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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My spouse moved to another state for work and voted and got licensed there while I stayed in our Virginia home — are we both still Virginia residents?
Split decision — the husband successfully changed his domicile to State A, but the wife, who never left Virginia, remained a Virginia resident. The husband took a job in State A in December 2019, inte…
My tax software wrongly claimed a Virginia credit for D.C. tax my commuting spouse never owed — can the assessment be abated because it was a software error?
No — the assessment stands. A Virginia couple's 2021 joint return claimed a credit for tax paid to the District of Columbia because the wife commuted to work there. But D.C. generally cannot tax nonre…
Are the reagents a medical diagnostic laboratory buys to test blood and urine specimens exempt from Virginia sales tax under the medicines and drugs exemption?
No — the refund was denied. An operator of medical diagnostic laboratories in Virginia sought a sales and use tax refund for the period February 2017 through December 2018, including tax it had accrue…
My auto repair shop was audited for 2020-2022 — aren't separately stated diagnostic labor charges exempt from Virginia sales tax?
Mostly no — the diagnostic-labor charges stayed taxable because the exemption postdates the audit period, though the taxpayer won two smaller points. An automotive repair shop and used car dealer was …
When a parking garage uses a third-party booking intermediary that adds a service fee on top of the parking charge, whose gross receipts figure goes on Line 1 of the Parking Excise Tax return — the amount the customer pays, or the smaller amount the intermediary forwards to the garage operator?
It depends on whether the intermediary's fee is separately stated. If the booking intermediary's service fee is not separately stated, the operator must report and pay tax on the full amount the custo…
I paid sales tax when I bought HVAC systems that were installed into my building — wasn't that really a nontaxable contractor job, and can I get the tax refunded?
No refund — the paperwork showed a taxable retail sale, not a contractor transaction. A buyer paid sales tax on HVAC equipment and supplies purchased from a vendor between September 2016 and May 2018,…
Since Illinois started taxing lease receipts on January 1, 2025, does a company that rents tower cranes owe tax on the crane rental itself, on the assist cranes and labor used to erect and dismantle it, on a separate maintenance agreement, and on freight charges?
The bare rental of the tower crane itself is taxable under Illinois's new lease-receipts tax, effective January 1, 2025. But the Department did not directly confirm or deny the taxpayer's specific lin…
My recycling equipment couldn't get DEQ certification until it was placed in service years after I bought it — can I claim Virginia's recycling equipment credit for the later year instead?
No — the credit denial was upheld. A corporation bought recycling machinery in 2021 and 2022 but couldn't obtain the required Virginia DEQ certification until the equipment was finally placed in servi…
Virginia is still collecting income tax assessments from the late 1990s and 2000s — doesn't the seven-year collection statute of limitations make them uncollectible?
No — the assessments remain collectible. A nonfiler was assessed Virginia income tax for twelve years spanning 1998 through 2011 and argued the SEVEN-YEAR collection statute of limitations had run. Bu…
I moved to another state for a permanent job, but COVID closed the office and I came back to Virginia — did I ever stop being a Virginia resident for income tax?
He stayed a Virginia domiciliary resident for 2020 — though he gets a credit for the other state's tax. The taxpayer moved to State A in October 2019 for a permanent job and leased a home there. When …
Virginia denied my noncash donation deductions for missing appraisals and receipts — can I at least keep a reduced $5,000 or $500 deduction per donation?
Mostly denied — and the fallback theory failed: a deduction that misses its tier's substantiation is denied IN FULL, not reduced to a lower tier. A married couple claimed noncash charitable contributi…
Does Illinois sales/use tax apply to fees a company pays a vendor for maintenance and support services on open-source database software?
The Department declined to issue a private letter ruling and instead issued this general guidance: if a maintenance agreement's software updates consist solely of open-source software distributed at n…
Does an Illinois wedding and event décor business have to charge sales tax on décor packages that combine the temporary use of owned décor items with design and setup services?
It depends on the 'true object' of the transaction. If the décor items would have no value to the client without the design/installation service, the business is a serviceman and owes Service Occupati…
My audit appeal just asked for a credit for tax I over-collected from related companies — why was it rejected, and why did the compliance and amnesty penalties stick?
Everything was upheld — the request wasn't a valid appeal, the credit wasn't available this way, and both penalties were proper. A dealer's SECOND audit (July 2014 through April 2017) assessed untaxed…
My company rents equipment from an LLC I own — just book entries, no money changes hands. Are those intercompany rentals really subject to Virginia use tax?
Yes — the assessment was upheld. A general contractor operating in Virginia and State A rented construction equipment from a State A LLC whose SOLE MEMBER was the contractor itself. The 'rentals' were…
I appealed my county's business tangible personal property tax assessments to the locality and then to the Virginia Department of Taxation — why won't the Department hear my appeal?
The Department dismissed the appeal for lack of jurisdiction — because the taxpayer's local appeal ran down the wrong statutory track. A business assessed county BTPP tax for 2020-2023 wrote the count…
If a company pays a federal tariff on imported materials and passes that cost on to a customer, does Illinois sales or use tax apply to the tariff amount?
It depends on who is legally responsible for the tariff. If the seller is the importer of record and passes the tariff cost on to the customer as part of the price, the tariff is part of the gross rec…
Now that Illinois taxes leases of tangible personal property as retail sales starting January 1, 2025, how do exemptions for construction contractors, exempt organizations, and resale purchases apply to a company that both rents and sells equipment and materials?
Since January 1, 2025, a lessor's gross receipts from leasing tangible personal property in Illinois are subject to State and local Retailers' Occupation Tax, replacing the old system where the lessor…
We didn't file a 2019 Virginia return because the income was earned in another state — are we still Virginia residents, and can we at least get credit for the other state's income tax?
The couple lost on residency but kept a path to relief. This was the merits determination after P.D. 24-21 (3/13/2024) gave a husband and wife one final chance to file a 2019 Virginia return or comple…
The city taxed my foreclosure deed's recordation on the property's assessed value, but I paid less than that — can other evidence of the real value lower the recordation tax?
Partial win — the Department sent the case back to the City's clerk to review the value considering the taxpayer's evidence. A buyer at a FORECLOSURE SALE recorded its deed, and the City computed reco…
I'm a disabled veteran and my home is exempt from Virginia real estate tax — shouldn't the recordation tax on the deed when I bought it be exempt too?
No — the refund was denied, because no statute exempts a disabled veteran's deed from recordation tax. A disabled veteran bought real property, paid state and local recordation tax to record the deed …
We're a home builder assessed use tax on purchases of sand — isn't sand part of the land (real property), not tangible personal property, so no sales or use tax applies?
The builder lost again — sand stops being real property the moment it's dug up, so its purchases were taxable. A custom home builder was audited for February 2016 through February 2022 and assessed us…
Our customer gave us a manufacturing exemption certificate, so we didn't charge sales tax on the equipment we sold them — doesn't accepting the certificate in good faith protect us in an audit?
The dealer lost — a certificate claiming the WRONG exemption is invalid, and good-faith protection never attaches to an invalid certificate. A dealer and renter of construction equipment was audited f…
We didn't know our farm's venue rentals were taxable, so we never filed returns — can the auditor really go back six years instead of three, and do we owe the 20% amnesty penalty?
The six-year reach-back stands — innocent ignorance doesn't shrink it — but the 20% amnesty penalty stays off as long as the payment plan stays current. A farm that rents out its venue was audited for…
If a nontaxable engineering firm passes along the cost of taxable materials or services to its client with a markup, does the whole reimbursement become taxable, or just the markup?
The entire reimbursement becomes taxable, not just the markup. A nontaxable service provider (like an engineer) can pass through the exact cost of taxable materials or services it buys for a client, t…
When a subscription bundle mixes a taxable data processing service (like website creation) with nontaxable marketing services (like social media posts) for one lump-sum price, is the whole bundle taxable?
Yes, generally. When a taxable data processing service (like custom website creation, online ordering, or reservation management) is bundled with nontaxable marketing services (like social media posts…
How does the South Carolina Department of Revenue audit a county's spending of Capital Project Sales Tax funds, and what must counties do to comply?
The Department of Revenue not only collects a county's Capital Project Sales Tax (CPST) but has a statutory duty to audit whether the county spends the proceeds on the projects approved in the referen…
My out-of-state S-corp's only Illinois connection is a minority interest in a Chicago hotel partnership -- can I petition to allocate 100% of that partnership's K-1 income to Illinois instead of using the standard apportionment formula?
Not as an alternative-apportionment petition -- the taxpayer's petition didn't provide the evidence Illinois requires (proof the standard formula produces a genuinely distorted, out-of-proportion resu…
Now that Illinois taxes leases as sales starting January 1, 2025, can a Chicago-based equipment-rental company charge tax based on its own Chicago location instead of tracking the tax rate for every city its customers take delivery in?
No — the Department did not grant the origin-based shortcut the lessor asked for. Effective January 1, 2025, lessors owe State and local retailers' occupation tax on lease receipts, and for leases wit…
Under Illinois's new 2025 lease-receipts tax, does a lessor of leased machinery owe sales tax on the cost of repair or replacement parts it buys to fix or refurbish the equipment it leases out?
No. A lessor's purchase of repair or replacement parts that get attached to equipment used solely for leasing (and whose lease receipts are already taxed under the new 2025 lease-receipts tax) is exem…
When a construction subcontractor fabricates and installs a staircase into a building, is its labor taxed, or only the materials it buys?
A construction subcontractor who buys materials to fabricate and install a staircase into a building is the consumer of those materials and owes Colorado sales or use tax on the materials it purchases…
If an event organizer charges a cancellation fee for a canceled event that would have included a hotel banquet hall and catered food, is that fee subject to Colorado sales or use tax?
No. A cancellation fee charged when an event — one that would have included a hotel banquet hall and catered food and drink — is canceled is not subject to Colorado state or state-administered local s…
When does a South Carolina retailer owe sales tax after taking merchandise out of resale inventory for its own use?
A South Carolina retailer generally makes a taxable retail sale when it takes property bought wholesale out of inventory for its own use or consumption. The tax base is usually the item's fair market …
I gave the county an appraisal showing my property was worth less than its tax assessment, but the clerk only cut the recordation tax value partway — can I make them use the appraised value?
Partial win — the Department asked the County's clerk to review the property's value considering the taxpayer's appraisal, with refunds to follow if a lower value results. In January 2024 the taxpayer…
I trade options for my own account and reported my costs as cost of goods sold on Schedule C — can my trading losses offset my ordinary income, or is Virginia right to disallow them?
Mostly a loss, with one adjustment in the taxpayer's favor. An options trader reported his securities costs as COST OF GOODS SOLD on federal Schedule C for 2020; the Department disallowed the COGS and…
Can a car buyer get a sales-tax trade-in credit when a manufacturer's Lemon Law settlement money is applied toward a replacement vehicle?
No. Illinois law does not allow a sales-tax trade-in credit for the portion of a new vehicle's price that is covered by a manufacturer's New Vehicle Buyer Protection Act ("Lemon Law") settlement. In t…
Does a small out-of-state online retailer that sells below Illinois's $100,000/200-transaction threshold still have to register and collect Illinois sales tax, and can Illinois simplify its local-tax remittance rules for remote sellers?
Illinois Retailers' Occupation Tax applies to remote retailers once they hit $100,000 in Illinois sales or 200 separate transactions with Illinois purchasers under 86 Ill. Adm. Code 131, and there is …
Is a federally-mandated prescription-drug-data (RxDC) compliance reporting service — even the tier where an attorney and CPA are involved — a taxable Texas data processing service?
Yes, at all three service tiers. A company that helps employer health plans file federally required prescription-drug-cost (RxDC) reports — testing, converting, compiling, storing, and extrapolating e…
What Illinois state sales tax rate applies to sales of food, and how are soft drinks and candy treated?
As of this March 2025 letter, Illinois taxed food for human consumption to be eaten off the premises at a reduced state rate of 1%, rather than the standard 6.25% Retailers' Occupation Tax rate. That …
My partnership owns rental real estate, a lending business, and oil and gas ventures across several states, and Illinois's single-sales-factor formula makes our Illinois apportionment badly out of proportion to our actual Illinois activity -- can we use separate accounting instead?
The Department denied this specific petition because the taxpayer didn't submit enough evidence to meet the demanding 'clear and cogent evidence' standard for alternative apportionment (and even left …
Under Illinois's 2025 lease-tax overhaul, does a party-entertainment company that rents out equipment along with an on-site supervisor owe retailers' occupation tax on the whole package, and how is that tax sourced?
Generally yes. Effective January 1, 2025, Illinois taxes leases of tangible personal property as retail sales (Article 75 of Public Act 103-592), and the Department explained that renting out equipmen…
We donated furniture, clothing, and household items to charities all year — no single dropoff was worth $5,000, so why is Virginia denying our itemized deductions for lack of an appraisal?
The deductions were denied — because the substantiation thresholds apply to the YEAR'S TOTAL of similar items, not to each dropoff, and a Form 8283 without underlying proof of value substantiates noth…
The auditor sampled one year, found a vendor's mistake, and multiplied it across six years — can we make the Department use the actual invoices instead of an extrapolated estimate?
The sample was thrown out — but not for the reason the taxpayer argued, and the do-over could RAISE the bill. A contractor headquartered in another state (State A) was audited for July 2015 through Ju…
Do pneumatic compression devices sold to Illinois patients for treating lymphedema and chronic venous insufficiency qualify for Illinois's reduced 1% sales tax rate on medical appliances?
The Department did not decide the question definitively, because a GIL can't resolve a specific taxability question. But it reaffirmed that a medical appliance is an item that directly substitutes for…
Under Illinois's 2025 leasing tax, does a park district owe sales tax on golf cart packages, room-rental add-ons, GPS geocache rentals, mini golf, facility rentals, and locker rentals?
It depends on the "true object" of each transaction. Golf carts bundled into golf packages, GPS units rented for geocache tours, and equipment add-ons to room rentals are generally taxable as leases o…
What are all the different taxes and fees listed on an Illinois landline phone bill, and who collects each one?
A landline bill in Illinois can show up to six separate items: a $1.50-per-connection 911 surcharge, a 0.1% Public Utilities Fund tax, a 0.5% Telecommunications Infrastructure Maintenance Fee, a Unive…
My manufacturing company's Illinois throwback sales are inflating our single-sales-factor apportionment -- can we add property and payroll factors, or alternatively drop throwback sales, to more fairly reflect our actual Illinois activity?
No -- the Department denied the petition because merely showing that a three-factor (property/payroll/sales) formula produces a smaller, different apportionment percentage isn't enough; the taxpayer n…
I'm self-employed with irregular income — can I avoid New Mexico's estimated-tax underpayment penalty if skipping the quarterly payments was an honest mistake, not negligence?
No. Craig Rochette, a self-employed New Mexican with irregular income, protested a $149.50 penalty for not making 2023 quarterly estimated tax payments, arguing it was a good-faith mistake and not neg…
Is injecting nitrogen into an oil/gas pipeline to create a safe environment for maintenance work a taxable service, and is the nitrogen itself taxed as a sale to the customer?
The service charge is not taxable. Pipelines aren't "buildings," so purging one with nitrogen isn't a taxable real property cleaning service, and simply clearing a pipeline for safe operation doesn't …
Does Illinois tax hyperbaric oxygen chambers, and other medical devices, at the reduced 1% medical-appliance rate or the general 6.25% rate?
It depends on the specific device and how it's used: Illinois taxes an item at the reduced 1% state rate only if it is a 'medical appliance' that directly substitutes for a malfunctioning body part (l…
I sold my Virginia home and moved to another state, but kept my Virginia driver's license because of pandemic DMV closures — am I still taxable as a Virginia resident?
The taxpayer WON — selling her Virginia home was 'a very strong example' of intent to abandon Virginia, and the 2020 assessment was abated. The case began as a nonfiler inquiry (IRS information sugges…
I left Virginia years ago but still owned my old house and stayed there for two months between out-of-state jobs — does that pit stop make me a Virginia resident again?
The taxpayer WON — a two-month stopover at his old Virginia house between out-of-state jobs did not reestablish Virginia domicile, and the 2020 assessment was abated. The case began as a nonfiler inqu…
I moved from Virginia to Puerto Rico to live there permanently, but I kept my Virginia driver's license — did I really change my domicile, or does Virginia still tax me?
The taxpayer WON — the totality of the factors showed he changed his domicile from Virginia to Puerto Rico before 2019, and the assessment was abated. The Department had opened a nonfiler inquiry afte…
Do wheelchair ramps, stair lifts, and grab bars qualify for Illinois's reduced 1% sales tax rate for medical appliances?
No. The Illinois Department of Revenue concluded that wheelchair ramps, stair lifts, and grab bars are taxed at the regular 6.25% state sales tax rate (plus local taxes), not the reduced 1% rate for m…
Is a conveyor system that moves raw fertilizer into storage bins before blending exempt as manufacturing equipment?
No. Because the conveyor system only transports raw fertilizer material into storage bins before the actual blending process begins at the mixers, it doesn't change the material's use, identity, or va…
Does a golf course have to collect sales tax when it rents out golf simulators it already paid sales tax on?
No. Because the golf course already paid sales tax when it purchased the golf simulators, Section 144.020.1(8), RSMo's previously-taxed-property exemption means it doesn't have to collect sales tax ag…
Does an agricultural retailer owe sales tax on a wheel loader it uses to move fertilizer around its own warehouse?
Yes. The farm machinery exemption only covers equipment used directly in raising crops or farm animals, and this retailer's wheel loader moves and blends fertilizer at its own facility -- a step remov…
Can a 501(c)(3) nonprofit sell a donated book tax-free, and does that change if the publisher later wants a cut of the profits?
The first 250 gifted books are exempt because all proceeds benefit the nonprofit's own charitable and educational activities, but if the publisher later negotiates a profit-sharing cut of additional b…
When a Missouri facility straddles two cities, which city's local sales and use tax rate applies?
Both local sales and use tax are sourced to Berkeley, because that's where the wholesaler's orders are taken and where its purchased items are first delivered in Missouri -- not to Ferguson, even thou…
Does a city owe sales tax on concessions at its aquatics center and merchandise sales at its municipal golf course?
No. Because the city owns and operates the aquatics center, Parks and Recreation events, and municipal golf course, and every dollar of proceeds benefits the city itself with no revenue-sharing agreem…
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