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 it double taxation for a county to use the same first full year's receipts in two BPOL license-year calculations?
No. The corrected 2015 liability and the 2016 license tax covered different periods, even though both used actual 2015 receipts. The business had not elected the final-year estimate procedure, and the…
Did the federal Internet Tax Freedom Act bar a Virginia city from including an internet provider's access-service receipts in its BPOL gross-receipts base for 2010 and 2011?
Not for the years at issue. Virginia concluded that a BPOL tax measured by internet-access receipts was a tax on internet access under the federal Internet Tax Freedom Act. But the city proved it had …
Must a business claiming Virginia's BPOL out-of-state deduction prove that each deducted gross receipt exactly equals income shown as a separate amount on another state's income tax return?
No. Once the city accepted that the taxpayer was eligible for the BPOL out-of-state deduction, the taxpayer did not have to make its sitused gross receipts equal the taxable income shown on another st…
Was a December 2014 amended return timely to recover a 2007 Virginia assessment paid through a tax lien in February 2012?
No. The taxpayers missed both the general May 1, 2011 amended-return deadline and the special two-year period after the February 2012 lien payment. Their December 2014 filing was late, so Virginia had…
How does Virginia calculate the retirement-income subtraction when pension contributions were deductible federally but taxed by another state before later distributions?
Virginia uses a pro-rata formula, not a dollar-for-dollar recovery of contributions. The taxpayers proved that the wife's 1984-1986 pension contributions were excluded federally and taxed by State A, …
Is Nebraska Revenue Ruling 22-05-3 on adopting federal life expectancy tables for the Nebraska Endowment Credit still in effect?
No -- it has been withdrawn as obsolete. Revenue Ruling 22-17-1 (issued June 9, 2017) rescinds Revenue Ruling 22-05-3, 'Adoption of Federal Life Expectancy Tables' (issued December 22, 2005). The Depa…
Does the Cook County Sweetened Beverage Tax become part of the selling price used to calculate Illinois Retailers' Occupation Tax liability?
No. Because the Cook County Sweetened Beverage Tax is imposed on the consumer (like the Cook County Liquor Gallonage Tax), it is not part of the selling price of the beverage and must be excluded when…
Could the Virginia Department of Taxation reconsider BPOL years already governed by a circuit-court order or hear later tax years when the taxpayer had not first filed the required local appeal?
No. For 2008-2012, the county had appealed the Department's earlier determination to circuit court, making assessment correctness and relief exclusively judicial matters. For 2013-2014, the taxpayer h…
Could a Virginia taxpayer's otherwise late amended refund return remain timely if it was filed within one year after another state's final determination changed the taxpayer's resident status?
Potentially. The taxpayer's second amended return was outside Virginia's ordinary three-year period, but Va. Code § 58.1-1823 A (v) allowed a refund claim within one year after another state's final d…
Must a Virginia real property contractor include separately stated shop drawings, administrative fees, custom gel coat, and tooling charges in the consumer use tax base for fabricated construction materials?
Yes. A real property contractor is the user and consumer of construction materials, and Virginia's cost-price definition does not deduct connected labor, service, or other expenses. The separately sta…
What administrative request fees did Virginia Tax Bulletin 17-5 announce effective July 1, 2017, and could taxpayers request a waiver?
Effective July 1, 2017, the bulletin announced a $50 fee for a doubtful-collectability offer in compromise, $275 for a ruling letter, $275 for a local business tax advisory opinion, and $100 for a cor…
Does having remote employees or independent contractors in Illinois create income tax or sales tax nexus?
The Department would not say. It explained that whether a taxpayer has nexus with Illinois is too fact-specific for a ruling, and instead pointed to its nexus regulation (Section 100.9720) and general…
When is South Carolina's 2017 sales tax holiday and what items are exempt (per SC IL #17-7)?
South Carolina's 2017 sales tax holiday runs from 12:01 a.m. Friday, August 4, 2017 through midnight Sunday, August 6, 2017. During that three-day weekend, the 6% state sales and use tax and any appli…
Does a company create Illinois sales-tax nexus by having a resident employee, using independent-contractor transcriptionists who work from home, and occasionally sending employees onsite to customer locations?
The Department declined to make a specific nexus determination in this GIL, saying nexus is too fact-specific for a General Information Letter and is better handled by an auditor. Instead, it explaine…
When a construction contractor buys materials and permanently installs them into real property, who owes Illinois Use Tax, and can a subcontractor's out-of-state tax payment avoid double taxation down the sales chain?
The construction contractor (or subcontractor doing the installing) that permanently affixes tangible personal property to real estate is the 'end user' of that property and owes Illinois Use Tax on i…
Does the Illinois manufacturing machinery and equipment exemption cover the welding gases (argon, helium, and O2) a metal fabricator uses in its MIG/TIG welding process?
No. The Department of Revenue advised that gases generally are not exempt under the manufacturing machinery and equipment exemption, citing 86 Ill. Adm. Code 130.330(c). This corrected an earlier 2011…
Did working and renting a home in another state establish a new domicile when the taxpayer kept a Virginia home for family, Virginia vehicles, and a Virginia driver's license?
No. The taxpayer's State A job, rental, and resident returns showed ties there, but he retained a Virginia home for his former wife and children, three Virginia-registered vehicles, and renewed his Vi…
Can Virginia personally assess a minority shareholder and senior manager for unpaid withholding tax when his work covered engineering and legal matters, not payroll or finance?
No. The taxpayer managed engineering, testing, business development, and legal matters, while other executives controlled accounting, payroll, and finance. His limited financial involvement consisted …
Could corrected fencing invoices separating materials from installation labor reduce a Virginia sales tax assessment that originally taxed lump-sum charges?
Yes, for this audit. Virginia accepted corrected invoices that separately stated fencing materials and installation labor, returned the audit for revision, and warned that future pre-July 2017 lump-su…
Were software purchases and a support renewal exempt from Virginia sales and use tax when some software was downloaded but manuals and a CD were delivered?
The two asset-software purchases were exempt because documentation showed electronic delivery. The annual support transaction was not fully exempt because manuals and a CD were physically delivered be…
Can a wastepaper recycler qualify for Virginia's industrial processing exemption when it performs mechanical treatments beyond ordinary sorting and baling?
Possibly. Virginia reaffirmed that ordinary sorting and baling of wastepaper was not qualifying industrial processing. But if the recycler proved that it also shredded, fluffed, compacted, compressed,…
Can the Virginia Department hear a BPOL refund appeal before the taxpayer appeals to the city and receives a final local determination?
No. The city's denial of the taxpayer's 2011-2013 BPOL refund request was an appealable event, giving the taxpayer one year to file a local appeal. The Department could hear the dispute only after the…
When may a taxpayer ask the Virginia Department to review a city's denial of a BPOL refund request?
Only after the taxpayer files the statutory local appeal and the locality issues a final determination. The city's denial of the 2010-2013 refund request was an appealable event, starting a one-year p…
Could a taxpayer appeal a city's BPOL refund denial directly to the Virginia Department without first filing the statutory local BPOL appeal?
No. The city's denial of the 2010-2013 BPOL refund request was an appealable event under the BPOL statute. The taxpayer had one year from communication of that denial to appeal to the city. Only after…
When does an out-of-state seller that stores inventory in an Illinois marketplace warehouse have to register and collect Illinois sales or use tax?
It depends on nexus: if the out-of-state seller's inventory is held in Illinois at the time of sale (or is produced there), the seller is treated as an Illinois retailer that must register and collect…
Does an out-of-state company that sells downloaded software over the internet, with no Illinois office or employees, have to collect Illinois sales/use tax on those sales?
It depends on whether the seller has nexus with Illinois. Under the Quill two-prong test, a retailer must have physical presence in Illinois (such as an office, agent, representative, or repetitive de…
Was A Team Productions' protest timely when Department mail records showed a June 15 assessment mailing and the company hand-delivered its protest on September 14?
No. Detailed GenTax, sorting, postage, and USPS records proved that the Department printed, postmarked, and mailed the assessment on June 15, 2016. The 90-day deadline was September 13. A Team hand-de…
Can a municipality impose its own tax on gas distributors and on cigarette retailers, and who actually pays that tax?
Yes. Under 65 ILCS 5/8-11-2, a municipality of 500,000 or fewer people may tax businesses that distribute, supply, furnish, or sell gas for use within the city (not for resale) at up to 5% of gross re…
A governmental pension trust that is exempt from federal income tax owns a single-member LLC that operates in Tennessee. Is that LLC disregarded for Tennessee franchise and excise tax, and is the exempt trust taxed on the LLC's earnings?
Yes, the LLC is disregarded — but the exempt owner can still owe tax on unrelated-business income. A governmental pension trust (exempt from federal income tax under I.R.C. § 501(a)) is the sole membe…
Was Louie Casias personally liable for Casias Trucking's tax lien after forming an LLC but never closing the sole-proprietor CRS account or registering the LLC?
Yes. Casias formed an LLC in 2003, but never proved that he closed the sole-proprietor CRS account, registered the LLC for a new CRS number, transferred the business obligations, or obtained the Depar…
For Texas sales tax, is a cloud-based business texting platform a taxable data processing service, and is a separately billed printer rental fee taxed the same way?
Two different tax treatments for two separately billed charges — a cloud-based (SaaS) texting and messaging platform that stores, retrieves, and analyzes customer message data is a taxable data proces…
Could a short-term car-rental company sell its fleet to a related title-holding entity and lease it back without Retailers' Occupation Tax or Use Tax?
Yes under the rental-use exemptions, though not as an occasional sale. The rental company and title-holding entity had agreed before transfer that the vehicles would continue in short-term rentals sub…
Was a festival promoter's percentage of concession sales taxable as rent for licensed public recreational-facility space?
No. Although the payment was for a license to use real property, it qualified for the exemption for food-and-drink concessionaire space within a publicly owned recreational facility.
Could taxpayers overturn a Virginia assessment based on an IRS audit while their later federal amendment was still pending, and would a payment plan admit liability?
No immediate abatement was available. Virginia properly used the IRS's final 2010 audit adjustments after the taxpayers failed to file a Virginia amended return, and the IRS's write-off of its balance…
Are a Virginia resident's wages and salaries exempt from Virginia income tax, and can that theory defeat assessments or filing duties?
No. Virginia begins with federal adjusted gross income, so a resident's wages included federally are taxable unless a specific Virginia modification applies. The taxpayer's cited cases did not support…
Must a Virginia resident estate file a fiduciary income tax return when securities sold after death should receive a stepped-up basis but may still produce some taxable gain?
Yes. A resident estate must file if it is required to file federally or has any Virginia taxable income. The Department agreed that securities acquired from the decedent should use fair market value a…
Could married taxpayers use a lower federal adjusted gross income than the IRS reported and claim an unreduced Virginia age deduction for 2013?
No. Virginia used the federal adjusted gross income reported by the IRS because the couple's return showed a lower amount, and any discrepancy had to be resolved federally. Only the husband qualified …
Did an employer still owe Virginia withholding tax and a 100% fraud penalty when its employees had already filed returns and paid their own tax?
The withholding tax itself was removed because each employee had filed and paid the Virginia tax, and the evidence did not support a fraudulent intent to evade tax. But the employer remained liable fo…
Could a taxpayer obtain abatement of a 2013 Virginia income-tax assessment with incomplete and conflicting evidence that she had moved to another state?
Not yet. The taxpayer's rental, address-change, and information-return records did not establish when she moved or whether she intended to remain in the other state, and some evidence conflicted. Beca…
Did foreign work assignments and purchasing property in another state establish a new domicile when the taxpayer returned to Virginia within six months?
No. The taxpayer's overseas work was temporary, his Virginia driver's-license record contradicted his claim that it had lapsed, Virginia tax continued to be withheld, and the property he bought in Sta…
Did an out-of-state online seller have to register for Virginia sales tax when its only Virginia presence was resale inventory stored at a fulfillment center?
Yes. Effective June 1, 2017, owning tangible personal property for sale in Virginia was sufficient activity under Va. Code § 58.1-612 C 9. Because the online seller kept its resale inventory at a Virg…
Must a business hold a Virginia state contractor's license before a locality may classify it as a contractor for BPOL tax purposes?
No. Virginia said state contractor licensing and local BPOL classification use different definitions and serve different purposes. A business could be classified as a contractor for BPOL tax even with…
Did Public Law 86-272 protect Aventis and Sanofi-Synthelabo from New Mexico corporate income tax when related-company detailers, education, and clinical trials supported the market?
No. The companies' New Mexico activity exceeded protected solicitation: LLC detailers collaborated on treatment protocols and supplied education, while a related corporation sponsored clinical trials …
Is a company that procures props and costumes for productions a Georgia vendor or a conduit for the film tax credit, and which of its sales or rentals qualify?
It depends on inventory. To be a Georgia vendor for specific items, a company must carry those specific items in its own regular inventory. When the company instead procures an item it does not stock …
For Texas sales tax, is a restaurant's monthly charge for tabletop ordering devices a taxable equipment rental or a nontaxable service, and are patron fees for premium content on those devices taxable?
Both charges are taxable, for different reasons — the restaurant's monthly per-unit charge to its vendor for tabletop ordering devices is taxable as the rental of tangible personal property (the 'esse…
What resale exemption certificate did Virginia Tax Bulletin 17-4 require for purchases of stamped cigarettes beginning January 1, 2018?
Beginning January 1, 2018, a retailer purchasing Virginia-stamped cigarettes for resale had to use a Department-issued Form ST-10 C Cigarette Resale Exemption Certificate. The certificate was unique t…
If a Georgia taxpayer files his return late and buys film tax credits after the deadline to zero out his tax, does he avoid the late-filing and late-payment penalties?
No. Buying Georgia film (entertainment) tax credits after the return's due date does not avoid the penalties. The late-filing penalty under O.C.G.A. § 48-7-57 is computed on the tax that should have b…
Could Donald Krumrey recover a $21.76 estimated-tax underpayment penalty because he did not understand the New Mexico PIT instructions to require 2015 payments?
No. Krumrey's Social Security and pension income lacked New Mexico withholding, so he had to make estimated payments for 2015. The 2014 PIT packet contained instructions stating who must pay estimated…
Does a franchised car dealer owe Texas sales tax on a ground lease for the land where it operates its dealership and stores vehicle inventory?
No — a franchised motor vehicle dealer's ground lease of the real property where it operates its dealership (including storing inventory per TxDMV licensing requirements) is a nontaxable lease of real…
Does Colorado sales or use tax apply to charging third parties for non-transplantable human tissue?
Yes. Charging third parties for non-transplantable human tissue is a taxable sale of tangible personal property in Colorado, not a tax-free service. Human tissue is corporeal property; the labor to ac…
Could a security-services provider qualify as a staffing firm and exclude employee wages, payroll taxes, and benefits from BPOL gross receipts?
No. Although its client contracts were temporary, the security company retained substantial control over its guards, equipment, supervision, reporting, and performance. Virginia treated it as providin…
How should former New Jersey residents calculate Virginia's subtraction for pension distributions attributable to contributions previously taxed by New Jersey?
They could not subtract the entire unrecovered contribution balance at once. Because the pension lacked an individual year-end account value, Virginia used the federal simplified annuity method. The s…
Could Virginia assess 2012 tax more than three years after the return due date when taxpayers had not reported an IRS increase in federal income?
Yes. The ordinary three-year limit did not apply because the taxpayers failed to file a Virginia amended return within one year of the IRS change. Va. Code § 58.1-312 A 3 then allowed Virginia to asse…
Was an IRA distribution received before a taxpayer became a Virginia resident included in her Virginia part-year resident income?
No. After reviewing new documentation, Virginia found that one taxable IRA distribution was received in May 2013, before the taxpayer became a Virginia resident in June. That distribution was excluded…
Could a Virginia resident claim an out-of-state tax credit for income tax a partnership paid on his behalf through another state's unified return?
Yes. The partnership statement showed both the taxpayer's pro rata share of income attributable to the other state and his pro rata share of the tax paid there on his behalf. That satisfied Virginia's…
Could a taxpayer claim Virginia's Livable Home Tax Credit without a certificate of approval from the Department of Housing and Community Development?
No. A taxpayer first had to apply to the Department of Housing and Community Development and obtain a certificate proving that the accessible new home or retrofit qualified. Without that certificate, …
Could an auto-parts and paint retailer rely on customers' resale certificates for consumable shop supplies when the certificates appeared valid and resale was plausible?
Yes. Virginia found that the retailer could reasonably conclude from the certificates and its knowledge of the customers' businesses that the disputed supplies might be resold. Its acceptance of the r…
Does Colorado sales or use tax apply to leasing space on a telecommunications tower?
Yes. Leasing space on a telecommunications tower is subject to Colorado state (and state-administered local) sales and use tax. The Department treats the towers as tangible personal property — not rea…
Which dealers had to make Virginia's accelerated sales-tax payments in June 2017 and June 2018, and how were those payments calculated and reconciled?
For the June 2017 payment, dealers with at least $2.5 million of taxable sales or purchases in the prior fiscal year had to prepay 90% of their June 2016 sales-tax liability. For June 2018, the thresh…
What sales-tax registration rule did Virginia Tax Bulletin 17-3 announce for out-of-state dealers storing inventory at Virginia warehouses or fulfillment centers?
Beginning June 1, 2017, an out-of-state dealer making sales to Virginia customers had to register and collect Virginia retail sales and use tax if it owned inventory for sale stored in Virginia, inclu…
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