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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Were a coupon-clearinghouse's internal fraud checks and purchased third-party investigations subject to Florida sales tax?
The clearinghouse's own manual and automated coupon-fraud checks were not taxable protection services. Purchased third-party investigative services were taxable when used in Florida or when their prim…
Could insurer-paid long-term disability benefits reported on Form W-2 qualify for Virginia's disability-income subtraction?
Potentially. Virginia modified its prior position and said Form W-2 reporting alone does not disqualify benefits proven to arise from long-term disability insurance. But the taxpayers documented perma…
Is a report analyzing a clients customers that benchmarks against industry data a taxable information service?
Yes. Collecting, compiling, and analyzing information and furnishing reports is an information service taxable under Tax Law section 1105(c)(1). There is an exclusion for information that is personal …
In a 'reverse' IRC § 1031 like-kind exchange, a specialized company (the exchange accommodation titleholder, or EAT) temporarily holds legal title to the replacement property until the taxpayer sells its old property. When the EAT later transfers that replacement property to the taxpayer, is that transfer itself subject to New York's Real Estate Transfer Tax (RETT)?
No RETT is due on that specific transfer. In a 'reverse' like-kind exchange under IRC § 1031, an exchange accommodation titleholder (EAT) buys and briefly holds legal title to replacement property bef…
Could a credit-card finance company use retailer assignments to claim Virginia sales-tax bad-debt credits on customer defaults?
No. Virginia strictly read the bad-debt statute to benefit the retail dealer that made the sale, reported it, and remitted the tax. The finance company bought or originated the accounts and bore the d…
Is civilian pay from a State of Illinois job that requires Illinois National Guard membership exempt from Illinois income tax?
No. The Illinois Department of Revenue concluded that civilian wages paid by the State of Illinois are not tax-exempt, even if the job requires the employee to maintain Illinois National Guard members…
If a nonresident partner's only Illinois income is pass-through income from a partnership that already withholds and remits tax on its behalf, does the partner still have to file its own annual Illinois corporate return?
No, generally not. The Illinois Department of Revenue explained that a nonresident partner whose Illinois income tax liability is fully paid through pass-through withholding under IITA Section 709.5 i…
Is a cable companys charge to extend its broadband network to a rural property a taxable capital improvement?
No, and not for the reason asked. The customer paid a $15,000 contribution in aid of construction so the cable company would build 6/10 mile of coaxial cable (owned by the cable company) to bring broa…
Are a medical-records companys retrieval, coding, abstraction, training, and storage services taxable?
Mostly not. Retrieving and furnishing a patients specific confidential medical records to an authorized requester is not taxable, no matter how delivered, and neither are the related delivery charges.…
Were motor-vehicle title transfers exempt when corporations converted to LLCs in qualifying same-owner reorganizations?
Yes, for the conversions described. Each transfer required a signed DR-40 affidavit stating that the corporation-to-LLC conversion qualified as an I.R.C. section 368(a)(1)(F) reorganization solely in …
Did a federally taxable lump-sum annuity death benefit qualify for Virginia's income subtraction even though it was not life-insurance proceeds?
Yes. The payment came from an annuity contract with an insurance company, was paid to the beneficiary in a lump sum, and was federally taxable. Those facts met Va. Code § 58.1-322 C 32; the payment di…
Did claiming residence in another state overturn this nonfiler's best-information Virginia assessment for 2012?
No. The taxpayer did not answer the Department's request for evidence showing abandonment of Virginia domicile, so the best-information assessment remained presumed correct. He received one final 30 d…
Could an employee claim a Virginia withholding credit for tax his employer allegedly should have withheld after March 2014?
No. An employee may receive credit when an employer actually deducts Virginia tax but fails to remit it, but this taxpayer did not prove any deduction after March 2014. Unemployment eligibility, a sub…
Did an asserted post-divorce move outside Virginia overturn this taxpayer's estimated 2012 resident income-tax assessment?
No. Virginia unemployment records covered all four quarters of 2012, the taxpayer retained Virginia DMV ties, and she supplied no evidence of living elsewhere that year. Because she did not complete t…
Did a construction NTTC protect crane-and-operator receipts when the project manager, rather than the subcontractor that issued the NTTC, paid the invoice?
Yes. US Field Service timely accepted a properly executed construction NTTC in good faith from the wind-power subcontractor that bought its crane-and-operator services. The project manager's payment o…
Which receipts from ATC Healthcare's New Mexico staffing franchise were taxable: payroll collections, franchise royalties, and administrative services?
ATC's payroll and client collections were taxable because it was the legal employer and failed New Mexico's disclosed-agency test. Pre-June 27, 2007 franchise royalties were abated under then-controll…
Could a $35.39 estimated-tax underpayment penalty be abated when a husband's terminal illness left the taxpayers unable to address withholding or obtain tax help?
Yes. The Chwirkas underpaid because no tax was withheld from Joseph Chwirka's final three months of disability income. Although the penalty was initially mandatory, his terminal illness and Rebecca Ch…
Did diesel used by lock-and-dam construction vessels or a boat repairer's tow vessels qualify for Illinois bordering-river fuel exemptions?
Not for the construction contractor transporting its own materials; that was not transportation for hire. A repair company's tow fuel could qualify only when transportation to and from the repair site…
Did a supermarket's rotisserie oven, cleaner, grease bags, and related equipment qualify for Illinois's manufacturing machinery exemption?
No. The supermarket used the equipment to slow-cook chickens for retail sale in its deli. Illinois's rule states that food and beverage preparation by restaurants, food-service establishments, and oth…
Does Illinois tax a nonresident's capital gain from the sale of stock in an Illinois company received as farm patronage dividends?
No. Gain from the sale or exchange of stock is nonbusiness income made up of intangible personal property, and under IITA Section 303(b)(3) it is allocable to Illinois only if the taxpayer's commercia…
What are the required wage and investment levels for Nebraska Advantage Act applications filed on or after January 1, 2017?
This ruling sets the 2017 thresholds. For Nebraska Advantage Act applications filed on or after January 1, 2017, the base average annual wage requirement is $25,709, and the required investment and em…
Are hosted email, fax, online meeting, and file-management services taxable in New York?
It splits four ways. Email service is not taxable: although email is telephony/telegraphy, the Internet Tax Freedom Act bars taxing Internet access, which includes email and instant messaging. Fax ser…
A Tennessee corporation will convert several subsidiaries that do business in Tennessee into single-member LLCs disregarded for federal income tax, effective December 31, 2016. How do those conversions affect its Tennessee franchise and excise tax returns and consolidated net-worth election?
It depends on the tax year. For the tax year ending December 31, 2016 (the reorganization is effective that day), the corporation and each converting entity are still SEPARATE entities, so they file S…
When a multi-state wind-power company sells its interest in a partnership that owns a wind farm, is the gain sourced to Illinois based on where the buyer is located or based on where the company's own work took place?
Illinois ruled the gain is sourced to the buyer's (customer's) location, not the seller's activity location, because the taxpayer qualified as a "dealer" in the partnership interest under Illinois' mo…
Could Good Karma reduce a gross receipts tax assessment by documenting out-of-state services and periods beyond the limitations period?
Yes, in part. Good Karma supplied documents showing that two companies' Form 1099 payments covered services performed outside New Mexico, and the Department also conceded that part of the assessment w…
Did the destination of goods shipped from an Illinois hub determine whether freight charges were taxable?
No. Freight taxability depended on whether delivery was inseparably linked to the sale, not destination. Charges were taxable when unstated or unavoidable; separately stated optional delivery could be…
Could a New Mexico freelance editor avoid a $276.96 negligence penalty because her longtime New York CPA never advised her about gross receipts tax?
No. Emily Metzloff owed gross receipts tax on editing services performed in New Mexico for out-of-state internet clients. Her New York CPA prepared only her income-tax returns, never discussed New Mex…
When did Florida diesel and pollutants taxes apply to B100 biodiesel and clear diesel sold for blending and export?
Diesel tax attached when the producer created taxable B100 below the bulk-transfer system, not merely at the later sale. B100 was not subject to pollutants tax, but the undyed diesel was.
A company sells access to a web-based interface that lets users send, receive, and manage text messages and other communications from one screen. Are its charges for that interface subject to Tennessee sales and use tax?
Yes. The company's charges for its web-based messaging interface are subject to Tennessee sales and use tax — as the sale of 'ancillary services,' a specifically enumerated taxable service (§ 67-6-205…
Is an equipment sale to an out-of-state customer taxable in Georgia when the customer's Georgia agent receives and assembles the products before final shipment?
Yes. The out-of-state customer received the products in Georgia when its third-party assembler accepted delivery on its behalf, so the Georgia dealer had to collect sales tax even though the assembled…
Did a faith-based nonprofit hospital qualify for Florida's religious-institution communications-services-tax exemption?
No. Although the hospital was faith based and operated public chapels, its primary function was medical care rather than operating as a religious institution within section 202.125(4).
Are prescription catheter, drainage, vertebroplasty, and kyphoplasty procedure kits exempt from Georgia sales tax as prosthetic devices?
Yes. The Department treated the catheters, tubing, collection containers, and bone cement as prescribed prosthetic devices permanently transferred to the patient. The kits' other items, such as scalpe…
Is a fraud-detection service that compares an online shopper's device data against a fraud database and returns an 'Allow/Deny/Review' recommendation a taxable information service in Texas?
No. The Comptroller ruled that a fraud-detection service — which gathers data from a shopper's device, compares it against the provider's own fraud database, and sends the retailer a recommendation to…
Were refrigerated pre-assembled meals sold through a weekly plan for later reheating subject to Florida sales tax?
No. The meals qualified as exempt food products because they required refrigeration and later heating, were not sold for immediate consumption, and were not sold by a restaurant or similar eating plac…
When a retailer sells and installs an appliance, is installation taxable and does the retailer become a construction contractor?
The appliance sale was taxable. Installation was included in taxable selling price only when bundled into that price; a separately agreed or separately listed installation charge was a nontaxable serv…
What corrections did Illinois give another state's survey about private vehicle sales, rentor sales, and long-term motor-vehicle leases?
IDOR said the survey was generally correct but needed clearer labels separating retail from occasional sales. Private-party vehicle transfers faced Private Party Vehicle Use Tax, while rentors selling…
Did an aircraft used primarily for crop scouting and field maintenance qualify for Illinois's farm machinery exemption?
No on the stated primary uses. An aircraft can qualify if used primarily in production agriculture, but Illinois's definition included activities such as tilling, planting, irrigation, chemical applic…
Does a lessee owe Illinois tax when buying a car at the end of a true lease after reimbursing the lessor's original Use Tax?
Yes. The original payment was likely a private contractual reimbursement of the lessor's up-front Use Tax, not the lessee's own tax liability. The later buyout was a separate retail sale, so the purch…
Did a nonprofit campground owe Illinois Hotel Operators' Occupation Tax on cabins rented for camps and public events?
Generally yes. The campground offered lodging for weddings, retreats, orientations, youth camps, and individual cabin stays, so it rented to the public as well as program participants. When sleeping a…
Did a nonprofit Christian camp or retreat center avoid Illinois hotel tax by renting only to church groups and youth camps?
Generally no for the described operation. A facility renting only to its own members may not be open to the public, but one renting to members and any public group is treated as public and all rental …
How did Illinois tax optional medical-equipment service agreements, later repairs and parts, restocking fees, and shipping?
An optional agreement invoiced separately from equipment was not taxable when sold; the provider instead owed tax under the serviceman rules on parts later transferred, while labor-only service involv…
Could a company obtain an Illinois cigarette stamping distributor license to sell stamped cigarettes directly to retailers?
It depended on whether the company was a manufacturer. A manufacturer licensed under the second or third statutory category could not sell stamped original packages directly to retailers or secondary …
Are charges for a golf driving range, batting-cage tokens, and professional golf lessons subject to Georgia sales tax?
Driving-range charges and batting-cage token charges are taxable retail sales because customers pay to participate in games or amusement activities. Separately charged golf lessons from a professional…
Could S.J. Tile avoid 2010-2012 gross receipts tax without NTTCs by arguing that its construction-contractor customers paid the tax?
No. S.J. Tile produced no NTTCs for its 2010-2012 tile-setting receipts and no specific evidence that construction contractors paid gross receipts tax on its behalf, so equitable recoupment and double…
Did buying a Tennessee home and working mostly in Tanzania end a taxpayer's New Mexico domicile when his wife, primary U.S. visits, mail, and vehicles remained in New Mexico?
No. James Hellerman clearly intended Tennessee to be his home and worked mostly in Tanzania, but he did not prove that his established New Mexico domicile changed. His wife and valuable New Mexico hom…
Must a tax-exempt nonprofit collect Georgia sales tax on admission to a historic home and its docent-led tour?
Yes. Admission to the historic home, including the docent-led tour, was a taxable retail sale because Georgia taxes admission to places of exhibition or display. The organization's Section 501(c)(3) s…
Are custom corporate-video production charges taxable when the video is delivered electronically or on a hard drive, thumb drive, or DVD?
Custom video production for one customer's specifications is a nontaxable professional service whether delivered electronically or on tangible storage media. If the seller separately charges for a har…
What South Carolina tax filing and payment relief is available to taxpayers affected by Hurricane Matthew (per SC IL #16-12)?
SC Information Letter #16-12 grants South Carolina tax filing and payment relief to individuals and businesses affected by Hurricane Matthew. Deadlines for returns and payments due on or after October…
Could this cargo-delivery business use Florida's transportation-company revenue-mile apportionment factor?
Yes. Because the taxpayer primarily earned income by transporting customer cargo, it qualified as a transportation company and apportioned income using Florida revenue miles over revenue miles everywh…
Are the franchise royalty fees I collect from my New Mexico franchisees taxable, or is the trademark-license part of the fee exempt from gross receipts tax?
They are taxable, and the franchisor lost. A & W Restaurants, Inc. licenses New Mexico franchisees to run A&W restaurants and collects a continuing royalty fee (5% of gross sales) plus an advertising …
Is a sewing (quilting) service performed on a customers quilt subject to New York sales tax?
Yes. The petitioner sews the layers of customers quilts together with a stitching design. That is taxable under Tax Law section 1105(c)(2) as producing, fabricating, or processing tangible personal pr…
Could a business overturn its Virginia sales-and-use-tax audit by claiming it operated only as a wholesaler?
No. The business did not keep or provide records separating wholesale from retail sales or substantiating sales, purchases, fixed assets, and an exempt Virginia transaction. Virginia upheld the assess…
Did work in another state and later hotel stays in Pennsylvania end this taxpayer's Virginia domicile for 2011 through 2013?
No. An out-of-state employment letter did not prove a permanent new domicile, and temporary Pennsylvania hotel stays were not a permanent abode. Virginia treated the taxpayer as a domiciliary resident…
Was a workstation and tool chest used to support cleaning, deburring, and inspection exempt as industrial manufacturing equipment?
No. Although the cabinet facilitated product inspection and could be essential to the business, it was not indispensable to or an immediate part of actual production. Its quality-control function also…
Did the Internet Tax Freedom Act or Virginia's Internet-access exclusion exempt a cellular provider's Picture Mail charges?
No. Picture Mail did not provide Internet access; customers needed Internet access before using it. Virginia also found the service was picture messaging rather than email, instant messaging, or a sim…
Which common catering charges were taxable, and when could nonprofit, church, or government customers buy meals and related services exempt?
Virginia treated customer charges for wait staff, passed-through delivery, disposable paper goods, and administrative fees as taxable. Gift certificates were taxed when redeemed, not when sold. Exempt…
Can a vendor bundle sales tax into its hourly rate, and must it investigate a customers exemption certificate?
No to absorbing tax, and no duty to investigate. A person required to collect tax may not absorb the sales tax into its hourly rate; the Tax Law requires it to collect the tax from the customer and to…
Is a demolition company that prepares recovered scrap for sale a manufacturer eligible for Georgia's manufacturing sales-tax exemptions?
No. The taxpayer's NAICS code classified it as a metal scrap and waste merchant wholesaler, not a manufacturer, and its income came from selling recovered scrap. The Department found it would not gene…
Is an on-site document-shredding service a manufacturer eligible to buy its truck-mounted shredding and compacting equipment tax-free?
No. The taxpayer was classified under NAICS 561990, All Other Support Services, and most of its revenue came from document-management services rather than shredded-paper sales. The Department treated …
What were the significant South Carolina tax-law changes from the 2016 legislative session, as summarized by the Department (per SC IL #16-11)?
SC Information Letter #16-11 is the Department's brief summary of the significant tax and regulatory law changes enacted in South Carolina's 2016 legislative session, organized into four categories: (…
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