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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Does a Kansas fulfillment center collect sales tax on books it ships for publishers, or do the publishers?
The publishers, not the fulfillment center. A Kansas fulfillment center that only warehouses and ships books it does not own is not a 'retailer' and does not collect Kansas sales or use tax on those s…
Does a manufacturer's purchase of CAD software used for product engineering and design qualify for the Kansas manufacturing exemption?
Yes, if its primary use is engineering, R&D, or product design. The Department found that a manufacturer's purchase of canned AutoCAD software appears to qualify for the sales tax exemption under K.S.…
Which truck-rental invoice charges were subject to Kansas sales tax and the 3.5% vehicle rental excise tax?
For truck rentals of 28 days or less, Kansas sales tax and the 3.5% vehicle rental excise tax used the same gross-receipts base. Fuel, liability insurance, damage waivers, permits, cleaning, IFTA amou…
How is qualified business facility investment computed for the Kansas High Performance Incentive Program (HPIP) investment tax credit when the tax year and the certification period do not run concurrently?
This Kansas Opinion Letter is a brief transmittal note, not a substantive ruling. In response to a request about computing qualified business facility investment at an existing qualified business faci…
Is a nutritional product sold through a multi-level marketing company subject to Kansas sales tax?
Yes. The Department advised that the sale of the nutritional product is subject to Kansas sales tax. Unlike many other states, Kansas taxes sales of groceries and food, so the product is taxable in Ka…
Are dietary supplements and nutritional products sold through a direct-sales company subject to Kansas sales tax?
Yes. The Department advised that sales of the two dietary supplement / nutritional products are subject to Kansas sales tax. Unlike many other states, Kansas taxes sales of groceries and food, so the …
Can a New Mexico subcontractor deduct its construction receipts without the general contractor's nontaxable transaction certificate (NTTC) in hand within 60 days, and does being unable to collect the tax from the customer excuse it?
Mostly no. J.W. Jones Mechanical Contractors, a subcontractor, could deduct its construction receipts under Section 7-9-52 only if it held the general contractor's NTTC — and Section 7-9-43 disallows …
When did Florida's $2,450 documentary-stamp cap begin, and did later new money trigger more tax after the cap was reached?
The $2,450 cap took effect May 1, 2002. For qualifying renewals of notes not secured by a Florida-filed or recorded mortgage, trust deed, or security agreement, no additional documentary stamp tax was…
Can a corporate partner claim Texas franchise jobs/investment credits for the partnership's jobs or investments, and must the business be in a specific industry?
No, a corporate partner cannot take the jobs creation credit (Texas Tax Code Sec. 171.752) or the capital investment credit (Sec. 171.802) based on jobs created or investments made by the partnership.…
Were a county's public-transit equipment head leases, subleases, and related loan documents exempt from Florida taxes?
Yes, under stated conditions. Sales tax did not apply when the head lessees gave resale certificates and the county gave its government exemption certificate. Public-transit leaseholds were exempt fro…
What must a homeowners association show to get the Texas franchise tax exemption, and when has voting control passed to the owners?
Before the Comptroller can grant a homeowners association the franchise tax exemption under Texas Tax Code Sec. 171.082, the association must show that voting control is vested in the owners of the in…
Were separately stated shipping and handling charges taxable on mail-order frozen food exempt from Florida sales tax?
No. Transportation charges were not taxable by themselves, so exempt frozen food had no taxable selling price to which shipping and handling could attach. Shipping associated with a taxable item, such…
What may a vehicle leasing company show a Texas county as proof that motor vehicle tax was paid to another state?
Texas law did not define acceptable proof, so each county tax assessor-collector could decide. When no state-issued proof was available, an original lease showing tax in the payments or a notarized le…
If New Mexico abates the penalty on a business's unpaid gross receipts tax, does that mean the interest must be abated too — and can confusion over an audit refund excuse the interest?
No on both points. Hammond Floors, a flooring business, collected gross receipts tax from customers but stopped filing and paying it from May 2000 through July 2001. The Department had already abated …
Does a company engaged in solar or wind energy qualify for a Texas franchise tax exemption, and what deduction or credits are available?
Yes, potentially. Texas Tax Code Sec. 171.056 exempts a corporation or LLC engaged SOLELY in the business of manufacturing, selling, or installing solar energy devices (as defined by Sec. 171.107), an…
Are food-service management services at a for-profit assisted living facility taxable, and do the elderly-center or meals exemptions apply?
The management services are taxable, but direct meal sales to residents are exempt. A company that manages the food-service operation at a for-profit assisted living facility is providing taxable BUSI…
Are a fitness club's membership dues, personal-training fees, and massage-therapy fees subject to New York State and New York City sales tax?
Membership dues and personal-training fees are not subject to any State or New York City sales tax, but massage-therapy fees are subject to New York City's local sales tax (though still not State sale…
Are a computer company's on-site repair visits, on-site staffing arrangements, service contracts, and telephone technical-support charges subject to New York sales tax?
It depends on whether the work is done on hardware or on software, and whether any nontaxable pieces are separately and reasonably stated on the bill. Repairing or maintaining computer hardware — whet…
Can an off-airport parking lot avoid sales tax on part of its fee by labeling a fixed percentage of the charge as a separate, nontaxable 'transportation' charge for shuttling customers to the airport?
No. Labeling 30% of the periodic parking fee as a 'nontaxable transportation charge' doesn't make it one, because the transportation and parking were never sold separately, the transportation charge w…
We're a mortgage lender developing a 'cost-plus sale' home-financing structure as an alternative to a conventional mortgage: the home-buyer contracts to buy a house, assigns us that purchase contract, we buy the house from the original seller and immediately resell it to the buyer at our cost plus a profit markup (paid off over time, economically identical to mortgage principal and interest), and the buyer gives us a mortgage securing only the amount we financed (not the profit markup). Which of these several transfers -- the original sale, the buyer's assignment of the contract to us, our resale to the buyer, and the mortgage recording -- trigger real estate transfer tax or mortgage recording tax, and on what amount?
Only one of the several transfers is taxable, and the mortgage tax applies to a narrower base than the full resale price. HSBC proposed a 'cost-plus sale' home-financing alternative to a conventional …
We're a fuel oil distributor who didn't know some of our multi-dwelling customers' buildings had commercial space, so we under-collected tax on those deliveries for years. We got assessed and paid the back taxes ourselves -- can we now go after our customers to recoup what we paid, and whose job was it to figure out which units were residential versus commercial in the first place?
Both the distributor and its customers can be held liable, and recoupment from customers is possible but not automatic. Petro, Inc. sold fuel oil for heating multiple-dwelling structures with both res…
Is a fixed fee that an antiques show promoter charges dealers and vendors for temporary booth space a nontaxable real-property rental, or a taxable sale of tangible personal property or services?
The booth-space fee itself is not subject to sales tax — it's a rental or license to use real property, which New York doesn't tax. But that exemption doesn't extend upstream: because the promoter is …
Do a patient-restraint 'Security Vest' and 'Tie-Back Vest,' sold to hospitals and nursing homes, qualify for New York's under-$110 clothing exemption, or as exempt medical equipment?
The vests don't qualify for the clothing exemption, but they do qualify as exempt medical equipment in most sales. Even though patients wear them, their primary function is to serve as a safety restra…
In a multi-tier supply chain for prepaid telephone calling cards, who owes New York sales tax on sales made from 1998-2000, and what happens when resale certificates were never issued between the companies?
It depends on the date of sale and whether a resale certificate was properly obtained. Before March 1, 2000, New York didn't tax the sale of a prepaid calling card itself — tax applied only when the e…
Are a multilevel marketer's dietary supplement capsules, powders, and bars exempt from New York sales tax, and what about its antiseptic gel and its skin-care lotions?
Most of the products are exempt, but two specific lotions are taxable. The bulk of the company's line — capsules, powders, tablets, caplets, and bars marketed as dietary supplements that substitute fo…
Is a company's charge to a day camp for supplying only the labor to cook meals — with the camp buying the groceries, setting the menu, and handling serving and cleanup — subject to New York sales tax?
No. The company's fee is not subject to sales or compensating use tax, because it isn't selling any food, drink, or tangible personal property, and it isn't providing catering — the camp itself buys t…
Does a children's baking-party business have to register as a vendor and collect sales tax on its birthday party packages, which bundle a baking class with snacks and drinks served on-site?
Yes. Baking instruction by itself isn't a taxable service, but because Little Chefs also serves food and drinks (pizza, juice, snacks) to the children for consumption on its premises while the baked g…
Is an uninstalled, portable greenhouse used to farm tilapia fish for food exempt from New York sales and use tax under the farming exemption?
Yes. Raising tilapia fish for sale as food counts as 'farming' under New York's tax rules, and the greenhouse — built over an in-ground pond to control temperature and sunlight for the fish and the al…
Are charges for rehabilitative therapy, X-rays, respiratory therapy, and nurse staffing subject to Kansas sales tax?
No. The Department advised that gross receipts from providing rehabilitative therapy, taking X-rays, respiratory therapy, and nurse staffing are not subject to Kansas retailers' sales tax. Kansas impo…
When a hotel charges for audio/visual equipment (microphones, projectors, screens) used at a meeting, banquet, or seminar, is that sales tax or state hotel occupancy tax -- and does it matter whether the hotel is also catering the food and whether the charge is itemized separately?
It's never a tax-free equipment 'rental' either way (a hotel's A/V equipment charge is NOT treated as renting tangible personal property, since guests never get possession or control of the equipment …
If a retired CUNY employee rolls over pension funds from the Optional Retirement Program into an IRA, is the entire IRA distribution still exempt from New York income tax?
Only in part. The portion of an IRA distribution that represents the original pension contribution rolled over from CUNY's Optional Retirement Program remains exempt from New York tax under Tax Law § …
Can a New York resident who won a slot machine jackpot at an Atlantic City casino and paid New Jersey tax on it claim a New York resident tax credit for that New Jersey tax?
No. The resident credit under Tax Law § 620(a) is only available for tax paid to another state on income actually derived from that state, and casual gambling winnings are not treated as derived from …
Are a swim-and-health club's membership fees subject to New York State or New York City sales tax?
No. Waterside Swim and Health Club's membership fees are not subject to any New York State or New York City sales tax. Members have no ownership interest in the club, no control over its social or ath…
Does the $50-per-member annual LLC filing fee under Tax Law § 658(c)(3) apply to investors who hold only a non-voting contractual economic interest in a portion of a member's interest, rather than actual LLC membership?
No. Under Limited Liability Company Law §§ 102(q), 603, and 604, a person who merely holds an assigned economic interest through a Participating Contract - without being admitted as a member or becomi…
Do distributions from the New York State Deferred Compensation Plan, a governmental section 457 deferred compensation plan, qualify for New York's $20,000 pension and annuity exclusion starting in 2002, and can they be rolled over tax-free into an IRA?
Yes. Effective January 1, 2002, a federal law change (EGTRRA) reclassified distributions from governmental section 457 plans like the New York State Deferred Compensation Plan as pension and annuity i…
Does a foreign (non-Texas) corporation that owns oil-and-gas working (mineral) interests in Texas have franchise-tax nexus, even if an independent contractor operates the interests?
Yes. The Comptroller treats mineral interests as real property for franchise tax purposes, and owning real property in Texas creates nexus for both franchise-tax components - taxable capital under Com…
Should the Kansas cigarette tax be included in the base when calculating retailers' sales tax on cigarettes?
Yes. The Department advised that the Kansas cigarette tax should be included in the taxable base when calculating retailers' sales tax on cigarettes. The reason is that the legal incidence of the ciga…
When a Canadian company designs, engineers, and fabricates structural steel and sells the finished steel to a New York vendor for use in a NY construction project, is New York use tax based on the whole price, or can the design/engineering portion be carved out?
New York's compensating use tax applies to the entire price paid for steel fabricated outside the state and brought in for a construction project, including the cost of design and engineering — even i…
Did the 2002 historic-preservation credit amendments apply to a project begun in 2001 but placed in service during the taxpayer's 2002 tax year?
Yes, on the stated facts. The 2002 amendments applied to tax years beginning after December 31, 2001 and changed the earning event from when project costs were incurred to when the rehabilitation was …
How is Nebraska sales tax charged on cell phone, paging, and other wireless service, and which state gets the tax?
Charges are taxed at the customer's place of primary use. Under Revenue Ruling 01-02-2, Neb. Rev. Stat. §77-2706.02 (Laws 2002, LB 947) imposes Nebraska sales and use tax on mobile telecommunications …
Did Florida documentary stamp tax apply when a loan check and note-and-security agreement were separate and did not expressly incorporate each other?
No. The negotiated check supplied the fixed loan amount, while the separate note-and-security agreement supplied the promise to repay. Because neither document expressly incorporated the other, the De…
Can New Mexico waive a late-payment penalty when a business's ACH tax transfer posted one day late because its office closed for Thanksgiving and its clearing house gave it wrong advice?
No. The negligence penalty stood. Gencon Corporation, a Las Cruces construction company, paid its October 2001 CRS taxes one day late when an ACH transfer initiated on the Saturday after Thanksgiving …
Was a supplemental indenture executed in Florida taxable when it added a subsidiary guarantor but did not amend the indenture or notes or state a sum certain?
No. The described supplemental indenture did not amend the indenture or notes, state that it was an amendment, contain a sum certain, or make an unconditional promise to pay. The Department warned tha…
Which of a campground and recreation center's charges — sports, rentals, cabins, tents, RV sites — are subject to Kansas sales tax?
It varies by charge. Miniature golf and roller skating are taxable as participation in sports (K.S.A. 79-3603(m)); racket and basketball rentals are taxable rental charges. Cabin, hotel, and similar r…
Is a subcontractor's charge to a general contractor for temporary protective pedestrian walkways at a capital-improvement construction site subject to New York sales tax?
It depends on how the arrangement is structured. If the subcontractor is simply renting the walkway equipment to the general contractor (with installation and dismantling as part of that rental), the …
If a curling club converts from a taxable social/athletic club to a tax-exempt organization, does that change whether its membership dues are subject to New York sales tax?
Yes, the change matters a great deal. Once the club qualifies and is certified as a tax-exempt organization under New York's exemption for charitable/educational/amateur-sports organizations, its memb…
Is a contractor's lease of fuel-distribution equipment from the Port Authority — used to fuel and defuel commercial aircraft it doesn't own — exempt from New York sales tax?
Yes. Fueling and defueling services are activities that keep commercial aircraft in a condition of fitness, efficiency, readiness, or safety, so they qualify as exempt aircraft maintenance services — …
Is a candy manufacturer's wastewater pipeline, metering/sampling equipment, and holding tank exempt as manufacturing waste-treatment equipment, or taxable as building materials?
The pipelines carrying wastewater from the plants to the holding tank, the flow metering and sampling equipment, and the holding tank itself all qualify as exempt manufacturing equipment, because they…
Which of a securities printer's corporate documents — prospectuses, proxy materials, SEC forms, offering circulars — qualify as exempt 'promotional materials' when mailed free to shareholders?
It depends on the specific document type. Prospectuses, red herring prospectuses, offering circulars, tender offer documents, private placement memorandums, and Forms 10-K and 10-Q all qualify as exem…
Is freshly extracted wheat grass juice and vegetable juice sold at a health food store's juice bar exempt from New York sales tax as food, or as a health-preservation product?
The juices are not exempt as a special health-preservation product — that exemption is meant for drug-like items, not nutrient-rich foods and beverages. But they are exempt beverages under the ordinar…
Can a cable manufacturer treat the scrap value of a customer's used cable as a tax-reducing 'trade-in' credit against the price of new cable, where the used cable is shipped straight to a third-party scrap dealer instead of back to the manufacturer?
It depends on how the deal is papered. Crediting a customer for the scrap value of its used cable against the price of new cable can qualify as a tax-reducing 'trade-in,' even though the used cable is…
Was documentary stamp tax due on a nonprofit's deed transferring mortgaged real estate as part of a program merger?
Yes. The special warranty deed was taxable because the grantee provided funds to pay off the property's mortgage at closing. The ruling measured consideration at 70 cents per $100 of the mortgage bala…
Can a homeowners association get the Texas franchise-tax exemption if its deed restrictions let some lots be used for commercial or business purposes?
No. The Sec. 171.082 franchise-tax exemption for certain homeowners associations applies only to residential property and does not allow for commercial use. Because this association's original deed re…
Are a corporate aircraft division's aircraft purchases and maintenance services exempt from New York sales tax as commercial aircraft, and are its cost-based intercompany flight charges to affiliates exempt air transportation rather than a taxable aircraft rental?
Yes. The Department ruled that Tropicana's aircraft operations division (SoBe) owns aircraft used over 90% for transporting PepsiCo affiliates' employees and customers for cost-based compensation, so …
Are an aircraft-owning subsidiary's purchases of its aircraft and maintenance services exempt from New York sales tax, and are the operating-cost charges it bills to affiliates for flights exempt as air transportation rather than a taxable aircraft rental?
Yes, once the lease ends. The Department ruled the subsidiary's aircraft qualify as tax-exempt 'commercial aircraft' because over 90% of flight time transports affiliates' employees and customers for …
How is an LLC running a telephone business, and its corporate members, taxed in New York -- under Article 9-A, sections 183/184, or section 186-e?
The LLC, treated as a partnership for New York tax purposes, is not subject to Article 9-A or sections 183/184, but as a provider of telecommunication services it owes the section 186-e tax. Its corpo…
How do the transitional depreciation rules apply to a utility's or power producer's depreciable property held under a synthetic lease?
The synthetic lessee (a qualified public utility or qualified power producer) is treated as owning the transition property, so the transitional depreciation rules apply. For Article 9-A it must add ba…
Can a nonprofit museum get a project exemption for exhibitry materials, and are audio-visual purchases exempt?
Mostly no, with one exemption. A nonprofit museum or historical society does NOT qualify for a Project Exemption Certificate, so a contractor's materials for a museum exhibitry project are taxable — t…
Are a carrier's reciprocal compensation receipts excluded from the section 186-e tax, and are they subject to the section 184 local telephone tax?
Both apply differently. A competitive local exchange carrier's receipts from reciprocal compensation arrangements with other carriers qualify for the sale-for-resale exclusion under section 186-e.2(b)…
Is a trailer-mounted nurse tank exempt from Texas motor vehicle tax when it is used primarily for controlled burning to improve cattle grazing?
Yes. Because the tank was mounted on a trailer and would be used primarily for controlled burning to enhance grass production for cattle, the Comptroller treated it as an exempt farm trailer. The buye…
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