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 separate tobacco packaging-and-shipping service buy cartons, paper, chipboard, and strapping under Virginia's manufacturing exemption?
No. The service provider did not process or change the tobacco and performed handling, storage, packaging, and shipping away from the manufacturer's plant. It was therefore the consumer of its cartons…
When do employer contributions to a nonqualified deferred compensation plan count toward my company's MCTMT payroll expense -- when they vest, or when they're actually paid out to the employee?
When the compensation vests (or is earned, if later), not when it's distributed. New York's MCTMT payroll expense follows the federal FICA timing rule for nonqualified deferred compensation under IRC …
Is medical equipment loaned 'free' to hospitals along with catheters taxable, and does the medical-equipment exemption apply?
The loaned equipment is treated as part of the taxable sale of the catheters, not as a separate exempt item -- and it does NOT qualify for the medical-equipment exemption because it is sold to hospita…
Does a high-security facility that hosts customers' websites qualify as an 'internet data center,' making its equipment purchases exempt?
Yes -- the facility qualifies as an 'operator of an internet data center' under Tax Law section 1115(a)(37)(i). It is a purpose-built, high-security data center that houses customers' website servers …
Is a company that applies coatings to manufacturers' parts a 'producer,' and is its coating equipment and fuel exempt from sales tax?
Yes, with conditions. Applying coatings that change the nature of a customer's parts is 'processing,' and the coater is engaged in production for sale -- as long as the coated parts are, or become a c…
Is a private NYC gym a taxable 'athletic club' on its dues, and is it a NYC-taxable gymnasium whose fees owe city sales tax?
It is not a taxable social or athletic club -- the members don't control the activities, management, or selection and hold no proprietary interest, so the dues tax under section 1105(f)(2) doesn't app…
Is a fitness facility that includes a swimming pool a NYC-taxable gymnasium, and how are its food/drink and locker charges taxed?
As decided in 2014, no -- because the facility included a participatory-sports facility (a swimming pool), it was NOT a New York City-taxable 'weight control salon, health salon, or gymnasium,' and it…
Is a heart mitral-valve repair clip -- sold with its single-use guide catheter and delivery system for one price -- exempt as a prosthetic device?
Yes -- the system is exempt from sales and use tax as a prosthetic aid under Tax Law section 1115(a)(4). The implanted clip permanently restores the function of a leaking mitral valve, so it is a pros…
Is a nursery 'farming' for the sales-tax exemption, and is its equipment exempt -- even for plants already ready to sell?
The nursery is engaged in farm production only for plants it is still growing toward saleable size -- not for plants that already arrive (or already are) in the form it will sell, which is administrat…
We're buying THREE adjacent condo units with one purchase money mortgage and plan to combine them into a single home after closing, but the units aren't merged yet. Does our mortgage get taxed at the residential rate or the higher commercial rate?
The lower combined residential rate of 2.175% applies (rather than the higher commercial rate), extending the same "clear intent to combine" analysis from TSB-A-13(3)R to a three-unit combination. Eve…
I'm a touring musician who performs a few shows a year in New York City, and my business manager and accountant happen to be based there too. Does that subject all my self-employment earnings to New York's MCTMT?
Partially -- only on the earnings actually tied to the in-district work. Tax Law § 801(a)(2) taxes an individual's net self-employment earnings attributable to the Metropolitan Commuter Transportation…
After a 2012 policy change, does the section 1505(a)(2) premiums-based limitation still cap the Article 33 tax of an unauthorized life insurance corporation that has no New York premiums?
No longer. This modification of TSB-A-08(3)C applies a 2012 Department change (TSB-M-12(4)C): because an unauthorized life insurance corporation owes no additional premiums tax under section 1510(b)(1…
Did a retiree who kept homes in two states become domiciled in Virginia after renewing a Virginia driver's license and maintaining vehicles there?
Yes. After weighing all evidence, Virginia found the taxpayer changed domicile to Virginia in 2007. Renewing a Virginia driver's license, relinquishing the other state's license, allowing most registr…
How did Virginia classify selected lip, acne, earwax, fiber, mouthwash, medical, beverage, propane, and coupon products for sales tax?
Virginia issued a product matrix. Acne medicine, Debrox, antiseptic mouthwash, qualifying heating pads and ice bags, domestic propane exchanges, and entertainment coupon books were exempt. Several bal…
Did reusable fabric sandwich and snack bags qualify as lunch boxes during Virginia's school-supplies sales-tax holiday?
No. The holiday guidelines used an all-inclusive list of qualifying school supplies. Lunch boxes were listed, but reusable fabric bags that held only sandwiches were more like ordinary plastic sandwic…
Could accountant error or financial hardship extend Virginia's deadline for claiming a refund on a late 2006 return?
No. The refund deadline expired May 3, 2010, but the original 2006 return was not filed until January 2013. Virginia had no discretion to extend the three-year period for accountant error or financial…
Was a Virginia appeal timely when the assessment went to the IRS-reported last known address and the taxpayer learned of it later?
No. Virginia treated the assessment as made when it was mailed to the last known address supplied through IRS information, so the March 26, 2013 appeal missed the February 5 deadline. The merits appea…
Could New Mexico calculate withholding penalties on tax that was paid late but fully paid before the Department issued its assessments?
No. Exerplay timely filed monthly returns but failed to pay May-October 2013 withholding tax because its payroll contractor and accountant each thought the other handled payment. Exerplay discovered t…
Are injectable medications and injectable biologics exempt from South Carolina sales and use tax (per SC IL #14-4)?
Phasing in. SC Information Letter #14-4 explains that S.C. Code § 12-36-2120(80) exempts injectable medications and injectable biologics from the state and local sales and use taxes, but the exemption…
What Virginia state and local tax legislation did the Department summarize for the 2014 General Assembly and Special Session I?
This Department guide summarizes state and local tax legislation enacted during Virginia's 2014 General Assembly and Special Session I through July 1, 2014. It covers administration, income tax, tobac…
When are the Kansas mineral severance tax return and payment due after the 2014 change?
Kansas Notice 14-12 (July 1, 2014) explains that 2014 Senate Bill 266 (Sections 7 and 8) amended K.S.A. 79-4220 and K.S.A. 79-4221 to change the mineral severance tax due dates. Previously the return …
How did Kansas change the definition of income for homestead property tax refund claims for 2013?
Kansas Notice 14-11 (July 1, 2014) explains that 2014 Senate Bill 265 (Section 2) amended K.S.A. 79-4502, which defines 'income' for homestead property tax relief claims. The 2012 income tax overhaul …
Can Kansas banks and other financial institutions now claim the expensing deduction?
Kansas Notice 14-10 (July 1, 2014) explains that 2014 House Bill 2057 (Section 7) amended K.S.A. 79-32,143a, the Kansas expensing (expense) deduction, so that certain financial institutions can claim …
Did Kansas repeal withholding on nonresident S corporation shareholders, partners and LLC members?
Kansas Notice 14-09 (July 1, 2014) explains that 2014 Senate Bill 265 (Section 9) repealed K.S.A. 79-32,100e, the provision that had required S corporations, partnerships and limited liability compani…
When does Kansas waive the 50% income tax penalty on additional tax from an adjusted return?
Kansas Notice 14-08 (July 1, 2014) explains that 2014 House Bill 2643 (Section 18) amended K.S.A. 79-3228(d), the income tax penalty statute, for tax years ending after December 31, 2013. When a taxpa…
Which counties were added to the Rural Opportunity Zone program in 2014?
Kansas Notice 14-07 (July 1, 2014) explains that 2014 House Bill 2643 (Section 19) amended K.S.A. 2013 Supp. 74-50,222 to add four counties -- Cherokee, Labette, Montgomery and Sumner -- to the list o…
Did Kansas restore the disabled accessibility credit for homes and extend the business version?
Kansas Notice 14-06 (July 1, 2014) explains that 2014 Senate Bill 265 (New Section 5) reenacted the disabled accessibility credit for dwellings that had been repealed in 2012, effective for tax year 2…
Did Kansas bring back the adoption income tax credit, and how much is it?
Kansas Notice 14-05 (July 1, 2014) explains that 2014 Senate Bill 265 (New Section 4) reenacted the Kansas adoption credit that had been repealed in 2012, effective for tax year 2014 and later. A resi…
Can a Kansas taxpayer subtract unreimbursed expenses for donating a human organ?
Kansas Notice 14-03 (July 1, 2014) explains that 2014 Senate Bill 265 added a new subtraction modification, K.S.A. 79-32,117(c)(xxi), letting a taxpayer subtract from federal adjusted gross income the…
How does Kansas treat a minister's self-employment tax deduction after the 2014 change?
Kansas Notice 14-02 (July 1, 2014) explains that 2014 Senate Bill 265 amended K.S.A. 79-32,117(b)(xx) so that the required Kansas add-back of the federal self-employment tax deduction (IRC section 164…
What were Kansas's simplified electronic return policies under the Streamlined Sales and Use Tax Agreement?
Kansas accepts the Streamlined Sales and Use Tax Agreement's simplified electronic return. Agreement-registered sellers generally were not required to submit Part 2 exempt-sales data unless Kansas fir…
Could a county defeat a Virginia BPOL appeal by treating an incomplete letter as final or by placing a later appeal under the general local-tax procedure?
No. The county's December 2012 letter lacked the analysis and appeal notice required for a final BPOL determination and the parties kept working on the dispute. The December 2013 appeal qualified unde…
Must a nonprofit performing-arts organization collect Georgia sales tax on admissions, donations tied to admission, and complimentary tickets?
Paid performance admissions were taxable despite nonprofit status. A documented tax-deductible donation was not a taxable admission contribution, but consideration exchanged for admission was taxable.…
Did a taxpayer avoid penalty and interest when she paid additional federal audit tax but did not file the required New Mexico amended return?
No. An IRS audit increased Sara Mills's 2007 federal tax, and she paid the federal amount on June 22, 2010 but did not report the adjustment to New Mexico. The law then in effect required a state amen…
How could a partnership calculate project income and allocate Florida's Capital Investment Tax Credit to its partners?
Florida approved a project pro forma based on Florida assets and workforce, with the resulting credit allocated to corporate partners by their represented ownership percentages.
Could a technology company remove audited use-tax purchases using representative invoices and unclear service agreements?
Only partly. Virginia removed a documented $35 item and conditionally removed two invoices showing sales tax paid. But representative invoices, emails, and claims about electronic delivery did not pro…
Was a common carrier created after the Interstate Commerce Commission was abolished exempt from Virginia local BPOL tax merely because it registered with the FMCSA?
No. Under the statute as written in 2014, the carrier had to have been formerly certified by the Interstate Commerce Commission or meet the specified Surface Transportation Board registration language…
Can a company use separate accounting instead of Colorado's single-sales-factor formula to apportion its income—and what does it have to prove?
The Department denied this request. Colorado (like most states) abandoned separate accounting long ago: it conflicts with the single-sales-factor method the legislature adopted in 2010, it's administr…
What project-income method did Florida approve for a consolidated filer's Capital Investment Tax Credit?
Florida approved a separate-ledger pro forma return using GAAP and section 220.13, followed by the project's Florida apportionment fraction and the 5.5 percent corporate tax rate.
Did Virginia violate a transferee's taxpayer rights or miss the assessment deadline when it reduced a transferred Land Preservation Tax Credit?
No. Virginia upheld the assessment. The credit-award letter warned that the conservation-easement value remained subject to audit and adjustment, the Department gave notice and appeal opportunities, a…
A tiered multinational group with corporations, LLCs, and disregarded single-member LLCs wants to compute its Tennessee franchise-tax net worth on a consolidated basis. Which entities are disregarded, who is in the affiliated group, and how are foreign holdings and disregarded SMLLCs treated in consolidated net worth?
Three answers. (1) The group's single-member LLCs that are disregarded for federal income tax and owned by a corporation (here, LLCs taxed as corporations) are ALSO disregarded for Tennessee franchise…
Did the University of Illinois have to withhold Illinois income tax from scholarships, contractor fees, honoraria, royalties, and other payments to foreign recipients?
Only compensation treated as employee wages and subject to federal income-tax withholding triggered required Illinois withholding under the provisions discussed. Illinois followed federal employee-ver…
How did Florida treat a section 338(h)(10) stock sale and the target's pre-sale distribution of unwanted assets?
Florida followed federal treatment. The target had to report deemed asset-sale gain as Florida business income, while the unwanted-asset distribution received the same treatment as federally under the…
A company sells a wearable, continuous-use medical device — a portable pack, a worn component, and ancillary parts — at one monthly price to treat a disease. Is the device exempt from Tennessee sales and use tax as a prosthetic device?
Yes. The wearable medical device is exempt from Tennessee sales and use tax as a 'prosthetic device' (Tenn. Code Ann. § 67-6-314(1)). To qualify, a device must be (1) for human use, (2) a replacement,…
Are storage, repair, and replacement-part charges for cargo containers and chassis exempt at a New Jersey marine terminal facility?
Storage of cargo containers and chassis was exempt when provided at a qualifying marine terminal facility but taxable elsewhere. Container repairs were exempt, and chassis repairs used for loading, un…
Did Virginia's ISP equipment exemption cover assets used for wholesale Internet service and web hosting as well as retail Internet access?
Only in part. Assets used in Fairfax County could qualify for the ISP exemption for retail or wholesale Internet service under a county circuit-court decision. Outside Fairfax, Virginia continued to d…
Can a bike-share operator buy all its equipment tax-free for resale, or only the bikes it actually rents to riders?
Only the bikes. The operator's purchase of the bikes is exempt as a purchase for resale, because riders rent the bikes -- they get custody, control, and direction of use during the rental. But the doc…
What is South Carolina's tax interest rate for the period ending September 30, 2014 (per SC IL #14-8)?
3%. SC Information Letter #14-8 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through September 30, 2014. Interest is compounded daily,…
Could a designated Special Payment taxpayer avoid penalty when it hand-delivered New Mexico bank checks on the usual due date instead of one business day earlier?
No. Santa Fe Hotel had been designated a Special Payment taxpayer effective January 1, 2008. When paying by a check drawn on a New Mexico bank, it had to deliver payment directly to the Santa Fe Depar…
Could a federal construction contractor and its subcontractor buy freestanding office furniture tax-free for resale to the agency?
Yes. Modular panels, freestanding furniture, chairs, shelving, file cabinets, power strips, and similar items that would not be incorporated into or permanently affixed to the building could be bought…
Did exterior light-box signs installed by a tenant become real-property fixtures rather than property subject to Virginia local BTPP tax?
No. Virginia upheld the county's classification of the entire light-box signage as taxable business tangible personal property. Although attached to the building, the boxes were not essential to the d…
What Virginia tax interest rates applied during the third quarter of 2014?
Virginia's third-quarter 2014 rate was 5% for both tax underpayments and overpayments. The reduced rate for a qualifying assessment still unresolved nine months after assessment was 0%. The bulletin a…
Did informal discussions with a Department auditor extend the deadline to protest a corporate income-tax assessment?
No. New Mexico Tech University Research received an $85,570.03 corporate income-tax assessment on May 20, 2013. Its CPA tried to resolve the net-operating-loss issue informally and noted that no prote…
Could a Public Health Service officer avoid penalty and interest after relying on employer statements and tax software to claim the armed-forces exemption?
No. Tracy Sanchez conceded that her Public Health Service pay was taxable because she was not serving in the armed forces covered by Section 7-2-5.11. Her PHS earnings statements and tax software had …
Could a contractor buy modular buildings tax-free because it installed them for a federal agency under a government contract?
No. The contractor installed modular buildings as real-property construction and was the consumer of the materials, even though title passed to a federal agency and the agency supplied an exemption ce…
Could a Virginia domiciliary avoid Virginia tax on another state's pension because he lived there more than 183 days and filed returns there?
No. The taxpayer remained domiciled in Virginia, so Virginia could tax all of his retirement income even though he spent more than 183 days and filed resident returns in another state. A credit might …
Did ongoing Department communications preserve a timely 2008 refund claim when no protest or lawsuit followed 120 days of agency inaction?
No. Josephine Miskowiec timely claimed a 2008 medical credit refund on April 9, 2012, but the Department neither granted nor denied it within 120 days. She then had until November 5, 2012—210 days fro…
Are remotely hosted cloud applications supporting customer phone and collaboration systems taxable in Georgia when no hardware or software is transferred?
No. The cloud collaboration and hosting charges were nontaxable services because customers received no title, possession, use, or control of hardware or software, and the provider did not sell taxable…
When a company that earned Georgia's quality jobs tax credit simply converts to an LLC, can the converted entity keep and continue that credit and its carryforward?
Yes. After the company converts from Taxpayer 1 to an LLC (Taxpayer 2), the converted entity keeps the quality jobs tax credit: its owners can claim the income-tax carryforwards and the unused approve…
How should a combined Virginia corporate group report Coalfield Employment Enhancement Tax Credits used against its income-tax liability?
The credits were not refunds or overpayment credits eligible for Virginia's income subtraction because they were fully used against current combined tax. Instead, they reduced the affiliate's deductib…
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