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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Are guided walking tours subject to Colorado sales tax, and what happens when food or drinks at a tour stop are included in the price?
It depends on whether food and drink are included. A guided walking tour by itself is a nontaxable service — it's not on Colorado's list of taxed services. But if the price includes food or beverages …
Did a nonresident's Florida-delivered aircraft purchase and limited return use during the first six months qualify for sales- and use-tax exemptions?
Yes. The purchaser qualified for the nonresident aircraft sales-tax exemption by timely removing the aircraft, registering it outside Florida, and supplying the required affidavit and documentation. I…
Does software delivered purely electronically need a special invoice or contract certifying that delivery method to be sales-tax exempt, and is Virginia's Internet-service-provider equipment exemption limited to companies that sell service at retail rather than wholesale?
No to both restrictions the Department had imposed. In a lawsuit over sales tax refund claims for software, equipment, and services sold to a wireless carrier, the Circuit Court of the City of Richmon…
My company filed amended corporate returns before an audit was finished, and disputes how the auditor handled loss characterization and overpayment credits across affiliates -- what does Virginia require?
Partly in the taxpayer's favor. A corporation that filed combined Virginia returns with its subsidiaries, then amended those returns before an audit concluded, disputed three things: (1) that the audi…
My company took title to equipment outside Virginia through an affiliate transfer, and calls it a corporate reorganization or a gift -- can Virginia still assess use tax once the equipment gets used here?
Yes. A marine cargo terminal operator owed Virginia use tax on ship-to-shore cranes because it took actual possession and began using them at the Virginia port once the cranes were erected, tested, an…
My company repairs and replaces command/communications/surveillance systems on Navy ships, including cabling and racks -- does that make me a retailer who can buy the parts tax-exempt for resale, or a consuming contractor who owes tax on them?
A retailer, not a consuming contractor -- meaning the contractor can buy the equipment and materials tax-exempt for resale to the government. A company contracts with the U.S. Navy to repair and repla…
The Department's auditor removed offsetting credit memos from my sales tax audit sample without a signed sampling agreement -- does that make the sample inflated and invalid?
No -- removing the offsetting invoice/credit-memo pairs and leaving the remaining unmatched credits out of the sample followed the Department's established, previously-published sampling policy, and t…
When is a motor vehicle sold to a nonresident exempt from Kansas sales tax, and what did the revised Form ST-8B change?
Kansas Notice 21-26 explains that the sales tax exemption for a motor vehicle, semitrailer, pole trailer, or aircraft sold in Kansas to a bona fide resident of another state is unchanged, and that the…
Does a permanently anchored racking system installed in a building qualify for Illinois's Enterprise Zone building materials sales tax exemption?
It depends on whether the racking has actually become part of the real estate. The Department explained that the Enterprise Zone building materials exemption only covers building materials incorporate…
When software is taxable remotely accessed software in Tennessee, are the separately stated implementation, onboarding, and content fees billed with it also taxable?
Taxable. When a company sells remotely accessed software that is taxable in Tennessee, the related implementation and content fees it bills along with the software are taxable too — even when they're …
When were tow-yard vehicle storage charges exempt as lawful impoundment and when did taxable storage begin?
Storage charges were exempt while a local, state, or federal law-enforcement agency directed the storage and the owner could not access or remove the vehicle without agency consent. Once that restrict…
Does a Colorado seller charge sales tax on an implantable, single-use diagnostic heart monitor sold to healthcare providers, or is it an exempt medical device?
Yes, it's taxable. A single-use heart monitor implanted to diagnose irregular heartbeats is taxable tangible personal property when sold to healthcare providers. It does NOT qualify for Colorado's med…
If the beneficiaries of an Illinois family trust move out of state and trust administration relocates with them, does the trust stop owing Illinois income and replacement tax?
Not necessarily. Under IITA § 1501(a)(20), a trust is an Illinois resident if the grantor was domiciled in Illinois when the trust became irrevocable -- that test doesn't change just because beneficia…
What is Illinois General Information Letter IT 21-0008-GIL, and what does it say about corporate income tax nexus, apportionment, and combined reporting?
It isn't a ruling on anyone's tax situation -- it's the Illinois Department of Revenue's completed answers to a private publisher's annual multistate corporate income tax survey, covering nexus, appor…
Where was the Department's index of South Carolina advisory opinions through September 30, 2021?
SC Information Letter #21-26 attaches the Department's index of South Carolina advisory opinions issued from 1987 through September 30, 2021 and supersedes SC Information Letter #21-21. The index cata…
How could taxpayers check the status of South Carolina advisory opinions through September 30, 2021?
SC Information Letter #21-25 attaches the Department's citator for advisory opinions issued from 1987 through September 30, 2021 and supersedes SC Information Letter #21-20. It identifies opinions kno…
How does Virginia decide whether a worker is an employee or an independent contractor, and what happens to a business that gets it wrong?
Virginia presumes anyone paid for services is an employee unless the worker or the business paying them proves independent-contractor status under the IRS's behavioral-control/financial-control/relati…
Is an enrollment marketing company's sale of prospective-student leads to colleges and universities a taxable information service, even when the contract calls the leads 'exclusive'?
Yes, taxable. A company that collects prospective students' personal information through online ad forms and sells matching leads to colleges/universities is providing a TAXABLE information service, e…
Can South Carolina's retirement income deduction be claimed on a COVID-related retirement plan distribution under the CARES Act, and what happens if the distribution is repaid?
Yes. A COVID-related (coronavirus-related) distribution from a qualifying retirement plan under CARES Act Section 2202 can qualify for South Carolina's retirement income deduction — up to $3,000 for a…
My S corporation and a related LLC are owned by the same family across different ownership structures -- do we count as an 'affiliated group' so fees between us are exempt from BPOL tax?
Yes -- fees between the two entities are exempt from BPOL tax because they qualify as an affiliated group. An S corporation owned by four siblings (one holding 100% of the voting stock, all four split…
A locality wants to count ALL of my company's Virginia remote employees' payroll in its BPOL apportionment numerator, just because they report to the local office -- is that right?
No -- a locality can't include the payroll of employees who work remotely OUTSIDE that locality in its BPOL payroll-apportionment numerator, even if those remote employees report to a manager at that …
A county's BPOL refund-denial letters were signed by a deputy, not the Commissioner of the Revenue -- do those letters count as a 'final local determination' I can appeal to the Department?
No -- the county's letters didn't qualify as valid final local determinations, so the Department issued this notice of jurisdiction instead of ruling on the merits. A business that had filed amended B…
Is a foodservice category management company's custom business-analytics reports and strategy consulting for restaurant/distributor clients a taxable information service in Texas?
No. A foodservice category management company's custom business-planning reports, strategic mapping, and consumer/operator insights -- built from third-party industry data plus the company's own analy…
Does federal ERISA law shield a Tennessee S corporation from franchise and excise tax just because the company is wholly owned by an employee stock ownership plan (ESOP)?
No. The Department ruled that ERISA — the federal law governing employee benefit plans — does not preempt Tennessee franchise and excise (F&E) tax on a Tennessee S corporation, even though the company…
I amended my corporate return to fix an apportionment mistake and I'm owed a refund -- do I still need to document the numbers, or does the Department just have to accept my corrected calculation?
No -- the Department can and did deny a refund on an amended return where the supporting documentation didn't establish the claimed amount, even though the taxpayer's underlying legal theory (that it …
A locality took over a year to rule on my BPOL appeal, and I might get taxed twice by two localities for the same software royalties -- do I automatically win, and does the software-development exclusion apply?
No to all three of the taxpayer's arguments -- and the underlying BPOL assessments were upheld. A software royalty recipient argued it should win automatically because its county took more than a year…
A vendor charged us sales tax on data center backup batteries because they were first delivered to a storage facility instead of straight to our data center -- does that disqualify the batteries from Virginia's data center exemption?
No -- delivering batteries to a storage facility first, rather than straight to the data center, doesn't disqualify them from Virginia's data center sales and use tax exemption. A battery manufacturer…
I'm a Virginia domiciliary who went to college out of state and earned summer internship wages in a different state -- do I still owe Virginia income tax on those wages?
Yes, unless he can show he actually abandoned his Virginia domicile -- and the facts here pointed the other way. A Virginia resident who enrolled in college out of state (a different state than his su…
Does an EV charging station operator that sells electricity have to register for and collect Illinois Electricity Excise Tax?
Yes. The Illinois Department of Revenue concluded that a person operating an EV charging station and selling electricity is a "delivering supplier" under 35 ILCS 640, so it must register with the Depa…
Which of a restaurant mobile-ordering platform's various fees (service fee, credit card fee, offers fee, setup fee, subscription fee) are subject to Texas sales tax?
Split ruling. The Service Fee, Credit Card Fee, Setup Fee, and Platform subscription fee are ALL taxable as data processing services (80% of the charge). The Credit Card Fee doesn't qualify for the 20…
What major South Carolina tax-law changes did the 2021 legislative session make?
SC Information Letter #21-24 summarizes major South Carolina tax and regulatory changes enacted in 2021. Act 87 updated state conformity to the Internal Revenue Code through December 31, 2020, while l…
I mailed my Qualified Equity and Subordinated Debt Investments Tax Credit application before the deadline, but the Department says it never arrived -- can I still get the credit?
No -- without proof the application was actually filed by the deadline, a hard statutory cutoff can't be waived. A taxpayer claimed he mailed his Qualified Equity and Subordinated Debt Investments Tax…
I'm in the military and had combat-zone pay excluded from my federal income -- can I also claim Virginia's combat-pay subtraction on it?
No -- you can't subtract combat-zone military pay on your Virginia return if that pay was never included in your federal adjusted gross income (FAGI) in the first place. Virginia's income tax starts w…
My business claims its supply purchases were tax-exempt for resale and its vendor invoices were labor-only -- but I don't have great paperwork proving it. Does the assessment still get upheld?
Yes, the assessment was upheld -- without adequate records, a business can't prove its purchases actually qualified for the resale exemption or the labor-only services exemption. A seasonal frozen yog…
Does an Illinois business have to pay tax on the training manuals it hands out at a paid customer seminar, and how is that tax calculated?
Yes. Because labor is not taxable but the training manuals handed out at the seminar are tangible personal property, the company (acting as a "serviceman") owes Service Occupation Tax or Use Tax on th…
Does capital equipment being installed as part of a facility expansion in an Illinois enterprise zone qualify for the Enterprise Zone building materials sales tax exemption?
Mostly yes. The Department ruled that the listed capital equipment items -- including a wastewater system, steam boiler, air compressors, rail systems, a tunnel washer, dryer system, and ironer line -…
Which Nebraska water-service charges qualified for the residential sales-tax exemption?
Water service to places designed primarily as permanent or long-term residences was exempt, including homes, apartments, dorms, nursing homes, and assisted-living homes. Unmetered mixed residential an…
Does an out-of-state online retailer owe Illinois Retailers' Occupation Tax (ROT) or Use Tax on sales fulfilled from its subsidiary's Illinois stores or from unrelated third-party inventory in Illinois?
Use Tax, not ROT. The Department concluded that when an out-of-state internet retailer's Illinois sales are fulfilled from inventory owned and possessed by its subsidiary's stores or by unrelated thir…
If a company bundles hardware and a required software subscription into one price and doesn't separately state what part of the charge is for the tangible property, how is Illinois Service Occupation Tax calculated?
Illinois ruled that because the company's hardware (sensors, trackers, monitors, tokens) and its software/firmware are sold together for one bundled price with no separate charge for the tangible pers…
Does Illinois sales and use tax apply to explosives, blasting agents, and detonator equipment a company sells and uses to break up rock for its quarrying and mining customers?
No, not on these facts. The Department ruled that the blasting agents, high explosives, boosters, and detonator delivery systems the company supplies and uses to fragment rock are exempt manufacturing…
How much proof does a company need to show that royalty payments to an affiliate were 'actually taxed' by another state, in order to escape Virginia's intangible-expense addback?
The taxpayer still couldn't meet its burden, and a request to reconsider that failure was denied. This is a Circuit Court order in the long-running Kohl's Department Stores litigation over Virginia's …
How could a Florida business calculate Capital Investment Tax Credit project income using project gross profit, expenses, Schedule M items, and apportionment?
Florida approved a method that started with actual gross profit from qualifying project lines, subtracted associated incremental expenses, made project-specific and ratio-based Schedule M adjustments,…
If an Indiana resident buys a car in Illinois and trades in another vehicle, does Illinois tax apply, and does the $10,000 trade-in credit cap still apply?
Yes to both. Illinois Retailers' Occupation Tax and Use Tax apply to a first division motor vehicle sold to an Indiana resident who takes delivery in Illinois but will register the vehicle in Indiana,…
Virginia won't give me a credit for the LOCAL county income tax I paid to Maryland (only the state tax) -- doesn't that amount to unconstitutional double taxation under the Commerce Clause?
No -- denying the credit for Maryland's local (county) income tax doesn't violate the Commerce Clause, even though it results in some double taxation. A Virginia domiciliary resident who also lived in…
My vendors told me by letter and email that our software was delivered electronically, not on a disc -- is that enough to get it exempted from a Virginia use tax audit assessment?
No -- a vendor's letter or email saying software was delivered electronically, by itself, isn't enough proof to win the exemption; you need contemporaneous sales documentation that expressly certifies…
My business claims its supply purchases were tax-exempt for resale and its vendor invoices were labor-only -- but I don't have great paperwork proving it. Does the assessment still get upheld?
Yes, the assessment was upheld -- without adequate records, a business can't prove its purchases actually qualified for the resale exemption or the labor-only services exemption. A seasonal frozen yog…
My spouse and I filed a joint Virginia return, then my spouse separately filed a part-year return, and now the Department reclassified my return as married filing separately -- can we fix this back to joint?
Yes -- submitting an actual joint return for the year fixed the problem. A married couple originally filed a joint 2017 Virginia return; the wife then separately filed her own part-year return. Becaus…
Does federal protection for a Colorado resident's retirement income override New Mexico's three-year deadline for refunding pension tax withheld by mistake?
No. Kimmet Holland moved from New Mexico to Colorado in 2012, but New Mexico PERA continued withholding New Mexico tax from his retirement payments because he notified PERA by phone and did not submit…
When a dealer sells a motor vehicle with a trade-in, can the buyer and dealer lower the sale price and the trade-in value by equal amounts to get around the $10,000 cap on the tax-free trade-in credit?
The Department did not say the practice is flatly illegal, but it warned that selling price and trade-in value have to reflect real, objective values — if a dealer's reported numbers deviate from what…
My county just adopted the Virginia Disposable Plastic Bag Tax -- what do I have to charge, on which bags, and how do I remit it?
Any Virginia county or city may adopt (by ordinance) a 5-cent-per-bag tax on disposable plastic bags provided at grocery stores, convenience stores, and drugstores in that locality, effective no earli…
How did Florida's $5,000 discretionary sales-surtax limitation apply to electrical products shipped in multiple deliveries under an order and change orders?
Each delivery or invoice was a separate sale because the purchase orders did not specify delivery periods and items shipped as available; each change order was also separate. Within each invoice, mult…
Does having one full-time remote employee working from her home in Illinois create Illinois corporate income tax nexus for an out-of-state company with zero Illinois sales?
IDOR wouldn't say -- it does not issue rulings on whether nexus exists, since that determination is 'extremely fact-specific.' But it explained that under IITA Section 502(a), if the company has zero …
For Illinois income-tax apportionment purposes, is bitcoin treated as intangible personal property, and is it treated like a patent, copyright, or trademark?
Yes and no. The Illinois Department of Revenue treats bitcoin as 'intangible personal property' under the state's apportionment statute (35 ILCS 5/304), but bitcoin is NOT treated as a 'patent, copyri…
Can Illinois Historic Preservation Tax Credits be divided among partners or LLC members however they agree in a contract, instead of strictly by ownership percentage?
Yes. Under 35 ILCS 31/10(d), a partnership or LLC taxed as a partnership can pass the Illinois Historic Preservation Tax Credit through to its partners or members on a pro rata basis OR per an execute…
What South Carolina tax interest rate applied from October 1 through December 31, 2021?
The listed South Carolina tax interest rate was 3% for October 1 through December 31, 2021. It applied to tax underpayments and overpayments and was compounded daily, except simple interest applied to…
Are subscription fees for an online freight-posting (advertising) platform and an aggregated freight-rate data service subject to Tennessee sales and use tax?
Not taxable. The Department ruled that neither part of this freight-matching platform is subject to Tennessee sales and use tax. The first offering is an online board where freight brokers post haulin…
How long did South Carolina extend its COVID-19 remote-work nexus and withholding relief in August 2021?
SC Information Letter #21-22 extended through December 31, 2021 the temporary COVID-19 relief originally stated in SC Information Letter #20-11. Under that relief, a business did not establish South C…
Is an out-of-state online retailer a 'marketplace facilitator' under Illinois law if it processes payment for third-party sellers' goods but never names those sellers on its website?
No. The Illinois Department of Revenue concluded that a retailer is not a marketplace facilitator if it never identifies the third-party sellers to purchasers on its website (the marketplace) — even t…
How does Illinois sales/use tax apply to a company that leases equipment (like traffic control trailers) to customers, when the equipment is bought and shipped from state to state?
Under Illinois's 2021-era rules, a lessor renting equipment under a true lease does not charge sales tax on the rental payments. Instead, the lessor itself owes Use Tax on its own cost price of the eq…
A county denied my manufacturer-classification refund claim in a letter, and I appealed straight to the Department -- but the Department says it can't hear my case yet. Why not?
Because the taxpayer skipped a required step -- a genuine local administrative appeal -- and even the county's letter that it treated as resolving the matter had a separate, independent defect. A prod…
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