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Aircraft – Alabama House Bill 20 extends the sales and use tax exemption for parts, components and systems which become part of a fixed or rotary wing military aircraft or certified transport category aircraft. The available exemption now extends until May 30, 2027, and includes conversion, reconfiguration and general maintenance services.

Bullion – Alabama State Bill 13 extends the sales tax exemption related to sales of bullion through June 1, 2028. Previously, the exemption was set to expire June 1, 2023. For periods June 1, 2018, through June 1, 2028, gross proceeds from sales of bullion containing at least 80 percent gold, silver, platinum, palladium or some combination of the metals, are exempt from Alabama sales and use tax.

Vehicles – Effective July 1, 2022, sales of travel trailers, campers and house cars are included in the list of vehicles subject to Alabama tax regardless if they are registered outside Alabama, titled outside Alabama, exported or removed from Alabama. In order to qualify as a travel trailer, camper or house car that will be registered or titled in another state, the purchaser must provide documentation to prove the purchaser is not a resident of Alabama.


Manufacturing – Effective April 7, 2022, the California Alternative Energy and Advanced Transportation Financing Authority confirmed the Sales and Use Tax Exclusion Program to be a permanent program moving forward. This program is available for qualifying manufacturers and recyclers for projects and products which create California based manufacturing jobs focused on advanced manufacturing processes, reducing greenhouse gases, air and water pollution, and energy consumption.


Construction – Effective August 10, 2022, the Colorado Department of Revenue issued House Bill 22-1024 extending the existing sales and use tax exemption related to construction and building materials used for the building of public works to home rule cities. The construction and building materials must be sold to a contractor or subcontractor and utilized in connection with the building, erection, alteration or repair of a public school.


Nonprofit – The Indiana Department of Revenue updated Information Bulletin No. ST40 clarifying a for-profit entity is not able to purchase tangible personal property exempt from sales tax, regardless of whether the for-profit plans to donate the tangible personal property to a nonprofit. Many for-profit entities donate items to be used as a prize or auction item for fundraising under the nonprofit. In order to purchase tangible personal property exempt from sales tax, the nonprofit must purchase the item directly from the vendor.

Nursing Home – The Indiana Department of Revenue updated Information Bulletin No. ST43 addressing sales tax requirements for nursing homes, clarifying de minimis charges and providing updated statutory references.


Shipping and Handling – Effective July 1, 2022, Kansas House Bill 2239 specifically identifies separately stated shipping and handling charges as exempt from sales and use tax. Separately stated shipping and handling charges itemized on an invoice are excluded from the tax base and may be treated as a single line item for taxability purposes.


Services Kentucky House Bill 8 recently updated the state’s list of taxable services. Effective January 1, 2023, enumerated services include photography, website design and hosting, prewritten computer software access, personal background checks, personal fitness training, cosmetic surgery and body modification, bodyguard, marketing, telemarketing, photography, research polling, lobbying, executive employee recruitment, ridesharing, vehicle renting and electric vehicle services. House Bill 8 includes a full listing of taxable services within the state. House Bill 8 also establishes a 60-day amnesty program for various taxes including sales and use tax. The amnesty program is valid October 1, 2022, through November 29, 2022.


Digital Advertising – The Maryland Comptroller recently posted the 2022 Maryland Form 600D, Declaration of Estimated Digital Advertising Gross Revenues Tax. The new tax form is in place to declare and remit estimated tax on gross revenues derived from digital advertising services in Maryland. Estimated tax payments are now required for any Maryland person or business with annual gross revenues exceeding $1 million attributable to digital advertising services.


Food and Beverage – The Michigan Department of Treasury issued Michigan Revenue Administrative Bulletin No. 2022-4 which replaces Michigan Revenue Administrative Bulletin No. 2009-8. The updated release includes an explanation of sales and use tax related to food and prepared food. The bulletin also includes specific examples of exempt food and food ingredients and taxable prepared food.


Accelerated Payment – The Minnesota Department of Revenue recently announced the June accelerated payment for sales and use tax is no longer required due to a law change. Instead, taxpayers must file and pay their June 2022 sales and use tax returns by the standard date of July 20, 2022.


Self Service Car Wash – The Missouri Department of Revenue recently issued Letter Ruling 8185 confirming the taxability of a self-service car wash operation. A self-service car wash does not qualify as the sale of tangible personal property or as a taxable service within the state of Missouri. Therefore, the related fee charged for a self-service car wash operation is exempt from Missouri sales and use tax.

New Jersey

Accommodations – Effective March 1, 2022, a new casino room daily surcharge of $2.00 will be imposed on any casino hotel room located in Atlantic City. The new daily surcharge fee is in addition to the current sales tax, occupancy tax, tourism promotion fee and casino room fee. The new surcharge is imposed on the casino hotel, however, the hotel may pass along the surcharge to room occupants. If the casino hotel passes along the surcharge, the fee is taxable regardless of whether it is itemized on the customer’s invoice.

South Carolina

Healthcare – The South Carolina Department of Revenue (SC DOR) confirmed the retail sale of injectable biologics as exempt from sales and use tax in Private Letter Ruling #22-1. The SC DOR exempts any “injectable medications and injectable biologics, so long as the medication or biologic is administered by or pursuant to the supervision of a physician in an office which is under the supervision of a physician.” Therefore, since the sale of the biologics was found to aid in diagnosis, the items were exempt from South Carolina sales and use tax.


Economic Development – The Tennessee Department of Revenue and Department of Economic and Community Development announced a new incentive program. Qualified productions may apply for a point of purchase sales tax exemption on certain eligible goods and service purchases.

Marketplace Facilitator – Effective March 23, 2022, the Tennessee Department of Revenue updated the marketplace facilitator definition to exclude an auctioneer from qualifying as a marketplace facilitator. However, auctioneers may still be required to collect Tennessee sales and use tax if they create nexus through other scenarios.


Precious Metals – Effective July 1, 2022, Utah House Bill 268 provides a sales and use tax exemption for the sale of certain items which contain a minimum amount of precious metal and are used as a currency but do not constitute legal tender. The item must contain 50 percent or more gold, silver or platinum metallic content.


Data Center Exemption – The Washington State Legislature recently passed House Bill 1846. Effective June 9, 2022, purchases of eligible server equipment and related labor and services for specific data centers may qualify for a sales and use tax exemption. The data center must be located in a county with a total population less than 800,000. The exemption is also available to specific businesses and tenants contracted to construct, install, repair, alter or significantly improve eligible power infrastructure at an eligible data center. The exemption is available until July 1, 2038.

Sales Tax Deferral Program Clean Technology – The Washington State Legislature recently passed House Bill 1988. Effective July 1, 2022, investment projects involving clean technology manufacturing, clear alternative fuels production or renewable energy storage may qualify for deferred state and local sales and use taxes. An eligible investment project includes at least $2,000,000 in either qualified buildings or qualified machinery and equipment for new, renovated or expanded manufacturing operations. It also includes facilities to produce clean fuels, renewable hydrogen, green electrolytic hydrogen or green hydrogen carriers and storage facilities. Applicants must submit all required paperwork and claims prior to initiating construction. Each project will be reviewed individually to determine qualification.

Previous Updates

March 2022 Updates


Alternative Fuel Sources – In March 2022, the Colorado Department of Revenue (CO DOR) released Private Letter Ruling No. PLR-21-007 which confirmed shredded tires and railroad ties used as alternative fuel sources are not exempt from sales tax. The taxpayer manufactures cement from raw materials and its plant utilizes shredded tires and railroad ties, acquired from third parties, to serve as an alternative fuel source. The following activities are exempt from Colorado sales and use tax: electricity, coal, gas, fuel oil, steam, coke or other nuclear fuel for use in processing, manufacturing and various specified activities. Since shredded tires and railroad ties are not included as an exempt item, the CO DOR deemed the items to be tangible personal property subject to Colorado sales tax.


Marketplace – The Illinois Department of Revenue revised the Leveling the Playing Field for Illinois Retail Act Flowchart to include guidance around marketplace sales. The flowchart provides details for retailers initiating sales through a marketplace, as well as outside of a marketplace.


Healthcare – The Indiana Department of Revenue published Indiana Revenue Ruling No. ST 22-01 confirming glucose test strips and at home COVID test kits as taxable items within Indiana. Glucose test strips, lancets and lancing devices are not considered "blood glucose monitoring supplies" as they do not meet the statutory requirement of "furnished without charge." In addition, glucose test strips and at home COVID test kits are considered diagnostic devices as opposed to a treatment. Therefore, neither item meets the qualification for exempt medical supplies or durable medical equipment leaving both items to fall as taxable in the state of Indiana.


Dealerships – The Kentucky Department of Revenue amended Regulation 230 concerning the taxability of sales incurred by motor vehicle body shops. Any charge for labor or service related to installing or applying a taxable repair part is subject to Kentucky sales and use tax. If there is not a related sale of taxable tangible personal property, any charge for labor or service related to installing or applying a repair part is not subject to Kentucky sales and use tax. The regulation includes further examples and scenarios.

Manufacturing – The Kentucky Department of Revenue amended Regulation 120, which provides guidance around the exemption requirements for new machinery. Kentucky imposes a four-prong test which confirms the qualification of the machinery exemption. The following must be met in order to meet the exemption: 1) it shall be machinery; 2) it shall be used directly in the manufacturing or industrial processing process; 3) it shall be incorporated for the first time into a) plant facilities established within the state; or b) the premise of alcohol beverage producers in the state which include a retail establishment licensed under KRS 243.030 or KRS 243.040; and 4) it shall not replace other machinery.

Publishing – Effective February 1, 2022, the Kentucky Department of Revenue amended Regulation 250 related to property utilized within the publication of newspapers. The regulation reviews the requirements for the related sales and use tax exemption and identifies what is included in the manufacturing process.

Repair – Effective February 1, 2022, the Kentucky Department of Revenue finalized Regulation 150, which provides guidance for repairers and reconditioners of tangible personal property. The regulation defines the sales and use tax requirements for parts and materials utilized in connection with tangible personal property. The changes include refined definitions, clarification of tax treatment related to service and installation charges, provides relevant examples, identifies de minimis parts and material and clarifies the tax treatment of extended warranty services.

Sourcing – The Kentucky Department of Revenue updated Regulation 190 clarifying the market sourcing position for sales of tangible personal property delivered outside the state. The regulation discusses tax implications for transactions consummated in Kentucky, as well as tax implications for transactions consummated outside of Kentucky.


Manufacturing – The Missouri Department of Revenue amended 12 CSR 10-111.060 focusing on available sales and use tax exemptions for material recovery processing. Any available sales and use tax exemption for machinery and equipment utilized for recovery processing plants will not extend to motor vehicles utilized on highways, or materials and supplies utilized in building construction.

North Carolina

Marketplace Facilitator – The North Carolina Department of Revenue (NC DOR) recently issued Private Letter Ruling 2022-0001 which confirmed a taxpayer qualified as a marketplace facilitator. The NC DOR imposed a two-part test to identify marketplace facilitators within the state. The first test requires a taxpayer to own or operate a marketplace which lists inventory and provides items available for sale within an online platform. The second test requires a taxpayer to provide payment processing services. Since the taxpayer satisfied the two-part definition of a marketplace facilitator, the state confirmed their categorization as a valid marketplace facilitator.


Consumers Use Tax – The Wisconsin Department of Revenue recently updated Fact Sheet 2104 which reviews the state's consumers use tax requirements. The fact sheet provides the underlying purpose of consumers use tax, confirms the applicable use tax rate, identifies special rules for local use tax rates, reviews the taxable base, includes instructions to remit accrued use tax, identifies available credits for taxes paid to another jurisdiction and more.

Occasional Sale – Effective June 1, 2022, the Wisconsin Department of Revenue will increase the exemption allowance for non-profit organizations. The current exemption is set at $10,000 which includes sales of tangible personal property and services. The new exemption will be set at $50,000.

February 2022 Update


Governmental Entities – Effective February 13, 2022, the Alabama Department of Revenue amended a rule to clarify that a "governmental entity" includes any airport authority which is otherwise exempt from sales and use tax. The sale of tangible personal property to be incorporated into realty with an airport authority is exempt from sales and use tax. In addition, the exempt purchase of construction materials for use on construction projects for governmental entities apsplies to contracts for the construction of highways, roads and bridge projects.

Leases and Rentals – The Alabama Department of Revenue issued Notice: Alabama Rental Tax Guidance for Rental Facilitators indicating rental facilitators must collect and remit rental tax for leases made to Alabama customers or comply with the notice and reporting requirements. Rental facilitators are defined as persons or entities which facilitate third party rental transactions of Class II or Class IV property. Rental facilitators are required to apply for a special rental tax account to comply with the requirements.

Local Taxes – The Alabama Department of Revenue (AL DOR) issued a recent notice confirming the AL DOR will no longer administer the Town of Clayton sales and use tax, effective February 1, 2022. Beginning with tax periods ending February 28, 2022 (due March 21, 2022), the Town of Clayton sales and use tax will be separately administered. These taxes may continue to be remitted online through the My Alabama Taxes portal.


Credit Card Purchase Refunds – In Colorado, if a retailer remits sales tax from a credit card sale and later writes the debt off as uncollectible, any sales tax remitted related to the uncollectible sale may be utilized as a credit against the retailer's subsequent sales tax obligation. In the recent court case Capital One v. Colorado Department of Revenue, the plaintiff financed purchases made with a private label credit card. Some of the purchases defaulted and the plaintiff sought a refund of sales tax remitted by the retailers. The Colorado Department of Revenue denied the refund claim and the plaintiff appealed. Ultimately, the Court of Appeals affirmed the judgment confirming the credit card company is not a retailer and did not remit the original sales tax, thus was not entitled to claim a refund of such sales tax. The credit card company and retailer are separate entities and do not act as a single unit.

District of Columbia

COVID-19 – The District of Columbia Office of Tax and Revenue (DC OTR) issued DC OTR Tax Notice 2022-02 advising the sale of at home COVID-19 test kits as exempt from sales and use tax.


Credits and Incentives – The Kansas governor signed State Bill 347, Attracting Powerful Economic Expansion Bill. This program hopes to entice large capital investments from businesses engaged in specified industries. New business facilities and operations located in Kansas and large capital investments in new national headquarters located in Kansas may qualify for the available credits and incentives. There are several incentives including a sales tax exemption for construction costs of a qualifying business facility.


Economic Nexus – Effective January 1, 2022, Maine eliminated the 200 transaction threshold from its economic nexus guidelines. Historically, remote sellers and marketplace facilitators were required to register to collect and remit sales tax if annual gross sales exceeded $100,000 or the seller completed at least 200 separate transactions. Under the new law, the transaction threshold is completely eliminated and only the $100,000 gross sale threshold applies.


Peer-to-Peer Car Sharing – The Comptroller of Maryland issued a Tax Alert on February 1, 2022, regarding peer-to-peer car sharing. The alert includes information around the definition of a short term vehicle rental, the eight percent sales tax rate, tax base and other pertinent information.

Sales Tax Calculation – The Comptroller of Maryland recently issued Business Tax Tip #8. The worksheet includes information regarding tax imposed on new modular buildings, alcoholic beverages, short term passenger car and recreational vehicle rentals, electronic smoking devices and other items.


Food and Beverage – Effective February 1, 2022, the Michigan Liquor Control Commission confirmed any seller, authorized as a distribution agent or wholesaler, may provide their licensee number to a retailer as proof to claim a sales tax exemption.


COVID-19 – The Minnesota Department of Revenue (MN DOR) recently confirmed at home COVID-19 kits as a taxable item. The MN DOR does not provide a sales tax exemption for the purchase unless the kit requires the test be processed via a lab facility. COVID-19 kits which are administered under the supervision of a health care professional and billed through insurance are exempt from Minnesota sales and use tax. COVID-19 kits purchased by any public or private nonprofit school are exempt from Minnesota sales and use tax as well.

New York

Advertising – The New York Division of Taxation (NY DOT) released Decision DTA No. 828619 clarifying taxability of the taxpayer's advertising effectiveness measurement services as information services. The taxpayer provided services to clients which measured the effectiveness of advertising. The NY DOT audited the taxpayer and assessed tax on the services claiming they were taxable as information services. The taxpayer filed an exception with the state arguing the primary function of the service was to provide consulting services and confirmed its services should not be considered information services. The department concluded: 1) the taxpayer's evaluation of advertising campaigns involved the collection and dissemination of taxable information service; 2) the taxpayer's provision of recommendations was ancillary to these services; and 3) though the Administrative Law Judge concluded the taxpayer provided information which was personal and individual, the taxpayer was not entitled to the sales tax exclusion when it "substantially incorporated" the information into reports for others by selling the information. Accordingly, the NY DOT denied the taxpayer's protest.

Clothing – Effective March 1, 2022, the New York Department of Finance issued Publication 718-C identifying exempt clothing and footwear. Within New York, any piece of clothing or footwear sold for less than $110 per item is exempt from sales and use tax at the state level. The items may also be exempt from sales and use tax at the local level if the local jurisdiction follows state guidance.


Manufacturing – The Commonwealth of Pennsylvania recently denied the manufacturing exemption for a taxpayer's purchase of machinery for a frozen food provider. In Quality Driven Copack, Inc. v. Commonwealth of Pennsylvania, the Commonwealth confirmed the taxpayer's operation process did not meet the state statutory definition of manufacturing thus rendering the machinery as taxable.


Quarries – The Tennessee Department of Revenue (TN DOR) recently issued Revenue Ruling 21-12 confirming equipment utilized to extract minerals at a quarry qualified for the industrial machinery exemption available within the state. Any taxpayer claiming the exemption must follow proper procedure prior to claiming the exemption, including submitting an exemption form to the TN DOR for each qualified location.

January 2022 Updates


Manufacturing – In a recent case, United Launch Alliance, LLC v. Alabama Department of Revenue, the Alabama Tax Tribunal found certain purchases by a rocket manufacturer qualified for the reduced manufacturing rate. The manufacturer purchased helium and nitrogen used in functional testing and leak testing of launch vehicles. The purchases qualified for the reduced machine rate of 1.50 percent instead of the standard 4.00 percent general state sales tax rate. The gases performed integral, distinct and independent functions in the manufacturing process.


Drop Shipment - Effective November 30, 2021, the California Department of Tax and Fee Administration amended Regulation 1706 clarifying marketplace sales are generally not considered a drop shipment transaction. The regulation also provides additional guidance around drop shipments and methodologies to overcome the presumption a seller qualifies as a drop shipper.

Manufacturing - Effective December 27, 2021, the California Department of Tax and Fee Administration issued amendments to the regulation regarding Manufacturing and Research and Development Equipment. The changes include expanding the definition of a qualified person, qualified tangible personal property, as well as expanding the partial exemption qualifications. The sunset date for the partial exemption historically listed June 30, 2022 but has now been extended to June 30, 2030.

Marketplace Facilitator - Effective January 1, 2022, the California Department of Tax and Fee Administration revised Publication 109, Internet Sales for marketplace facilitators. Currently, marketplace facilitators are required to register to collect, report and pay applicable sales and use tax. However, moving forward marketplace facilitators should also register to obtain accounts to collect, report and pay applicable fees on their retail sales of certain items, outside of sales and use tax.

Sales and Use Tax Exclusion Program - Effective December 9, 2021, the California Alternative Energy and Advanced Transportation Financing Authority published emergency regulation amendments around the Sales and Use Tax Exclusion Program for Alternative Source, Advanced Transportation and Advanced Manufacturing projects. The amendments expire June 8, 2022 and additional details may be found here.


Vehicles - Beginning January 1, 2022, peer-to-peer car sharing programs must collect and remit sales tax in connection with rentals of motor vehicles. Peer-to-peer car sharing programs are required to register in each county in which the business is located. Additional information may be found in Florida Tax Information Publication No. 21A01-14.


Aircraft - Effective November 2, 2021, the Illinois Department of Revenue (IL DOR) amended a regulation to reinstate the aircraft maintenance exemption. The exemption spans January 1, 2010 through December 31, 2024. However, the IL DOR will not allow a claim for credit or refund after February 5, 2020 for taxes paid during the period January 1, 2015 through February 4, 2020.

Food and Beverage - Effective December 3, 2021, the Illinois Department of Revenue amended Ill. Admin. Code § 130.2050 to increase the average cost of free meals provided to employees. Historically, the free meal was limited to $0.75 but has since been raised to $3.50 for purposes of determining the employers use tax liability. Tax should be paid at the rate in effect on the date the employer purchased the goods provided to employees free of charge.

Vehicles - Effective January 1, 2022, the Illinois Department of Revenue issued Informational Bulletin No. FY 2022-03 removing the $10,000 trade in credit limit for sales and purchases of first division motor vehicles. For sales and purchases made on or after this date, the credit for the trade in of a first division motor vehicle may now reflect the full value of or credit given for the trade in.


Energy - On November 19, 2021, the Iowa Department of Revenue published updated guidance around solar energy equipment exemptions. The revised guidance provides additional details regarding the type of equipment which qualifies for the exemption and the type of equipment which remains taxable.


General Taxability - The Maryland Comptroller's Officer recently issued an updated list of tangible personal property and services subject to sales and use tax within the state. Although the list is not all encompassing, it should be utilized as a guide in determining taxability for each category.


Taxable Base - The Minnesota Department of Revenue released Sales Tax Fact Sheet 167 providing guidance around coupons, discounts, rewards, rebates and other forms of payments. Often, it can be difficult for a retailer to determine the appropriate taxable base in order to calculate sales tax properly. The fact sheet defines the various types of categories and explains how each category affects the taxable base.


Fitness Center - The Missouri Department of Revenue (MO DOR) recently published Letter Ruling 8159 confirming fitness center fees are exempt from sales tax. In the taxpayer's specific fitness center, customers are always engaged with an instructor during the workout. Therefore, the MO DOR clarified membership fees, charged by a health and fitness center, are not subject to sales tax as the fitness center's services qualify as instructional classes.

New Mexico

Manufacturing - The New Mexico Taxation and Revenue Department issued FYI-275 around allowable deductions for sales to manufacturers. Under New Mexico Statute 1978 § 7-9-46, a seller may deduct receipts from sales to a manufacturer of tangible personal property which become an ingredient or component part of a manufactured product. The FYI-275 guide includes details around use of nontaxable transaction certificates, reporting deductible receipts, several specific examples and taxpayer specific information.

New York

Contractor - The New York Department of Taxation and Finance released advisory opinion TSB-A-20(69)S, noting the taxpayer's charges for overseeing a third party contractor installation alongside charges for assessing environmental conditions of real property were not subject to sales and use tax. The taxpayer inquired whether either of the charges were subject to sales tax. The department concluded: 1) the design and monitoring of remediation systems constitute nontaxable "engineering services" to the extent the services were legally required to be performed by a licensed engineer; 2) charges solely for overseeing the installation of remediation systems were not subject to sales tax; 3) the taxability of charges for any sampling and testing services were dependent on the purpose for the sampling and testing services; and 4) charges for consulting services unconnected to any planned remediation were not subject to sales tax.

Information Service - The New York Department of Taxation and Finance (NY DOT) published Determination DTA No. 829434 confirming a corporations annual membership fee was not subject to sales and use tax within the state. The taxpayer, an out of state corporation, provided healthcare navigation services. The NY DOT initially issued a notice of determination finding the taxpayers services as taxable information services and imposed a related penalty. The taxpayer applied for a redetermination hearing after asserting its membership fees should be considered nontaxable services. The department concluded: 1) the division's determination regarding the taxpayer's membership fee had a rational basis; 2) the taxpayer's service was not enumerated in the tax law; 3) the division's assessment did not impose a prohibited tax on internet access; 4) the taxpayer failed to establish the tax and penalty imposed for the fixed assets and expenses were incorrect; and 5) the taxpayer showed the primary purpose of its fees was the provision of a non-taxable service, not the taxable sale of software. Accordingly, the NY DOT partly granted the petition in favor of Taxpayer.

Medical Equipment - The New York Department of Taxation and Finance released advisory opinion TSB-A-20(68)S clarifying taxability of a spinal cord stimulator device, comprised of an implant, a wireless remote and charger. The taxpayer sold the system to medical service providers and inquired whether the system was exempt from sales tax as a prosthetic device or medical equipment. The department concluded: 1) the system was not a prosthetic aid but was medical equipment because the implant mitigated and alleviated physical incapacity; 2) the wireless remote and charger were designed specifically for use with the implant and had no other functionality or purpose; and 3) the taxpayer was required to collect taxes on sales of the system to medical service providers because purchases of the product by medical service providers were not exempt purchases of medical equipment.

Software - The New York Department of Taxation and Finance released advisory opinion TSB-A-20(70)S, noting the taxpayer's sales of hosting websites and applications were not subject to sales and use tax. The taxpayer inquired whether its services of creating, operating and hosting websites and applications accessed on mobile devices were subject to tax. The department concluded: 1) website development services were not enumerated services subject to state and local taxes; 2) hosting fees charged by a third party where the taxpayer paid and passed through to its clients were not enumerated services subject to tax; 3) the taxpayer's optimization and reporting service was an information service, but it was not taxable because the taxpayer prepared reports based on information individual in nature and unique to each client; and 4) the taxpayer's mobile website development services and professional services involved updates to a mobile website and were not taxable.

North Carolina

Manufacturing - The North Carolina Department of Revenue (NC DOR) recently published Private Letter Ruling 2021-0026 and Private Letter Ruling 2021-0027, both of which focus on the sales tax exemption for mill machinery used within the state. The NC DOR reiterated the taxpayers purchase of machinery utilized in the production phase qualified as exempt mill machinery due to the specific factors listed in both letter rulings. However, any machinery not utilized in the production phase, including machinery utilized prior to or subsequent to the production phase, will not qualify for the exemption. Each piece of equipment and machinery should be reviewed carefully to confirm how and where in the process the machinery is utilized.

Rhode Island

Fire Hydrant Fee - The Rhode Island Division of Taxation recently issued Declaratory Order 2021-02 ruling a fire hydrant fee charged for private fire hydrants located on a residential premise as exempt from sales and use tax. The taxpayer provides water supply services through metered sales and is responsible to operate and maintain the water supply systems. The fire hydrant fee, implemented by the Public Utilities Commission, charges taxpayers for public fire protection services and applies to both public and private fire hydrants. The taxpayer is required to charge, collect and remit tax on all taxable sales as a retailer within the state. However, since the fees relate to operating and maintaining water infrastructure and relate to an exempt sale of water, the fire hydrant fee is exempt from sales tax.


Exemption Certificate - The Tennessee Department of Revenue issued Notice #22-01 around drop shipment documentation rules previously implemented. Effective January 10, 2022, a Tennessee supplier selling to an out of sate dealer's Tennessee customer may accept a resale certificate issued by another state or a fully completed Streamlined Sales and Use Tax Exemption Certificate with a home state ID. The new change will allow an out of state seller to purchase an item for resale from an in state seller without paying sales tax.

Software - The Tennessee Department of Revenue (TN DOR) recently issued Letter Ruling # 21-10 detailing charges for services related to furnishing remotely accessed software. The taxpayer provides onboarding services including integrating, configuring and mapping orders within the customers software system. The taxpayer also provides software training and content fees. The taxpayer reached out to the TN DOR to confirm taxability of the various charges. The TN DOR confirmed all charges are taxable, as the true object of the service is access to and use of computer software. The line items identified above are all considered an essential and integral part of the purchase of the related software and the software would not function correctly without the proper configuration. This is an important reminder of the viewpoint any DOR may take with a taxpayer invoice during review. The true object of the transaction must be considered and may taint the taxability of certain exempt line items.


Digital Goods - The Wisconsin Department of Revenue published Publication 240, Digital Goods discussing taxability of products transferred electronically, not including prewritten computer software. The publication states charges for access to an online database or website which allows the user to perform searches of the database are taxable sales of news or information products. The publication includes definitions, sourcing instructions, details around bundled transactions, exemptions and more.

December 2021 Updates


Marketplace Facilitator – The Arkansas Department of Finance and Administration recently released Legal Opinion # 20190703. This opinion provides information around marketplace facilitator obligations and clarifies how regulations apply to government agencies. In addition, the opinion strictly states there is no longer leniency around compliance for marketplace facilitators as economic nexus regulations are in full effect in Arkansas.


Click-Through Nexus - Effective November 1, 2021, Notice 21-23 was issued by the Kansas Department of Revenue. This notice eliminates the click-through nexus provisions for affiliated persons related to sales and use tax collections. With economic nexus in effect, Kansas no longer needs to rely on

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