telephone support subject to Utah sales and use tax?
Mostly yes. An electronic jukebox company's music-service package fees (flat-rate, revenue-percentage, and per-play plans), additional song download charges, and Tune Central database-access fees are …
Can a franchised dealer use its Texas rental permit to defer tax when rental-plan vehicles are titled to the manufacturer's finance affiliate?
Yes. Under the described manufacturer rental-purchase plan, the dealer could use its Texas rental permit on Form 130-U even though title named the manufacturer's affiliate in care of the dealer. The d…
When did a Virginia Land Preservation Tax Credit application over $1 million enter the 2007 allocation queue?
Only after the Department received the required DCR verification of the donation's conservation value. Virginia would not hold a tentative place in the queue while verification was pending. For 2007 d…
Could Virginia consider an individual's challenge to corporate-officer assessments filed more than two years after the latest assessment?
No. Virginia did not decide whether the individual was a corporate officer. The latest converted assessment was dated September 17, 2004, making December 16, 2004 the latest 90-day appeal deadline. Hi…
Could a State A resident amend 2001 and 2002 Virginia returns as a nonresident and claim credit after State A's tax-court decision?
Yes. Virginia found that the taxpayer never abandoned her State A domicile and was not an actual Virginia resident, so only Virginia-source income was taxable. Because State A offered a substantially …
Which pharmacy purchases did Virginia remove from a retirement community's sales-and-use-tax audit?
Virginia removed five line items after reviewing additional information, but left the other contested purchases in the audit. The taxpayer did not explain how claimed medicine, supply, or packaging it…
Did resale certificates obtained after a Virginia sales-tax audit began protect a seller when the account numbers were invalid?
No. Certificates obtained after an audit begins do not receive the ordinary good-faith protection and are accepted only when Virginia can verify their valid use for the audited transaction. The submit…
Were calendars distributed to federal employees at enrollment fairs exempt Virginia media advertising?
No. The calendars promoted a health insurer's services only to federal employees attending enrollment fairs. Because that was a limited customer base rather than the general public, the calendars were…
Could a technology consultant remove a three-month software license fee from Virginia's sales-tax audit sample as an unusual purchase?
No. Virginia found that the software license purchase was not isolated: it covered up to 3,000 workspaces for three months and was reasonably part of a technology consultant's normal operations. The p…
Could a bank-equipment installer treat permanently installed and monitored-service equipment as exempt retail sales to federal credit unions?
No. Virginia treated the company as a real-property contractor for permanently installed bank equipment and as the consumer of equipment used in surveillance and monitoring services. Federal credit-un…
Did accounting-personnel changes justify splitting a Virginia audit into two periods with separate error factors?
No. Virginia kept one 2002 sample error factor for the March 2001-February 2004 audit. The sample included three months after the personnel change, and 23% of all sampled exceptions occurred then. Lat…
Did federal treatment of a partnership credit allocation as a deemed purchase require Virginia to revoke Historic Rehabilitation Credits?
No. On the hypothetical facts in IRS AM 2007-002, Virginia said federal deemed-purchase treatment affected federal income-tax computation but did not invalidate a partnership or credit allocation othe…
When did an airplane bought outside Louisiana become subject to Louisiana use tax after entering the state?
Use tax became due when an out-of-state-purchased airplane entered Louisiana, came to rest, and had a taxable moment outside continuous bona fide interstate commerce. Merely intending future interstat…
Did brief Florida visits during a yacht's first six months of ownership trigger Florida use tax?
No, under the stated limits. The out-of-state-purchased, federally documented, Delaware-registered yacht could enter Florida during the first six months without use tax if its presence did not exceed …
Would Florida use tax apply when an out-of-state-purchased yacht entered Florida after more than six months of use in other states?
No, on the stated facts and conditions. The yacht was purchased and titled outside Florida, was not bought for Florida use, and would be used for more than six months under conditions giving other sta…
Did warehouse racks anchored into concrete become real-property improvements, or were they taxable tangible personal property?
They remained tangible personal property. Although concrete anchors physically attached the racks, warehouses could function without them and the racks were trade fixtures expected to change with use …
How did Virginia include an out-of-state corporation's share of joint-venture satellite sales in its 2001 sales factor?
Virginia included the corporation's proportionate share in the sales-factor denominator because a joint venture was treated as a partnership. The satellites were not transferred in Virginia, so those …
Could a landscaper use internal records to exempt installation labor that was not separately stated after Virginia gave inaccurate advice?
For this first audit only, yes. Although installation labor normally had to be separately charged, the auditor verified internal records splitting labor from materials, and the company had relied on i…
Did working overseas for all of 2004 end Virginia domicile when the taxpayer kept an unleased Virginia home and driver's license?
No. Living and working overseas for the entire year did not by itself change domicile. The taxpayer kept an unleased Virginia home and driver's license, later registered another Virginia vehicle, and …
Did a securities-investment partnership managed from Virginia have to file a Virginia return or make its nonresident partners taxable?
No, on the stated facts. The securities-only partnership had no employees, real property, or tangible property and was not carrying on a Virginia trade or business, so it had no Virginia-source income…
Could an advertising company replace Virginia Forms ST-10 and ST-10A with its multijurisdictional blanket exemption certificate?
No. The proposed multijurisdictional form lacked the information Virginia required for a blanket resale certificate. The company had to use Form ST-10 for property bought for resale and Form ST-10A fo…
Could a corporation separately allocate pass-through income from Virginia land sales when its other-state losses eliminated taxable income?
No. The corporation did not follow the required refund procedure or show an unconstitutional or Virginia-caused double-tax result. Its proposal was disfavored separate accounting and would create Virg…
Were software license fees under the same contract decided in Intersections exempt from Virginia sales and use tax for 2002-2004?
Yes. A Fairfax County Circuit Court had already held the license fees under the contract exempt for an earlier period. Because the 2002-2004 appeal presented the identical issue, Virginia treated the …
Could Virginia separately assess a retailer's freight-in costs after those costs were included in the customer price already subjected to sales tax?
No. Freight-in is normally part of a retailer's taxable product cost, but this retailer included the freight in its marked-up customer price and collected sales tax on that full price. A separate audi…
Was a parent company liable for Virginia sales tax on hotel property sold by a wholly owned QSub subsidiary?
No. The purchase and settlement documents showed that the subsidiary, not the parent, owned and sold the hotel. A qualified Subchapter S subsidiary remained a separate legal entity for Virginia sales …
Were replacement parts and tires for trucks carrying exempt oil-and-gas drilling equipment also exempt from Virginia sales tax?
Only partly. Parts and supplies for truck-mounted equipment used directly in exempt drilling qualified under the former exemption. The trucks themselves were not used directly in drilling, so their ti…
When could Virginia residents claim an other-state tax credit for income passed through from a limited partnership or LLC?
It depended on the entity and activity. General partners were treated as conducting the business; a limited partner's facts could fail the resident credit's continuous, regular, profit-motivated busin…
Is selling an alphanumeric code that lets someone download digital music -- whether the code is emailed or printed on a plastic card -- subject to New York sales tax?
No. A download code is treated like a gift certificate regardless of the physical medium used to deliver it, and the digital music itself is intangible property when downloaded electronically -- neith…
Is an email-marketing company's fee to run targeted email campaigns for clients subject to New York sales tax?
The company's charges to clients for running targeted email marketing campaigns are exempt as nontaxable marketing services (not information services), but its own purchases of the databases used to r…
Is an out-of-state company subject to New York's corporate franchise tax when its only New York activity is delivering equipment it sold, including occasional deliveries in its own truck?
No. An out-of-state party-equipment seller whose only New York activity is delivering goods it sold - by common carrier or occasionally its own truck - is not doing business, employing capital, owning…
I own a Queens shopping center and want to ground-lease a small newly-created parcel (less than half the shopping center's total rentable space) to a new retail tenant for more than 49 years, with substantial construction planned but no purchase option. The lease easily clears two of the three tests for a taxable long-term lease -- but does the third test, requiring the lease to cover 'substantially all' of the real property, look at just this one parcel or at my entire integrated shopping center?
No RETT is due on signing this ground lease, because the relevant 'premises' for the 90% test is the ENTIRE integrated shopping center, not just the newly-created parcel. A shopping center owner in Qu…
What are South Carolina's latest state and county per capita income figures used for tax incentives (per SC IL #07-11)?
$29,515 statewide. SC Information Letter #07-11 publishes the most recently available per capita personal income figures for South Carolina — $29,515 for the state, plus a figure for every county — wh…
Did a couple become Virginia domiciliaries merely by living there temporarily and listing Virginia as their permanent passport address?
No. Their State A ties, lack of a Virginia home or family ties, and conduct showed no acquisition of Virginia domicile; the passport address was used for expediency. But domicile was separate from act…
Did customers' direct payment of use tax excuse a registered dealer's failure to collect tax on sales lacking exemption certificates?
No. A registered dealer still had to collect Virginia tax on sales unsupported by valid exemption certificates, so customer self-assessment did not remove those sales from the audit sample. Credits we…
Did a country club owe use tax on sod that its golf-course renovation contractor furnished and installed without charging sales tax?
Yes. Virginia treated the contractor as a retailer for the sod even though its other renovation work was a real-property service. Because the contractor did not collect sales tax on the furnished and …
Was a church trustee's musical equipment exempt from local business tangible personal property tax when it was also used in a band business?
No. Although a duly designated church trustee could be treated as holding property for the church, the exemption required exclusive charitable, religious, or educational use. The taxpayer also used an…
Was a buyer liable for a seller's unpaid Virginia use tax when it acquired the business assets without obtaining tax clearance or withholding funds?
Yes. The buyer neither obtained Department certification that the seller's liabilities were paid nor withheld enough purchase money to cover them. Under Va. Code § 58.1-629, the buyer became personall…
Could restaurants buy foil wraps, bamboo skewers, napkin bands, and carryout foil pans tax-free for resale?
Yes. The foil wraps, bamboo skewers, paper napkin rings or bands, and lidded foil carryout pans were furnished with meals and discarded after one customer's use. Virginia treated them as part of the m…
Should Virginia remove one of two annual production charges from a one-year audit sample when including both distorted the projection?
Yes. Although sampling was a valid audit technique, Virginia found that including both annual video-production charges in the September 2003 through August 2004 purchase sample distorted its result. T…
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