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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Were an open-end credit application, disclosures, consent, and line agreement stamp-taxable?
Not by themselves. The reviewed documents lacked a signed written obligation to pay a sum certain and did not expressly incorporate one another. But a notice or check could create a taxable combined o…
As a New Mexico artist, do I owe gross receipts tax on art a gallery sells for me, and can I deduct rent from letting a film crew use my studio?
Mostly in the artist's favor — the protest was GRANTED and the assessment abated in full. Brian Blount, a Santa Fe artist, was assessed gross receipts tax after the IRS reported his 1994 business inco…
If a contractor rents equipment for a government job and later sells it (leaving it on-site instead of taking it back), does it become tax-exempt "consumed" material instead of taxable equipment?
No refund. Crane mats rented to a contractor for a Texas Department of Transportation project, then sold to the contractor and left on the project site at the end of the job, do not qualify for the ta…
Are receipts from coin-operated air compressors at convenience stores subject to Kansas sales tax?
Yes. The Department ruled that money collected from coin-operated air compressors at convenience stores is subject to both state and local Kansas sales tax. The imposition is K.S.A. 79-3603(f), which …
Are a church's telephone charges exempt from Kansas sales tax?
They are exempt if the church pays and uses the phones only for religious purposes. The Department ruled that telephone charges to a church are exempt from state and local sales tax when the church it…
Could one $5,000 county-surtax cap apply to a weekly order of windows and related materials?
Yes. Each specified weekly order, delivery, and single invoice was one sale, and the windows, doors, screens, paint, glazing bead, and related installation materials were normally sold in bulk or asse…
Were sales of pre-cut submerged logs exempt as agricultural commodities or as resale inventory?
The logs were not exempt agricultural commodities because the definition excluded forestry products. But buyers manufacturing finished wood goods for retail sale could give the logger a resale certifi…
Is diesel fuel used in the various steps of a sandpit operation exempt from Kansas sales tax as consumed in production?
Partly exempt. The Department ruled that diesel fuel used to pump sand from the pit and to screen and separate it is exempt as property consumed in production under K.S.A. 79-3606(n) and 79-3602(m). B…
Can the Kansas Department of Revenue release a list of businesses by their sales tax filing frequency?
No — the Department cannot release it because the information is confidential. A person asked for a list of Wichita businesses that file sales tax monthly or quarterly. Because filing frequency is set…
Is water used to water livestock held for resale subject to Kansas sales tax?
It is exempt from both state and local sales tax. The Department ruled that sales of water used exclusively to water livestock held for resale are exempt because the water is 'consumed in production,'…
When did Florida credit upfront tax paid on an out-of-state motor-vehicle lease?
Florida allowed credit only when the other state mandatorily imposed a like upfront tax on the lessee and offered no removal refund or credit. Florida taxed any rate difference on monthly payments. No…
Was a pre-1986 partnership property's unencumbered liquidating distribution stamp-taxable?
No. The partnership acquired the property before July 1, 1986, and distributed it unencumbered to its 85% corporate partner on dissolution. Florida applied the earlier law, which taxed that conveyance…
Did label-cutting dies and rubber flexographic plates qualify for Florida's printing exemption?
Yes. Dies used to cut designs in pressure-sensitive label material qualified as dies used for embossing and engraving, and rubber flexographic plates qualified as lithographic plates when used in the …
Are management services subject to Kansas sales tax?
They are not taxable. The Department ruled that management services are not subject to Kansas sales tax because the sales tax applies only to services that are 'enumerated (specified) by statutes,' an…
Does a new painting, faux-finishing, and stenciling business need to charge sales tax to customers, and does it matter whether the work is new construction, residential remodeling, or commercial remodeling?
It depends on the job and the contract type. New construction of realty, or repair/remodeling of *residential* realty, is done as a "contractor": under a lump-sum contract you pay tax on your own mate…
Are single-use yellow traffic-control tabs, thrown away after 2-3 days on a state road job, exempt from sales tax as consumable supplies used in an exempt government contract?
Possibly exempt, but it depends on facts the Comptroller couldn't confirm from this letter alone. Disposable yellow traffic-control tabs placed on a road for 2-3 days, then pulled up and thrown away (…
Does an out-of-state touring band's corporation owe Texas franchise tax if it performs in Texas only a few days a year, even without corporate-income nexus?
Yes. A corporate touring band that performs in Texas - even about seven days out of the year - is 'doing business' in Texas and is subject to the franchise tax. Tax Code Sec. 171.001 imposes the tax o…
Is wax paper a restaurant buys to microwave-heat sandwiches on exempt as a manufacturing item, or taxable because it's really used to store or separate food?
It depends entirely on how the wax paper is actually used, and the taxpayer bears the burden of proof either way. If the restaurant can show the wax paper is used in preparing, warming, or reheating f…
Are health food products and herbal supplements subject to Kansas sales and use tax?
They are taxable. The Department ruled that health food products and herbal supplements — caplets of beet, carrot, and barley extract; aloe vera juice; pollen and trace-mineral supplements; coenzyme Q…
Can a manufacturing customer use a single manufacturing exemption certificate to buy everything tax-free — including hand tools, brooms, and sports drinks — and just self-assess use tax later on its own return?
No. A manufacturer may only buy tax-free, under a manufacturing exemption certificate, items that will be incorporated into a product for sale or that otherwise qualify for exemption under Tax Code § …
Does an individual who pays sales tax on an item, then donates it to a nonprofit's charity auction where it resells for more than $5,000, get taxed twice — and does the nonprofit's $5,000 one-day-sale limit apply to every 501(c) organization or just colleges?
No double taxation, with a fix available: a purchaser can avoid paying sales tax twice by giving the retailer an exemption certificate at the time of purchase for an item intended for donation to an e…
Does a tax-exempt nonprofit hospital have to collect sales tax when it leases radiology equipment to a for-profit joint venture it forms with a group of radiologists?
No. A Section 501(c)(3) nonprofit hospital's sales and leases are generally exempt from New York sales tax, and leasing radiology equipment to a single for-profit joint venture on the hospital's own p…
Does an out-of-state manufacturer that only makes wholesale sales for resale, and whose sole New York presence is two traveling sales representatives, have to register as a New York sales tax vendor?
Yes. Having even just two traveling sales representatives soliciting business in New York is enough of a physical presence to satisfy the constitutional nexus requirement, so the out-of-state manufact…
Was a Texas highway sweeper taxed as a motor vehicle or as moveable specialized equipment?
It depended on construction. Sweeper equipment mounted on a cab chassis was a motor vehicle. A sweeper manufactured from beginning to end was moveable specialized equipment subject to limited sales an…
Is repairing a central air conditioning system taxed the same as repairing a window AC unit, and does it matter whether the building is residential or commercial?
No, they're taxed differently. A charge to repair a central air conditioning system in a nonresidential (commercial) building has been taxable since January 1, 1988, but the same repair on a residenti…
Is the lane-rental portion of a bowling alley's private 'bowling party' package subject to sales tax, and does bundling it with taxable food and beverage charges change the answer?
No sales tax on the lane-rental charge. Bowling is a participant sporting activity, so admission charges for the use of a bowling lane are specifically excluded from New York sales tax, even when sold…
How did Florida tax repairs, additions, and installations of fire and security alarm systems?
Repairs to an existing alarm system were taxable protection services, with parts also taxable unless separately sold for resale treatment. New or expanded systems were taxed as tangible-property sales…
Is dredging silt out of a nonprofit country club's irrigation reservoir a nontaxable maintenance activity, or a taxable repair to real property?
It's taxable, not exempt maintenance. If a country club's water reservoir is manmade, dredging silt and sediment out of it is a repair, remodel, or restoration of a nonresidential improvement to realt…
For an internet-based flower business that takes orders online and uses wire services to fulfill deliveries worldwide, when is Texas sales tax due, and to which local jurisdiction?
A planned Internet flower service bureau — taking web orders for worldwide delivery and using a flower wire service to fulfill them — got a full rundown under 34 TAC § 3.307 (Florists): Texas sales ta…
If a computer shop bench-tests a customer's computer to diagnose a problem, is that diagnostic charge taxable on its own, and what happens if the shop then repairs it?
Diagnostic testing and analysis of computer hardware — bench-testing a machine to find out what's wrong — is not subject to Texas sales tax by itself, unless the shop actually repairs the computer. If…
Does a plumber charge Texas sales tax on labor for new construction plumbing, residential repairs, or commercial plumbing work, and how does the contract type (lump-sum vs. separated) affect materials tax?
No sales tax applies to labor when a plumber installs plumbing/fixtures in new construction or repairs/remodels residential property — the plumber is a "contractor," and how materials are taxed depend…
After Utah's 1998 legislative amendment removed the SIC-code / manufacturing-only limits, which businesses now qualify for the Utah enterprise zone tax credits, and how do the payroll and investment credits work?
After Utah's 1998 amendment removed the old SIC-code (manufacturing-only) limit, any business firm can qualify for the enterprise zone tax credits except retail trade and public utility businesses, as…
Can a door manufacturer buy tax-free, as exempt wrapping/packaging supplies, the advertising brochures it includes with each manufactured door?
No. A door manufacturer's advertising brochures — describing additional options like screen doors or other door types — are taxable whether they're included with the manufactured product or placed in …
Does an out-of-state reed manufacturer have to register for New York sales tax just because it employs three New York residents, working from their own homes, to test and pack its products before shipping them back out of state?
Yes. Simply having three New York-resident employees performing work for the company -- even work as limited as testing and packing product that gets shipped right back out of state, with no in-state …
When a contractor buys cabinets from a Texas manufacturer for drop-shipment to a construction site in a different Texas city, is the local sales tax rate based on the manufacturer's location or the job site's location?
It depends entirely on the contract type — resolving the dispute between the contractor and manufacturer, both of whom were partly right. Under a lump-sum contract, the contractor is the consumer of t…
Does an out-of-state mail-order computer company create New York sales tax nexus just by hiring an independent New York repair company to make on-site warranty repair visits to its New York customers?
Yes. Even though the mail-order computer company has no office, sales force, or sales representatives of its own in New York, hiring an independent New York-based repair company to perform on-site war…
What charges must a caterer include in the Kansas sales tax base?
Tax the total. The Department ruled that a caterer must impose Kansas sales tax on the total selling price of its service, including charges for food, beverage, service charge, hall rental, flowers, a…
Can a water/sewer materials supplier split a nonprofit Water Supply Corporation's account into taxable "water" purchases and exempt "sewer" purchases, since the sewer items are used in the wastewater treatment (manufacturing) process?
Not a clean split. Nonprofit water supply corporations are not exempt from sales tax generally — some of their purchases can qualify for a manufacturing exemption because processing water (or treated …
Is dialysate, the chemical solution used inside an artificial kidney during hemodialysis, an exempt prosthetic aid, or a taxable medical supply?
Dialysate qualifies as an exempt prosthetic aid, not a taxable medical supply. Because it performs an essential part of the kidney's lost filtering function inside the artificial kidney during dialysi…
Can a Manhattan co-op buy garage spaces at nearby third-party garages and resell the garaging rights to its own tenant-shareholders tax-free, either through the resale certificate or the homeowner's-association parking exclusion?
The co-op itself can buy the garaging rights from the third-party garages tax-free, using a properly completed resale certificate, since it's buying them exclusively to resell to its tenant-shareholde…
When a car dealer pays the up-front sales tax on a long-term lease on the customer's behalf and rolls that cost into higher monthly payments, how is the tax recalculated so the customer's after-tax payments come out to the intended amount?
There's no option to simply add the sales tax to each monthly payment as it comes due — New York taxes a long-term motor vehicle lease all at once, up front, on the total amount of all lease payments …
Can a retailer switch from reporting sales tax on an accrual basis to a cash basis, and what happens to sales tax already reported under the old method?
Yes, it's permissible for a retailer to switch from an accrual basis to a cash basis of accounting for sales tax reporting purposes (remitting tax as payments are received), and no special forms need …
Is a corporate aviation subsidiary's purchase of a new $30 million jet exempt from sales tax as a 'commercial aircraft,' when the plane is used mainly to fly employees and guests of affiliated companies who are charged an intercompany fee for using it?
Yes, exempt -- as long as more than 50% of the new aircraft's use is devoted to transporting employees, customers, and other business contacts of related companies for a fee that reasonably reflects t…
Is a managing corporate partner of an electricity/steam generating partnership subject to section 186/186-a, and are IPP contract termination payments part of gross earnings or gross operating income?
The managing partner is taxed; the termination payments are not. A corporate partner deeply involved in running an electricity/steam generating partnership (more than 50% of its receipts from the part…
Did an equipment lease, schedule, and acceptance certificate trigger documentary stamp tax?
No. The lease and equipment schedule were expressly incorporated, but rent was not fixed and unconditional until a separate acceptance certificate. That certificate neither incorporated the other docu…
Is a Procedural Spinal Needle exempt from Texas sales tax as a hypodermic needle, even though it's not listed by that exact name in the administrative rules?
Yes. A hypodermic needle is defined as a needle adapted for use in, or administered by, injection beneath the skin, and hypodermic needles are exempt from Texas sales tax. A Procedural Spinal Needle q…
Which optical products were exempt prescription eyeglasses and which stock products were taxable?
Patient-specific prescription lenses, accompanying frames, and contact lenses were exempt. Finished, semi-finished, finished-stock, and semi-finished-stock lenses, stock frames, and related accessorie…
How does Kansas sales tax apply to 'core charges' on replacement parts?
The core charge is taxable when you charge it, and you refund the tax with it when the core comes back. The Department ruled that because a retailer cannot tell at the time of sale whether the custome…
Is a separately stated project consulting charge on a multimedia (CD-ROM) production invoice taxable as part of the overall taxable presentation, or can it be a nontaxable standalone service?
As billed here, it's taxable. A multimedia CD-ROM presentation (video, animation, interface design, interface programming, CD duplication, and project consulting) is taxable as a whole, and the separa…
If a homebuyer pays extra for upgrade choices (change orders) on a new residential construction contract, can the builder charge sales tax on the labor portion of those change orders?
It depends on the base contract type, and change orders follow that same classification — a realtor's builder client cannot simply tax labor on change orders just because they're billed separately. La…
When a car dealership signs a long-term lease with a customer and immediately assigns it to a separate leasing company, who is the 'original lessor' responsible for collecting the up-front sales tax, and is a trade-in credit applied to the lease taxable?
The dealer -- not the leasing company the lease gets assigned to -- is the original lessor and is responsible for collecting and remitting the sales tax due at the inception of the lease, since the de…
Were lump-sum horse embryo-transfer services and separate horse boarding charges taxable?
No. Horse embryo-transfer and related professional services were exempt even when sold in an all-inclusive package. Separate horse-boarding charges were also exempt because boarding and kennel service…
Were a country club's golf and social equity memberships and retained resale amounts taxable?
No, on the stated facts. The $85,000 golf and $30,000 sports-social equity contributions, including club-retained resale amounts, were not taxable when separately accounted for as paid-in capital, unu…
Was a custom personal-biography service taxable, and what about extra manuscript copies?
The custom biography service was exempt, including the manuscript delivered as an inconsequential part of the personal service. Additional manuscript copies were taxable. Because the interview was par…
Was a computer-based real-time hearing and communication device exempt from Florida sales tax?
Only with a prescription. The system qualified as a prosthetic or orthopedic appliance used to alleviate a body-part malfunction, but it was not shown to be a hearing aid or listed exempt product. Ret…
Were railcar lease charges exempt when the lessee was an electric cooperative, not a railroad?
Yes. The leases were exempt car service agreements even though the lessor was a bank and the lessee was an electric cooperative rather than a railroad. The railcars were leased for railroad hauling of…
Were hot soft-baked pretzels taxable across mall, kiosk, food-court, and outlet locations?
Yes. Hot soft-baked pretzels were taxable at all eight described bakery formats, including locations with no seller-provided seating and off-premises sales, because the statutory food exemption did no…
Does an out-of-state software company that licenses stock-trading software to Utah broker dealers and their customers have Utah sales tax nexus, and which of its license, tech-support, and installation fees are taxable?
Yes, nexus exists, and most fees are taxable. A Texas software company licensing canned trading software to Utah broker dealers or their customers has Utah sales and use tax nexus because it owns and …
Must a non-profit hospital collect Kansas sales tax on admission charges to a fundraising concert?
It must collect sales tax if it is, or should be, a registered retailer. The Department ruled that admission charges to places of entertainment are taxable under K.S.A. 79-3603(e), and there is no gen…
Are sales of discount or prepaid legal service plans subject to Texas sales and use tax?
No. Sales of discount or prepaid legal services are not a taxable service under Texas Tax Code § 151.0101(a)'s list of taxable services, and Tax Code § 151.308(a)(8) separately exempts insurance premi…
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