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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Do tanks for a natural-gas combined-cycle power plant qualify for Colorado's renewable-energy or manufacturing-machinery sales tax exemptions?
No renewable-energy exemption, and the manufacturing question was left open. Tanks for a natural-gas combined-cycle power plant don't qualify for Colorado's exemption for components that produce AC el…
Could a multistate healthcare staffing company avoid penalty based on an earlier CPA review that concluded no New Mexico gross receipts tax was due?
No. PPR Healthcare Staffing proved that its 2006 controller was a CPA who surveyed the states where it operated and concluded that tax was due in Washington but not New Mexico. It did not prove what r…
Was solar electricity sold under a power-purchase agreement exempt while leasing the photovoltaic equipment remained taxable in Virginia?
Yes, on the facts presented. Electricity sold to host customers under a power-purchase agreement qualified for the exemption for electricity delivered through lines. An unmetered customer agreement wh…
Did a customer's later use-tax payment remove an untaxed sale from a Virginia seller's audit sample?
No. A customer's later use-tax payment did not erase the seller's duty to collect tax or remove the sale from the audit sample. Virginia kept those sales in the sample but allowed one-time credits for…
Could an acquired Florida consolidated group keep filing as a subgroup of its new parent's affiliated group?
No. The old affiliated group ceased to exist when an unrelated parent acquired it, and the acquired companies became bound by the new parent's separate-return election.
Did using hosted servers in Illinois create sales-tax nexus for an out-of-state institution that owned no hardware there?
IDOR made no nexus determination, saying the needed facts were best gathered by an auditor. Under the historical 2014 framework it described, physical presence included an Illinois agent or representa…
How could an Illinois supplier document resale when drop-shipping goods for an unregistered out-of-state purchaser to an Illinois customer?
The Illinois supplier had to collect tax or document the resale exemption with a valid Certificate of Resale from the out-of-state purchaser. A proper certificate with a registration or resale number …
When did purchased idle manufacturing equipment become taxable machinery and tools, and which owner's cost controlled its valuation?
Altered machinery was subject to M&T tax when it was necessary and actually used in the buyer's manufacturing process. Equipment bought in April 2012 but not operational until February 2013 was treate…
Were installed senior-living emergency call systems taxable property sales or real-property improvements?
It depended on each contract. Hardwired call stations and lights became real property, while consoles, pagers, radios, and other movable equipment remained tangible personal property.
When would Virginia remove disputed hardware-store transactions from an audit sample or accept a claimed nonprofit exemption?
Virginia removed a documented 44-day customer account from the sample and taxed those sales separately, while sending an unusually large truss sale for review under a larger sample. Unsupported nonpro…
Were permanently installed gas pumps fixtures to real estate or business tangible personal property subject to a Virginia city's BTPP tax?
They were fixtures to real estate, not taxable BTPP. The pumps were connected to the station's electrical wiring and underground tanks, were essential to the site's use as a gas station, and were inte…
Are portable corral panels, round-bale feeders, and livestock shelters a fabricator sells to Kansas farmers taxable?
It depends on the item and the buyer. Portable corral panels and portable round-bale livestock feeders sold to a farmer, rancher, or feedlot for production agriculture are exempt farm equipment under …
When a Kansas customer orders a custom-fabricated article billed in progress payments, when and on what amount does Kansas sales tax apply?
Sales tax applies to the full selling price of the finished article — including fabrication, materials, design, overhead, and shipping, with no deductions — but only when the completed article is deli…
Could an occupational therapist recover 2004-2009 gross receipts tax after later being told that Medicaid-waiver services might be exempt?
No. Tawanda Latham filed her June 2013 refund claim too late for all 2004-2009 periods. The ordinary three-year limit had expired, and two 2010 payments toward 2008 liability also missed the separate …
Could a couple avoid penalty after an unverified tax preparer advised that Public Health Service pay qualified for the armed-forces exemption?
No. Deborah Yellowhorse's Public Health Service wages were not exempt because Section 7-2-5.11 covered active-duty armed-forces pay, and the cited federal definition excluded PHS from the armed forces…
What counted as a small quantity of domestic-use propane, and was the Virginia rule applied per sale or by averaging transactions?
Virginia generally treated a small portable propane cylinder—such as a 20- or 34-pound tank or smaller, filled to capacity—as a small quantity. The test applied to each sale, not an average across a m…
Could a privately employed New Mexico resident avoid 2008 income tax by claiming he earned no federal wages and was only a state citizen?
No. Stephen Fingado worked for CAPS Inc. and Tempur Production USA in Bernalillo County and admitted receiving salary paychecks with benefit and Social Security deductions. The decision held that the …
How did Illinois distinguish true equipment leases from conditional sales, and could a collection agent remit the lessor's tax under its own ID?
IDOR did not classify the contracts. A true lessor was the end user, owed Use Tax on equipment cost, could not buy it for resale, and owed no tax on rental receipts. A conditional sale made all receip…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #14-7)?
Use the citator attached to SC Information Letter #14-7. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Must a company that answers calls and gives advice for healthcare providers collect Kansas sales tax on those services?
Not taxable. The company's services to Kansas healthcare providers went beyond simply receiving, transferring, and answering phone calls — it also supplied qualified staff to give advice and answer pa…
Were colocation and managed-hosting charges for bandwidth, private lines, cross-connects, and software taxable in Illinois?
IDOR did not classify the specific services on the limited facts. Under the historical 2014 rules, taxable telecommunications included private lines, qualifying Internet access was protected only duri…
Could an Illinois business add a credit-card surcharge, and was the fee part of taxable gross receipts?
As of this 2014 letter, Illinois did not prohibit the surcharge described. For a taxable retail transaction, the card fee was a cost of doing business included in taxable gross receipts even if separa…
Were paid and free-trial memberships bundling shipping, streaming video, and e-books subject to Florida sales tax or CST?
The membership owed no sales tax, but its streaming-video portion owed CST when sourced to Florida. Free-trial video cost was taxable to the retailer because no resale occurred.
Did paying an independent Illinois business to teach a remote seller's customers create Illinois sales-tax nexus?
IDOR did not decide, saying nexus facts were best gathered by an auditor. Under the historical 2014 framework it described, physical presence was not limited to employees, offices, or buildings and co…
How did IDOR answer a 2014 survey on sales-tax nexus, digital products, drop shipments, services, and SSUTA?
IDOR refused activity-by-activity nexus answers because nexus was fact-specific. Under its historical framework, Illinois presence included agents and repetitive delivery or installation. Canned softw…
Could a corporate cafeteria with limited seating charge Illinois's reduced food rate on grocery items sold for takeout?
Potentially, but IDOR made no fact-specific determination. Any on-premises seating created a presumption that all food sales used the high rate. Qualifying grocery items could use the reduced rate onl…
Are separately listed delivery and installation charges subject to Illinois sales tax?
Not automatically exempt. Under Illinois' Retailers' Occupation Tax, delivery and installation charges are generally part of taxable gross receipts even when listed separately on the invoice. They are…
When is Illinois sales tax due on computer software licenses and software maintenance agreements?
Canned (prewritten) computer software is taxable tangible personal property in Illinois, whatever the medium; genuinely custom software may not be. A software license is not a taxable retail sale if t…
Do two whole-food snack bars qualify for Illinois's 1% state food rate or the 6.25% general-merchandise rate?
The letter did not classify the two bars because it lacked facts about how the seller conducted sales. It gave the general rule: qualifying food for off-premises consumption was taxed at the 1% state …
When are Illinois trailer sales or leases taxable, and when can the rolling stock exemption apply?
A trailer sale or conditional lease-sale generally triggers Retailers' Occupation Tax. Under a true lease, the lessor is the user and owes Use Tax on its cost, while rental receipts are not taxed. The…
Are fruit trees, nut trees, shrubs, vines, and other nursery stock exempt as Illinois farm machinery or equipment?
No. IDOR said nursery stock and seedlings are not farm machinery or equipment under 86 Ill. Adm. Code 130.305, even when bought for agricultural production. A separate sale for resale can be nontaxabl…
Does cooking wine sold as a food ingredient qualify for Illinois's 1% state food rate?
The GIL did not specifically classify the cooking wine. It explained that food sold for off-premises consumption generally received the 1% state rate plus local taxes, but alcoholic beverages, candy, …
Did improved systems and business changes justify waiving a second-audit Virginia use-tax penalty when compliance was only 30%?
Not by themselves. Virginia removed documented purchases and transfer entries from the audit and would recompute the use-tax compliance ratio. A second-audit penalty would be fully waived if the revis…
Were separately stated shipping and handling fees on F.O.B.-origin online sales subject to Florida sales tax?
No. The retailer separately stated every shipping and handling charge and sold F.O.B. origin, so title and risk passed when the goods were delivered to the carrier.
Are Illinois membership fees taxable when members also receive guides, magazines, and marketing materials?
A pure membership fee is generally an intangible and is not subject to Retailers' Occupation Tax or Use Tax when no tangible personal property is transferred. But this association also described guide…
Which electricity-bill charges enter an Illinois self-assessing purchaser's Electricity Excise Tax base?
The 5.1% Electricity Excise Tax applied to the broad aggregate purchase price paid for nonresidential electricity, including supply, distribution, transmission, delivery, and directly related services…
Which server-training programs does South Carolina recognize as a mitigating factor for alcohol-licensing penalties (per SC IL #14-6)?
SC Information Letter #14-6 lists the alcohol server/seller training programs the Department recognizes as a mitigating circumstance when it assesses penalties for beer, wine, and distilled-spirits vi…
Could an excellent filing and payment history excuse penalties for one missed electronic return and one payment made a day late?
No. Tent Rock timely paid its February 2013 combined reporting system taxes but forgot to submit the electronic return. For July, it timely filed the return but forgot payment until August 27, one day…
Would appointing a Virginia resident to a limited co-trustee committee make three out-of-state trusts Virginia resident trusts?
No. The trusts were created outside Virginia by non-Virginia grantors, owned no Virginia property, and were administered in another state. The Virginia co-trustee could not act individually and would …
Did an out-of-state engineering LLC have to file a Virginia pass-through return when occasional site visits created no positive apportionment factor?
No, on the stated facts. The LLC had no Virginia property or payroll, and its service-sales factor was outside Virginia because more than half of the service costs were incurred at its out-of-state of…
Could a nonresident carry forward Virginia pass-through losses when no corresponding federal net-operating-loss deduction remained?
No. Virginia allowed a net-operating-loss deduction only to the extent a corresponding deduction was available federally. Because the prior losses had been absorbed by other federal income and no fede…
Was a husband who owned a Virginia home, license, vehicles, and voter registration still a nonresident when his permanent ties remained elsewhere?
Yes, he remained a nonresident for 2009. Although he owned a Virginia home and held a Virginia driver's license, voter registration, and vehicles, he spent fewer than 183 days in Virginia and had not …
Did buying Illinois-hosted data services, while owning software but no server hardware, create Illinois income-tax nexus for an out-of-state corporation?
The GIL did not decide. The corporation bought hosting from a commercial provider, owned no server hardware, and owned or licensed software used on the hosted systems. IDOR said nexus was extremely fa…
Were software and credit-data receipts sourced to Illinois because the servers and programmers were there, or to the states where lender customers received the product or service?
The GIL could not give one sourcing answer without knowing what each company transferred. A copyright transfer followed the copyright-utilization rule; another software license followed the intangible…
Could a counseling contractor deduct services passed through to an insurer when the buyer paid no gross receipts tax and delivered a late NTTC?
No. Healing Through Hypnosis performed counseling as an independent contractor for Martin Klehn, who resold the services under an insurer contract but paid no gross receipts tax because he treated his…
What income method did Florida approve for a CITC project spanning a new facility and a renovated facility?
Florida approved all income from the new facility plus reasonably allocated incremental growth from services remaining at the renovated facility, supported by a project pro forma return.
Did a merchant mariner abandon Virginia domicile by taking an indefinite out-of-state job and using motels or a training center between voyages?
No. Although the mariner had indefinite employment and a post-office box in another state, he never established a permanent abode there and retained major Virginia ties: his wife, voter registration, …
What documentary stamp tax applied when a partnership deeded unencumbered property to its wholly owned LLC before selling LLC interests?
Only nominal deed tax applied when beneficial ownership stayed identical and no consideration was paid. The later 51 percent LLC-interest transfer was taxable under the conduit-entity rules.
Could existing leasehold interests reduce the property value used for Virginia grantor tax when the fee and leases were sold together?
Yes. Because the purchase documents and deed preserved the leasehold interests instead of merging them into the purchaser's fee ownership, the leases remained encumbrances whose value was excluded fro…
What base-year method did Florida approve for measuring income from a two-location headquarters CITC project?
Florida approved the increase in consolidated Florida income over a representative base year, after adding back acquisition transaction costs in both the base and comparison years.
Was a Tennessee installer of blinds, drapes, shades, valances, and cubicle curtains a retailer or a consuming contractor on Virginia jobs?
It was a consuming real-property contractor, not a retailer, because it did not maintain enough inventory of window treatments or component materials to meet Virginia's retailer definition. It owed us…
Were monthly and per-class charges for coach-led group personal training subject to Florida sales tax?
No. Members had access only during scheduled, supervised classes and could not use the studio independently, so the charges were for instruction rather than taxable club admission.
When were software sold to manufacturers, electronically delivered programs, custom software, modifications, and cloud services exempt in Virginia?
Software used primarily to direct or control production or quality control could qualify for the manufacturing exemption, while administrative monitoring software was taxable. Custom programs and sepa…
Was the full price of an amusement-center party package taxable when it bundled attraction admissions, a room, hosting, and food?
Yes. A single-priced party package that included attraction admissions and taxable food was taxable in full, even if customers primarily wanted the party experience. Virginia nevertheless removed pack…
What Virginia tax interest rates applied during the second quarter of 2014?
Virginia's second-quarter 2014 rates were 5% for tax underpayments and assessments and 5% for tax overpayments and refunds. The reduced rate for qualifying assessments under administrative appeal was …
Could Virginia abate pass-through withholding assessments when the LLC had paid enough tax into the wrong employer-withholding account?
Yes. The LLC had remitted enough employer withholding to cover its 2008-2011 pass-through withholding, so Virginia abated the assessments and refunded the 2011 overpayment with interest. But partners …
Did Virginia's railroad-rolling-stock exemption apply when a bank bought rail cars from the manufacturer and leased them to the user?
No. The statute exempted railroad rolling stock only when sold or leased by its manufacturer. Once a financial institution bought the cars and became the lessor, the exemption did not apply—even thoug…
Which equipment at a nonutility Virginia solar facility qualified for the manufacturing sales-tax exemption?
The non-public-service company qualified as a manufacturer because it produced electricity for sale. Solar panels, inverters, wires and cables carrying electricity, and step-up transformers were direc…
Was a Virginia tax appeal filed by fax two days after the 90-day deadline considered timely?
No. The assessment was dated November 5, 2013, so a complete administrative appeal was due February 3, 2014. The taxpayer's fax arrived February 5—two days late—and Virginia treated the application as…
Were LLC members liable for their shares of unreported partnership income even if another member controlled the books and they received no benefit?
Yes. Because the LLC was taxed as a partnership, each member was responsible for tax on the member's distributive share of increased income, regardless of who controlled bookkeeping or whether the mem…
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