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 an Illinois-headquartered employer have to withhold Illinois tax when its nonresident truck drivers performed all services in another state?
No, if the drivers truly performed all services outside Illinois. Section 304(a)(2)(B) required some Illinois service before compensation could be treated as paid in Illinois. The employer's claim tha…
What must a South Carolina datacenter do to qualify computers, equipment, software, and electricity for the sales-tax exemption?
A certified South Carolina datacenter can exempt qualifying computers, equipment, hardware, software, electricity, and electrical infrastructure if it meets the statute's facility design, notice, inve…
Were regularly mailed envelopes containing coupons and advertisements from multiple vendors subject to Florida sales and use tax?
No. The mail-outs qualified for the exemption for advertising materials distributed free by mail in an envelope because they contained only ads from at least 10 vendors and were mailed regularly.
Did an independent contractor that improved real property and resold furniture to a related company have to register as a Florida dealer?
Yes. The company was an independent contractor, not the related company's agent. It owed use tax on materials consumed in real-property work and had to collect sales tax on furniture and furnishings s…
How should an Illinois propane delivery truck using a propane-diesel conversion system calculate tax on propane burned for highway travel?
Propane bought for off-highway use was not subject to Motor Fuel Tax, but any amount later burned to propel a vehicle on Illinois public highways became taxable. IDOR said the best calculation general…
Could an Illinois delivery leg carrying a mix of out-of-state-origin and Illinois-origin freight count toward the rolling-stock exemption?
Yes, in both scenarios presented. Whether 90% or only 10% of the commingled freight originated outside Illinois, the trips or miles could count toward qualifying rolling-stock use if the carrier docum…
Did an Illinois hotel owe Hotel Operators' Occupation Tax when a guest redeemed loyalty points for a complimentary room?
Generally no, when Hotel Operators' Occupation Tax was remitted on the original paid stays and the reimbursement fund was wholly owned by the hotel franchisor. The answer could change if a third party…
Did an Illinois end user's factory pickup make a drop shipment taxable when the manufacturer had adequate resale proof from the out-of-state distributor?
No. If the Illinois manufacturer obtained adequate resale documentation from the out-of-state distributor, IDOR would treat the manufacturer's sale as a sale for resale and would not require it to col…
Were colocation rack-space rent and a percentage pass-through of the provider's electricity bill taxable in Illinois?
The GIL did not expressly decide whether rack-space rent was a real-property charge or a tangible-property lease. It gave Illinois's general true-lease and conditional-sale rules. On electricity, it s…
Were sweetened protein drinks containing milk and protein bars containing flour taxed as food rather than soft drinks or candy in Illinois?
Yes under the definitions explained in the 2013 GIL. A sweetened beverage containing milk or milk products was excluded from “soft drinks” and treated as food. A bar containing flour was excluded from…
Were fees for cashing payroll, government, or tax-refund checks subject to Illinois sales or service tax?
No. The described customer received cash equal to the check's face value minus a fee, and no tangible personal property was transferred as part of the service. IDOR said Illinois sales and use taxes d…
Which commonly controlled out-of-state dealers had to begin collecting Virginia sales tax on September 1, 2013?
Historical rule: an out-of-state dealer was presumed required to collect Virginia sales and use tax when a commonly controlled person maintained a Virginia distribution center, warehouse, fulfillment …
How much of related-party royalties escaped Virginia's add-back when affiliates paid tax elsewhere or licensed third parties?
The taxpayer received a full exception for royalties paid to IHCA and IHCB because their substantial unrelated-party licensing met the statutory third-party exception. For IHCC, only the portion corre…
Are a medical-records company's retrieval and copying fees taxable in Colorado, and must the company collect tax?
Not taxable, and the company doesn't have to collect tax. The Department ruled that a company's charges for retrieving and copying medical records aren't subject to Colorado sales tax no matter how de…
Could a temporary-housing company lease furniture tax-free from suppliers when it acquired each item solely to re-lease to a customer?
Yes. Supplier leases were exempt resale transactions because each furniture package was acquired solely for a specific customer's re-lease. The company still had to collect sales tax on the rental cha…
Does an out-of-state wholesaler lose Public Law 86-272 protection in Colorado when its in-state employee supervises a sales team, oversees major-account contracts, and develops sales strategy?
It depends — possibly. Public Law 86-272 still protects an out-of-state seller of tangible personal property even if its in-state employee does things closely related to soliciting orders, but protect…
After Colorado reinstated the exemption for electronically delivered software on July 1, 2012, are digital e-books, music, and movies also exempt, and how is tax applied to ASPs and software accessed over the internet?
It depends on what's delivered. Effective July 1, 2012, Colorado exempts electronically delivered computer SOFTWARE from sales and use tax — but digital BOOKS, MUSIC, and MOVIES remain taxable tangibl…
A company leases equipment to contractors and bundles in services (training, bookkeeping, advertising) and a trade-name license under one contract. Are the services and license taxable, or only the equipment lease?
Yes — the services and the license are taxable, because they are bundled into a single, indivisible lease of taxable equipment. Tennessee taxes the full 'sales price' of a lease or rental of tangible …
Could a geotechnical testing company deduct all claimed construction services and avoid interest by treating an ordinary field audit as a managed audit?
No. Grandin Testing Lab did not prove its remaining construction-service deductions. Services sold to government agencies were not deductible under the cited construction rule; church services remaine…
For Nebraska Advantage incentives, when must a taxpayer use E-Verify for new employees, and can employees be verified after the fact or counted if transferred in?
You must use E-Verify starting at the application date, and you cannot fix it later. Revenue Ruling 29-13-3 explains that for the Nebraska Advantage incentive acts (applications filed on or after Octo…
Which related-entity management fees qualified for Virginia's BPOL intercompany-receipts exemption?
Only fees from ASC and VALP7 qualified. The taxpayer and ASC had identical 100% ownership, while three common owners held about 95% identical interests in the taxpayer and VALP7, satisfying both broth…
Was a sale between an out-of-state distributor and out-of-state dealer taxable when goods were drop-shipped to the dealer's Florida customer?
No. The seller-to-dealer transaction occurred outside Florida's jurisdiction. The Florida recipient instead had resale-collection or consumer use-tax duties, and the seller had to retain invoices and …
How does Kansas sales tax apply to pallets manufacturers buy or lease to store and ship their products?
It depends on the pallet and the exemption claimed. 'Nonreturnable' pallets and packing materials a manufacturer buys are exempt as an 'ingredient or component part' (a sale for resale) under K.S.A. 7…
Could a consolidated group exclude nonallocable expenses tied to Subpart F and gross-up income from Virginia's foreign-source subtraction formula?
No for 2008-2010. Virginia required the subtraction formula to include all deductions not definitely allocable from the relevant Forms 1118, even when some related income—Subpart F dividends or foreig…
Did the Servicemembers Civil Relief Act preserve a husband's out-of-state domicile for Virginia tax in 2009 and 2011?
No. Military orders alone did not preserve the husband's former domicile after his conduct showed a Virginia change: he filed resident returns, obtained and renewed a Virginia driver's license, regist…
Could an employer reduce its withholding audit for snow-removal contractors while avoiding employer and fraud liability?
Only in part. Virginia removed three in-period snow-removal invoices that documented payments to subcontractors, but the employer's incomplete records could not establish that other individual payees …
Could an employer reduce a withholding assessment or shift all liability and fraud penalties to its former officer?
No. Later payroll documents did not prove a lower withholding rate for July 2006-September 2010 because the employer could not identify the employees or supply period records. The corporation remained…
Did New Mexico's active-duty military pay exemption cover a commissioned U.S. Public Health Service officer because PHS is part of the uniformed services?
No. The U.S. Public Health Service Commissioned Corps is part of the broader uniformed services, but New Mexico's exemption covered active-duty service in the armed forces. The federal definition of a…
Did an FDA-regulated cold-and-compression system qualify for Illinois's reduced medical-appliance tax rate?
No. IDOR said a qualifying medical appliance must directly substitute for a malfunctioning part of the human body. Although the cold-and-compression system was described as FDA-regulated and used for …
When a company installs fire sprinkler/alarm systems into buildings through subcontractors and bills clients time-and-material, who owes Colorado sales tax?
The company's time-and-material charges to clients are taxable; its payments to subcontractors are not. A company that installs, repairs, and inspects fire sprinkler and alarm systems built into build…
Did a pass-through telecommunications company owe Virginia's 2008 minimum tax after Virginia Cellular?
Yes. Although Virginia Cellular had held the earlier statute insufficient to impose the minimum tax on pass-through telecommunications companies, the 2009 General Assembly enacted House Bill 2378 retr…
Were certified pit liners, storage tanks, and silt fence bought after July 1, 2006 still exempt pollution-control equipment?
Yes. Virginia reversed its earlier view that the DMME-certified pollution-control exemption expired July 1, 2006. A later Department ruling and 2013 legislation clarified that the exemption continued …
Are a sign company's entry towers installed at car dealerships taxed as real-property fixtures, and does lump-sum vs. time-and-material billing change who pays?
If the entry towers are FIXTURES — tangible personal property so affixed to a building that it can't be removed without substantial damage (Reg 39-26-102.15) — then Colorado's CONTRACTOR rules govern,…
How did South Carolina source an engineering firm's service receipts when employees and contractors worked in multiple states?
The engineering firm had to apportion its service income using a gross-receipts factor based on where the engineering work was performed. Work performed in South Carolina counted in the South Carolina…
Is the electronic renewal of a software license taxable when the original prewritten software was delivered on a CD but the renewal involves no new tangible delivery?
Yes — the renewal is taxable. For software sold on or after July 1, 2012, Colorado taxes prewritten 'canned' software only if it's (1) pre-packaged for repeated sale/license, (2) governed by a tear-op…
Did a corporation substantiate 2006-2008 charitable carryovers and related-party interest and factoring deductions?
Not yet. Virginia upheld the auditor's partial add-back of related-party factoring fees and would not consider a valid-business-purpose exception because the corporation had not followed the statutory…
Was a corporation formed under tribal law automatically exempt from Virginia corporate income tax and filing?
No automatic exemption was established. Virginia treated the tribally chartered entity as a corporation subject to state income tax because it was unclear whether the IRS considered it an integral par…
Did cold deli trays and party platters packaged with lids qualify for Virginia's reduced food-tax rate?
Yes. Virginia Tax Bulletins 05-7 and 99-11 treated cold deli trays and party platters packaged in containers with lids or tops as food for home consumption, whether sold in single or multiple serving …
For New Mexico's alternative-energy manufacturers credit, did the employee lookback run from the date Emcore signed its application or the later date it mailed it?
The mailing date controlled. Emcore signed its alternative-energy manufacturers credit application on July 24, 2011, when it had added at least one employee over the prior year, but delayed submission…
Could a convenience store overturn a sales-tax assessment by disputing the audit sample without producing supporting records?
No. The auditor compared returns, cash-register receipts, and sales spreadsheets over a three-month sample and found the store's spreadsheets did not reconcile to gross sales reported on its returns. …
Did federal Medicare Part D premium-tax preemption exempt prescription-drug sales to private Part D plans from Illinois sales and service taxes?
No. IDOR said Medicare Part D plans operated as private insurers, not government purchasers, so drug sales to them did not qualify for Illinois's government exemption. The Department also said Service…
Could a cable wholesaler claim the manufacturing exemption for machinery used by its separately incorporated sister company?
No. The wholesaler bought and owned the machinery, but its separately incorporated sister company used it to manufacture specialized products. The purchaser itself performed no manufacturing and could…
Was a Virginia sales-tax appeal timely when postmarked nine days after the 90-day deadline?
No. The assessment was dated July 24, 2012, making October 22 the last day to file a complete administrative appeal. The taxpayer's October 31 postmark was nine days late. Virginia strictly enforced t…
Did Maryland-Virginia reciprocity exempt a Maryland resident's Virginia wages when she also had Virginia S-corporation income?
Yes. Maryland-Virginia reciprocity kept the taxpayer's Virginia wages exempt even though she also had Virginia-source S-corporation income. She could not claim a Virginia credit for Maryland tax, but …
What did Illinois's 2013 annual survey say about nexus, BOGO and coupon discounts, and seminar or webinar charges?
For promotions, unreimbursed discounts reduced taxable gross receipts, manufacturer-reimbursed coupons did not, and a BOGO sale was taxed only on the amount actually received when no one reimbursed th…
How did Illinois tax data-center cabling installation, termination, testing, labeling, and inventory services?
IDOR did not classify the described cabling tasks or state which tax method applied. It explained that pure services without tangible-property transfer are outside retail tax, while property transferr…
Which restaurant-franchise charges for hosting, software, hardware, faxing, online ordering, and shipping were taxable in Illinois?
IDOR did not provide an item-by-item answer. Pure services without tangible-property transfers generally were outside retail tax, while transferred property followed Service Occupation or Use Tax rule…
Could a beneficiary subtract monthly survivor-annuity payments as Virginia annuity death benefits for 2007-2009?
No. Virginia limited the historical subtraction to federally taxable death benefits paid in a lump sum under an annuity contract between a customer and an insurance company. The beneficiary received m…
Could a Virginia locality issue one group BPOL license to itinerant merchants and exempt merchants at sponsored events?
Yes, conditionally. A locality could create an umbrella subclassification for itinerant merchants operating together for five or fewer days and divide the $500 fee, because no merchant's charge exceed…
Could Virginia hear county BPOL and BTPP appeals when the county gave incomplete appeal notice and the taxpayer skipped required notice?
No. The county's letter omitted the required appeal and collection notice, so it was not a proper final local determination. The taxpayer also had not given the county the required 30-day notice befor…
Could a film worker exclude unexplained Schedule C income from New Mexico gross receipts tax by saying he had mixed W-2 wages into the business-income figure?
No. Kevin St. John reported $23,630 of 2006 Schedule C business income but no New Mexico gross receipts tax. He proved that $16,607 of contractor receipts were covered by timely NTTCs, and employee wa…
Did an RV traveler change his domicile from New Mexico to Nevada for personal income-tax purposes, and did reliance on an attorney excuse penalties?
No domicile change was proved. New Mexico remained the taxpayer's center of daily life despite his Nevada RV lot and declarations of intent. He owed income tax and interest, but penalties were abated …
Could a required intermediary be ignored so a one-time sale of business equipment qualified for Illinois's occasional-sale exemption?
IDOR did not decide. The buyer argued that the intermediary was only a conduit and should be ignored under J1 Aviation, leaving a nontaxable occasional sale between non-retailers. The Department said …
How did Virginia's annual withholding option work for employers whose workers performed only household service?
Beginning with wages paid on or after January 1, 2013, a qualifying household employer could elect annual Virginia income-tax withholding without the former $5,000 quarterly-payroll cap. The employer …
Could Virginia estimate a grocery store's taxable nonfood sales when the store had no records for most of the audit period?
Yes. With no records for 2009-2011, Virginia could use the best information available. Auditors reasonably projected nonfood sales from two agreed observation days, a 6% barcode-error test, and untaxe…
Is selling customers online access to fill-in forms templates on my web site -- with no software copy delivered -- subject to NY sales tax?
Yes. Charging customers to access forms templates on your server, fill them in with their own data, and download the populated forms is a sale of prewritten computer software, which NY treats as taxab…
Did a timely $2,801.96 income-tax refund claim survive when the Department did nothing for 120 days and the taxpayers did not protest or sue within the next 90 days?
No. Henry and Krystyna Kalka timely filed a $2,801.96 refund claim on December 21, 2011 after the Department itself identified their 2007 overpayment and said a check would be mailed. The Department t…
Were free promotional tobacco products and early-payment cash discounts included in the manufacturer's sales price for Virginia's 2010 tax?
No for the 2010 assessment. Free promotional products had no sale for consideration and therefore no manufacturer's sales price on which to calculate the tax. Cash discounts allowed and taken for earl…
Was an LLC's sole officer personally liable for sales-and-use-tax and litter-tax liabilities discovered after the business closed?
No. Although the taxpayer was the LLC's sole officer and owner, the audit did not identify the sales-and-use-tax and litter-tax liabilities until 18 months after the business had closed and its debts …
Could an individual challenge Virginia's 2008-2009 estimated income-tax assessments after the 90-day appeal deadlines?
No. The taxpayer appealed the 2008 assessment more than a year after its April 4, 2012 deadline and appealed the 2009 assessment after its November 27, 2012 deadline, so both applications were barred.…
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