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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I'm a 99% limited partner in a partnership that owns one piece of commercial real estate worth $51 million (with $41 million in mortgages). I'm considering transferring my entire limited partnership interest into an irrevocable grantor retained annuity trust (GRAT), which will pay me an annuity for seven years and then pass the remaining trust principal to a discretionary trust for my husband and children. Does either transfer -- into the GRAT, or later out of it -- trigger New York's Real Estate Transfer Tax?
Two different answers for the two transfers -- taxable going IN to the GRAT, exempt coming OUT. Petitioner held a 99% limited partnership interest in a partnership whose only asset was commercial real…
Can an auditor adjust a corporation's Texas earned surplus based on a federal Form 1139 tentative-refund application carrying back an NOL?
Yes, an auditor may adjust the corporation's net taxable earned surplus. The taxpayer filed a federal Form 1139 (Application for Tentative Refund) carrying back NOLs, which reduced a prior-year charit…
In a section 338(h)(10) stock sale, is a subsidiary's actual distribution of unwanted assets to its parent treated as part of a complete liquidation for Article 9-A?
It follows the federal treatment. Where a target corporation actually distributes unwanted assets to its selling parent in connection with a section 338(h)(10) stock sale, and the distribution is trea…
Were charges for high-speed satellite downloading, bundled or satellite-only Internet access, dedicated lines, and purchased Internet access taxable in the four scenarios presented?
No. Downloading was an excluded information service, Internet access was protected by the then-applicable federal moratorium, dedicated lines were sourced outside Louisiana, and purchased Internet acc…
Does the federal FSC Repeal and Extraterritorial Income Exclusion Act of 2000 affect the Texas franchise tax, and how is a Foreign Sales Corporation treated?
The federal FSC Repeal and Extraterritorial Income Exclusion Act of 2000 has no effect for Texas franchise tax purposes. Texas franchise tax is calculated under the Internal Revenue Code of 1986 as in…
When a subsidiary with federal NOLs liquidates into its parent, do the losses carry over to the parent for Texas franchise tax?
No. A parent (P) bought all the stock of a subsidiary (S) that had unused federal net operating losses (NOLs), then liquidated S into P with non-recognition under IRC Sections 332 and 337, and under I…
When a Texas parent's LLC (taxed federally as a partnership) sells all its assets, is the gain included in the parent corporation's Texas franchise-tax receipts?
No. The taxpayer (a corporation) owns an LLC that elected to be taxed federally as a partnership; the LLC sold all of its telecommunications assets to a buyer, and the taxpayer did not sell any of its…
Does a water company's discounted (bargain) sale of open space land and conservation easements to the State and a nonprofit qualify for the open space land donation tax credit, and how is 'use value' measured given the land's restrictions?
Yes -- the discounted (bargain) sale qualifies for the credit, and 'use value' is measured net of the land's restrictions. A water company that sells Class II/III land and Class I conservation easemen…
For an interstate ferry crew and onshore staff, whose wages are subject to Connecticut income tax withholding and Connecticut income tax, given the federal law that preempts state taxation of vessel crew?
Federal maritime law (46 U.S.C. section 11108) controls the ferry crew. For masters and seamen who work on the interstate ferries (including those with de minimis onshore duties), Connecticut CANNOT w…
Does a local 501(c)(3) charity that helps cancer patients qualify for a Kansas sales-tax exemption?
No. The Department advised that a local charity that assists cancer patients — even with federal 501(c)(3) status — does not qualify for a Kansas sales-tax exemption. Exemptions are narrowly construed…
Does a 501(c)(3) charity that grants wishes to seriously ill children qualify for a Kansas sales-tax exemption?
No. The Department advised that a local chapter of a wish-granting charity for children with life-threatening illnesses — even with federal 501(c)(3) status, a charitable solicitation license, and a s…
Does the newly enacted federal Job Creation and Worker Assistance Act of 2002 change the Texas franchise tax?
No. The new provisions of the federal Job Creation and Worker Assistance Act of 2002 have no effect for Texas franchise tax purposes. Texas franchise tax is calculated under the Internal Revenue Code …
Are sales from Texas-Mexico border duty-free stores, picked up in 'No Man's Land,' Texas receipts for franchise tax even though the goods are exported?
Yes. Sales of goods from border duty-free stores (Class 9 U.S. customs bonded warehouses) - where a store employee delivers the goods to the customer in 'No Man's Land' at the border - are Texas recei…
When were sales or leases of kinetic-therapy and pressure-reduction medical beds exempt from Florida sales tax?
Beds sold or leased for an individual patient's use under a physician's prescription were exempt. A hospital or treatment facility's purchase for general on-premises use was taxable. A facility could …
What must a cooperative (organized as an LLC) show to get the Texas franchise-tax cooperative-association exemption, and can it use the marketing-association exemption instead?
To qualify for the Texas franchise-tax exemption for a cooperative association under Tax Code Sec. 171.075, the cooperative must be incorporated under (or, if foreign, abide by the provisions of) the …
Must a museum collect Kansas sales tax on tour-ticket admissions and gift-shop sales?
Yes to both. The Department advised that a museum must collect Kansas sales tax on the sale of tour tickets that admit people to the museum, because K.S.A. 79-3603(e) taxes the gross receipts from adm…
Does warehousing products in Texas for less than a week qualify as a 'necessary delay in transit,' or are the receipts subject to the throwback rule?
The Texas warehousing here is not a 'necessary delay in transit,' so the receipts are Texas sales subject to the throwback rule. Franchise Tax Rules 3.549(e)(41)(G) and 3.557(e)(37)(G) recognize no Te…
Does a nonprofit providing housing and job-training services qualify for the Texas franchise-tax charitable exemption?
No, not under the state charitable exemption. To qualify under Texas Tax Code Sec. 171.062, a corporation must devote all or substantially all of its activities to the alleviation of disease, poverty,…
Did a nominee company owe Florida annual intangible tax on claim-expense-fund assets it held as agent for an exempt insurer?
No. The nominee itself was not an insurer, but it held the assets only as agent for a licensed motor-vehicle service-agreement company that qualified as an exempt insurer. Because the principal had no…
How did Florida tax a long-term vehicle lease after a vehicle leased in another state was moved to and registered in Florida?
Florida allowed credit when the other state required an upfront like tax from the lessee and allowed no refund after removal. If that tax rate was lower than Florida's state and applicable surtax rate…
Did a publisher owe Florida sales tax on the paper, printing, folding, and binding used to produce a free apartment advertising guide?
No. The Department reviewed the guide and found that its regular free distribution through newsstands in public venues, primarily as apartment advertising, satisfied Florida's exemption for qualifying…
Could a school board buy materials tax exempt for additions at three elementary schools under its proposed direct-purchase procedures?
Yes. The procedures made the school board the purchaser because it issued purchase orders with its exemption number, received direct invoices, paid vendors directly, took title and liability at job-si…
Could a school board buy materials tax exempt for a junior-high media-center project under its proposed direct-purchase procedures?
Yes. The procedures made the school board the purchaser because it issued purchase orders with its exemption number, received direct invoices, paid vendors directly, took title and liability at job-si…
When are an interior designer's design fees, product charges, and real-property improvement work subject to Florida sales tax?
Standalone consultation and design fees were not taxable when no tangible personal property was sold with them. Fees that were part of a furniture or other property sale were taxable even if separatel…
Does a personal shopper who buys and delivers items for a customer charge Kansas sales tax on the service fee?
No. The Department advised that personal-shopping services — buying and delivering groceries, gifts, restaurant food, flowers, toys, and similar items for the customer who hires you — are not an enume…
Are concert/show tickets given away in barter (for advertising, airtime, or sponsorship) subject to Kansas sales tax?
It depends on whether the ticket is exchanged for value. Kansas taxes barter because 'selling price' (K.S.A. 79-3602(g), K.A.R. 92-19-46) is the total consideration given — including by exchange or ba…
Could an enterprise-zone business claim Florida's property-tax credit when an affiliated LLC owned the building and paid the assessed ad valorem tax?
No. The affiliated LLC owned the building, was assessed for the ad valorem tax, funded the mortgage escrow, and held the tax receipt. The operating business's rent and additional expense payments did …
Can a cigarette retailer advertise a manufacturer buy-down price, and how must sales tax be shown?
Yes, with conditions. Under Revenue Ruling 57-02-1, a cigarette retailer taking part in a manufacturer's buy-down promotion may use promotional signs and displays to advertise either the manufacturer'…
Does a 501(c)(3) adult day-care program for severely disabled young adults qualify for a Kansas sales-tax exemption?
No. The Department advised that a 501(c)(3) adult day-care program for young adults with severe or multiple physical and mental disabilities does not qualify for a Kansas sales-tax exemption. Exemptio…
Did a mobile-fueling wholesaler's gasoline and diesel deliveries to a federal agency meet Florida's 500-gallon fuel-tax exemption threshold?
Yes. Section 206.62 required each sale and delivery to the federal agency to be a bulk lot of at least 500 gallons for exclusive federal use. The wholesaler's invoices showed that the agency was bille…
Were a nonprofit association's membership fees subject to Florida admissions tax when membership did not provide recreational or fitness facilities?
No. Association membership did not entitle members to use recreational or physical-fitness facilities, so the dues were not taxable admissions. Affiliated clubs could collect the association's fees as…
Does a farm tire repair machine qualify for Kansas's farm machinery and equipment sales-tax exemption?
No. The Department advised that a farm tire repair machine is not exempt as farm machinery and equipment, because it is repair equipment — not farm production equipment. Although sod production is an …
When was an MRI scanner an immovable hospital component rather than taxable movable equipment for Louisiana sales-tax purposes?
A traditional MRI wired into a specially designed imaging room was an immovable component, so dealers paid tax on acquisition or repair parts rather than charging tax on the scanner transaction. Porta…
Were collagen-based implants administered to patients by physicians exempt from Florida sales tax as medical products?
Yes. The collagen implants were medical products administered to patients under the guidance and supervision of prescribing physicians. The Department concluded that products dispensed by a physician …
Before Louisiana's 2002 QSub legislation took effect, how did an S-corporation parent and qualified Subchapter S subsidiary report Louisiana income and franchise tax?
Both remained separate Louisiana taxpayers and filed separate income and franchise returns, but used a consolidated statement eliminating intercompany items. Revenue normally attributed all resulting …
Must a federally tax-exempt homeowners association still file a Texas franchise tax report, and how can it get exempt?
Being exempt from federal tax does not by itself relieve a homeowners association from the Texas franchise tax. The franchise tax is imposed on all corporations, including nonprofit corporations, so t…
When must an entertainment promoter accrue Kansas sales tax on admission tickets provided to performers, vendors, media, the public, or employees?
Tickets transferred under a contract in exchange for something of value — such as performance, advertising, venue, sponsorship, signage, or radio services — were taxable admission sales, and the promo…
Can a New Mexico service provider deduct receipts from selling services for resale when she never actually had the buyer's nontaxable transaction certificate (NTTC) in her possession?
No. Sharon Steinberg sold patient-counseling services to a doctor who resold them to his patients, and claimed the Section 7-9-48 sale-for-resale deduction. But that deduction requires the buyer to de…
How did Florida's intangible-tax exemption apply to a securities firm's margin-account receivables for 1999, 2000, and 2001?
Margin-account receivables were one-third exempt for 1999, two-thirds exempt for 2000, and fully exempt for tax years beginning on or after January 1, 2001. The firm could seek a refund for excess 199…
Were mortgage-secured promissory notes owned by section 501(c)(3) nonprofit lenders exempt from Florida's nonrecurring intangible tax?
Yes, while the lending corporations retained their section 501(c)(3) charitable status. Their notes and mortgages qualified for Florida's nonprofit charitable-institution exemption. If a note and mort…
Can New Mexico recover fuel-tax refunds it mistakenly paid on erroneous IFTA returns, and does the Department's uneven enforcement or lack of training estop it from assessing one carrier?
Yes, the state can recover them. Cimarron Oilfield Service filed IFTA fuel-tax returns that wrongly deducted off-highway miles and omitted tax on fuel moved from IFTA vehicles into off-highway equipme…
Did a state university's proposed direct-purchase program qualify construction materials for Florida's government sales-tax exemption?
Yes, if the controlling documents made the university the buyer. It had to issue purchase orders with its exemption number, receive invoices, pay vendors directly, take title and liability at delivery…
Is a federal land bank association's personal property — including a registered vehicle — exempt from Utah property tax and the uniform fee in lieu of it?
Yes. Federal law (12 U.S.C. § 2098) exempts a federal land bank association's personal property from state and local taxation entirely (only its real estate can be taxed), and because Utah's uniform f…
Could a country club satisfy Florida's customer-refund requirement through a board resolution creating automatic member credits?
Yes. The board resolution legally obligated the club to give each current member an automatic house-account credit for that member's share of any state refund, with an option to contribute it to the c…
Could a parent company stop filing Florida consolidated corporate income-tax returns after substantial changes in its affiliated group and operations?
Yes, conditionally. Although the group did not show a harmful law change or substantial adverse tax effect, the Department found major changes in its market, size, organizational structure, and operat…
Are Internet service and web-hosting services subject to Kansas sales tax?
No. The Department advised that Internet service and web-hosting services are not subject to Kansas sales tax, because they are not among the services specifically enumerated as taxable in the sales t…
Does a contractor qualify for the Enterprise Zone sales tax exemption on a new facility as a 'nonmanufacturing business'?
Yes -- the exemption was granted and a refund ordered. A contractor sought the Enterprise Zone business-and-job sales tax exemption (K.S.A. 79-3606(cc)) for a new Wichita facility. As a 'retail busine…
How did the pre-2008 Texas franchise tax apply to a transmission and distribution utility (TDU) and a retail electric provider (REP) after electricity deregulation?
For the pre-2008 Texas franchise tax, the key effect of electricity deregulation was on gross receipts and apportionment. A transmission and distribution utility (TDU) that only moves electricity is p…
Was Florida's nonrecurring intangible tax due when a recorded mortgage on Florida real property secured only a contingent guaranty?
No, while the mortgage secured only a contingent guaranty rather than an unconditional obligation to pay money. If the guaranty conditions were later met and the Florida property then secured an uncon…
Which charges in a live-operator answering-service package were subject to Florida communications services tax or sales tax?
Customer charges for the live-operator answering service were not communications services, even when the package included voicemail, an auto attendant, toll-free usage, and fax or pager message delive…
Was a separately stated, optional guaranteed auto protection charge included in the taxable sales price of a financed motor vehicle?
No. The purchaser alone decided whether to buy the GAP debt-cancellation coverage, and its one-time charge was separately stated on a signed election form. Because the coverage was avoidable and separ…
Can New Mexico refund an overpayment of gross receipts tax when the claim is filed after the three-year deadline, even if a Department employee never mentioned the deadline and the taxpayer faced serious personal hardship?
No. At Elan Chiropractic overpaid about $3,000 of gross receipts tax for March–October 1997, but did not file a refund claim until September 15, 2001 — after the three-year limitations period in Secti…
Is service work on a manufacturing plant's garage doors exempt under the integrated production (integrated plant) exemption?
No — the work is taxable. The Department advised that service performed on a plant's garage doors is subject to state and local sales tax, because garage doors are not integrated production equipment.…
Is a third-party hauler's separate charge to deliver materials to a job site subject to Kansas sales or use tax?
No, on these facts. The Department advised that where an asphalt paving contractor buys materials and separately hires an independent third-party hauler (paid separately from the supplier) to deliver …
Is a tarp purchased to cover an agricultural gravity box exempt from Kansas sales tax as part of farm machinery and equipment?
Yes. A gravity box used in the described farming and ranching operation qualified as exempt farm machinery and equipment, and the tarp covering the box was treated as part of that exempt equipment. Be…
Is safety and protective apparel for production employees exempt under the integrated production exemption, and are safety shoes exempt if the employee shares the cost?
It depends on whether the apparel is furnished entirely free. Under K.S.A. 79-3606(kk)(1), the integrated production exemption reaches safety and protective apparel an employer buys and furnishes with…
Does taking title to a vehicle and assuming or paying its debt create a taxable motor vehicle sale in Texas?
Usually yes. A new owner who pays or assumes the prior owner's vehicle debt gives consideration and owes motor vehicle sales tax. But a co-maker or co-borrower already jointly liable for the original …
When are charges for computer programming or software-development services subject to Nebraska sales tax, and when are they treated as nontaxable temporary-employee wages?
Taxable, unless a three-part safe harbor is met. Under Revenue Ruling 01-02-1, Neb. Rev. Stat. §77-2702.07(3) taxes charges for personal services (such as those of programmers and consultants) that re…
Did Florida documentary stamp tax apply when a Florida financing office approved and prepared loan documents that borrowers executed and delivered outside the state?
No. The borrowers signed and delivered the checks containing the promises to pay to an authorized agent outside Florida, and all processing and acceptance occurred there. Florida approval, document pr…
Does a Louisiana sales-tax filing extension also prevent late-payment penalties and preserve vendor compensation?
Yes, if the filer submits the return and pays all tax by the extension deadline. The payment is timely, so no late-payment penalty applies and vendor compensation is preserved, but interest still runs…
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