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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If the IRS limited our net operating loss carryovers after an ownership change on our consolidated federal return, does Virginia apply the same limitation to our separate Virginia corporate return?
Partly granted, partly remanded. The Tax Commissioner agreed the Department should have recalculated the IRC § 382 loss limitation on a separate-company basis (not the consolidated federal amount) and…
If I move abroad and Virginia later says I was still a full-year resident, how do I show I changed my domicile and become a part-year filer instead?
Partly granted: the Tax Commissioner found the taxpayer did abandon his Virginia domicile, but only as of late September 2015 (not earlier as claimed), so the original full-year-resident assessment wa…
How is the basis of inherited Virginia real estate determined for a capital gain/loss on the state income tax return when the taxpayer's appraisal and the locality's tax appraisal disagree?
Neither side fully won: the Tax Commissioner rejected both the taxpayers' March 2007 appraisal (too remote in time and unsupported by the actual appraisal report or estate tax return) and the Departme…
What does Illinois Private Letter Ruling ST 20-0005-PLR conclude about the manufacturing machinery and equipment exemption for a cold-storage food processing facility?
The Illinois Department of Revenue ruled that essentially all of the machinery, equipment, and related property a cold-storage food processing company planned to buy for an expanded refrigerated wareh…
Can a real estate company or team (a licensed business entity) also exclude from its BPOL gross receipts the commissions it pays to its own real estate salespersons, the way the principal broker excludes commissions paid to it?
Only if that company or team is itself licensed as a real estate broker (not merely as a real estate salesperson entity). Virginia's BPOL exclusion in Va. Code § 58.1-3732.2 lets a real estate broker …
If a taxpayer appeals a sales/use tax audit by offering to prove its customers already paid consumer use tax, what happens to the appeal?
The Tax Commissioner closed the appeal and sent it back to the auditor, who agreed to review the taxpayer's evidence (submitted in Excel format) that its Virginia customers had paid consumer use tax o…
Can a Virginia county ask the Department of Taxation for a formal advisory opinion on whether it may assess local real property tax against leaseholders of tax-exempt property?
No. The Department of Taxation's authority to issue advisory opinions on local tax matters is limited by statute to the BPOL tax and certain local mobile-property and business taxes; it has no express…
Can a taxpayer still appeal a converted sales and use tax assessment after the 90-day appeal deadline has passed, and what options remain if they cannot afford to pay it?
No. Virginia Code § 58.1-1821 gives a taxpayer only 90 days from the date of an assessment to apply for relief, and an appeal filed years after that deadline is barred regardless of its merits. A taxp…
Does a 501(c)(6) nonprofit's revenue from originating, processing, and servicing SBA 504 commercial real estate loans qualify for Virginia's BPOL tax exemption for nonprofit organizations?
Only partly. Because the Company is exempt under IRC § 501(c)(6) rather than § 501(c)(3) or § 501(c)(19), it is not a "charitable nonprofit organization" under Va. Code § 58.1-3703 C 18 a, so its rece…
Can a taxpayer void a six-year use-tax audit and challenge a one-year sample period used to project the assessment, and how does a taxpayer request relief from an assessment based on financial hardship?
No on both audit challenges: the Tax Commissioner upheld the six-year audit period (extended from three years because the contractor had never registered for or filed consumer use tax) and upheld the …
Who owes Virginia's Motor Vehicle Rental Tax and Peer-to-Peer Vehicle Sharing Tax, and how does it work?
Virginia imposes a combined Motor Vehicle Rental Tax and Fee (MVRT) of up to 10 percent of gross proceeds on traditional short-term vehicle rentals, and a separate Peer-to-Peer (PTP) Vehicle Sharing T…
Could a grandmother claim grandchildren who lived with and were supported by her when New Mexico flagged another taxpayer's duplicate dependent claim?
Partly. Lisa Chavez showed that grandchild C.C. met the qualifying-child tests in 2016 and that the child's mother did not claim dependents that year, supporting Chavez's dependent exemption and Worki…
In a consumer use tax audit of out-of-state real property contractors, how does Virginia sort dozens of contested vendor purchases into taxable versus nontaxable based on recordkeeping, the fencing/cabinets/countertops retailer exception, and taxes already paid elsewhere?
Mixed, line-item-by-line-item outcome: the Tax Commissioner reviewed the audit vendor by vendor and removed some charges (proven consuming-contractor installations, unpaid disputed invoices, items pro…
Did keeping a Virginia driver's license and two registered vehicles make this taxpayer a taxable Virginia domiciliary resident for 2016 and 2017, despite living out of state?
No — the Department abated the assessments. The taxpayer kept some Virginia ties (a driver's license obtained in June 2016 and two vehicles registered in 2014), but he had not physically resided in Vi…
I disagree with the Department's determination denying my corporate income tax refund claim -- can I still get it reconsidered if my request comes in more than 45 days after the determination letter?
No -- Virginia gives a taxpayer only 45 days from the date of a final determination letter to request reconsideration, and that deadline is enforced strictly. Here, the Department's determination lett…
Were CDs containing scanned invoices exempt Florida export sales when the dealer shipped them to an out-of-state customer?
Possibly, but Florida could not decide from the submitted information. The dealer needed records tracing each CD from the sale into an immediate, continuous, and unbroken export process to the out-of-…
Was the airport-taxiway portion of a mixed-use real-property lease exempt from Florida sales tax, and how could rent be allocated?
Yes, if the area was used exclusively for aircraft taxiing and not for parking aircraft or regular vehicle traffic. Florida accepted a reasonable square-footage method to divide the total rent between…
Did Florida's $5,000 discretionary surtax limitation cover installation and administrative fees charged with projection equipment?
Yes. Engineering, design, installation, professional-integration, and administrative charges were part of the projection equipment's sales price, so they were combined with the equipment for one $5,00…
If a taxpayer's federal net operating loss deduction is limited because of an IRC Section 965(n) election (related to the repatriation transition tax), can the taxpayer still subtract that disallowed federal deduction amount on its Illinois return?
No. The Department ruled that the Illinois Income Tax Act does not provide any subtraction modification for the 'deferred amount' that a Section 965(n) election prevents from being deducted federally.…
How does Texas sales tax apply to a rent-to-own company's agreements — are they taxed as financing leases or operating leases, who's the responsible seller, and what happens when a customer takes the rented item out of state?
Rent-to-own agreements structured like this one are operating leases, not financing leases — so the full rental stream (including any "origination" or "interest"-labeled fees) is taxable, with no excl…
If a taxpayer timely files a Virginia amended return but waits years to send the Department the IRS's acceptance letter, is the refund still barred by the statute of limitations?
No. The Tax Commissioner ruled that because the taxpayer's amended Virginia return was filed in October 2016 -- well within the three-year limitations period for refund claims under § 58.1-1823 -- and…
If Virginia denies a 529 college savings deduction for lack of proof of contributions, what documentation is enough to get the deduction restored on appeal?
The Tax Commissioner ruled the Taxpayers' documentation was sufficient after all: the husband and wife showed contributions to Virginia 529 prepaid tuition/savings trust accounts, so the disallowed de…
Is a retailer that sells and installs custom closets selling taxable tangible personal property or performing exempt real-property construction, and does sales tax apply to its installation and delivery charges?
The custom closets remain tangible personal property even after installation, so the retailer must charge and collect Virginia sales tax on the sale of the materials. However, separately stated instal…
Can a university get a refund for sales tax it mistakenly paid on exempt textbook sales to students, and what must it prove to get that refund?
Yes, but only if the university can show it never actually collected the tax from students in the first place. Certified textbooks sold to students are exempt from Virginia sales tax, but if a seller …
Can a cigarette retailer avoid a sales tax assessment on untaxed cigarette purchases by claiming someone else made the purchases without the business's knowledge?
No. The Tax Commissioner upheld the assessment because the taxpayer offered no documentation to support its claim that the cigarette purchases were fraudulent or made without its knowledge, and Virgin…
How does Texas tax the different service lines of a national medical-records and health-information-management company: record retrieval and copies, clinical data services sold to insurers vs. life sciences companies, medical coding, EMR scanning/storage, and data abstraction?
It depends on the service line. Medical records released directly to a patient or their authorized representative are NOT taxable, even as photocopies — but the same records processing done for a medi…
Does an airline catering company qualify for Virginia's industrial manufacturing sales-tax exemption, and how are the other contested items in its audit resolved?
The big exemption was denied. An airline catering company argued its kitchens turn raw food into finished in-flight meals and should qualify for Virginia's industrial manufacturing exemption (Va. Code…
If the IRS audits me and increases my federal income, what must I do in Virginia, and what happens if I don't report the change?
You lose. When the IRS audits and increases your federal taxable income, Virginia law (Va. Code § 58.1-311) requires you to report that change by filing an amended Virginia return within one year of t…
Will Virginia remove a communications sales and use tax assessment on Universal Service Fund and PUC fee charges if the taxpayer proves a one-month system error caused the tax to be under-collected?
The Tax Commissioner did not decide the merits; instead the Department sent the case back to the auditor to review the taxpayer's documentation of a claimed one-month system abnormality and make any a…
Does getting a Virginia driver's license and vehicle registration make me a Virginia resident for income tax before I actually move here?
No -- the assessment was abated. Establishing a Virginia domicile requires both physical presence in Virginia and the intent to remain permanently or indefinitely; neither one alone is enough. This ta…
Is a resale exemption certificate valid when it names a related but different entity than the actual buyer, and can I raise a new audit-sample challenge on reconsideration?
The Department said no. On reconsideration of P.D. 19-85, the Commissioner again rejected the dealer's resale exemption certificate because it named a different, related entity (Company A trading as C…
When a taxpayer's refund claim spans several tax years, how far back can a Virginia locality go, and is a fuel-blending business a manufacturer or a processor for machinery and tools tax purposes?
A locality cannot issue a refund for a tax year once more than three years have passed since the last day of that tax year, so the Department had no jurisdiction over the earliest year in this refund …
Can I claim both a Virginia historic rehabilitation credit and a land preservation credit within five years when the conservation easement I donate also protects the rehabilitated building's façade?
No. Virginia Code § 58.1-513 A bars the same building from serving as the basis of both the historic rehabilitation tax credit and the land preservation tax credit within a five-year period. A land pr…
When can a Virginia dealer avoid sales tax on sales it treated as exempt, and how are exemption certificates for meals sold to nonprofits, churches, and governments handled?
It depends on your documentation. A Virginia dealer is liable for sales tax on any sale it treats as exempt unless it took a valid exemption certificate from the buyer in good faith, using reasonable …
Could an acquired parent discontinue Florida consolidated filing when its old group ceased to exist but its request was late for the first year?
Only prospectively. Florida found good cause because the acquisition ended the taxpayer's old affiliated group and it was no longer the common parent. But the request missed the rule's 90-day deadline…
Were COVID-19 surcharges, handling fees, carryout charges, and delivery fees included in the South Carolina sales-tax base?
Yes, when the charge was part of a retail sale of tangible personal property. A COVID-19 surcharge, handling fee, carryout charge, delivery fee, or similar retailer charge was included in gross procee…
Is a subscription fee for accessing freely-licensed, company-branded open-source software (bundled with support services) taxable in Texas, even though the underlying open-source license itself is free?
Yes. Texas ruled that a company's subscription fee — charged to access and download its own branded, machine-readable build of open-source software, bundled with software support services — is fully t…
When a homeowners association collects quarterly assessments from lot owners and passes them through to a separately-owned country club as the price of club access, who owes sales tax — the club, or the homeowners association?
The club, not the homeowners association. Texas ruled that when a subdivision's homeowners association pays quarterly "support assessments" to a separately-owned private country club so lot owners can…
Were redacted trade documents subject to Florida documentary stamp tax merely because they were executed in Florida?
No. The reviewed trade documents did not contain an unconditional promise to pay, a sum certain, and the borrower's signature, so they were not taxable written obligations. Execution in Florida alone …
What were the main South Carolina Department of Revenue refund, assessment, property-tax, and Administrative Law Court appeal deadlines in the 2020 guides?
The letter attached four quick-reference guides for nonproperty refund claims, nonproperty assessments and license actions, Department-administered property-tax refund claims, and Department-administe…
How could taxpayers check the status of South Carolina advisory opinions through June 30, 2020?
SC Information Letter #20-21 attaches the Department's citator for advisory opinions issued from 1987 through June 30, 2020. It identifies opinions the Department knew to be modified, modifying anothe…
Where was the Department's index of South Carolina advisory opinions issued through June 30, 2020?
SC Information Letter #20-20 attaches the Department's index of South Carolina advisory opinions issued from 1987 through June 30, 2020 and supersedes SC Information Letter #20-6. The index catalogs R…
Is a service that lets each customer log in and run reports on its own vehicle-maintenance data a taxable information service in New York?
No. The service is a non-taxable information service. Although furnishing information is generally taxable, New York excludes information that is personal or individual in nature and not substantially…
When can a Virginia dealer treat sales to volunteer fire companies, nonprofits, and government agencies as exempt from sales tax -- and what exemption certificate does it need?
A Virginia dealer must charge sales tax unless it has a valid exemption certificate on file when the sale happens; a certificate obtained afterward is accepted only under greater scrutiny and only if …
Does a company create Illinois Use Tax nexus just by being acquired by an Illinois-based parent company?
The Department did not decide whether the acquisition itself created nexus because the letter lacked enough detail, but it explained that if the two companies are separate legal entities, each determi…
Could Elite Well Services use a refund claim to revive a $3.29 million High-Wage Jobs Tax Credit after missing the 90-day protest deadline for the credit denial?
No. The Department denied Elite Well Services' $3,287,058.23 High-Wage Jobs Tax Credit application on June 27, 2017. Elite did not protest within 90 days, so the denial became indisputable. Filing a r…
Are an out-of-state production company's video, sound, and lighting services taxable in New York, and does it owe use tax on equipment it brings in?
The services are not taxable, but use tax may be. When the company uses its own video, sound, and lighting equipment to produce events and never hands control to the customer, it is selling a non-taxa…
What New York sales tax does a for-profit nursing home owe on the items it buys for residents — and does Medicaid or Medicare coverage change the answer?
It varies by item, and the resident's Medicaid/Medicare status makes no difference. A for-profit nursing home owes sales tax on medical equipment and supplies, toilet articles, bedding, and similar co…
Why did Virginia uphold sales tax on a caterer's meals sold to a federal agency and a nonprofit even though each customer claimed exemption?
The federal banquet lacked the required purchase order and proof of direct federal payment. The nonprofit's certificate had expired and the caterer produced neither an updated certificate nor the Depa…
After Virginia let governments and nonprofits buy meals exempt in 2016, what documentation does a caterer still need to treat those sales as tax-exempt?
The taxpayer lost on all three sales. This caterer treated meal sales to a federal (DOD) employee and two nonprofits as exempt, but the exemption certificates were invalid or incomplete, so the tax wa…
For Virginia's corporate sales factor, is electronically delivered canned software a sale of tangible personal property, and how are software updates and technical support sourced?
Canned software is tangible property. For the Virginia corporate sales factor, sales of pre-written 'canned' software -- and updates to it -- are treated as sales of tangible personal property and att…
What happens if a Virginia audit is completed without giving the taxpayer the audit report or a chance to discuss the findings?
The audit goes back for review. The taxpayer wasn't able to give the auditor documentation during the audit and, importantly, was not given the audit report or an opportunity to discuss the findings a…
When a charter school finances a new campus through a 25-year build-to-suit lease with private landlords, does the two-prong exempt-contract test let the landlords' contractor buy construction materials tax-free?
Yes. Texas ruled that a 25-year build-to-suit lease under which private landlords finance and construct a new charter school campus, then lease it to the tax-exempt charter school operator, qualifies …
Can a dentist buy a CEREC milling machine tax-free under New York's production-machinery exemption because it fabricates crowns and other dental devices?
No. The milling machine is taxable. New York's exemption for machinery used directly and predominantly to produce tangible personal property for sale does not apply, because the dentist is not in the …
Does New York sales tax apply to a teleprompter company's operated teleprompting service versus renting the equipment alone?
It depends on who controls the equipment. When the company supplies a teleprompter system plus its own technician who keeps control, it is selling a non-taxable service, so no sales tax applies. But w…
Are fees for online courses, completion certificates, specializations, and degrees subject to New York sales tax?
No. The free streaming access and downloadable software carry no charge, so there is nothing to tax there. The paid 'course certificate' videos, specializations, and university-recognized degrees are …
Must a public golf course charge sales tax on golf carts that golfers use at no extra charge?
No. Because the green fee is the same with or without a cart and no separate charge is made for the cart, there is no consideration for the cart, so its use is not a taxable sale or rental of tangible…
Can a security guard company accept Direct Payment Permits from customers when it already knows its services are taxable?
No. A Direct Payment Permit applies only when, at the time of purchase, it is impossible to determine how the property or service will be used and whether it is taxable. A security guard company knows…
Is a service that lets customers send large volumes of email, plus related consulting, subject to New York sales tax?
No. The primary function of the service is letting customers send large quantities of email over the provider's servers, which is a non-taxable email service protected by the federal Internet Tax Free…
Are fees to store dogs in climate-controlled lockers, plus the membership and unit rentals, subject to New York sales tax?
Yes, all three. Dogs are tangible personal property, so the per-minute charge to store a dog in a locker is taxable storage under Tax Law 1105(c)(4). The annual membership fee is taxable too, as a pre…
How these rulings are useful
- See how the rule applies: A letter ruling shows how a state revenue department actually applied the tax law to a specific business and set of facts.
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