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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Which department-store audit items could be removed when the retailer supplied transaction-level proof?
Documented items were adjusted, while unsupported claims stayed taxable. Virginia credited partial use tax, removed returned goods, separately stated alterations, and two proven out-of-state shipments…
Could Emcore Solar protest a proposed transfer of its approved advanced-energy tax credit before any sale or restructuring occurred?
No. Emcore Solar had not sold an ownership interest, merged, changed organizational form, or transferred its approved $675,444.07 advanced-energy credit. Without an actual transaction and resulting bu…
Were receipts and reasonable acquisition costs for processing and distributing human tissue to hospitals subject to Florida sales tax?
No. The hospital tissue transfers were not taxable sales, and authorized reasonable payments for acquiring tissue for processing and distribution were also outside Chapter 212 tax.
Must an out-of-state subcontractor installing floors and permanently attached flooring in Virginia pay tax on its job materials?
Yes. The subcontractor was a using-and-consuming real estate contractor for floors, subflooring, and permanently attached coverings. It had to pay Virginia sales tax to suppliers on job materials or a…
Were stretch-mark cream, anti-wrinkle cream with SPF 15, and SPF 50 sunscreen exempt nonprescription drugs?
Only the SPF 50 sunscreen was exempt. It used a nonprescription drug to prevent sunburn. Stretch-mark therapy and anti-wrinkle cream were taxable cosmetics because their primary use was improving appe…
Could former owners be personally liable for business taxes arising after they left the company?
No. A mutual exit agreement and corrected ownership returns showed that the former owners ended their association with the business on March 1, 2013, before the April 2013-March 2014 tax periods. The …
Could a Virginia wholesaler remove sampled sales from an audit using corrected resale certificates and supporting customer records?
Yes. After greater scrutiny of certificates obtained or corrected during and after audit, Virginia removed the sales for Customers 1, 2, 3, 5, 6, and 7. The Department verified the claimed resale uses…
Are replacement air-conditioning units and repair parts for exempt manufacturing cranes also exempt from Virginia sales tax?
Yes. The cranes were used directly to move in-process material and qualified as exempt manufacturing equipment. Because their air-conditioning units were integral original components, replacement unit…
Did a telecommunications provider make taxable use of broadcast equipment it paid for under an FCC relocation plan?
No. The provider reviewed purchases for FCC reimbursement and paid the invoices, but the broadcasters selected, received, inspected, and controlled the equipment. Because the provider exercised no suf…
Did a later Department review and partial abatement reopen Robert Hooper's expired 90-day deadline to protest gross receipts tax assessments?
No. Robert Hooper did not protest three February 9, 2015 assessments by the May 11 deadline. The Department's later review of additional documents and partial 2011 abatement did not restart the mandat…
What is the last year a brownfield tangible-property credit may be claimed when the Certificate of Completion issued December 31, 2008?
The tangible-property credit may be claimed for qualified property placed in service for up to ten taxable years after the year the Certificate of Completion (CoC) issued. With a December 31, 2008 CoC…
Is a cloud data-storage, backup, file-sharing and sync subscription subject to New York sales tax?
No. The service is not taxable. It is not a sale of prewritten software, because the optional app is free, is not required, and the service is fully usable through any web browser - so customers are n…
Was a lump-sum pension taxable when received after signing an out-of-state home contract but before closing and moving?
Yes. Signing a purchase contract showed intent but did not create the physical presence required for a new domicile. The couple remained Virginia residents until the February 29 closing, so the pensio…
Could a taxpayer keep lower Virginia FAGI when IRS records showed omitted wages and cancellation-of-debt income?
No. IRS information showed wages on Form W-2 and cancellation-of-debt income on Form 1099-C that were omitted from the Virginia return. Without objective contrary evidence, Virginia adjusted federal a…
Could a copy of a Virginia return overturn an assessment when IRS records showed much higher federal adjusted gross income?
Not by itself. IRS data showed significantly higher federal adjusted gross income than the return copy, and the taxpayer did not supply the requested official federal transcript. Virginia allowed 30 d…
Was software exempt when specific vendor records proved it was downloaded, despite freight for promotional materials and a guide?
Yes. A vendor certification, dated download history, and email with the product serial number proved the software itself was delivered electronically. Virginia revised the paid audit assessment and or…
Could a grocery store overturn an estimated sales-tax audit without sales records supporting its claimed exempt-sales percentage?
No. With no adequate sales records, Virginia could estimate sales from cash-flow statements and a 25% markup. A Form 1099-K did not isolate food-stamp sales or prove that 65% of sales were exempt. The…
Could a retailer obtain a 2010 Accelerated Sales Tax refund after the three-year claim deadline because it lacked notice of the limit?
No. The June 2010 payment was due July 20, 2010, but the Department did not receive the refund request until October 2014. Virginia's three-year deadline had expired, and claimed lack of notice or dif…
Are remote maintenance and alarm-code changes taxable when customers monitor the video-security systems themselves?
Yes. Because the customers—not the seller—reviewed the surveillance images, the systems were non-monitored systems and taxable sales of tangible property. Remote maintenance and alarm-code changes sup…
Are charges for advertising space in hospital display cases taxable, and who owes tax on the cases?
The advertising-space charges were not taxable retail sales. The concessionaire remained the owner and consumer of the removable display cases, so it owed Virginia use tax on them if no similar tax ha…
Did living and working in another state for 2012 end Virginia domicile when the taxpayer kept a Virginia license and voter registration?
No. The taxpayer lived and worked elsewhere and registered a vehicle there, but kept her Virginia driver's license and voter registration and returned in 2013. Virginia found no permanent abandonment …
Was Reggie Olguin's assessment protest timely when he mailed it before the deadline but used the wrong Department address and it was never received?
No. Reggie Olguin prepared and mailed a protest before the January 25, 2016 deadline, but he transposed the Department's street and post-office-box information. The Department never received the impro…
Was Linda Wasko's Type 5 NTTC untimely when it was executed one day after the deadline printed on the Department's audit notice?
Not proven. Linda Wasko obtained the correct Type 5 NTTC on August 26, 2015, one day after the deadline printed on an audit notice dated June 26. But credible testimony showed the notice might not hav…
Could a partner support Virginia credits for taxes paid through state composite returns with a per-state allocation schedule?
Yes. The schedule separately listed the partner's share of taxable income and tax paid for each state, satisfying Virginia's composite-return documentation rule. Virginia also confirmed the relevant A…
How did Virginia treat flooring strapping equipment, late resale certificates, and a challenged sales-audit sample?
The production strapping, machine, and parts were exempt. Four sales stayed taxable because the customer's later certificate was incomplete and the customer was not registered at the sale dates. Virgi…
Were end-of-line lumber strapping, the strapping tool, and repair parts exempt manufacturing property?
Yes. Lumber was not ready for sale until it was strapped at the end of the production line. The strapping, tool, and repair parts performed an immediate production and quality-control function before …
Were strapping materials and strapping-tool parts used throughout lumber production exempt from Virginia use tax?
Yes. The strapping protected and conveyed unfinished lumber between production stages and bundled finished lumber before storage or shipping. It played an immediate production and quality-control role…
Was an off-site warehouse still ancillary to manufacturing when it directed sales activity, ran vending operations, and distributed third-party goods?
No. The facility did more than store the manufacturer's finished goods: it directed employees engaged in sales-related activity, operated a vending business, and handled products made by others. It wa…
When a vacation-rental booking agent takes a commission out of what the guest pays for a Colorado short-term rental, is sales/lodging tax calculated on the full amount the guest paid, including the agent's commission?
Yes. When a booking agent collects a guest's payment for a Colorado short-term rental and keeps part of it as commission before forwarding the rest to the property manager, the lodging sales tax is ca…
Which hotel group-contract fees (early departure, room and food-and-beverage attrition, cancellation, no-show, meeting-room cancellation) are subject to Colorado sales/lodging tax, and is the tax on an online-travel-company booking figured on the lower contract rate or the higher website rate?
It depends on the fee. Early departure, no-show, and cancellation fees are cancellation charges judged by the '50% rule': if the charge is more than 50% of the daily room rate it's taxable as payment …
How did South Carolina Revenue Ruling 16-4 classify coin-operated amusement devices and their license requirements?
The ruling sorted amusement equipment into Type I, II, and III license categories based on the machine's function, slot or payment method, and free-play feature, while treating specified for-profit bi…
Did a former Virginia resident owe 2014 Virginia tax on out-of-state wages and an early retirement withdrawal from a Virginia business?
No. She had established a home and employment in another state and was neither a Virginia domiciliary nor actual resident. Her out-of-state wages and retirement withdrawal were not Virginia-source inc…
When were sales of an implantable urinary prosthetic device exempt from Virginia sales tax?
Sales were exempt when a licensed practitioner purchased the implant for a specific patient under a prescription or work order, including direct delivery, advance shipment, and consignment. Bulk purch…
Were intercompany equipment-cost allocations taxable rental charges even without cash payment or markup?
Yes. The holding company owned and depreciated equipment, transferred possession to subsidiaries, and recorded monthly cost allocations. Those accounting entries were consideration for taxable rentals…
How did Virginia treat gain from a dairy farmer's sale of milk-production quota, or milk base?
Federal law determines the amount and character of any gain case by case. Income included in federal adjusted gross income or federal taxable income flows into Virginia tax. The qualified-business cap…
Does Virginia's three-year refund limitation also apply when an individual elects an overpayment credit?
Yes. Virginia treated a refund and an elected overpayment credit as functionally equivalent under Va. Code § 58.1-499. Because the 2011 return was filed in June 2015, after the May 1 deadline, the cre…
Were prescription-only natural latex mattresses exempt durable medical equipment in Virginia?
No. The mattresses were useful even without illness or injury, so they failed a mandatory durable-medical-equipment test despite required prescriptions. Virginia also replaced the 50% fraud penalty wi…
Could a countertop seller exclude combined installation labor and profit from sales tax and reduce withholding without supporting records?
Not on the records presented. A single charge combining exempt installation labor with taxable profit remained taxable, and the seller had not substantiated its wage, profit, or independent-contractor…
Is a prescription-only implant system exempt from Georgia sales tax when it includes a single-use surgical placement tool?
Yes. The permanent implant qualified as an exempt prescription prosthetic device, and including its otherwise taxable single-use placement housing did not make the system taxable because the housing w…
Were Bogle Management's farm-management fees and payroll reimbursements excluded from New Mexico gross receipts as receipts of a disclosed agent?
No. Bogle Management was doing business in New Mexico through managers it supplied to two farms. Its management fees belonged to Bogle, and its payroll reimbursements were not excluded because it did …
Could gain from selling a small parcel to a Virginia public university qualify for a capital-gain or open-space subtraction?
No. The real estate was not an investment in a qualified technology business, and the roughly 5,000-square-foot parcel did not meet Virginia's minimum open-space acreage standards. The individual inco…
Did renting Virginia web servers create corporate-income-tax or sales-tax nexus for an online healthcare retailer?
Corporate-income-tax nexus could not be decided without more facts about how the rented Virginia servers were used. If nexus existed, the equipment belonged in the Virginia property factor. Third-part…
What happened when a medical-equipment seller supplied new documents after a Virginia sales-tax audit?
Virginia did not decide the claimed exemptions outright. Because the seller supplied additional records after the audit, the Department returned the case to audit staff for review and directed that th…
Could a road-service provider reduce an estimated sales-tax audit without records proving vendor tax and snow-clearing revenue?
No. Virginia could allow credit for verified sales tax paid to vendors on resale property, but the taxpayer supplied no proof. It also failed to document claimed snow-clearing revenue, so the estimate…
If a retailer charged sales tax on mandatory shipping and a customer returns the goods for a full refund of the item price but not the shipping, must the retailer refund the sales tax it collected on the shipping charge?
Yes. When a retailer refunds the customer the full purchase price of returned goods but keeps the mandatory shipping charge, it must also refund the sales tax it collected on that shipping charge. Man…
Could for-profit hospital HealthSouth use New Mexico's managed-care health-service gross receipts deduction despite regulations excluding hospitals?
Yes. Section 7-9-93 limited the source and nature of deductible managed-care payments, but did not restrict which taxpayer could claim them. The AHO held that regulations excluding hospitals added a l…
Did Mountain Liquors become liable as a successor when it took a defaulting tenant's inventory and continued the same grocery, liquor, and deli business?
Yes, for tax only. Mountain Liquors took Trail House Enterprises' grocery and liquor inventory after lease default, continued the same store and deli at the same property, used existing signage, and p…
Were internet-protocol television and streaming-video services taxable in Nebraska?
Yes. Sales to end users were taxable as digital audio-visual works when delivered or transferred to a server or device in Nebraska, whether the customer received permanent or temporary use. An FCC-aut…
Could construction contractors estimate Virginia consumer use tax by allocating inventory cost according to Virginia revenue?
No. Virginia use tax had to be computed from the actual cost of materials used in Virginia, not a revenue-based estimate. The contractors could use FIFO for commingled inventory and had to assign the …
Could John and Susan Grazier receive 2008-2010 income-tax refunds claimed in 2015 because hardship and Department conversations delayed their returns?
No. The Graziers filed their 2008, 2009, and 2010 personal income tax returns on November 19, 2015, after each three-year refund deadline had expired. Job loss, illness, inability to afford a preparer…
Did Sol Bookkeeping become a successor to a related accounting firm when it retained shared software, employees, goodwill, and some former clients?
Yes. The two companies had operated simultaneously and separately, but after the older accounting firm closed, Sol retained shared billing software, kept employees associated with both businesses, ser…
Was a retiree with no claimed permanent home still a Virginia domiciliary resident for 2012?
Yes. Although he spent about 120 days in Virginia and moved among several states, he used a Virginia family address for mail and his federal return and held a Virginia driver's license. With no eviden…
Were staffing services bundled with leased copying equipment taxable to a Virginia nonprofit?
The staffing was normally taxable because it directly supported the leased equipment and was part of the sale. But the nonprofit's exemption certificate covered the equipment lease and connected servi…
Did selling scrap from a Virginia research pilot line destroy the facility's sales-tax exemption?
No. The Virginia facility existed solely to improve an existing film product, and the unusable scrap was only a by-product of that research. Finding a buyer for the waste did not turn the facility int…
Were bulk prosthetic parts and patient-specific liners exempt from Virginia sales tax?
Bulk purchases were taxable even when parts were later fitted or attached to an exempt prosthetic device. Liners ordered for an identified patient were exempt as purchases on that individual's behalf,…
Is a service that collects and segments internet-user data for ad targeting a taxable information service?
Yes. The company collects and analyzes data on roughly 700 million internet users (via HTML tags and cookies), groups them into targeting 'segments' and makes those segments available to advertisers. …
Did South Carolina Revenue Ruling 16-3 require an amusement-machine license for restaurant ordering and payment tablets?
No. Under the stated facts, the tablets' purpose and intended use were to streamline restaurant ordering and bill payment, not to provide amusements or video games. Optional educational content, puzzl…
Were a photographer's service fees taxable when customers received images on flash drives or as prints?
Yes. The true object of the package was the images delivered as tangible property, so photography, editing, posting, and related service fees were taxable. Flash drives and albums transferred to custo…
Does an out-of-state franchisor have Colorado sales- or income-tax nexus, and which of its franchise revenues count toward the income-tax thresholds?
The Department wouldn't decide sales-tax nexus—too fact-intensive for a general letter. For income tax, a company has nexus if it exceeds Public Law 86-272 and meets any one threshold ($50,000 propert…
Does New York sales or use tax apply to a sculpture bought from a NY dealer but delivered abroad and later displayed in New York?
No. New York sales tax is a destination tax: it turns on where the buyer takes possession. Here the Florida buyer authorized a museum to retrieve the sculpture, and the museum's contract carrier (the …
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