State Tax Rulings
Free state tax letter rulings and advisory opinions with plain-English summaries, full citations, and the original source on every page.
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Could Estes Spehar Design use a late Type 5 NTTC for billboard advertising after an audit employee said its Type 2 certificates and records looked okay during the 60-day period?
No. Billboard placement was a service, so the customer's Type 2 property-resale certificate did not cover it; a Type 5 service-resale NTTC was required. Estes obtained that certificate in January 2003…
A wholesaler stores goods in Connecticut with an unaffiliated fulfillment company and drop-ships them to an out-of-state retailer's Connecticut customers -- must the wholesaler collect Connecticut sales tax, or does the fulfillment house exclusion relieve it?
The wholesaler must collect Connecticut sales tax, and the fulfillment house exclusion does not save it. Under the 'drop shipment rule' (Conn. Gen. Stat. § 12-407(a)(3)(A)), when a wholesaler delivers…
How does an insurance agency get the Texas franchise tax clearance the Department of Insurance requires for a license - a Certificate of Account Status or a No Nexus Letter?
It depends on whether the agency is doing business in Texas. The Texas Department of Insurance requires a franchise tax clearance before licensing an insurance agency. A corporation doing business in …
Does a community federation or umbrella organization qualify as a tax-exempt 'religious organization' under the Kansas sales tax act?
No. A community federation or umbrella organization that supports a religion — but is not itself a church, synagogue, or mosque and is not made up exclusively of such congregations — does not qualify …
Does the Kansas vehicle rental excise tax apply to truck rentals, and how does the 28-day rule work?
The 3.5% vehicle rental excise tax applies to truck rentals for 28 days or less; rentals for more than 28 consecutive days are exempt. Rather than relying on a customer's stated intent, a rental compa…
How is a publisher of free community magazines taxed on printing costs, advertising sales, and bartered ad space in Kansas?
As the final consumer of a free publication, the publisher owes tax on the printing. Under K.A.R. 92-19-12(d), a company that prints and distributes magazines free of charge is the final user of the m…
Are crane services taxable in Kansas, and how does renting a crane with or without an operator affect the tax?
It depends on what the contract requires. Crane services that only lift property and set it in place are not installation or application services and are not subject to Kansas sales tax. But if you co…
Are sales of weed barrier fabric used for soil conservation subject to Kansas sales tax?
Yes, weed barrier fabric is subject to Kansas sales tax. The soil-erosion exemption (K.S.A. 79-3606(mm)) is limited to seeds and seedlings, fertilizers, pest-control chemicals, and services — it does …
Is a charge for computerized handwriting analysis at a fair booth subject to Kansas sales tax?
No. Charges for computerized handwriting analysis are not subject to Kansas sales tax. It is not a taxable amusement admission (K.S.A. 79-3603(e)), not a fee for participation in sports, games, or rec…
Did percentage rent based on hotel room revenue enter taxable rent under a mixed-use hotel ground lease?
Yes. Base rent, additional rent, and incentive rent based on room revenue all entered the lease's total rent. Florida then applied the mixed-use allocation so tax reached the portion attributable to n…
Can a veterinary-drug distributor sell drugs and medicine to New York veterinarians tax-free as a 'sale for resale,' when those veterinarians in turn resell the products directly to farmers under a drop-ship program?
No. Even though the veterinarians are reselling the drugs directly to farmers (through the distributor's 'Pharm Link' drop-ship program), New York has a special rule specifically for veterinarians: an…
Were fabricated variable message signs installed for FDOT tangible personal property or real-property improvements, and who owed tax?
They were real-property improvements under the attachment-focused law discussed in the ruling. The contractor, not FDOT, owed tax on materials and manufactured cost and did not collect sales tax from …
Could a mechanic treated as a 1099 contractor obtain the employee-wage gross receipts tax exemption by correcting only his New Mexico return after the IRS amendment period had expired?
Yes. The work schedule, supervision, employer premises, equipment, uniform, and exclusive relationship showed Douglas Leach was an employee despite receiving Form 1099 and filing Schedule C. The IRS r…
How should an internet advertising company apportion its various revenues — banner and click ads, commissions, subscriptions, hosting, and licensing — for Texas franchise tax?
At the time, the Comptroller treated nearly all of these internet revenues as receipts from performing a service, sourced to where the service is performed — so a company doing all its advertising wor…
Can sandblast sand consumed on an exempt construction project be purchased free of Kansas sales tax with a project exemption certificate?
Yes. Sandblast sand can be purchased exempt from Kansas sales and use tax with a valid project exemption certificate, because the sand is consumed on an exempt project. Under K.S.A. 79-3606(d), when a…
Does a charitable educational corporation qualify for a Kansas sales tax exemption on its purchases?
No. A charitable educational corporation that raises funds to support public and community education does not qualify for a Kansas sales tax exemption on its purchases. Kansas grants only certain spec…
Did a Texas resident employed as a federal customs inspector at New Mexico's Santa Teresa Port of Entry owe New Mexico income tax on those wages?
Yes. Section 7-2-3 taxed a nonresident's income from employment within New Mexico, and controlling New Mexico precedent allowed taxation of federal employees working in the state. Owens worked at the …
Did Kansas repeal its succession tax, and what should estates do about returns already filed?
Yes. 2003 House Bill 2005 (New Section 49) retroactively repealed the Kansas succession tax that had applied to estates of decedents dying on or after June 6, 2002. The Department asked such estates t…
Could nonprofit ARCA avoid $769.46 of penalty and interest when its bookkeeper went on leave, no backup was assigned, and one CRS payment was 22 days late after 17 years of good compliance?
No. Interest was mandatory from the November 25, 2001 due date until payment, and failing to arrange coverage for the absent bookkeeper was negligence. ARCA's nonprofit status and otherwise exemplary …
Was Tom Growney Equipment liable for negligence penalty after its manager selected ACH instead of electronic check, failed to initiate the transfer, and did not verify two large online CRS payments?
Yes. New Mexico's instructions distinguished electronic checks, which authorized the Department to debit the account, from ACH transfers, which the taxpayer had to initiate. The manager assumed New Me…
A custom kitchen and bathroom counter-top fabricator asked the Department to walk through four common transaction types — installing for a general-contractor customer with or without a resale/capital-improvement certificate, doing manufacturer-paid warranty repair work with the manufacturer's own materials, and the same warranty work using some of the fabricator's own materials — and explain exactly who owes sales tax, on what, and what paperwork controls each scenario.
It depends on the certificate the fabricator receives and whether the installed counter top is a genuine capital improvement (intended to be permanent). With a proper Certificate of Capital Improvemen…
Is a contract capacity charge adjustment (and related interest) received by an unregulated utility taxable as gross operating income under section 186-a, and in what year?
The capacity charge adjustment is gross operating income subject to the section 186-a utility tax; the related interest is not. A cash-basis utility includes the adjustment in the year it is received;…
Is a company's sale and installation of energy-saving 'Motorboss' motor controllers exempt from New York sales tax when wired onto a customer's exempt production machinery, and does it matter that the same controllers are sometimes installed on non-production equipment like automatic doors or escalators?
When Motorboss motor controllers are installed onto machinery that already qualifies for New York's production-equipment exemption, the controllers themselves 'assume the identity' of that exempt mach…
Are subscription fees a company charges health plans and hospitals to access its online database of physician credentialing information taxable as an information service, even though the underlying data comes from each physician individually?
Yes. Even though each physician's credentialing data starts out as that individual's own information, once a company collects it into a shared database and sells subscription access to multiple health…
Is a caterer's separately billed charge for a wedding-ceremony room taxable, when the ceremony happens in one room and the catered reception happens in another room at the same venue?
Yes. Even though the ceremony-room charge is billed separately from the reception and covers a different room used only briefly for the ceremony itself, the Department treats a caterer's whole event —…
Does New York's manufacturing exemption cover an Internet ad-serving company's purchases of servers, modems, and routers used to run its ad-delivery platform and store client data?
Mostly no. Computer hardware used to run an Internet ad-delivery service (housing client data, serving ads, tracking users) doesn't qualify for New York's manufacturing exemption, because delivering a…
Can an interstate trucking company get a refund of New York diesel motor fuel tax on the fuel its trucks burn while idling to load and unload cargo or to drop and hook trailers on private or restricted property?
No. The diesel motor fuel a trucking company burns while idling its vehicles to keep the motors warm during loading, unloading, and dropping or hooking trailers is not refundable, even when that happe…
How is income a pharmaceutical parent recognizes under the IRC Section 936 Profit Split Method sourced for the Texas franchise tax earned-surplus gross receipts factor?
The Profit Split Method (PSM) income splits into two categories that source differently. The parent's share of the split profit is a receipt from the use of an intangible: it is a gross receipt (Tax C…
What did the original Florida ruling say about a pool warranty covering both equipment and real-property improvements?
The original ruling said an unallocated warranty covering both taxable equipment and exempt real-property improvements was fully taxable, while a warranty covering only real-property improvements was …
Were lease-to-own security-system contracts true leases, and when was Florida sales or use tax due?
They were financed sales, not true leases. For a system predominantly treated as tangible personal property, tax was due on the full sales price when the agreement began, not on each monthly payment. …
Was a contractor's charge for disassembling, removing, packing, and arranging shipment of customer-owned equipment taxable?
No. The contractor disassembled and removed customer-owned equipment, discarded related debris, packed the equipment, and arranged shipment out of state without selling tangible personal property to t…
Does an out-of-state government agency, or the company it leases light rail cars from, owe Utah corporate franchise tax if the agency subleases those cars to Utah Transit Authority?
The out-of-state government agency subleasing the rail cars owes no Utah corporate franchise tax, because it isn't a federally-taxed 'corporation' at all. But the Commission could NOT yet rule on the …
Does a religious organization carrying out a church's ministry qualify for the Kansas sales tax exemption, and how must exempt purchases be made?
Yes. A religious organization that is exempt under I.R.C. 501(c)(3) and carries out the ministry of the church meets the criteria in Notice 99-14 and qualifies for the Kansas sales tax exemption under…
Did a country club prove that its recurring member capital assessment was exempt from Florida admissions tax?
No. The club had not shown that the proposed charge met every requirement for a nontaxable capital assessment. The record left unclear whether the assessment was for a specific amount, whether proceed…
Did an assigned airport lease qualify for Florida's historical airline cargo-loading real-property tax exemption?
Yes, but only conditionally. The certified airline had to actually use the airport property, its affiliate agent had to make lease payments on the airline's behalf, and each exempt area had to be used…
Can a film production company buy or rent equipment, props, and construction materials tax-free in Utah, the way some other states offer a film-production tax rebate?
No blanket exemption exists. Utah has no legislatively authorized sales-tax rebate program for film productions like some other states offer. A production company can buy tax-free only items that phys…
Must a school collect Kansas sales tax on gift bag sales and on admissions to its sporting events?
Yes to both. The gross receipts from a school's sale of gift bags are subject to Kansas sales tax because no exemption applies, and the school is likewise obligated to collect sales tax from spectator…
Was software sold and delivered only through an internet download subject to Florida sales tax?
No. On the documented 2003 transaction, the seller emailed an unlock code and the customer downloaded the software from a web server, with no physical product delivered. Florida therefore found no tax…
Was documentary stamp tax due when a trust transferred mortgaged Florida property to a new LLC for a 100% membership interest?
Yes. The LLC was not a named beneficiary of the trust, and the trust transferred legal title in exchange for a 100% LLC membership interest. Florida therefore treated the conveyance as taxable, using …
Did Florida's residential electricity exemption apply to timeshare units, master meters, and short-term occupants?
Yes, to the extent the electricity was used solely for residential household purposes. Meter type and utility rate did not change the result, and short-term occupants could qualify by making the unit …
Is a city's lease of pilot-study water filtration equipment exempt under the Kansas manufacturing machinery and equipment exemption?
It appears to be exempt. So long as the leased filtration equipment is used to treat water the city sells to its water utility customers, the lease qualifies for the Kansas 'manufacturing machinery an…
Were a private club's optional locker, golf-club cleaning and storage charges, and mandatory capital-improvement fees subject to Louisiana sales tax?
Separately stated locker space and golf-club cleaning and storage were not taxable services. Mandatory capital-improvement fees were taxable because members had to pay them for club access. Refunds of…
Was equipment sold below the seller's cost taxed on cost or on the separately stated customer price?
Florida treated a below-cost equipment transfer as a retail sale and calculated sales tax from the separately stated customer price, not the seller's higher cost. If the equipment was given away for n…
Which well-site services performed by a hot oiler are subject to Kansas sales tax, and which are exempt?
It depends on what is serviced. Maintenance services performed on processing equipment located at a well site are exempt, but services to feeder lines, gathering systems, and pipelines are taxable — a…
Were an aircraft owner's charter proceeds taxable rent or nontaxable proceeds under a management agreement?
They were not aircraft-rental payments. Florida found a principal-agent management relationship because the owner bore nearly all economic risk, paid operating costs, retained oversight rights, and re…
How did PLR 03-006 apply the 2002 Louisiana film investor and employment credits to a layered LLC production and credit-allocation structure?
The investor credit arose when qualifying investment was made, post-completion funding counted only against bona fide debt, and written LLC agreements could specially allocate credits. The official hi…
Was documentary stamp tax due when unencumbered trust property ultimately moved into a new LLC?
Yes when the property entered the LLC. A preliminary deed from the trust to its existing beneficiaries was exempt to their prior beneficial shares, but their later deed to the LLC was taxable on fair …
Are window coverings like blinds, drapes, and plantation shutters subject to Utah sales tax when sold with installation, and does it matter which type of covering it is?
It depends on the specific type of window covering, based on whether it becomes part of the real property upon installation or stays personal property. Custom-built plantation shutters generally becom…
If an S corporation withholds and remits Utah tax on behalf of its nonresident Electing Small Business Trust (ESBT) shareholders, are those trusts still required to file their own separate Utah returns?
No, they can elect not to. Utah already required the S corporation to withhold and remit tax on behalf of its nonresident shareholders, including nonresident trusts, on Form TC-20S. What was previousl…
Is the labor to erect and remove rented scaffolding at a job site taxable in Utah?
Yes, in almost every real-world case. Renting scaffolding is a taxable rental of tangible personal property, and charges for delivering, setting it up, and tearing it down are ordinarily just part of …
If a Utah-registered wholesaler drop-ships products directly to a reseller's Utah customers, does the wholesaler have to collect Utah sales tax when the reseller itself has no Utah nexus?
No, as long as the resale is properly documented. In a drop-shipment where a reseller (not the wholesaler) is the one actually selling to the Utah end customer, the reseller — not the wholesaler doing…
Are labor services to install a flue for a manufacturer's industrial oven exempt from Kansas sales tax?
The Department did not grant an exemption. It concluded that the 'installation' services described — venting a manufacturer's industrial oven through a flue exiting the roof — were really the roofing …
What are a finance company's Kansas sales and use tax duties under a conditional sales contract or purchase order financing arrangement?
A conditional sale is taxed on the full selling price when the goods are transferred, with separately stated finance charges excluded. A finance company financing such a deal isn't required to collect…
Does fabricating and installing a roof curb for a manufacturer's oven flue qualify for the Kansas manufacturing machinery and equipment exemption?
No. Fabricating, installing, and flashing a roof curb for an oven flue is taxable roofing work on the building and does not qualify for the manufacturing machinery and equipment exemption in K.S.A. 79…
Does an out-of-state corporation moving into a New York empire zone qualify as a new business eligible for a refund of the empire zone wage tax credit?
Yes. After a planned recapitalization left more than 50% of its voting stock owned by entities not subject to New York franchise tax, and given that it was not substantially similar in operation or ow…
How do Texas tax rules differ for street-legal motorcycles and off-road units when dealers charge fees, warranties, freight, and setup labor?
Street-legal units were taxed under Chapter 152, while dirt bikes, ATVs, go-karts, and similar off-road units remained Chapter 151 property. That split changed the taxability of documentary fees, inve…
Was documentary stamp tax due when a corporation transferred unencumbered stores to a new S corporation for its stock?
Yes. Shares of the new corporation were issued in exchange for the stores, so Florida treated the real-property deed as taxable on fair market value even though the new corporation was initially wholl…
Did converting a New York general partnership into a Florida or New York LLC trigger Florida documentary stamp tax?
No, if the statutory conversion complied with the governing Florida or New York law. The same entity continued and its Florida real property vested in the converted LLC by operation of law, so no deed…
Could a city buy public-library construction materials tax-free under its direct-purchase procedures?
Yes, if the controlling documents were fully executed and the city remained the purchaser in substance and form. The city had to issue purchase orders with its exemption number, receive vendor invoice…
Must a corporation add back to its entire net income the interest it pays on a loan from an individual shareholder who owns more than 50% of its stock?
No. There is no provision in Article 9-A that requires a corporation to add back to federal taxable income the interest it pays to an individual shareholder -- even one owning more than 50% of the sto…
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