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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Was a 2019 amended Virginia return claiming a 2014 refund timely when another state had just assessed the taxpayer for 2014?
Yes. The ordinary three-year refund period had expired in May 2018, but Va. Code § 58.1-1823 A (v) gave the taxpayer one year after another state's final determination to amend the Virginia return. Sh…
Did a military couple establish Virginia domicile before the wife's active-duty assignment despite claiming another state as home of record?
Yes. They voluntarily moved to Virginia in May 2015, obtained a Virginia license and vehicle registrations, leased and later bought a home, and had no definite departure plan. The wife's active-duty a…
Did a demolition contractor's construction-material recycling equipment qualify for Virginia's industrial manufacturing and processing exemption?
No. The contractor's primary activity fit NAICS 238910, Site Preparation Contractors, in Sector 23 rather than manufacturing Sectors 31-33, so its recycling equipment and parts did not qualify. Virgin…
Could a home-health agency deduct federal EEOICPA payments because its patients were Medicare beneficiaries, or exclude services involving Navajo Nation members?
No. Four Corners Healthcare received its payments from the U.S. Department of Labor under the Energy Employees Occupational Illness Compensation Program Act, not under Medicare Title 18. Section 7-9-7…
Could a Capital Investment Tax Credit project measure its income as the increase over the taxpayer's pre-project base-year income?
Yes. Florida approved comparing current Florida adjusted federal income with a representative pre-project base year, treating the increase as project income, applying a project apportionment factor, t…
Does an Illinois trucking company have to withhold Illinois income tax on wages paid to an out-of-state driver who is dispatched from Illinois but drives interstate routes that originate and end near his home in another state?
It depends, and the Department did not give a final yes-or-no answer for this driver. The Department explained that Illinois withholding is not required if the driver's work qualifies for a federal ex…
Could owners claim Virginia fixed-date-conformity bonus-depreciation subtractions reported on their pass-through entity forms when Virginia had no record of an earlier addition?
Yes. The couple accurately reported the 2015 and 2016 subtractions shown on the entity's Virginia asset reports and VK-1 forms, so they were entitled to claim them and the assessments were abated. If …
Is a discharged servicemember's severance pay taxable by Virginia when he received it after separation while still living in Virginia?
Yes. A servicemember was discharged in January 2015 and received his final military pay plus a severance payment in February 2015. He left those amounts out of his federal adjusted gross income, but t…
What proof did Virginia require for 2017 personal-property-tax and cash or noncash charitable deductions?
Property-tax bills alone were insufficient; the couple needed receipts, canceled checks, or other proof of payment and received 30 days to provide it. Cash gifts would be adjusted to the supplied rece…
Could an acquired Florida consolidated group deconsolidate after the former common parent became a subsidiary of an unrelated separate-filing parent?
Yes. The unrelated acquisition ended the taxpayer's old consolidated group because it was no longer the common parent. Its members joined a new parent's affiliated group whose Florida election was sep…
How did Florida source software-subscription licensing fees and implementation-service revenue for the corporate sales factor?
Software licensing fees were Florida sales to the extent the software was used in Florida. Implementation-service receipts were Florida sales when the client was located in Florida. If the taxpayer co…
When an Illinois retailer sells food and beverages, does it collect both Use Tax and Retailers' Occupation Tax from the customer, and can it reduce what it remits to the State?
Yes. Illinois retailers collect a single combined tax (6.25% state, plus any local Retailers' Occupation Tax) from patrons at the time of sale, and when remitting to the State they reduce the Use Tax …
If a software company can't satisfy Illinois' five-part test for an exempt software license, can it avoid charging sales tax by getting a resale certificate from the distributor instead?
Yes, but the underlying software transaction was taxable. The Department ruled that a software license accepted by the end user clicking 'I agree' -- rather than by a wet-ink or verifiable electronic …
Are a software company's four SaaS offerings for optometry practices — patient communication automation, online lens ordering, digital marketing sync, and a bundled marketing-consultant package — all taxable as data processing services in Texas?
Yes, all four. Texas ruled that a software company's four Software-as-a-Service offerings for optometry and ophthalmology practices are each taxable as data processing services: patient-relationship-m…
Is the "success fee" an AI-driven online recruiting marketplace charges employers — only when they hire a candidate — a taxable information service in Texas?
Yes. Texas ruled that an online recruiting marketplace's "success fee" — 15% of a new hire's first-year base salary, charged to employers only when they actually hire a candidate through the platform …
Were an out-of-state online bakery's products exempt, and did decorative tins or Florida internet sales require registration?
Ordinary brownies, cookies, and bars sold for off-premises consumption were exempt. A single-price package became taxable if its decorative tin or box exceeded 25% of total value; at 25% or less, the …
What is South Carolina's tax interest rate for underpayments and overpayments for the period ending June 30, 2020 (per SC IL #20-1)?
5%. SC Information Letter #20-1 sets South Carolina's interest rate on tax underpayments and overpayments at 5% for the period July 1, 2019 through June 30, 2020. Interest is compounded daily, except …
Is a yoga and meditation studio's instruction, classes, memberships, and retreats subject to Texas sales tax as taxable amusement services?
Instruction itself is not taxable, but related sales are. Texas ruled that yoga and meditation classes, private sessions, memberships, workshops, and retreats are all nontaxable instructional services…
Could taxpayers receive Virginia's Qualified Equity and Subordinated Debt Investments Tax Credit when their 2018 applications arrived after April 1, 2019?
No. The applications arrived May 8, 2019, after the hard April 1 deadline for capped credits. The taxpayers also could not move the 2018 investments into the 2019 credit pool; the 15-year carryforward…
Did listing a New Mexico home address on Schedule C make an Ohio tea shop's sales subject to New Mexico gross receipts tax?
No. Bruce Winchell proved with Ohio registration, sales-tax returns, location evidence, and credible testimony that At Portage Lakes, LLC operated entirely in Akron and earned all 2014 sales there. Th…
Does Illinois tax the transportation and delivery charges that trucking companies charge when they sell and deliver rock, sand, or gravel from a quarry to a customer?
Yes, in most cases. Illinois treats trucking companies that sell and deliver rock, sand, or gravel from a quarry as retailers subject to Retailers' Occupation Tax, and under the 'inseparable link' rul…
How should a Virginia taxpayer report bonus depreciation embedded in a federally suspended passive activity loss?
The suspended loss and embedded bonus depreciation were not in federal adjusted gross income, so separate Virginia additions and subtractions were not required. The passive loss offset the bonus-depre…
Could a Virginia distributor use the manufacturers' single-sales-factor election because it owned 99.9% of a separate manufacturing partnership?
No. The distributor was a Sector 42 entity that did not produce or assemble products. Its Sector 31 partnership's manufacturing activity, income, and factor attributes could flow through proportionate…
Is the service fee a mobile lottery-ticket-purchasing app charges users — covering OCR ticket scanning, secure storage, and management of public/private lottery pools — taxable in Texas, and is the licensed retailer's sales commission also taxable?
The app's fee is taxable; the retailer's commission is not. Texas ruled that a mobile app letting users buy Texas Lottery tickets is subject to sales tax on its Service Fee (9% of the funding amount p…
Was a proposed allocation between taxable and exempt rent reasonable for a project combining student housing, common areas, classrooms, and wetlands?
Mostly yes. Florida accepted the proposed square-footage allocation for residential units and resident-only common areas and allowed supported relative appraisal values for wetlands and other parcels.…
Were sealed, refrigerated meals sold through a weekly plan exempt when customers reheated them later?
Yes. The meals were prepared and sealed at a separate non-seating facility, delivered or picked up in insulated bags with ice packs, required refrigeration and reheating, and were not sold with utensi…
New York Advisory Opinion TSB-A-20(3)C: Does New York follow the federal IRC section 338(h)(10) treatment of a stock sale and a pre-sale asset distribution when computing Article 9-A entire net income?
Yes. If a stock sale and a pre-sale distribution of assets conform to IRC section 338(h)(10), New York follows the federal tax treatment for Article 9-A entire net income, because entire net income st…
Is a nonresident limited partner's loss on liquidating a partnership New York source income when the partnership sold its New York building the day before?
No. The loss is not derived from or connected with New York sources. New York source treatment for a partnership-interest loss depends on the partnership owning New York real property worth at least 5…
What does Illinois General Information Letter ST 20-0006-GIL conclude about Leasing?
Lessors who lease tangible personal property, like portable buildings or motor vehicles, into Illinois under a 'true lease' owe Illinois Use Tax up-front on their own cost price of the property -- the…
Are a federal contractor's (and its subcontractors') purchases of equipment and construction materials for a new steam-production facility on U.S.-government-owned land in Tennessee exempt from sales and use tax?
Yes — with an important limit. The Department ruled that equipment and materials a federal contractor (or its subcontractors) buy to build and install a new closed-loop steam-production facility on U.…
Did Virginia decide whether an event venue's space rentals were taxable when the operator refused to provide rental records during audit?
No. Without the records, the Department could not evaluate the venue's claim that it rented only space and provided no transient lodging. The estimated six-year assessments were upheld, but the operat…
Were oil-and-gas title research and lease-acquisition receipts taxable merely because the prospects involved New Mexico land?
No. Continental Land Resources proved that its products were title reports, leases, or lease-acquisition efforts—not merely the management of landmen—and that out-of-state clients received and first u…
What does Illinois General Information Letter ST 20-0005-GIL conclude about Sale At Retail?
It depends on whether the seller has a contract to permanently affix the home to real estate. If so, the seller acts as a construction contractor and owes Illinois Use Tax on its own cost price of the…
Which companies must use Virginia's Debt Buyer Apportionment method, and how are recovered-debt receipts sourced?
A company whose majority business is buying qualifying nonperforming debt from unaffiliated commercial entities must use a single sales factor. Debt recoveries are sourced first to the debtor's actual…
How should a Virginia county calculate BPOL tax for a multistate staffing firm with temporary workers at client sites?
The county had to first apply the staffing-firm deduction, then identify the taxpayer's own definite places of business and situs remaining receipts under the statutory hierarchy, and only then test t…
Could a Virginia county require a farm winery's event-rental operation to hold a separate BPOL license and assess up to six preceding years of omitted tax?
Yes, if local officials found the event rentals were an independent business rather than ancillary to winemaking. The winery license would not cover that business, and failure to apply allowed—but did…
Does a company owe Georgia sales tax on the fees it charges distributors to attend business training meetings, seminars, and conventions?
No. Georgia taxes admissions to amusement, entertainment, and exhibition events, but fees for these business training meetings, seminars, and conventions are not taxable. The Department found the even…
When a non-exempt landlord builds a facility and leases it to a Texas tax-exempt charter school, is the construction contract exempt from sales tax, and how long does the lease term need to be?
Yes. A construction contract between a non-exempt landlord and a Texas tax-exempt charter school is an exempt contract under Section 151.311 if the school qualifies for exempt status AND the lease ter…
When a charter school temporarily co-locating at another campus signs a 25-year build-to-suit lease to finance its permanent campus, does the two-prong exempt-contract test still exempt the construction materials from sales tax?
Yes. Texas ruled that a 25-year build-to-suit lease under which a private landlord finances and constructs a permanent campus for an open-enrollment charter school -- while the school temporarily oper…
Can an irrevocable resident trust with an out-of-state trustee avoid New York fiduciary income tax if a small share of its income is New York source income?
No. The trust is taxed by New York on all its income. A resident trust escapes tax only if it meets all three conditions of Tax Law § 605(b)(3)(D): no New York trustee, no New York corpus, and no New …
Could a Virginia convenience store overturn an assessment for sales tax collected but not remitted when earlier records were destroyed and no proof of overpayment was supplied?
No. Available 2018 z-tapes and tax records showed that the store collected tax at correct rates but underreported sales and tax. The assessment was presumed correct, and the owner supplied no evidence…
Were structural 'blue boxes' permanently attached to a building to support a manufactured sign treated as real property or taxable tangible personal property in Virginia?
They were taxable tangible personal property. Virginia's manufactured-sign rule covered the sign and structural additions built to support it, even when permanently attached to the building. The Commi…
Could an IFTA carrier replace destroyed 2015 fuel records with a reconstructed four-month sample from 2018 and avoid the default 4.0 MPG assessment?
No. Distribution Management Corporation kept fuel records for only 90 days even though IFTA required four years, so it could not produce 2015 gallonage, fuel type, vehicle identification, or other raw…
Are a member-owned golf club's membership dues subject to New York sales tax?
Yes. The club is a 'social or athletic club' (its material purpose is golf, and it is member-owned and member-managed), so under Tax Law § 1105(f)(2) its dues are taxable because an active annual memb…
Could a regulated investment company subtract undistributed capital gains from Virginia income, or could resident shareholders claim credit for Virginia tax paid by the company?
No. Federal conformity included the undistributed gains in both the RIC's Virginia taxable income and resident shareholders' FAGI. Virginia law provided neither the requested corporate subtraction nor…
Could a Virginia home-staging company keep design services nontaxable by separately stating them from taxable furniture rentals on the same invoice?
Yes. 'Billed separately' required separate line-item charges, not separate invoices. Because the staging company separately stated design services and furniture rentals and collected tax on the rental…
Could a New Mexico manufacturer substantiate R&D wage allocations with drafting logs and engineer interviews instead of a formal project-timekeeping system?
Yes. Process Equipment & Service Company proved its 2014 and 2016 qualified R&D wage expenditures through contemporaneous drafting logs, project-change codes, engineer interviews, and payroll data. Se…
Does a small city's luxury hotel-and-convention-center project qualify for a 10-year Chapter 351 tax rebate, are resort fees included, and can the city back more than one such project?
Yes — the project qualifies, and the Comptroller answered all thirteen questions favorably. The city (population under 6,000, meeting the adjacent-county and landmark criteria of Section 351.152(17)) …
Does a city's proposed luxury hotel and convention center project qualify for Texas's 10-year state tax rebate under Tax Code Chapter 351, and what taxes and facilities does the rebate cover?
Yes. A city's proposed hotel and connected convention center qualified as a "qualified hotel project" under Tex. Tax Code Chapter 351, entitling the city to a rebate of state sales tax, state hotel oc…
How does a married couple file Louisiana income tax when one spouse is a Louisiana resident and the other lives in another community-property state?
The couple keeps the federal joint filing status but uses Louisiana Form IT-540B. Louisiana includes the resident spouse's half of all community income plus the nonresident spouse's half of community …
What does Illinois General Information Letter ST 20-0004-GIL conclude about Exempt Organizations?
An educational institution that trains optometrists does not owe Retailers' Occupation Tax or Service Occupation Tax on prescription eyeglasses and contact lenses it transfers to patients as part of i…
Does a city's hotel and convention center project, financed through a public facility corporation and a municipal development district, qualify for Texas's Chapter 351 state tax rebate, and how is the rebate obtained?
Yes. A city that met Tax Code § 351.152(27)'s population-and-county criteria, and structured its hotel and convention center project through a public facility corporation (which will own the hotel) an…
Does a city's planned hotel-and-convention-center project qualify for the Chapter 351 'qualified project' program, entitling the city to rebates of state and (with consent) local taxes generated at the project?
Yes — the project qualifies, and the Comptroller answered all eleven questions favorably. The city (population 70,000–90,000, located in two counties — one over four million, one under 50,000) is an e…
Does a company that arranges events for clients have to charge sales tax on its service fees, and how does gross receipts tax apply to caterers?
Caterers owe Illinois Retailers' Occupation Tax on their entire gross receipts from selling food, with no deduction for overhead costs like linens, dishes, flowers, or delivery. A pure event-planning …
Does Illinois sales/use tax apply to tangible personal property an electric-vehicle maker buys to build pre-production test vehicles?
No, not in this case. The Illinois Department of Revenue ruled that tangible personal property an electric-vehicle manufacturer buys to build pre-production, non-saleable test vehicles used for resear…
Which Georgia franchise startup charges and online-store sales were taxable: truck and business outfitting, direct-mail marketing, operations training, apparel, or promotional items?
Truck Outfitting and Business Outfitting charges were taxable retail sales because they were specific charges for tools, equipment, supplies, apparel, and marketing property transferred to franchisees…
Could a hotel-site-selection company buy Georgia rooms tax-free for resale, and when could federal-government rooms avoid the $5 state hotel-motel fee?
The company could buy hotel rooms tax-free for resale by giving the hotel a properly executed resale certificate, then had to collect and remit sales tax on its own selling price to end users unless a…
Can a customary one-way hauler claim New Mexico's reduced weight distance tax rate when its logs show total trip miles but not separate empty and loaded miles?
No. Star Paving's trucks customarily hauled material one way, but the reduced rate also required proof that at least 45% of each qualifying vehicle's annual New Mexico mileage was traveled completely …
Does a convention center that a developer conveys to a city's local government corporation only in a reversible 'determinable fee' qualify as municipally owned, so the project earns Texas 'qualified hotel project' tax rebates?
No. To be a 'qualified hotel project' eligible for state tax rebates under Section 151.429(h), the convention center must be owned by the municipality (here, a city of 1,500,000+) as defined in Govern…
Does a convention center count as "owned by a municipality" for Texas's qualified-hotel-project tax rebate if the city's ownership interest is a reversionary "determinable fee" instead of outright fee simple?
No. A convention center conveyed to a city-affiliated local government corporation in "determinable fee" — meaning title could revert back to the private developer after a set period — does not satisf…
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