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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When an Illinois resident pays alimony and earns income taxed by another state that won't let her deduct the alimony against that nonresident income, does the alimony still reduce her Illinois credit for taxes paid to that other state?
Yes. The Department ruled that because Article 3 of the Illinois Income Tax Act would let a nonresident allocate 100% of an alimony deduction to Illinois, the alimony deduction must be allocated to th…
Is a U.S. REIT that is more than 50%-owned by publicly traded foreign REIT-type entities a 'captive REIT' under Illinois law, requiring it to add back its federal dividends-paid deduction?
No. The Illinois Department of Revenue ruled that the taxpayer, a U.S. REIT more than 50%-owned (directly and constructively) by a Dutch REIT-type entity whose Class A shares are staple-traded on fore…
Who decides whether a building is in a qualifying census tract for New York's historic rehabilitation tax credit, and is that decision binding on the Tax Department?
The New York State Office of Parks, Recreation and Historic Preservation (OPRHP) decides, and its determination is controlling. Where OPRHP has determined and certified that a building is in a qualify…
What does Illinois General Information Letter ST 20-0002-GIL conclude about Computer Software?
A cloud-based online file storage service that does not transfer any tangible personal property (including computer software) to its customers is generally not subject to Illinois Retailers' Occupatio…
Was a federal civilian employee a Virginia resident for 2015 after obtaining a Virginia license, spending less than six months abroad, and returning to Virginia?
Yes. The taxpayer established Virginia domicile in 2014 and did not prove abandonment when he lived abroad for less than six months and returned. He also spent more than 183 days in Virginia during 20…
Could medical disability, an assessment-period waiver, or an IRS credit-transfer notice extend Virginia's three-year deadline for refunds claimed on late original returns?
No. Virginia required a fiduciary or agent to file for a disabled taxpayer and did not toll the refund period. Assessment waivers did not extend original-return refund claims, and the IRS notice did n…
Did creating a new parent company let a Virginia affiliated group replace its separate-return election with consolidated filing?
No. A new parent and reorganization did not create a new election or extraordinary circumstances; the group remained bound by its established method. A later change could be possible under the statuto…
Were points used only to activate games and rides taxable when sold with food in an entertainment center's value-deal and birthday-party packages?
No. The points were neither admission charges nor taxable meal-related charges, gave no entitlement to food, and activated only games and rides. Including them in a package with food did not make them…
What proof did Virginia require before refunding use tax paid on software claimed to have been delivered electronically?
An invoice, contract, sales agreement, or comparable evidence had to expressly confirm electronic delivery and that no tangible software medium was or would be supplied. The taxpayer failed to provide…
Could a Virginia business remove sales-tax audit items through an appeal without providing invoices, exemption certificates, or other supporting records?
Not on the existing record. Virginia required suitable transaction records and a complete appeal supported by essential documentation. The taxpayer had supplied none, so it received one final 30-day p…
Could part-year Virginia residents subtract all of a spouse's 2015 wages when Form W-2 data showed he earned wages after the couple moved into Virginia?
No. Part-year residents owed tax on income attributable to their Virginia residency period. Because the husband earned wages after the August move, subtracting 100% was incorrect. The estimated assess…
Did a taxpayer abandon Virginia domicile after moving to another state for work even though she retained a Virginia driver's license and voter registration?
Yes. She leased a home, worked, registered and garaged vehicles, used the other-state address for federal tax documents, and remained there until an unexpected 2017 job loss. Considering all facts, Vi…
Was a Virginia LLC that bought, renovated, and sold two properties subject to the BPOL contractor rate even though it argued it did not accept construction contracts?
Yes. A business that improves real estate for its own account and sale is treated at the contractor rate, including a speculative builder that engages others to perform the work. The LLC's purchase, r…
Were separately stated fees to pick up, remove, and recycle an old mattress taxable when offered only with the sale and delivery of a new mattress?
Yes. The services were offered only in connection with new-mattress sales, making the pickup, removal, and recycling fees part of the taxable sales price. Separately stating the charges did not change…
Could a retired federal CSRS employee claim a Virginia subtraction equivalent to the subtraction for Social Security or Railroad Retirement benefits?
No. Virginia courts had already rejected the claim that denying CSRS retirees an equivalent subtraction violated 4 U.S.C. § 111. The Commissioner found Dawson v. Steager involved a different compariso…
Can a company exclude the sale proceeds of its inventory from the Illinois sales-factor when it sells off an entire division, using Illinois's alternative apportionment petition process?
No, not on the facts presented here. The Department agreed that the accounts-receivable and fixed-asset portions of the sale qualified for the 'occasional sale' exclusion from the sales factor, but it…
Can a taxpayer exclude the inventory portion of proceeds from selling an entire business division out of its Illinois sales apportionment factor?
No, not on the facts presented here. The Department denied the taxpayer's petition for alternative apportionment. It agreed that the accounts-receivable and fixed-asset portions of the division sale q…
Can a taxpayer get permission to use an alternative apportionment method (separate accounting) to exclude a non-unitary investment entity from its Illinois sales factor?
Not through this request. The Department denied the petition outright because it was not timely filed under 86 Ill. Adm. Code 100.3390(e)(1) — it needed to have been submitted at least 120 days before…
Which New York taxes apply when a licensed tobacco distributor and retailer sells chewing tobacco to customers inside and outside New York?
In-state retail sales of chewing tobacco are subject to New York State and local sales tax, and all tobacco products the distributor holds in New York for sale are subject to the tobacco products exci…
Does Illinois's new Parking Excise Tax apply to parking spaces at self-storage facilities, and is it in addition to local parking taxes?
The Illinois Department of Revenue pointed the taxpayer to its then-proposed Parking Excise Tax Act rules (86 Ill. Adm. Code 195), noting that storage units are specifically addressed in proposed Sect…
Was the requesting company's cloud software subscription taxable in South Carolina?
Yes. The Department treated the requesting company's lump-sum monthly charge for online access to its cloud software as a taxable communications charge for access to an application service provider. C…
After a corporate group moves the employees and jobs behind a quality jobs tax credit into a new affiliated entity, can that entity continue the credit and assign it to other affiliates?
Yes, with a timing condition. After the group transfers all of a location's employees (and the jobs that earned the credit) to a new disregarded LLC as a contribution to capital, the new entity can co…
How did Florida source a technology platform's user access and transaction-related service fees for the corporate sales factor?
On the redacted facts, a user-related fee was sourced to Florida when the triggering user item was created in Florida, with the user's billing address as a rebuttable indicator. Transaction-related fe…
Did Virginia's BPOL exemption for newspapers, magazines, newsletters, and similar publications cover a free online food blog earning advertising income?
No, in the Department's opinion. Strictly construing the exemption in its 1988 tangible-media context, the Department found a blog was not an 'other publication' of the same kind as a newspaper, magaz…
Could a cable-company subsidiary use payroll apportionment to move county subscriber receipts to its out-of-state parent and affiliates for BPOL tax?
No. The subsidiary was a separate taxable entity, its only definite places of business were in the county, and it was responsible for providing subscriber access under local franchise agreements. All …
Could the Virginia Department decide a BPOL appeal when the city's supposed final determination lacked the revenue commissioner's signature or delegated authority?
No. The employee-signed letter was not a valid final local determination because it lacked the commissioner's signature and evidence of express delegation. The case returned to the city; after a valid…
Does a Virginia locality's farm-equipment BTPP exemption automatically cover aeroponics operations?
Not automatically. Business tangible personal property (BTPP) tax is a local tax, and a Virginia locality may, by ordinance, exempt farm equipment and even define what 'farm' and 'farm equipment' mean…
Can a taxpayer get permission to use an alternative apportionment method (based on trading volume by exchange location) instead of the statutory sales-factor sourcing rules?
Not on this record. The Illinois Department of Revenue denied the petition because the taxpayer never first calculated its apportionment under the standard statutory method (sourcing dealer income to …
How did Virginia require taxpayers to apply the IRC § 163(j) business-interest limitation and the state's additional 20% deduction?
Virginia generally followed the federal limitation, allowed a current Virginia deduction equal to 20% of federally disallowed business interest, and required later reconciliation. Corporate groups had…
Is a permanently implanted spinal cord stimulator exempt from Texas sales tax as a prosthetic device, and does the same exemption cover the temporary trial stimulator used to test the implant beforehand?
It depends on permanence. The permanently implanted spinal cord stimulator system — including its wireless remote and charger — is an exempt prosthetic device under Tex. Tax Code § 151.313(a)(5). But …
How did Florida tax airport ramp, hangar, aircraft-parking, and office-sublease space used by a fixed-base operator?
Aircraft parking, hangar, tie-down, and storage charges to end users were taxed under section 212.03(6), so qualifying prime rent for that same subleased space was not also taxed under section 212.031…
What does Illinois Private Letter Ruling IT 19-0004-PLR conclude about (Alternative Apportionment) Alternative Method of Apportionment?
IDOR ruled that this taxpayer could not use Illinois's standard sales-factor apportionment for its earn-out and installment-sale income -- because excluding those receipts under the occasional-sale ru…
Does Illinois Telecommunications Excise Tax or sales tax apply to a fleet-telematics company's purchased data plans and its monthly customer fee?
No to both questions. The Department concluded that the company's purchased cellular data connectivity qualifies as exempt 'internet access' under the federal Internet Tax Freedom Act, so it is not su…
How would Virginia tax installment gain from an S-corporation stock sale before and after the seller became a nonresident?
Gain included in FAGI while the seller remained a Virginia resident was fully taxable. After genuine nonresidency, installments from stock not employed in a Virginia trade or business were not Virgini…
If a Texas printing company splits its printing and fulfillment (storage/shipping) operations into two separate related companies, how does each company charge Texas sales tax, and does the out-of-state shipment exemption still apply?
The print company must charge tax on all in-house printing and related charges (design, technology, transportation/"kitting," account management) that are part of the sale, including printed material …
How did Act 83 of 2019 increase South Carolina job tax credits in Tier III and Tier IV counties?
For qualifying jobs created in tax years beginning on or after January 1, 2019, Act 83 raised the basic per-job credit from $8,000 to $25,000 in Tier IV counties and from $4,250 to $20,250 in Tier III…
What does Illinois General Information Letter ST 19-0035-GIL conclude about Computer Software?
A software-as-a-service provider is treated as a 'serviceman,' not a retailer. If the provider never transfers any tangible personal property (including software) to the customer, the transaction gene…
How are portable toilets, hand-washing stations, and waste-holding-tank services taxed in South Carolina?
Seventy percent of gross proceeds from renting a portable toilet or toilet trailer is exempt, so state and local sales and use tax applies to the remaining 30% of all connected charges, including rent…
Does Illinois' manufacturing machinery and equipment sales tax exemption cover chemical processing aids used to clean, protect, and prepare production equipment before or after a production run?
It depends on how the chemicals are used, but generally yes. Beginning July 1, 2019, Illinois' manufacturing and assembling machinery and equipment exemption was expanded to cover 'production related …
Does Illinois' manufacturing machinery and equipment sales tax exemption cover cleaning chemicals and detergents used to clean production equipment?
It depends on what gets cleaned. Since July 1, 2019, Illinois' manufacturing and assembling machinery and equipment exemption covers 'production related tangible personal property,' so cleaning chemic…
Does Illinois sales tax exemption for Manufacturing Machinery & Equipment cover oxygen used by a brewery in its brewing process?
It depends on how the oxygen is used. The Illinois Department of Revenue explained that, beginning July 1, 2019, the Manufacturing Machinery and Equipment ('MM&E') exemption was expanded to cover 'pro…
If a perpetual software license meets all five requirements of 86 Ill. Adm. Code 130.1935(a)(1), is the transfer treated as a taxable lease/rental, or as a non-taxable license of an intangible?
A transfer of prewritten computer software under a perpetual license is not a taxable lease or rental if the license meets all five conditions in 86 Ill. Adm. Code 130.1935(a)(1)(A)-(E) -- it is treat…
I rent and sell heavy construction equipment and am setting up to do business in Illinois -- do I charge sales tax or use tax on equipment rentals, and is it calculated on the equipment's value or on the rental charge?
Under a true lease (other than autos leased for a year or less), the lessor -- not the lessee -- is treated as the end user of the equipment, and owes Use Tax on its own cost to acquire the equipment,…
We manufacture custom signs and sell them into Illinois, where we're registered; an independent contractor installs them (attached to a building or a pole set in concrete) and an independent carrier delivers them, with installation and freight separately billed above our cost -- do we charge sales tax or owe use tax, does tax apply to the freight and installation charges, and what happens if we use subcontractors to install?
It depends on whether the sign has 'commercial value' to anyone besides the buyer: a generic sign (for example, one that just reads "real estate" or "insurance" without the customer's name or brand) t…
We're a family farm doing production agriculture and got a Form ST-587 exemption certificate from a local business -- can we use it to buy parts for our semis, tractors, and trailers used on the farm without paying sales tax?
It depends on how the vehicle is used, not on the exemption certificate alone. Illinois exempts machinery and equipment (and their individual replacement parts) from sales tax only when used or leased…
Does a Georgia car wash have to charge sales tax on its washing and waxing packages?
No. Charges for car washing and waxing are nontaxable services in Georgia -- they are not among the state's enumerated taxable services and are treated like nontaxable auto refinishing or painting, ev…
Does Illinois's Telecommunications Excise Tax exemption for 'State governments' cover sales to OTHER states' governments (and their agencies), not just Illinois's own government -- and can a taxpayer get a binding ruling on that?
Yes -- the state-government exemption in the Telecommunications Excise Tax Act applies to Illinois and all 49 other states, and to their executive, legislative, and judicial agencies and instrumentali…
My MLM company charges new distributors a $20 enrollment fee and charges active distributors the same $20 fee annually to renew their status and keep their wholesale discount, support services, and web access -- no physical item is sent in exchange. Is that fee subject to Illinois Retailers' Occupation Tax?
No -- when a membership or enrollment fee doesn't come with any tangible personal property in exchange, it's treated as an intangible and isn't part of the gross receipts subject to Illinois Retailers…
My manufacturing customers buy PPE items like gloves, hardhats, respirators, and disposable clothing from us -- since Illinois expanded the manufacturing machinery exemption on July 1, 2019 to cover 'production related tangible personal property,' can they buy these items exempt using Form ST-587?
Yes, potentially: as of July 1, 2019, Illinois's manufacturing and assembling machinery and equipment exemption was expanded to cover 'production related tangible personal property,' which the Departm…
Our MLM company reformulated its '24K' mental-clarity dietary supplement from a ready-to-drink liquid into a powder that customers mix with water before drinking -- does it still qualify as tax-favored food under Illinois sales tax law?
The Department didn't classify the specific 24K product (no product label was actually enclosed with the request), but it explained the controlling rule: food for human consumption to be eaten off the…
We're a steel-framing manufacturer: we use overhead cranes to take master coil out of storage and load it onto our slitter. Is that loading step part of the production cycle (exempt) or a pre-production activity (taxable) under the manufacturing machinery and equipment exemption?
The Department did NOT answer the specific overhead-crane question. It did not say whether moving master coil from storage onto the slitter counts as a taxable 'pre-production activity' or an exempt u…
My company charged Illinois sales tax on a separately-invoiced, no-markup freight charge for delivering glass by common carrier -- the customer could have picked it up in person but we always deliver instead. Is that freight charge taxable, and can the customer get a refund?
No -- the freight charges here are NOT taxable, because the customer had the option to pick up the glass in person instead of paying for delivery. Under 86 Ill. Adm. Code 130.415 and Kean v. Wal-Mart,…
Our company sells an enhanced communications-platform product to Illinois customers, and separately some businesses offer software as a service or resell conferencing/telecom services -- when is computer software a taxable retail sale versus a non-taxable license, when does SaaS/cloud delivery escape sales tax, and when does audio-conferencing trigger the Telecommunications Excise Tax?
The Department did NOT classify the taxpayer's own PRODUCT -- it first declined to issue the binding Private Letter Ruling the taxpayer requested, citing "the lack of information regarding the product…
Does the Illinois prepaid wireless E911 surcharge apply to recharges sold to Illinois customers when the actual phone being recharged is used abroad by family or friends on a foreign network?
Yes, the surcharge applies. The Illinois Department of Revenue held that the Prepaid Wireless 9-1-1 Surcharge attaches to the retail transaction -- the purchase of the recharge in Illinois -- not to w…
When are delivery, freight, shipping, transportation, and fuel charges taxable in South Carolina?
A delivery charge generally follows the sale it serves: it is taxable when included in a taxable retail sale and nontaxable when tied to an exempt or wholesale sale. For a shipment containing taxable …
Could an independent-living community use after-the-fact cost and market studies to increase the real-property rental deduction from its bundled resident charges?
No. Gemini Las Colinas was entitled to deduct the part of its receipts derived from leasing real property, but it did not prove that the Department incorrectly calculated that part from the available …
What are the required wage and investment levels for Nebraska Advantage Act applications filed on or after January 1, 2020?
This ruling sets the 2020 thresholds. For Nebraska Advantage Act applications filed on or after January 1, 2020, the required investment and average-annual-wage levels by tier are: Tier 1 -- $1 millio…
Could a New Mexico rancher prove that his 2011–2013 livestock sales and ranch services were exempt from gross receipts tax using reconstructed memories and affidavits instead of business records?
Only partly. Dusty Stone credibly testified that he sold livestock and performed ranch services, but his reconstructed calendars, memories, customer conversations, and yearly affidavits did not docume…
When did Kansas's environmental assurance fee on petroleum products resume?
This Kansas Department of Revenue notice (approved November 25, 2019) advises Environmental Assurance Fee filers that, effective January 1, 2020, the environmental assurance fee of $0.01 per gallon on…
When a Texas hotel pays money into its loyalty-rewards fund for issuing points to guests, are those 'Marketing Promotions' contributions administrative charges or charges for issuing reward points?
They are charges for issuing reward points, not administrative charges. A hotel's 'Marketing Promotions' contributions to its frequent-stay rewards fund are paid in conjunction with issuing points to …
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