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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Did a copy of a federal return prove that Virginia's 2011 assessment used the wrong federal adjusted gross income?
No. Virginia relied on the higher federal adjusted gross income reported by the IRS because the taxpayer supplied no objective proof that the IRS data was wrong. The assessment was upheld, but the tax…
A nonprofit client holds a 'state sales/use tax only' exemption certificate — does that exemption also cover special district, city, and county taxes on construction materials?
It reaches state-administered local taxes too, but not home-rule. Construction and building materials a contractor buys for a structure owned and used by a charitable organization (or government or sc…
Could a vehicle dealer exclude a federal gas-guzzler tax passed through in the vehicle price from the Illinois sales-tax base?
No. Because the federal excise tax was legally imposed on the automobile manufacturer rather than the consumer, IDOR treated the passed-through amount as a nondeductible business cost included in the …
Was an Illinois print broker's direct-mail job for an out-of-state customer exempt as interstate commerce?
IDOR would not decide from the limited facts. It said property actually delivered from Illinois to an out-of-state point and not returned could qualify with supporting records, but pieces delivered or…
Was a Virginia sales-tax appeal timely when the 90th day fell on Sunday but the envelope was postmarked Tuesday?
No. The 90th day fell on Sunday, so Virginia extended the filing deadline only through Monday, the Commonwealth's next business day. The taxpayer's appeal was postmarked Tuesday—one day late—so the De…
Could a qualified funeral trust contest Virginia fiduciary assessments after filing its first appeal letter beyond the 90-day deadline?
No. Virginia required a complete administrative appeal within 90 days of each assessment. The trustee's first appeal correspondence arrived well after the deadline even for the most recent assessment,…
Could a winery receive Virginia's 2014 Farm Wineries and Vineyards Tax Credit after filing its application after April 1, 2015?
No. Virginia required the 2014 credit application and supporting documents by April 1, 2015. Because the credit had a $250,000 annual cap that could require pro-rata allocation among timely applicants…
Did paying the full balance with a 2014 part-year return eliminate Virginia's estimated-tax underpayment addition and accrued interest?
No. Paying the balance with the return did not replace the required timely withholding or estimated installments during 2014. The couple did not satisfy the prior-year or annualized-income exceptions,…
Could unfamiliarity with Virginia law or website language save a 2010 refund claim filed after the limitations period?
No. Virginia held that the automatic extension still required filing by the extended due date and timely payment of the estimated balance. Because the taxpayers did neither, the refund period ran from…
Did paying income tax to a former state excuse a full-year Virginia resident from filing a 2012 Virginia return?
No. The taxpayer lived and worked in Virginia throughout 2012, so another state's withholding and return did not remove the Virginia filing duty. He was responsible for updating his employer's withhol…
Did the 2009 military-spouse law automatically end a spouse's existing Virginia domicile without personal presence in the service member's state?
No. The military-spouse amendment was not retroactive and did not let the taxpayer simply elect her spouse's domicile. Because she had established Virginia domicile and did not acquire personal presen…
A company pays third-party vendors for software the vendors build and host to convert and translate data between two incompatible records-management systems. The company and its clients never access or control that software. Are those charges subject to Tennessee sales and use tax?
No. The charges the company pays its records-management vendors are not subject to Tennessee sales and use tax, because the vendors are providing the nontaxable service of converting digital products.…
Did a powdered product intended to be mixed with liquid qualify for Illinois' 1% state food tax rate?
It appeared to qualify on the limited facts. Beverage powders and dry mixes were not soft drinks, and the product was not for immediate consumption, so IDOR said it appeared taxable at the 1% state fo…
When were drugs, medicines, and beauty or hygiene products supplied by a nonprofit hospital or clinic exempt or taxable?
A charitable hospital or clinic with a valid exemption number did not owe Retailers' Occupation Tax on products supplied in furtherance of care while the person was a patient. Later sales of non-drug …
Were Virginia vacation-home rentals for fewer than 90 continuous days subject to retail sales tax, including seasonal rentals?
Yes. Virginia treated vacation homes regularly offered for fewer than 90 continuous days as taxable transient accommodations, whether the provider was a business or individual and whether an entire ho…
Could a Virginia resident reduce an estimated 2012 nonfiler assessment by filing the actual return with income and deductions?
Yes, through filing the actual return. Virginia could estimate liability from IRS information when the resident did not file or supply records. The taxpayer received 30 days to submit a 2012 Virginia …
Did storing resale inventory in a Virginia fulfillment center require out-of-state online sellers to register for Virginia sales tax in 2015?
No, under the 2015 statute and stated facts. The sellers owned resale inventory stored in independent Virginia fulfillment centers but had no Virginia offices, employees, locations, warehouses, agents…
If a certified Texas data center occupant expands into a new, physically separate building on the same campus, does that new space count as part of the original certified data center for tax-exemption purposes?
No, the new building doesn't count as part of the existing certified data center. The Comptroller ruled that Tax Code Section 151.359's data center exemption applies only within the single building ce…
As the owner of a data center campus, does the Comptroller treat a tenant's expansion data halls in a newly built, separate building as part of the same already-certified qualifying data center?
No. In a companion ruling to the one issued to its tenant, the Comptroller told the CAMPUS OWNER the same thing: a tenant's planned expansion data halls, to be built in a separate new building on the …
Did Illinois tax fees for electronic or hardcopy medical-record copies?
Electronic viewing, downloading, or transmission of medical records was not a transfer of tangible personal property. Hardcopy records did involve property transferred with a service and generally cre…
How did Illinois tax a custom-sign seller that separately billed freight and installation for signs attached to buildings or concrete-set poles?
IDOR did not give one result for every sale. It said sign vendors could owe Retailers' Occupation Tax, Service Occupation Tax, or Use Tax depending on the facts; a vendor acting as a construction cont…
Was a restaurant tabletop device used for ordering, paying, surveys, and optional games a taxable amusement device or redemption machine?
No, based on IDOR's understanding. The device was primarily used to buy food and services, place orders, and pay bills rather than for amusement, and it did not appear to meet the redemption-machine d…
Did Illinois' River Edge Redevelopment Zone building-materials exemption cover mixed-use projects with multifamily rental housing?
Only the commercial portion. The exemption covered materials incorporated into an industrial or commercial project, not a residential project. For a mixed-use development, retailers could claim the ex…
Was an annual software license and support fee subject to Illinois sales tax, and could the customer obtain a refund?
The license was nontaxable only if its signed written terms met all five conditions in 86 Ill. Adm. Code 130.1935(a)(1). Otherwise the canned-software license was taxable, and bundled support was taxa…
What special abandoned-building credit rules did SC Revenue Ruling 15-12 provide for formerly state-owned properties?
Under the historical ruling, a formerly state-owned abandoned building generally had to exceed 50,000 square feet, have been abandoned for more than five years, and have been most recently owned by So…
Can a large utility-scale solar generating facility qualify as a manufacturer for South Carolina sales-tax exemptions?
Yes for the requesting taxpayer's proposed facility. DOR treated the 74.9-megawatt, $100 million solar facility as a manufacturer because it would generate electricity—statutorily treated as tangible …
In a sale-and-leaseback, when do the purchase, the resale to the lessor, and the lease-back get taxed — and does the lease term change the answer?
It depends on the lease term. The lessee's original purchase is a tax-free wholesale (resale) buy only if it really resells to the lessor without using the property first. On the lease-back: if the le…
Does a city's 10-cent disposable bag fee get added into the sales tax base when a customer buys taxable goods?
No. A municipal disposable bag fee (here, 10 cents per bag charged to the customer and collected by the retailer) is not subject to state sales or use tax. The retailer gives the bag away free of char…
Did a general contractor owe Florida sales tax on materials it purchased for a public-works project for a tax-exempt governmental entity?
Yes. The contractor was the purchaser shown on the invoices and paid the vendors, so it owed sales tax on the public-works materials. The governmental entity could not assign its exemption, and no ref…
What South Carolina tax filing and payment relief is available to taxpayers affected by the October 2015 South Carolina floods (per SC IL #15-14)?
SC Information Letter #15-14 grants South Carolina tax filing and payment relief to individuals and businesses affected by the October 2015 South Carolina floods, matching the IRS relief (IR-2015-112)…
Was Brent's HVAC & Plumbing a successor to an owner's failed air-conditioning corporation, and did it owe the corporation's full tax assessment?
Brent's was a successor because essentially all unrepossessed equipment from the failed air-conditioning corporation was transferred outside its ordinary business. But Brent's primarily served homeown…
Could taxpayers restore a 2013 estimated-payment carryover by repeatedly ignoring Virginia's earlier out-of-state credit adjustments?
No. Virginia traced the carryover from 2010 through 2013 and upheld its reductions because the taxpayers kept reclaiming an out-of-state credit the Department had previously adjusted. The 2013 assessm…
Must subcontracted services be considered when a Virginia locality classifies a contractor for BPOL tax?
Yes. BPOL classification generally depends on the goods or services the business offers customers. Because the contractor remained responsible for services performed by subcontractors, those activitie…
Were prepackaged meals exempt when inmates customarily heated them in a microwave after purchase and before eating?
Yes. The prepackaged meals were exempt food because inmates customarily heated them in a microwave after purchase and before consumption, so the meals were not ready for immediate consumption when sol…
Did a three-year foreign job and another state's license, voting, and vehicle records prove that a Virginia domiciliary changed domicile?
No. The taxpayer's three-year foreign assignment was for a definite term, and she showed no permanent intent to remain abroad. Although she obtained another state's license, voter registration, and ve…
Should a taxpayer who moved into Virginia in May 2010 file as a full-year resident after an IRS income adjustment?
No. Virginia found that the taxpayer became domiciled in the state in May 2010 rather than being a full-year resident. He had to file Form 760PY, report income attributable to the Virginia-residence p…
How did Virginia correct overlapping estimated-tax and late-filing penalties on a December 2014 return for 2013?
Virginia found the estimated-tax addition had already been paid with the return, so it should not appear again. But the return was filed in December 2014, making the 30% late-filing penalty proper. Th…
Did an employer's failure to issue a W-2 or withhold enough Virginia tax excuse the employee from filing and paying 2011 income tax?
No. Even if the employer failed to issue a W-2 or withhold Virginia tax, the employee remained responsible for reporting the income, filing the resident return, and paying the full liability. Because …
Was Andrew Winton personally liable for an LLC restaurant's unpaid withholding tax because registrations listed him as an agent, manager, and officer?
No. Although Texas and New Mexico filings listed Winton as an LLC agent, manager, or officer, he did not own or operate the New Mexico restaurant, work there, receive pay, control accounts, handle fin…
Could Elizabeth Brower avoid estimated-tax penalties because her retirement distributions arrived mostly in December and she paid based on income received by each due date?
No. Brower was required to pay estimated personal income tax in installments using the lesser of 90% of current-year tax or 100% of prior-year tax. Although most retirement distributions arrived in De…
Did Virginia have to restore a tuition deduction after the IRS denied it and the taxpayer failed to amend the 2011 Virginia return?
No. Virginia began with federal adjusted gross income, and the IRS transcript showed that the tuition-and-fees deduction had been denied. The taxpayer was required to report that final federal change …
Did a military spouse keep her former-state domicile after moving to Virginia, renting out that home, and obtaining a Virginia driver's license?
No. Virginia found that the spouse did not maintain enough ties to her former state: its home became rental property, vehicles were registered only to the service member, and she obtained and kept a V…
Is a database-access 'interface' to medical records and lab results taxable in Kansas?
Not taxable. The 'interface' — a web-based system that lets physicians and hospitals access patient lab test results over the internet — is a nontaxable 'information' or 'database access service.' Kan…
Which horse-care products were exempt: nonprescription medicines, a glucosamine supplement, fly repellants, or fly-protection sheets and masks?
The nonprescription wormer and ulcer medicine were taxable except for qualifying sales to veterinary clinics or licensed veterinarians. The glucosamine supplement and fly repellants were exempt; the f…
Could Virginia assess a nonfiler from IRS information when the taxpayer claimed some reported income was nontaxable but filed no state return?
Yes. Virginia could use IRS information and other available data to assess a resident who filed no proper 2012 return. The taxpayer's assertion that some income should have been reported as nontaxable…
Could an employee-shareholder deduct loans that became worthless when his S corporation closed?
Yes, on the record before Virginia. A shareholder-employee's loans qualify as business bad debt only if protecting employment, rather than the investment, was the dominant motive. The Department lacke…
What Virginia return was required when a taxpayer moved into the state and established domicile in August 2011?
A part-year return. Virginia found that the taxpayer established domicile when he moved into the state in August 2011, so he was not a full-year resident. He had to file Form 760PY and report income a…
Did a taxpayer prove she was domiciled outside Virginia in 2011 without providing the requested objective records?
Not yet. The taxpayer claimed another-state residence but supplied no objective evidence despite two information requests, while her federal return used a Virginia mailing address. The assessment rema…
Did an apartment-complex statement prove that a taxpayer with a Virginia W-2 address was not a Virginia actual resident in 2013?
No. A Virginia address on the taxpayer's W-2 triggered a request for residency evidence. An apartment-complex statement from State B, without additional proof and against other returns showing nonresi…
Did an initial letter that questioned Virginia sales-tax assessments count as a complete appeal before the 90-day deadline?
No. The initial letter merely questioned the assessments and did not fully identify the alleged errors, supporting facts, requested remedy, or controlling authority. Virginia warned the taxpayer and g…
Could a tire wholesaler accept a valid resale certificate from a dealer not registered for Virginia's tire recycling fee?
Yes. Virginia sales-tax law did not require a tire buyer to be registered for the tire recycling fee before giving a valid resale certificate. Sales supported by complete Form ST-10 certificates had t…
Did moving abroad for a temporary job end a taxpayer's Virginia domicile when he kept major Virginia ties and planned another state later?
No. The taxpayer's foreign job was temporary, he did not intend to remain abroad, and he kept Virginia homes, family, voter registration, vehicles, and a driver's license. He also could not establish …
Did an active-duty service member and spouse have the same Virginia residency result for 2012?
No. The husband maintained another-state domicile through his military legal-residence certificate, driver's license, and voter registration, so his active-duty income was not treated as Virginia resi…
Could a restaurant overturn reconstructed sales-tax liability with revised figures unsupported by daily sales records?
No. The restaurant kept no daily sales logs or register tapes to reconcile its tax returns and alcoholic-beverage reports. Virginia could therefore use the best information available—beverage reports …
An Irish private limited company that owns property in Tennessee will elect to be a disregarded entity for U.S. federal income tax. Will it still be a separate taxpayer for Tennessee franchise and excise tax, or can it be disregarded?
It will be a separate taxpayer — it cannot be disregarded for Tennessee franchise and excise (F&E) tax. Tennessee follows federal entity classification, but with one key exception: a federally disrega…
Are charges for computer-based electronic messaging and data-distribution services subject to Georgia sales and use tax?
No. Georgia taxes services only when they are specifically listed as taxable, and data-distribution and electronic-messaging services are not on that list, so the provider's charges to customers are n…
Are prescription-only dental appliances that correct misaligned teeth exempt from Georgia sales tax when sold to dentists for patients?
Yes. The appliance was worn in a patient's mouth to correct misaligned teeth and could be sold or used only by prescription, so it qualified as an exempt prosthetic device. A dentist could buy it with…
What Virginia tax interest rates applied during the fourth quarter of 2015?
Virginia's fourth-quarter 2015 rates were 5% for tax underpayments and 5% for tax overpayments. The reduced rate for qualifying assessments in administrative appeals was 0%. Certain local delinquency …
Is a hosted IT cost-management service taxable -- as an information service, as software, or both?
It depends on how it's sold. The core 'Line-Item IT Billing' offering is a nontaxable information service: it collects, processes, and reports the customer's own IT-usage data back to that customer. I…
Were commercial kitchen-hood cleaning, hood repairs, and fire-suppression inspection or repair charges subject to Florida sales tax?
Generally no. Hood cleaning, hood inspection and repair, fire-suppression inspection, and fire-suppression parts replacement were nontaxable customer charges. But checking an alarm-panel signal was ta…
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