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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Is orgeat almond syrup, a sweet mixer used in soft and alcoholic drinks, subject to New York sales tax?
Yes. Although most food and beverages are exempt, the exemption does not cover soft drinks and beverages ordinarily dispensed at soda fountains, or fruit drinks with less than 70% natural fruit juice.…
How does Illinois sales, use, and service occupation tax apply to open-source software licenses and to paid software subscriptions?
Free open-source software licenses are not subject to Illinois Retailers' Occupation Tax because there's no charge for the software; the company owes no Use Tax either, since it also acquired the soft…
Does a company that leases land under triple net leases, where tenants happen to store vehicles on it, owe Illinois Parking Excise Tax on the rent it collects?
No. The Illinois Department of Revenue ruled that a company leasing land to tenants under triple net leases -- even when the tenants use it to store vehicles -- does not owe Parking Excise Tax on the …
Are the site safety manager, fire safety manager, and emergency watchman services a company provides on construction sites subject to New York sales tax?
Yes. These site safety officials regularly patrol and inspect construction sites to protect against fire, property damage, and injury to persons, so New York treats their services as taxable protectiv…
Is the service fee a federally licensed firearms dealer charges to transfer a firearm to a New York resident subject to sales tax?
No. The FFL's transfer services, receiving the firearm, recording it, running the NICS background check, and completing the required forms, are not among the services New York taxes under Tax Law § 11…
Are charges for the annual government-mandated inspection of backflow prevention devices subject to New York sales tax?
Not by themselves. A government-mandated inspection performed solely for code compliance, and not in conjunction with installing or repairing the device, is not taxable. But an inspection done at the …
When a cigarette manufacturer funds a 'buy-down' price reduction, does the retailer calculate sales tax on the reduced price or the full price?
On the full price. A manufacturer-funded buy-down is a reimbursement the retailer receives after the sale, so the taxable receipt includes both the reduced price the customer pays and the buy-down amo…
When does a bridal shop owe sales tax on a wedding dress, at the deposit or when the dress is finished?
When title to the dress transfers, which is when the customer has fully paid. If a customer pays a 50% deposit and the balance later, the sale occurs (and tax is collected) at full payment. If a custo…
Which items at a meat-processing plant qualify for Virginia's manufacturing exemption, and can the audit penalty be waived as a new area?
Mixed, with the penalty upheld. At a meat-processing plant, Virginia's manufacturing exemption covers property 'used directly' in an integral step of production, not ancillary maintenance (Va. Code Se…
Does Virginia's military basic-pay subtraction require more than 90 consecutive days of active duty, or do nonconsecutive days count?
No -- the subtraction was denied. A married couple claimed Virginia's military basic-pay subtraction for 2016-2018, arguing the husband served more than 90 days of active duty each year even though th…
Must a restaurant show free employee meals on payroll or W-2s to claim the wages exemption, or can policy and accounting records prove it?
Yes, exempt -- the restaurant won. The Department had assessed use tax on free meals a restaurant gives employees during shifts, because the value wasn't shown in the payroll account or on W-2 forms. …
Can a partnership match its Virginia bonus-depreciation subtraction to owners using shifting distributive-share percentages, relying on the tax benefit rule or on Virginia's alternative apportionment method?
No. Virginia does not conform to federal bonus depreciation, so a business must add back the bonus deduction and later subtract the difference as regular depreciation is claimed. A partnership asked t…
How are a restaurant's fiscal-year reporting, free meals to employees' families, and complimentary meal cards treated in a sales tax audit?
Mixed. A five-restaurant operator's audit raised three issues. On its 52-53 week fiscal year, the Department found catch-up payments made its remitted sales tax consistent with its income return, so t…
Are separately stated programming charges and technician 'trip' charges tied to selling audiovisual equipment taxable?
Yes, both are taxable. An audiovisual integrator was assessed sales tax on separately stated 'programming' charges (customizing the AV equipment it sold) and 'trip' charges (sending a technician). It …
When a city leases a public facility to a private management company that pays for capital improvements and the city reimburses the company, are the improvements exempt from Texas sales tax?
It depends on who signs the contract, not who ultimately pays. Texas ruled that when a private limited partnership (LP) — which has full operational and revenue control of a city-owned convention/even…
Were U.S. online purchases sent to related Florida courier and export companies for foreign delivery exempt from Florida sales tax?
Yes, if the goods were committed to export at the time of sale and remained in a continuous and unbroken export process. The related Florida companies were licensed exporters, one was an indirect air …
Were online purchases shipped to Florida freight forwarders for delivery to foreign consumers exempt export sales?
Yes. The licensed air freight forwarder received goods at each foreign customer's assigned U.S. export address, processed them, and exported them within 24 to 48 hours. Because the contracts prevented…
Did a hotel contractor provide taxable housekeeping services rather than nontaxable temporary staffing?
Taxable housekeeping services. Although the hotel paid by the hour and described the arrangement as staffing, the contractor assigned supervisors, managed hours and performance, assisted with inspecti…
How did expired Nebraska GIL 29-20-2 count remote, ready-to-work, reduced-hour, and furloughed workers during the COVID-19 emergency?
Through July 30, 2021, displaced remote workers and qualifying paid ready-to-work or reduced-hour employees could count toward Nebraska Advantage Act employment levels under the GIL's rules. Furloughe…
Can a restaurant on a 52-53 week fiscal year show that a monthly-based audit sample overstated its unremitted sales tax?
A chance to prove it. A fast food restaurant's audit found it underreported sales tax versus its daily sales reports, treated as tax collected but not remitted. The restaurant said the mismatch came f…
Is a general contractor liable for use tax on payments to subcontractors who furnish and install materials on a real property project?
Mostly for the contractor. A real property construction contractor was assessed consumer use tax on untaxed purchases. The Tax Commissioner removed several items: a computer bought in 2007 (before the…
Is a corporation's NOL carryback refund time-barred by a late-submitted federal Form 870 when the Department never finally denied the original, timely refund claim?
Yes, the refund is allowed -- the corporation won. It timely filed a 2008 return with a net operating loss and, in October 2012, timely applied to carry the loss back to 2006 and 2007. The Department …
Can a corporation support its Virginia foreign-source-income subtraction with Virginia-only amended Form 1118s without amending its federal returns?
Yes -- the corporation prevailed. Virginia lets corporations subtract foreign source income, but the subtraction is net of related expenses computed under the federal sourcing rules of IRC Sec. 861 et…
Can a one-time end-of-lease equipment purchase be pulled out of an audit sample when the taxpayer can't prove the purchased item is the same equipment assessed?
No, on this record. A medical practice that never filed sales or use tax returns was audited using a sample factor extrapolated over the whole period. One sampled item was the exercise of an end-of-le…
Is the ticket price for a pedal-bus sightseeing tour subject to New York sales tax?
No. A sightseeing tour is not one of the services New York taxes under Tax Law § 1105(c). As long as the ticket is solely for the sightseeing tour and not for food or drink (none is sold or served on …
Are a graphic designer's charges for packaging designs, comps, and prototypes subject to New York sales tax?
It depends on how they're delivered. Comps or prototypes delivered in tangible form to a customer in New York are taxable on the entire charge (including design costs), whether or not separately state…
Do large operable wall partitions installed in hotels and convention centers qualify as a capital improvement, so the installation is exempt from sales tax?
Yes. The partitions are big, heavy, track-mounted structures that effectively replace walls and can't be removed without material damage (becoming inoperable demolition debris), so they meet the three…
Is a distillery exempt from local BPOL tax on its retail tastings as an agent of the ABC Authority or as a manufacturer, and can it appeal the local meals tax to the Department?
BPOL upheld on the tastings. A distillery argued it owed no local BPOL tax because it sold tastings as an agent of the Virginia ABC Authority and because it was a manufacturer. The Commissioner reject…
Is installing cellulose and spray-foam insulation in homes and commercial buildings subject to New York sales tax?
The installer's charge is not. Installing insulation is a capital improvement (it adds value, is meant to be permanent, and isn't intended to be removed), so the installer's receipts are exempt under …
Does a tax-exempt youth softball league have to charge sales tax on food and drinks sold at its concession stand?
Yes. A 501(c)(3) organization's sales-tax exemption does not extend to prepared food and drink sold at a concession stand. Under Tax Law § 1105(d) and § 1116(b), food and beverages sold by a restauran…
Does a member-owned club owe sales tax on dues from a new class of 'limited members' who have no ownership stake or voting rights?
Yes. The limited members' payments are 'dues' paid to a social or athletic club, taxable under Tax Law § 1105(f)(2)(i). Lacking an ownership or voting interest does not stop someone from being a 'memb…
What South Carolina state per-capita income figure did the Department publish in May 2020 for tax-incentive tests?
The Department published $45,314 as the most recently available South Carolina state per-capita personal income figure. The figure helped taxpayers test wage requirements for incentives such as the jo…
Can individuals get a 2005 Virginia refund from a 2008 casualty-loss carryback when the amended return was filed years after the federal change and the three-year limit?
Denied -- the refund is time-barred. The taxpayers suffered a 2008 casualty loss from a Ponzi scheme and, working with the Department, learned the loss had to be carried back three years (to 2005) und…
What does Illinois General Information Letter ST 20-0017-GIL say about sales tax nexus, marketplace facilitators, and related topics?
This isn't a ruling for a specific taxpayer -- it's Illinois's reply to an outside organization's annual multistate tax survey. The Department declined to fill out the survey format (nexus questions a…
Were the requesting company's cloud software subscription and optional training taxable in South Carolina?
The online software subscription was taxable as access to an application service provider. Training was also taxable when sold in conjunction with or as part of the subscription because the service ch…
How did South Carolina extend the May 31, 2020 renewal deadline for coin-operated device and owner-operator licenses?
Eligible biennial coin-operated device and owner-operator licenses expiring May 31, 2020 could be renewed and paid by July 31, 2020 without the stated penalties. The renewed license still covered the …
Can a Virginia contractor that paid Virginia sales tax on materials used in a North Carolina project get a Virginia credit or refund through a reciprocity agreement?
No relief. A Virginia real property contractor paid Virginia sales tax on materials it used on a North Carolina construction project and asked whether a reciprocity agreement could give it a credit to…
Could a separately filing subsidiary treat all of its Florida apportioned income as income from its Capital Investment Tax Credit project?
Yes. The subsidiary's only activity was the qualifying project, all expenses related to it, and it had no other locations. Florida approved using 100% of its Florida apportioned income as project inco…
Was installation of a hospital pneumatic tube conveyor system a real-property improvement or installation of tangible personal property?
Installation of tangible personal property. Florida classified the hospital pneumatic tube conveyor as machinery and equipment that retained its identity, even though parts were attached to the buildi…
Did a temporary COVID-19 remote-work location change create South Carolina nexus, alter income apportionment, or change employer withholding from March 13 through September 30, 2020?
Generally no. From March 13 through September 30, 2020, South Carolina did not use an employee's temporary COVID-related work-location change by itself to establish nexus, alter income apportionment, …
Are a company's utilization review, peer review, and independent medical exam services — sold to insurers to evaluate whether an injured patient's treatment is appropriate — taxable insurance services in Texas?
Yes, generally — with one important 2023 carve-out. Texas ruled that utilization review, peer review, and independent medical examination services a company sells to insurance companies to evaluate wh…
Did a retiree who registered to vote in another state, inherited a home there, and later moved his license and vehicle successfully change his domicile out of Virginia for 2014?
Won -- the assessment was abated. On reconsideration of P.D. 19-103, the Commissioner found this retiree had successfully changed his domicile to another state by the 2014 tax year. He moved there in …
When a cigarette retailer cannot document its resale purchases, can Virginia assess tax from distributor records, and is a new owner liable for the prior owner's cigarette sales tax?
Mostly upheld, with one credit. A cigarette retailer could not produce sales records, bank statements, or purchase invoices, so the Department used distributor records of the retailer's tax-free (for …
Does the ISP equipment exemption cover wholesale Internet access and 100%-exempt mixed-use claims, and can a refund be denied for unverified transactions?
Refund denied. This is one of three materially identical companion determinations the Department issued the same day (May 12, 2020) to related Internet service providers -- see P.D. 20-80 (the fuller …
Does the ISP equipment exemption cover wholesale Internet sales and 100%-exempt mixed-use claims, and can a refund be denied for unverified transactions?
Refund denied. This is one of three materially identical companion determinations the Department issued the same day (May 12, 2020) to related Internet service providers -- see P.D. 20-80 (the fuller …
Does the Internet service provider (ISP) equipment exemption cover wholesale Internet sales and mixed-use equipment, and can a refund be denied for unverified transactions?
Refund denied. The Internet service provider (ISP) equipment exemption (Va. Code Sec. 58.1-609.6 2) reaches only equipment used to provide Internet access to end-user subscribers -- retail ISPs -- not…
Can a pass-through entity claim the IRC 965(c) repatriation deduction and an IRC 754 basis deduction when computing its 2017 Virginia nonresident withholding tax?
Won -- the withholding assessment was abated. A pass-through entity owes 5% nonresident withholding on Virginia-source income allocated to nonresident owners (Va. Code Sec. 58.1-486.2). This entity cl…
Could a medical-billing company avoid New Mexico gross receipts tax by treating part of its revenue as software licensing and the rest as services performed outside the state?
No. PST Services supplied billing and accounts-receivable services to ABQ Health, including access to Flowcast software. The evidence did not show that fewer than all 525 licenses were employed in New…
Did IFTA registration and weight-distance payments at New Mexico ports of entry protect a tour-bus company from the separate audit penalty for underreported miles?
No. Jackson Rock Springs Stages operated tour buses on New Mexico highways but never registered for the state's weight distance tax program or filed its required quarterly mileage reports. Its federal…
Are water transfer services and frac fluid treatment services provided to oil and gas drillers subject to Texas sales tax, or to the state's oil/gas production or oil well service taxes?
Split ruling. Texas ruled that transporting fresh water to a client's frac tanks is not taxable (transportation isn't a listed taxable service), but treating used "frac fluid" afterward — removing hyd…
If goods originally purchased for export are stuck in storage at a Texas freight forwarder after the export deal falls through, and a new buyer is found in Texas instead, does the sale lose its tax-exempt export status?
Yes, the Texas sale is allowed. Texas ruled that two mobile power plants originally purchased for export to Venezuela — but stranded at a Texas freight forwarder after U.S. sanctions blocked the expor…
If I have a pre-existing tax deficiency, will Illinois apply my overpayment credit to that old deficiency first instead of letting me credit it to a current or future liability?
Yes. The Department confirmed that if a taxpayer with a pre-existing liability files a return asking to credit an overpayment toward a future liability, the Department will first apply the overpayment…
Can a manufacturer make the modified (single sales factor) apportionment election retroactively on an amended return after an audit, instead of on a timely original return?
Denied. After an audit, a manufacturing corporation tried to elect the modified apportionment method for manufacturers (Va. Code Sec. 58.1-422) -- effectively a single sales factor -- for years it had…
Can a Virginia partner subtract the entire gain from selling a Historic Rehabilitation Tax Credit, or is the subtraction limited to net capital gain?
The entire gain is subtractable. A partner reported his share of a short-term capital gain from the partnership's sale of a Historic Rehabilitation Tax Credit and subtracted the full amount on his Vir…
Can Virginia estimate a use tax assessment from a contractor's income tax returns, and use a six-year period, when the contractor did not provide records or file sales tax returns?
Upheld, with one more chance. A real property contractor with a Virginia location never filed Virginia sales and use tax returns and did not respond to the auditor's repeated requests for records or t…
In a fuel dealer's audit, which sales qualified as exempt home heating fuel, and when do manufacturing or government exemptions and out-of-state certificates fail?
Partly won. This fuel dealer's audit was adjusted but mostly upheld. Home heating oil, gas, coal, or firewood sold to an individual for non-business use is exempt for domestic consumption (Va. Code Se…
Does the ISP equipment exemption cover wholesale Internet access and 100%-exempt mixed-use claims, and can a refund be denied for unverified transactions?
Refund denied. This May 5, 2020 determination is part of the same materially identical series of Internet service provider refund rulings as P.D. 20-80 (the fuller companion) and P.D. 20-81 and 20-82 …
Does providing a certified operator along with rented bypass-pumping equipment turn a taxable equipment lease into a nontaxable service, and does that depend on who keeps "operational control" of the equipment?
It depends on who keeps "operational control." Texas ruled that when a company rents bypass-pumping equipment to a customer without an operator, the customer takes operational control and possession, …
Are on-hold telephone messaging, digital video-signage programming, and overhead music services subject to Tennessee sales tax, and does the provider owe use tax on the equipment it hands customers for free?
They're taxable. The Department ruled (in an advisory, non-binding revenue ruling) that a provider's On-Hold Messaging, VideoCast (digital video-signage) Programming, and Overhead Music services are a…
What tobacco products tax rate changes took effect July 1, 2020, and how is the new tax on liquid nicotine (vaping) products applied?
These are the Department's guidelines implementing the July 1, 2020 tobacco products tax changes enacted by Item 3-5.21 of the 2020 Appropriation Act (House Bill 30). Effective July 1, 2020, the tobac…
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