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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Does Illinois's Parking Excise Tax residential off-street parking exemption still apply if the parking facility is located near a building rather than inside it?
Yes. The Illinois Department of Revenue confirmed that the residential off-street parking exemption applies regardless of whether the parking spaces are inside the residential building or in a separat…
Did South Carolina extend the 2020 individual income tax filing deadline to May 17, 2021, and what was South Carolina's IRC conformity status for 2020?
South Carolina automatically extended the deadline to file and pay 2020 individual income tax to May 17, 2021, matching the IRS's COVID-19 relief. SC Information Letter #21-7 explains that returns and…
Did a concrete purchase agreement and related construction documents create one sale for Florida's $5,000 discretionary surtax limitation?
No. The purchase agreement, subcontract documents, and addendum were executed on different dates and did not clearly specify all quantities and delivery periods. Each delivery or invoice therefore rem…
The IRS adjusted my old federal return years ago and I never amended my Virginia return -- can Virginia still assess me now, and can I settle the bill for less?
Yes, Virginia can assess tax with no time limit at all if a taxpayer never files the Virginia amended return required after an IRS adjustment, and no, an offer to settle for less doesn't work when the…
My employer withheld Maryland income tax from my wages even though I live in Virginia -- can I claim a Virginia credit for the Maryland tax withheld?
No -- a Virginia resident who commuted to a job in Maryland lost her appeal after claiming a Virginia credit for Maryland income tax her employer had withheld. Virginia has a reciprocal agreement with…
I moved to Virginia partway through the year -- the Department assumed I was a full-year Virginia resident, but I filed a part-year return. Who's right?
A couple who moved to Virginia from another state in 2016 won their appeal after the Department initially assumed they were full-year Virginia domiciliary residents and adjusted their part-year return…
I never filed my Virginia return because my taxes were too complicated, and the Department assessed me based on IRS data -- can I get the penalty and interest waived?
No -- a couple who never filed a 2017 Virginia return, and were assessed based on IRS-supplied income data after the Department got no response to its requests for information, lost their bid to have …
Did Kansas extend the 2020 tax filing and payment deadline, and to when?
Kansas Notice 21-01 explains that, to conform to filing and payment extensions announced by the IRS, the Director of Taxation extended the Kansas deadline for 2020 returns from April 15 to May 17, 202…
Could a California contractor deduct military-range cleanup services because the Air Force command accepted contract deliverables in Virginia?
No. Timberline performed demilitarization and range-debris removal at the Oscura and Melrose ranges in New Mexico. Although Air Combat Command was an out-of-state buyer and the contract designated Lan…
A cigarette distributor's own sales records show I bought more cigarettes tax-free for resale than I reported selling -- can the Department assess me on that difference even without my own sales records?
Yes -- a convenience store lost its appeal of a sales tax assessment on cigarettes, which the Department calculated using the DISTRIBUTOR's own purchase records rather than the store's, because the st…
What does Virginia Ruling of the Tax Commissioner P.D. 21-40 conclude about Net Operating Loss (NOL) : NOL Deduction (NOLD) - Amendments to Carryback Provisions - Tax Cuts and Jobs Act (TCJA) - Coronavirus Aid, Relief and Economic Security Act (CARES Act)?
NO, the refund/NOL carryback was correctly denied -- even though the federal CARES Act let this taxpayer carry its 2018 NOL back to 2016 for federal purposes, Virginia's conformity to the Internal Rev…
What does Virginia Ruling of the Tax Commissioner P.D. 21-39 conclude about Residency: Domicile - Failure to Abandon Virginia Domicile; Administration : Written Advice - Previous Audit Abatement?
The taxpayer remained a Virginia domiciliary resident for 2015-2017 despite claiming to live and work in another state, because he kept a Virginia home, vehicle registration, and driver license, and, …
What does Virginia Ruling of the Tax Commissioner P.D. 21-37 conclude about Deduction: Itemized - Documentation, Unreimbursed Business Expenses, Employee Business Expenses, Health Sanitation Supplies, Tax Preparation Fees, Work Clothing?
The Department upheld the disallowance because the taxpayers provided zero supporting documentation across every expense category -- work clothing, health-sanitation supplies, Form 2106 travel costs, …
What does Virginia Ruling of the Tax Commissioner P.D. 21-36 conclude about Allocation and Apportionment : Alternative Method - Non - Business Income, Pass-Through Entities - Factor Attributes Pass Through To Owners?
NO, both assessments are upheld -- a corporation that holds an interest in a pass-through entity (including an LLC treated as a partnership) must fold that entity's own property, payroll, and sales in…
I live in Maryland most of the year but still own a home and vote in Virginia -- can I claim a Virginia credit for the Maryland tax I paid?
Yes -- because the taxpayer was a "dual resident," the Virginia-Maryland reciprocal agreement didn't apply, and he was entitled to claim a credit for the tax he paid to Maryland. He spent 290 nights i…
What does Virginia Ruling of the Tax Commissioner P.D. 21-32 conclude about the credit for tax paid to another state when a couple is a dual resident of Virginia and another state?
The Department reversed itself and ordered the couple's credits for tax paid to another state reinstated. Being a ‘dual resident’ -- domiciled in Virginia while also treated as a resident of another s…
Does Illinois' farm machinery and equipment sales tax exemption cover corrugated plastic drainage pipe and other water management products used in production agriculture?
No. The Illinois Department of Revenue concluded that corrugated plastic pipe and other water management/drainage products, even when used primarily in production agriculture, are "drainage facilities…
Does Illinois sales tax apply to a records-management company's document storage, shredding, scanning, software, and related service fees?
Generally, no. The Department confirmed that if a transaction does not involve transferring tangible personal property to the customer, no Retailers' Occupation Tax, Use Tax, Service Occupation Tax, o…
If an Illinois business buys goods from an out-of-state supplier and has them shipped to customers or locations both inside and outside Illinois, who owes Illinois sales or use tax?
It depends on where the property physically is when the sale happens. If the goods are delivered to a purchaser in Illinois, the sale is taxable there even if the buyer immediately takes the goods out…
Does a company that resells hosted phone system licenses have to collect and remit Illinois telecommunications tax or sales tax on those licenses?
It depends on what's actually being resold: hosted telecommunications service is generally subject to the 7% Telecommunications Excise Tax unless the reseller holds an active Illinois resale number, w…
Does a grocery store charge the high or low Illinois sales tax rate on individually sold rolls and cookies, and on prepackaged cold prepared food, when the store also has a separate dining area?
The low sales tax rate applies to individually sold rolls and cookies, and to prepackaged cold prepared food, as long as they aren't sold for consumption in the store's dining area. Because the store'…
Does Illinois' manufacturing machinery and equipment exemption let a manufacturer buy electricity and natural gas tax-free for use in production?
No. The Illinois Department of Revenue told a zinc-plating manufacturer that electricity and natural gas used in manufacturing are not covered by the manufacturing machinery and equipment exemption, b…
What does Virginia Ruling of the Tax Commissioner P.D. 21-34 conclude about Subtractions : Foreign Source Income - Tax Cuts and Jobs Act (TCJA)?
NO, Virginia does not offer the same 8-year federal installment option for TCJA repatriation tax, because that federal provision is just a payment mechanism, not part of computing FAGI/FTI, which is t…
What does Virginia Ruling of the Tax Commissioner P.D. 21-31 conclude about Residency : Part-Year - Moved to Virginia?
The Department agreed the taxpayer should be treated as a part-year Virginia resident, not a full-year resident, because he moved to Virginia in August 2017; he must file Form 760PY reporting only the…
What does Virginia Ruling of the Tax Commissioner P.D. 21-30 conclude about Administration : Appeal - Reconsideration; Residency : Domicile - Different States, Decree of Divorce?
Two separate issues. For 2014: the taxpayer's request to reconsider an earlier determination (P.D. 19-79) arrived well after the 45-day deadline, so that assessment stands regardless of the merits. Fo…
Was a global asset manager a financial organization, and where should it source management fees, incentive fees, carried interest, and advisory receipts?
Florida treated the asset manager as a financial organization. Its management fees, incentive fees, performance allocations, and advisory or transaction receipts were sourced on a market basis to the …
What is South Carolina's tax interest rate for underpayments and overpayments for the period ending June 30, 2021 (per SC IL #21-5)?
3%. SC Information Letter #21-5 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period July 1, 2020 through June 30, 2021. Interest is compounded daily, except …
Can a taxpayer get a Virginia income tax refund by amending her return more than three years later, based on a correction made to her other state's return?
No -- the refund was denied as time-barred, because the one-year exception for changes made by another state only applies when that change actually decreases Virginia tax, and here the State A rate co…
When a pass-through entity files a unified (composite) return for its nonresident partners, must the tax be computed at the highest individual rate instead of each partner's own bracket, and does that income include guaranteed payments for services performed outside Virginia?
The Department's rate adjustment was correct -- a unified/composite return must be taxed at the single highest Virginia individual income tax rate under § 58.1-320, not at each partner's own lower bra…
What does Virginia Ruling of the Tax Commissioner P.D. 21-27 conclude about Net Operating Loss (NOL) : NOL Deduction (NOLD) - Election to Forego Carryback?
YES, the Taxpayer's election to forego the two-year NOL carryback was valid -- even though it did not attach a separate election statement to its Virginia return, checking the 'forego carryback' box o…
What does Virginia Ruling of the Tax Commissioner P.D. 21-26 conclude about a dealer's failure to file a retail sales and use tax return?
The statutory assessment was upheld: the dealer was required to file a sales tax return for the period even though no tax may have been due, and the assessment stands as due and payable unless the dea…
How does South Carolina's housing tax credit for low-income housing projects work — who qualifies, what taxes it offsets, how partnerships allocate it, and can it be sold?
South Carolina's housing tax credit (Code Section 12-6-3795, the 'Workforce and Senior Affordable Housing Act,' enacted May 14, 2020) gives investors in qualified low-income housing a state credit EQU…
Could a parent company stop filing Florida consolidated returns after an acquisition ended its former affiliated group?
Yes. Florida granted permission because the complete acquisition ended the taxpayer's former affiliated group and nullified its prior consolidated election. The taxpayer and members of its former grou…
Can a Virginia taxpayer get an income tax refund after the statute of limitations has run because their tax preparer made a filing error?
No -- the refund was denied as time-barred because the return was not filed until October 2019, more than three years after the May 2, 2016 deadline, and the Taxpayers could not prove their preparer h…
Did this taxpayer succeed in proving he had changed his domicile from Virginia to Maryland, and could he still get credit for the Maryland tax he paid?
NO, the taxpayer did not establish a change of domicile to Maryland -- he failed to provide the Department with documentation supporting his claimed Maryland domicile, so the Virginia resident assessm…
Can a Virginia resident claim a credit for tax paid to Pennsylvania on fees earned as trustee and power of attorney for a family member, even though the Pennsylvania-Virginia reciprocity agreement doesn't apply and the income was reported as 'other income' on the federal return?
YES, the Taxpayer was entitled to the credit -- although the Pennsylvania-Virginia reciprocity agreement did not apply because the Taxpayer was not an employee earning 'compensation,' the fees she ear…
Was a Virginia individual income tax refund claim for the 2015 tax year timely when the amended Virginia return was filed more than three years after the original return but within one year of a related amended federal return?
YES, the refund was allowed -- although the Department initially denied it as filed too late, the amended Virginia return was actually timely because it was filed within one year of the taxpayer's ame…
Can Virginia uphold an estimated sales and use tax assessment against a contractor who refused to give the auditor its purchase records?
YES, the estimated assessment was upheld as properly issued -- the Taxpayer, a real property contractor, refused to provide purchase records during the audit, so the Department was authorized under Va…
Can a business avoid Virginia use tax on purchased software by claiming it was delivered electronically, if its own invoice and vendor emails do not clearly document that electronic delivery?
No -- the Tax Commissioner upheld the use tax assessment because the taxpayer's documentation (a vendor email referencing the purchase order, plus a sales invoice) did not meet Virginia's minimum proo…
Can a New Mexico income tax late-filing penalty be abated when domestic abuse and its trauma prevented the taxpayer from filing on time, and does the same reasoning erase the interest?
The penalty was abated; the interest was not. Dennette Kauzlaric, a domestic-abuse survivor going through a multi-year divorce, filed her 2018 New Mexico income tax return and paid the tax several mon…
Was a revolving credit agreement with a fixed limit subject to Florida documentary stamp tax before the borrower took an advance?
No. The agreement's promise to repay depended on the borrower taking future advances, so neither it nor the related documents contained an unconditional promise to pay a sum certain. No mortgage or se…
Did boat technology, custom canvas, and a tuna tower qualify as working units for Florida's $5,000 discretionary surtax limitation?
Yes. On the documented facts, each business's invoice for work on one boat was a single sale, and the boat was a working unit. The $5,000 discretionary surtax limitation therefore applied to the full …
Does Subpart F income qualify for Nebraska's dividend and deemed-dividend deduction?
Not as a whole -- only in part. Subpart F income is not categorically a dividend or deemed dividend, so it does not all qualify for Nebraska's dividend and deemed-dividend deduction. But the specific …
Can a taxpayer still get a refund of a 2014 Virginia income tax overpayment if the return claiming it wasn't filed until December 2019?
No -- the refund was time-barred. The Taxpayers had three years from the original May 1, 2015 due date (since they never validly elected the extension by filing or paying on time) to claim a refund, s…
What does Virginia Ruling of the Tax Commissioner P.D. 21-17 conclude about an appeal of a sales tax audit assessment filed after the 90-day deadline, where the taxpayer also asked for a conference to submit more records?
NO relief was granted -- the Taxpayer's appeal was filed on May 18, 2020, well after the December 30, 2019 deadline set by the 90-day limit in Va. Code § 58.1-1821, so it was barred as untimely, and s…
What happens if a Virginia taxpayer appeals a sales and use tax audit assessment but the appeal letter does not allege specific errors or cite any legal authority?
The appeal was denied as incomplete because the Taxpayer's letter did not allege any errors in the assessment or cite any legal authority, and on the merits the audit assessment was upheld as correct.
What does Virginia Ruling of the Tax Commissioner P.D. 21-15 conclude about Residency : Part year - Income Allocation; Administration: Interest - Accrual; Administration : Reliance on Tax Preparer - Tax Preparation Software?
Both parts of the assessment were upheld: the Taxpayers had to allocate the retirement income they received on or after their self-reported February 1 move date to their period of Virginia residency (…
Can a Virginia resident claim a credit for income tax paid to California if the spouse is also an actual resident of California?
Possibly yes -- Virginia normally denies the credit for tax paid to California because California lets a Virginia resident claim the credit instead, but if the husband was truly an actual (dual) resid…
Did a testing laboratory's product and component testing qualify for Virginia's research and development sales and use tax exemption?
No -- the Tax Commissioner upheld the use tax assessments because the Taxpayer's testing was taxable environmental and feasibility testing, not exempt research and development, and the Taxpayer failed…
For tax year 2020, may South Carolina taxpayers use the higher 2019 earned income amount to compute the South Carolina earned income credit (per SC IL #21-4)?
No. For tax year 2020, the South Carolina earned income credit must be figured using the 2020 earned income amount, even though a federal COVID-19 relief provision let taxpayers elect to use their hig…
Is a soccer coach who reports his pay as self-employment business income on Schedule C liable for New Mexico gross receipts tax, or is he an exempt employee?
He is liable. Bryan Huskisson, a longtime soccer coach paid by clubs on a per-lesson basis, reported his coaching pay as self-employment business income on federal Schedule C-EZ and New Mexico's PIT-B…
If I receive a South Carolina tax credit for donating to a charity, does that reduce the charitable contribution deduction I can claim on my federal and South Carolina income tax returns?
Usually yes. Under a federal Treasury regulation that South Carolina follows (Treas. Reg. 1.170A-1(h)(3), final August 11, 2020), if you donate to a charity and receive a state or local tax CREDIT in …
Are forgivable Paycheck Protection Program (PPP) loan proceeds counted as gross receipts for Virginia's local BPOL tax?
No -- the Tax Commissioner advised that PPP loan proceeds are not gross receipts for BPOL tax purposes, regardless of whether the loan is later forgiven in whole or in part.
Did a contractor succeed in lowering a use tax assessment by arguing the Department overestimated the taxable materials cost in its lump-sum invoices?
No -- the Tax Commissioner upheld the assessment because the Taxpayer billed in undifferentiated lump sums, the auditor's 37.73% materials estimate came from the Taxpayer's own records, and the Taxpay…
Our nonprofit's exemption renewal was denied because we submitted a financial review instead of a financial audit -- do we have to get the audit, or can the Department accept the review we already have?
No relief -- the Tax Commissioner ruled the Department was within its authority to require an independent certified public accountant's financial audit (rather than accept the financial review already…
Are the membership dues a professional association charges subject to Tennessee sales and use tax when the membership comes with some digital perks?
Not taxable. The Department ruled that the annual Individual Membership dues a nonprofit professional association charges are not subject to Tennessee sales and use tax. Professional memberships aren'…
Were a utility's electricity sales through electric-vehicle charging stations subject to Florida sales and gross receipts taxes?
Yes. Electricity sold directly by the utility to EV drivers—including applicable network-provider and idle fees—was subject to sales tax at 4.35% and gross receipts tax. Its electricity sales to nonut…
How do I ask the Nebraska Department of Revenue to review, revise, or repeal one of its guidance documents?
Send a written request to the Department's Policy Section. Revenue Ruling 99-21-1 sets out the procedure: because Neb. Rev. Stat. § 84-901.03 lets any person ask an agency to revise, repeal, or conver…
Does Illinois tax single-use catheters and rented catheter-driving equipment (laser/electrical signal generators) sold by a medical device company to hospitals at the 1% low medical-appliance rate, or the 6.25% general rate, and how are the equipment rentals and hospital sales taxed?
The catheters and rented signal/laser-generating equipment described do not qualify as low-rate (1%) medical appliances because they don't directly substitute for a malfunctioning body part, so they'r…
Could a university use an alternative method to situs BPOL gross receipts from online courses instead of the statutory 'definite place of business' rule?
No -- the Tax Commissioner upheld the city's BPOL assessment because the Taxpayer failed to show its receipts should have been sitused differently under the statutory method, and the Department has no…
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