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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A buyer and seller will make a federal I.R.C. § 338(h)(10) election treating a stock sale as a deemed asset sale, after the target pre-distributes assets to the seller in a tax-free liquidation. How do the resulting federal gains (and non-gains) flow into net earnings for Tennessee excise tax?
Tennessee excise-tax 'net earnings' start from federal taxable income, so the federal election's results flow straight through. (1) The gain the target recognizes on the deemed asset sale under the fe…
What is South Carolina's tax interest rate for the period ending June 30, 2014 (per SC IL #14-3)?
3%. SC Information Letter #14-3 sets South Carolina's interest rate on tax underpayments and overpayments at 3% for the period October 1, 2011 through June 30, 2014. Interest is compounded daily, exce…
Was a traveling psychiatrist still a New Mexico resident when he spent fewer than 185 days here and worked entirely in other states?
Yes. Rohana Calnaido spent at most 40 days a year in New Mexico and worked only in Washington, Texas, and North Carolina, so he did not satisfy the 185-day physical-presence test. But New Mexico resid…
Were fees for mobile painting parties with instruction and provided supplies subject to Florida sales tax?
No. The business sold two hours of step-by-step painting instruction rather than tangible personal property and paid tax when purchasing the reusable and consumable supplies.
Were remote cloud storage, virtual compute instances, and related data-transfer fees subject to Florida sales tax or CST?
No. Remote storage, virtual compute instances using open-source or third-party operating systems, and incidental data-transfer fees were information services rather than taxable property or communicat…
Did Robert Wiles's oral discussions about a payment plan prevent New Mexico from levying his bank accounts for unpaid gross receipts tax?
No. Wiles was delinquent on unpaid 2005 and 2006 gross receipts tax, and his conversations with Department employees did not create the written installment agreement required to stop levy enforcement.…
How do Illinois sales and service taxes apply to foodservice arrangements with exempt hospitals and nursing homes?
IDOR declined to decide the eight hypothetical arrangements without contracts and clearer facts. It explained that resale transactions require a valid certificate; qualifying charitable hospitals and …
When are custom-designed precast concrete components treated as a service rather than a taxable retail sale in Illinois?
A custom component can be treated as special-order property produced in a service occupation only if the purchaser primarily hires the seller for engineering or scientific skill, the item has use or v…
How should Virginia taxpayers report a 2008 NOL that was used under the federal five-year carryback but remained available under Virginia's shorter rule?
They could not subtract the NOL directly from 2010 federal adjusted gross income or make FAGI negative. The Virginia-available carryover had to be claimed as a fixed-date conformity subtraction, limit…
Can an Illinois intermediary use a general contractor's resale number or a minority-participation program to buy HVAC equipment tax-free?
No Illinois sales-tax exemption existed merely because a transaction involved a minority-participation program. If the intermediary bought equipment for resale, it had to give the seller a valid Certi…
When do Illinois construction contractors owe use tax, and what documentation supports exempt-entity or enterprise-zone purchases?
Construction contractors were end users and owed Use Tax on the cost of property permanently incorporated into Illinois real estate. Audiovisual and telecommunications systems sold and installed for o…
What general Illinois exemptions and credits applied to manufacturers and exempt organizations in 2014?
IDOR could not answer the broad questions specifically. It explained that machinery used more than 50% of the time in qualifying manufacturing or assembly could be exempt; exempt machinery purchases a…
Could a Virginia resident avoid a 2010 income-tax assessment by claiming wages were exempt and IRS information lacked federal paperwork approval?
No. Employment income was taxable, the resident's income exceeded Virginia's filing threshold, and the Department could use IRS information to estimate liability when she did not provide adequate reco…
Could buyers of a transferred land-preservation credit avoid interest because Virginia later reduced the easement value or the seller promised indemnity?
No. Virginia timely assessed the couple after the donor and Department agreed to a lower easement value, and statutory interest on the resulting underpayment was mandatory. The donor's private indemni…
Is an unused landlord-funded tenant improvement allowance taxable when the lease permits it only as a credit against rent?
No. The unused landlord-funded allowance was not taxable when the lease permitted only a rent reduction and gave the tenant no cash, property, reimbursement, or other benefit.
Could a Virginia locality deny the BPOL out-of-state deduction merely because the contractor used payroll apportionment to situs receipts?
No. A government contractor using payroll apportionment could still deduct the portion of Virginia-sitused receipts attributable to business in states or countries where it owed an income or income-li…
Could a government contractor recover BPOL tax and claim a current deduction for out-of-state receipts when it used payroll situs?
Yes. Virginia held that payroll apportionment did not eliminate the deduction for qualifying business where the contractor owed income-based tax. It remanded the 2008-2011 refund claims and 2012 deduc…
Could a business-service provider using payroll situs claim BPOL deductions and refunds for qualifying out-of-state receipts?
Yes. Payroll apportionment did not bar the out-of-state deduction. Virginia remanded the 2008-2012 refund and assessment dispute so the county could identify qualifying receipts from states where the …
Did Illinois's 1% rate apply to a motorcycle hand-brake system designed for disabled riders?
Generally yes. Illinois imposed a 1% rate on motor-vehicle modifications that enable a disabled person to drive or assist in transporting disabled persons. IDOR said systems allowing a disabled rider …
When are separately stated furniture delivery or merchandise shipping charges excluded from Illinois sales tax?
A delivery charge was outside the taxable selling price only when the buyer and seller separately agreed to it and the amount reflected actual transportation cost. Merely listing 'shipping' or 'additi…
Were LLC members liable for underreported partnership income when another member kept the books and employees were paid cash?
Yes. Partnership treatment made each LLC member responsible for the member's distributive share of increased income, despite another member's bookkeeping control or the absence of an economic benefit.…
Who owes Illinois use tax when a subcontractor buys and installs drainage tile as part of a pipeline project?
The party contractually required to buy drainage tile for permanent incorporation into real estate was the construction contractor and owed Use Tax on its cost. If the subcontractor bought and install…
Does Colorado charge excise tax (or sales tax) on propane and other liquefied petroleum gas sold for home heating and other non-vehicle uses?
No state fuel excise tax. Propane and other liquefied petroleum gas (LPG) used for home heating or other non-vehicle purposes is not 'special fuel,' so the special-fuel excise tax does not apply; a ve…
Did tax software's automatic annuity death-benefit subtraction prove that a Virginia taxpayer qualified for the refund?
No. Virginia's approval of tax-preparation software meant the program met processing requirements, not that every tax calculation was correct. The annuity subtraction required a qualifying insurance-c…
Can a Georgia city buy water-treatment machinery tax-free and furnish it to its construction contractor without triggering use tax?
Yes. The city could buy water-treatment machinery tax-free when it paid the seller directly by warrant on appropriated funds. Equipment furnished to a contractor remained exempt if it retained its tan…
Can a building-material invoice to an exempt governmental entity also name its contractor or subcontractor as the c/o party?
Yes. Naming a contractor or subcontractor as c/o does not defeat the exemption if the governmental entity remains the billed purchaser and every other direct-purchase requirement is satisfied.
Would out-of-state employees who commuted to Virginia and rented an apartment become Virginia residents?
No, based on the proposed facts. They would retain their out-of-state homes, families, licenses, registrations, banking ties, and intent to return, and would spend no more than 183 days in Virginia. B…
Did leasing homes outside Virginia establish a new domicile when the taxpayer retained Virginia property, licensing, and registration ties?
No. Even if the taxpayer began abandoning Virginia in 2009, she did not establish a new permanent or indefinite domicile in either state where she temporarily leased housing during 2010. She retained …
Did Virginia's 2% Land Preservation Tax Credit transfer fee apply to a sale by individual owners, and could alleged telephone advice excuse it?
Yes. The 2% fee applied to any transfer arising from a sale of Land Preservation Tax Credits by any taxpayer, not only to pass-through-entity transactions. Form LPC-2 said the same. Virginia would not…
Could an advertising business reduce a consumer-use-tax assessment without records supporting its tax-paid, resale, and sampling objections?
No. Virginia assessments are presumed correct, and the taxpayer bears the burden of proving an error. The advertising business received extra time but supplied no records supporting its claims that pu…
Did Virginia definitively decide that a paper mill's winders, slicers, conveyors, packaging stations, and shipping equipment were subject to machinery-and-tools tax?
No definitive item-by-item ruling was made. The stated facts did not show that packaging or shipping equipment was directly used in paper manufacturing, and the winders and slicers also did not appear…
Was a business that bought replacement parts and resold them to mining companies a BPOL wholesaler rather than a retailer or service provider?
Yes. The business took title to replacement parts, paid vendors, and resold the parts to mining companies that incorporated them into industrial processing operations. Virginia treated those sales as …
Did a corporate general partner's voting control make three partnerships part of its BPOL affiliated group under the brother-sister test?
No. The brother-sister test counted ownership held by individuals, estates, or trusts, not the corporation's interest as general partner. Although four shareholders owned all of the corporation, their…
Could a gasoline station avoid sales tax it failed to collect on prepaid telephone cards because it did not know the sales were taxable?
No. Virginia had treated the initial retail sale of telephone calling cards as taxable tangible personal property since July 1, 2004. A dealer that failed to collect the tax remained liable for it, an…
Could New Mexico levy a joint senior checking account used by a taxpayer's mother when he was listed only for emergencies and did not spend its funds?
Yes. Marcus Scott and his 82-year-old mother were both named owners of a multiple-party senior checking account with right of survivorship. Although her retirement and Social Security income funded th…
Could New Mexico assess extra weight-distance tax by comparing PC Miler with ProMiles and choosing whichever mileage was higher in each period?
No. JKL Transportation consistently used industry-standard PC Miler to route trips, invoice customers, pay drivers, and report New Mexico mileage. The Department compared those complete records with P…
Did a county's proposed direct-purchase procedures qualify building materials for its courthouse project for Florida's governmental exemption?
Yes, the stated procedures met the direct-purchase requirements because the county ordered, paid for, took title to, insured, and assumed risk for the materials and issued the required certificates. T…
What did Virginia Tax Bulletin 14-1 say about the enhanced federal EITC and other fixed-date conformity adjustments for 2013 returns?
Virginia extended conformity to the enhanced federal Earned Income Tax Credit for tax years 2013 through 2017, allowing eligible individuals to compute the Virginia credit without a special adjustment…
Are downloaded prewritten software, electronic updates, and monthly cloud subscriptions subject to Georgia sales tax?
No. Prewritten software and enhancements available only by electronic download were not tangible-property sales, and cloud subscriptions were neither taxable services nor transfers of tangible propert…
Is documentary stamp tax due on a deed placing partnership property held in the partners' names into the partnership's LLP name?
No, if the partnership existed before the purchase, partnership assets bought the property, and it was continuously treated as partnership property. The deed then only established record title in the …
Must a Florida linen-rental company collect sales tax on an automatic recurring inventory-maintenance fee?
Yes. The automatic recurring fee guaranteed that linen inventory stayed at the agreed level and was charged even without a specific replacement, so it was part of the taxable rental price.
Could an Illinois resident claim an other-state credit after that state recharacterized wages from an S corporation as the shareholder's distributive income?
Not for the wage portion. The shareholder lived and worked in Illinois, his employment base of operations appeared to be Illinois, and the S corporation reported all of his W-2 compensation as Illinoi…
Is a copper-coated IUD taxable, or exempt as a drug or medicine like birth control pills?
It is exempt as a drug or medicine under Tax Law section 1115(a)(3). This opinion corrects an earlier 2010 ruling: the copper-coated intrauterine device works like a contraceptive drug (its copper rel…
What documentary stamp tax applies when three equal owners deed unencumbered Florida property to an LLC they own equally?
Only nominal documentary stamp tax applied because the parcels were unencumbered, no other consideration was paid, and each transferor kept the same one-third ownership through the LLC.
Were bidis cigarettes that had to be listed in the Virginia Tobacco Directory, making the retailer's contraband-cigarette penalty valid?
Yes. The Portsmouth Circuit Court found that bidis met Virginia's statutory definition of cigarettes and that the unlisted bidis were contraband cigarettes. The retailer failed to prove otherwise, so …
Could a Zuni Navy veteran receive Native American veterans' settlement funds for years without records showing New Mexico tax withholding?
No. Andrus Lesansee was an enrolled Zuni Pueblo member who remained domiciled on tribal land while serving in the Navy from 1981 through 1985, satisfying those settlement-fund conditions. A 1985 Leave…
How is the federal credit for prior year minimum tax recomputed to determine the Nebraska minimum tax credit on a 2013 fiduciary (estate or trust) return?
Recompute the federal prior-year minimum tax credit for the estate or trust using Nebraska's adjustments, then apply a 29.6% factor. Revenue Ruling 23-13-2 tells fiduciaries filing a 2013 Nebraska Fid…
How is the federal alternative minimum tax recomputed to determine the Nebraska minimum tax on a 2013 fiduciary (estate or trust) income tax return?
Recompute the federal fiduciary AMT using Nebraska's adjustments. Revenue Ruling 23-13-1 tells estates and trusts filing a 2013 Nebraska Fiduciary Income Tax Return (Form 1041N) to recalculate the alt…
Did Virginia's Taxpayer Bill of Rights automatically apply to audits and assessments of taxes administered by cities and counties?
No. The Taxpayer Bill of Rights protected processes administered by the Virginia Department of Taxation, not taxes that local officials administer, such as real estate, tangible personal property, and…
How much South Carolina sales tax is due when a dealer sells a motor vehicle or trailer to an out-of-state resident (per SC IL #14-2)?
When a South Carolina dealer sells a motor vehicle, trailer, semitrailer, or pole trailer to a nonresident who will register and license it in their home state, S.C. Code § 12-36-930 limits the South …
How is the federal credit for prior year minimum tax recomputed to determine the Nebraska minimum tax credit on a 2013 individual income tax return?
Recompute the federal prior-year minimum tax credit with Nebraska's adjustments, then apply a 29.6% factor. Revenue Ruling 22-13-3 tells 2013 individual filers to recalculate the federal credit for pr…
How is the federal alternative minimum tax recomputed to determine the Nebraska minimum tax on a 2013 individual income tax return?
Recompute the federal AMT using Nebraska's adjustments. Revenue Ruling 22-13-2 tells 2013 individual filers to recalculate the alternative minimum tax (AMT) from their federal return (Form 6251, or th…
Can a PRIVATELY owned hotel next to Houston's George R. Brown Convention Center still qualify as a 'qualified hotel project' entitled to a 100% state tax rebate for 10 years, even though a private company (not the city) owns the hotel itself?
Yes. The Comptroller ruled that a Houston convention-center hotel PRIVATELY owned by an LLC can still qualify as a 'qualified hotel project' entitled to the 10-year, 100% state sales/use and hotel occ…
Is the federal excise tax on jet fuel included in the price Colorado sales tax is calculated on, or is it backed out?
It depends who the federal excise tax (FET) is levied on. Colorado sales tax is figured on the price charged, but a DIRECT federal tax — one levied on the purchaser — is backed out of the base, while …
Did a governmental owner's proposed direct-purchase procedures qualify materials for a seawall public-works project for sales-tax exemption?
Yes. The owner could buy the materials tax-exempt because it would issue the purchase orders, receive vendor invoices, pay vendors directly, take title at delivery, bear risk of loss, and issue Certif…
What historical filing method did SC Revenue Ruling 14-1 require for same-sex married couples before later court decisions?
In 2014, the ruling required same-sex spouses who filed married federal returns to prepare separate South Carolina returns as single or, if eligible, head of household, using pro forma federal returns…
Did buying through a GSA Schedule make a federal systems contract an indefinite-delivery contract whose task orders received separate true-object tests?
No. The GSA Schedule was only the procurement vehicle; the separate system contract controlled the taxable transactions and was not shown to be an indefinite-delivery contract. Because that 2002 contr…
On a new car, which amounts are taxed -- the trade-in credit, manufacturer's rebate, doc fee, DMV title/registration fees, and the extended warranty?
A trade-in credit reduces the taxable price (it's not taxed) if the dealer takes the trade-in for resale. A manufacturer's rebate does NOT reduce the taxable price -- the full sale price is taxed even…
Was a hosted software subscription accessed only through the Internet subject to Florida sales and use tax?
No. The customer accessed the hosted software only through the Internet, received no tangible software or other tangible personal property, and had no possession or control of the vendor's server.
Were optional Internet-delivered document services and separately stated customer-specific programming taxable when a business also sold printed materials?
No. Optional electronic-document viewing and PDF-transfer services were independent from printed-material sales, delivered through the Internet without tangible property, and exempt. Separately stated…
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