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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Could a federal contractor buy Army property tax-free merely because the solicitation named it purchasing agent and advanced government funds?
Not on the facts supplied. Calling the contractor a purchasing agent and advancing federal funds did not prove that the United States' credit was directly bound. Virginia could not determine who was t…
Could an office-furniture seller accept Form ST-11 after Virginia said manufacturing machinery may be bought exempt?
No. Virginia's email said machines used in manufacturing may qualify; it did not approve office furnishings. The seller knew the furniture was not used in production and directed the customer to use F…
Is a cloud-computing (infrastructure-as-a-service) product that sells scalable computing power subject to NY sales tax?
No -- selling computing power is not one of the services made taxable by the Tax Law, so the cloud product is not subject to sales tax. Customers rent 'instances' of CPU, memory, and storage to run th…
Could a Virginia resident claim credit for North Carolina tax on gain from investment land, and did the special border-state rule apply?
Yes, under the general credit. The investment land was a capital asset, so the Virginia resident could claim credit for North Carolina tax on the 2014 gain. The special border-state rule did not apply…
Could taxpayers avoid Virginia assessments while contesting IRS adjustments if they filed no amended Virginia returns or proof of a revised federal result?
No. Virginia upheld the 2009, 2010, and 2013 assessments because the taxpayers did not report the IRS changes or provide enough evidence of a revised federal determination. If the IRS later changed it…
Was a military spouse exempt from Virginia income tax when she claimed another domicile but had a home, job, voter registration, and license in Virginia?
No. Virginia found the spouse was a Virginia domiciliary because she showed no continuing connections to the claimed state and established a home, employment, voter registration, and a driver's licens…
Did visible correction fluid on a timely service-resale NTTC invalidate Joseph and Carmen Garcia's gross receipts deductions?
No. The buyer used white correction fluid to fix an address mistake before delivering the service-resale NTTC in 2008. The certificate was timely, the proper type, contained all required information a…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #15-5)?
Use the citator attached to SC Information Letter #15-5. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Were restaurant meal-delivery fees taxable when separately stated but customers were not told they could choose carryout?
Yes. A separate invoice line was insufficient. Because the restaurant did not notify customers that they could buy the meal for the stated price and choose carryout instead of delivery for an added ch…
Is a training service taxable when students receive t-shirts, notebooks, flash drives, downloadable content, and other materials without separate charges?
No. The clients' primary purpose was to obtain training, and the unitemized t-shirts, notebooks, flash drives, digital supplements, and other participation materials were inconsequential elements of t…
Could a Virginia resident use Maryland rental income and tax to claim the special border-state credit without Virginia's ordinary limitation?
No. Maryland rental income reported on Schedule E did not qualify for Virginia's special border-state rule. Virginia correctly limited each 2011-2013 credit to the Virginia tax on Maryland net income,…
Could severe illness extend Virginia's refund deadline when a 2010 joint return claiming a refund was filed in June 2014?
No. The 2010 return had to be filed by May 2, 2014 to preserve the refund, but the wife and husband's estate filed it in June. Virginia law required a fiduciary or authorized agent to file for a disab…
Could taxpayers deduct long-term care premiums paid in 2009 and 2010 on their 2011 Virginia return after the earlier refund periods expired?
No. Under the taxpayers' cash method, long-term care premiums were deductible only in the year paid. Their 2011 return could include the 2011 premium, not premiums paid in 2009 or 2010, and the three-…
Could late 2005-2009 overpayments be credited to 2012-2013 assessments when disability prevented the taxpayer from filing until March 2014?
No. Applying an overpayment to later tax is still subject to the refund deadline. The taxpayer filed the 2005-2009 returns in March 2014, after every limitation period had expired, and disability did …
Could a taxpayer overturn a Virginia assessment based only on saying it was larger than taxes owed in other years when no 2010 Virginia return had been filed?
No. Virginia's best-information assessment was presumed correct, and comparing it with other years did not prove the 2010 liability was wrong. The taxpayer had 30 days to file a 2010 Virginia return s…
Could taxpayers subtract a 2011 long-term gain from selling real property under Virginia's qualified-technology-business subtraction?
No. Virginia's subtraction required gain attributable to an investment in a qualifying Virginia technology business. The taxpayers' gain came from selling real property, and they had no qualifying wri…
Could Virginia residents subtract foreign salary, foreign investment gains, and the 2011 portion of a 2010 Roth IRA conversion from federal adjusted gross income?
No. The amounts were included in the taxpayers' 2011 federal adjusted gross income while they were Virginia residents, and Virginia law supplied no applicable modification. That included foreign earni…
Did a taxpayer remain a Virginia domiciliary in 2011 despite owning a Virginia home and maintaining family and business connections there?
No. Although the taxpayer still owned a Virginia home and had family, business, and vehicle connections there, his long-running State A home, license, vehicle registration, voter registration, nonresi…
Could a married couple avoid the $4,000-per-contract Virginia prepaid-tuition deduction limit because the nonowner spouse was over age 70?
No. Only the listed purchaser-owner could claim the prepaid-tuition deduction. Because the husband owned both contracts and was under 70, each deduction was limited to $4,000 per year despite the wife…
Could preparing a 2011 Virginia return in tax software prove it was filed when the Department had no return, confirmation number, or payment record?
No. Tax software preparation did not prove that the Virginia return was transmitted or received. With no return, confirmation number, or payment proof, Virginia could assess from the IRS transcript at…
Did a taxable lump-sum death payment qualify for Virginia's annuity death-benefit subtraction when it came from a § 403(b) retirement plan?
No. Even though an insurance company issued a taxable lump-sum death payment, the documents showed it came from an IRC § 403(b) retirement plan. Virginia's subtraction applied to qualifying annuity-co…
Do owners who rent out South Carolina vacation properties through 'rent by owner' websites owe sales and accommodations tax (per SC IL #15-4)?
Yes. SC Information Letter #15-4 reminds owners who rent South Carolina vacation properties — including through 'rent by owner' vacation rental websites — that furnishing sleeping accommodations to tr…
Did exchange memberships, SIPC-protected broker cash, and broker receivables count toward Illinois's 90% investment-partnership asset test?
Exchange seats or memberships did not qualify: they were neither listed investment securities nor office space or equipment, even if necessary to trading. The GIL treated SIPC-protected currency accou…
Is the annual fee for an internet retailer's shopping membership program (free shipping, streaming, e-book borrowing, member discounts) subject to NY sales tax?
Yes, the annual membership fee is taxable. A payment for the right to buy taxable goods at a discounted price -- or to get discounted delivery on taxable goods -- later is itself subject to sales tax,…
Could Covenant use New Mexico NOLs from subsidiaries' prior separate returns after switching to a combined unitary return, or retroactively switch back?
No NOL deduction or retroactive switch was allowed. New Mexico base income added back the federal Section 172 deduction, and Section 7-2A-2(H) did not authorize a combined group to use losses establis…
Are a healthcare-standards group's subscription Rapid Recall Exchange and Healthcare Registry internet services subject to NY sales tax?
Yes -- both subscription database services are taxable information services, though the separately sold ID codes are not. Furnishing information -- collecting, compiling, or analyzing information and …
If only one membership class of a social or athletic club has dues over $10 a year, must the club charge sales tax on all the other classes' dues too?
Yes -- because the club's class A members are active annual members paying dues well over $10 a year, the dues tax applies to the club, and once it applies the club must collect it on the dues, assess…
Are a fitness-training gym's membership and per-visit fees subject to New York State sales tax or New York City local tax?
Not State sales tax, but yes NYC local tax. The gym (a functional-fitness training affiliate with coaches and specialized equipment) charges membership or per-visit fees to use its facilities. These f…
Can a New York resident who made post-tax contributions to a Keogh Plan years ago, and later rolled that account into an IRA, exclude the return of those already-taxed contributions from New York taxable income once required minimum distributions begin?
No - Article 22 of the Tax Law contains no provision letting a resident subtract post-tax Keogh Plan contributions from federal gross income when the rolled-over IRA is later distributed. However, Tax…
Must a firm that writes radio news advertorials and places them on stations charge sales tax when it emails the client an MP3 copy?
No. The sales of the news advertorials are not subject to sales tax because the firm is providing nontaxable advertising services. The firm writes radio 'news advertorials' (financial-market-style ads…
New York Advisory Opinion TSB-A-15(1)C: Is an Internet access provider subject to the Tax Law section 184 additional franchise tax when it sells Internet access alone or bundled with VoIP?
No. The provider is not subject to the Tax Law section 184 additional franchise tax, because Internet access is not a telephone or transmission business under Tax Law section 179, and the provider's l…
Could a corporation exclude a large sale of Florida business real property from its corporate income-tax sales factor?
No. The alternative-apportionment request was late, and the corporation did not prove that the standard formula represented its Florida tax base unreasonably or arbitrarily. The sale proceeds had to r…
What productions, expenses, payroll, and application steps qualified for Virginia's Motion Picture Production Tax Credit under the 2015 guidelines?
Under these historical guidelines, an eligible production generally needed at least $250,000 of qualifying Virginia expenses. The refundable base credit was 15%, or 20% in a designated distressed area…
A retailer sells a custom home-improvement product that rests on the floor and is secured to walls only by small anti-tip brackets or finishing nails, then assembles and installs it at the customer's location. Are the sale and installation subject to Tennessee sales and use tax?
Yes. The sale and installation of the product are subject to Tennessee sales and use tax because the product remains tangible personal property after it is installed. Installing tangible personal prop…
Does a clinical laboratory's testing of pharmaceutical drug-trial samples qualify as exempt research and development, exempting its equipment and utility purchases?
Yes, the drug-trial testing is exempt research and development -- but not everything the lab buys qualifies. The lab tests clinical-trial samples to determine the safety and efficacy of new drugs (and…
Is a software maintenance and support contract taxable when it entitles the customer to upgraded versions of prewritten software?
Yes -- if the upgraded software is prewritten software, the whole contract is taxable unless the support and upgrade charges are separately stated. Selling prewritten computer software (including prew…
Must a tax-exempt 501(c)(3) library-support group collect sales tax on its semi-annual used-book sales?
Yes. The semi-annual book sales are taxable because the organization is operating a 'shop or store.' Although the group is an IRS 501(c)(3) and holds a New York Exempt Organization Certificate, the ex…
For a retail merchandising agency's in-store marketing services, which are taxable, and is the whole charge taxable if some services are?
Only the installation work is taxable; itemizing lets you tax just that. Installing signs and assembling mannequins are taxable services of installing or servicing tangible personal property under Tax…
Is a pension from the World Bank (International Bank for Reconstruction and Development) exempt from New York personal income tax as a pension from a U.S. government instrumentality?
No. The Department concluded the World Bank is not an instrumentality of the United States, so a World Bank pension doesn't qualify for the Tax Law § 612(c)(3)(ii) subtraction available for pensions o…
Are receipts from renting self-serve mini-storage units subject to NY sales tax as a storage service, or are they a nontaxable real-property lease?
They're a nontaxable lease of real property, not a taxable storage service. Tax Law section 1105(c)(4) taxes storage services, but the essence of a taxable storage service is that the owner relinquish…
Are an online provider's legal-document services (wills, entity formation, registered agent, trademarks, legal plans) subject to NY sales tax?
No -- none of these services is subject to sales tax, because each one's primary function is producing documents or providing a legal or agent service, not furnishing information, and legal and regist…
Were a municipality's leases of unlit dark fiber subject to Florida communications services tax or sales tax?
The unlit dark fiber was not a communications service, so its lease was not subject to communications services tax. Sales tax depended on whether the real-property lease met the utility-use exemption …
Could an Illinois copy shop charge tax on paper copies even though copying was a service?
Yes, potentially. Illinois treated copying as a service, but paper transferred to the customer could create Service Occupation and corresponding Service Use Tax. Depending on the shop's method and de …
How did Illinois tax paper and electronic medical records, coding, training, abstraction, SaaS storage, and shipping?
The activities appeared to be services. Electronic records and services transferring no tangible property generally avoided retail, use, and service taxes; hardcopy records could create service-tax li…
What did Illinois report in a 2015 survey about nexus, software, digital goods, services, and drop shipments?
IDOR declined yes-or-no nexus answers and gave historical 2015 guidance. Physical presence through agents or representatives could create collection duties; affiliate and tracked-referral rules used $…
Did a charitable lessee's Illinois E-number exempt a lessor from Use Tax or cancel a contractual tax reimbursement?
Generally no. In a true lease, the lessor remained the end user and owed Use Tax on cost despite the lessee's E-number, subject to narrow hospital-equipment exceptions. Illinois did not tax rental rec…
Were an online retailer's mandatory shipping-and-handling fees taxable, and could it allocate fees between taxable and exempt items?
Yes. Customers had to choose shipping and could not pick up at the fulfillment centers, so shipping and handling were inseparably linked to taxable merchandise and entered taxable gross receipts. For …
What is South Carolina's tax interest rate for underpayments and overpayments for the period ending June 30, 2015 (per SC IL #15-2)?
3%. SC Information Letter #15-2 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through June 30, 2015. Interest is compounded daily, exce…
Was an out-of-state trust a Virginia resident trust after its family moved to Virginia, and could LLC income still create Virginia tax?
The trust was not a Virginia resident trust after the Virginia-resident trustee resigned on December 26, 2013, but that did not eliminate Virginia tax exposure. Depending on whether it remained a gran…
Did a federal filing extension preserve a Virginia refund when the original 2010 state return was not filed until September 2014?
No. A federal extension did not establish a Virginia extension, and filing the original state return after the extended due date negated the state election. The refund period reverted to the May 2, 20…
Were fees to reactivate disconnected Internet service subject to Virginia communications sales tax despite the Internet-access exemption?
Yes. Internet access itself was excluded from the tax, but reactivating disconnected service was a taxable connection or reconnection of communications service. The charge was not an exempt incidental…
Was a hospital's one-time sale of laboratory equipment exempt as an occasional sale even though the hospital was registered for other retail sales?
Yes. The hospital's sales-tax registration covered its cafeteria and gift shop, not the laboratory assets, so the one-time equipment sale qualified as an occasional sale. A refund was due only after t…
Could a restaurant replace Virginia's reconstructed alcoholic-beverage sales audit with bank-based reports that ABC had not yet verified?
Not yet. Virginia could use ABC reports to reconstruct sales because the restaurant lacked adequate daily records. It would accept revised bank-based MBAR figures only after ABC verified them within 6…
Could a mobile repair business overturn an estimated Virginia sales-tax audit when its records were stolen and it supplied no proof of exempt services or sales?
No. With no returns or sales records, Virginia could estimate taxable sales from ticket books, bank statements, corporate returns, and prior audit data. Unsupported claims about exempt services did no…
Is a tumor-treating-fields cancer-treatment device, with its supplies and replacement parts, exempt from NY sales tax as medical equipment?
Yes -- the device, its supplies, and replacement parts are exempt medical equipment when the patient is the buyer. The device produces alternating electrical fields, applied through scalp electrodes, …
New York Advisory Opinion TSB-A-15(2)C: Is a corporation dissolved by proclamation that merely holds title to land as an inactive nominee still subject to Article 9-A franchise tax after dissolution?
The corporation was subject to Article 9-A franchise tax from its incorporation through its dissolution by proclamation, but not after dissolution, because afterward it merely held title to land as an…
Is reformatting electronic data and transmitting it to third parties taxable, and must a mailing-list vendor collect tax from a customer who resells the information?
Reformatting and transmitting data isn't taxable; selling mailing-list information is a taxable information service, exempt only when bought for resale. The combined service of changing the format of …
What Virginia tax interest rates applied during the second quarter of 2015?
Virginia's second-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 …
Was Use Tax due on leased computer servers placed in an Illinois data center for cloud-hosting customers outside Illinois?
The servers were taxable tangible personal property. IDOR could not classify the lease without its contracts. If it was a true lease, the lessor owed Use Tax on server cost and rental receipts were un…
How did Illinois tax HVAC retrofit hardware bundled with cloud monitoring and a SaaS subscription?
IDOR did not decide the four proposed scenarios. Hardware delivered in Illinois was taxable unless resale or another exemption was documented. Online data access appeared to be a service, and electron…
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