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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Is equipment removed from oil and gas leases taxable when sold as salvage in Kansas?
Yes, it is taxable — unless the seller makes such sales no more often than once a year. The Department ruled that all retail sales of tangible personal property are taxable, including items removed fr…
How could a person show new Texas residency for the reduced motor vehicle use tax?
Rule 3.71(b) generally allowed a person to demonstrate intent to live in Texas by establishing a fixed Texas dwelling, registering to vote in Texas, or showing a legal or economic constraint to live t…
How does Texas sales tax apply to an arborist's oak-wilt treatment — both the taxable chemical injection/spraying and a concrete root-barrier trench built to stop the disease from spreading?
It's split. Chemical treatment/injection to fight oak wilt disease is a taxable real property service under Rule 3.356 and must be billed and taxed separately. A permanent concrete barrier trenched to…
When a software company sells a development-tool product AND separately hires out consultants to help clients build their own applications with that tool, which charges are taxable — the tool itself, the consulting/training, or the applications the consultants help build?
Split ruling. The sale of the SOFTWARE development-tool product itself is taxable. Separately stated charges to train clients on using the tool are not taxable, and charges to help a client build an a…
Which items sold to physical therapy patients — crutches, braces, straps, resistive bands, cold packs, taping supplies, heel lifts — are exempt from Texas sales tax, and does each one need a doctor's prescription?
It varies by item, and mainly turns on whether a doctor's prescription is required. Crutches, tennis elbow straps, patellar straps, and lumbar supports are exempt as prosthetic devices or braces with …
Is the sale of a building that sits on leased land and is taxed as real property a taxable sale of tangible personal property, or a non-taxable sale of real property?
It is a sale of real property, not taxable. The Department ruled that a building permanently affixed to the land — and classified and taxed as real property by the county appraiser — is real property.…
Were backhaul services and Internet Protocol port charges subject to Florida communications taxes?
Yes. The charges were for telecommunications and were subject to gross receipts and sales tax when service originated or terminated in Florida and was billed to a Florida device, number, or customer. …
If a for-profit business (like a bank) hires and pays for valet parking at a fundraising social it hosts for a 501(c)(3) exempt organization, does the exempt organization's status make the valet parking service tax-exempt?
No. Valet parking services purchased by a for-profit entity hosting a social event for a sales-tax-exempt 501(c)(3) organization are taxable. The exemption belongs to the entity that holds the exempti…
Was an off-balance-sheet real-property lease actually nontaxable mortgage financing?
Yes. Considering all agreements together, the arrangement was a mortgage loan rather than a taxable real-property lease. It was designed as off-balance-sheet financing, payments equaled interest rathe…
Are Kansas cigarette and tobacco products taxes owed on wholesale sales to retailers or individuals on Indian reservations?
The Department's position is that there is no exemption under Kansas law from cigarette and tobacco products tax for sales to any retailer or individual on an Indian reservation or land, including sal…
Does a pagination system — the computer hardware and software a newspaper publisher uses to design and lay out pages before printing — qualify for Texas's manufacturing exemption from sales and use tax?
Yes. A pagination system — the combined computer hardware and software used to design, edit, and assemble newspaper page layouts before the negatives and plates are made — qualifies as exempt manufact…
If a business stops keeping copies of individual invoices (relying instead on a purchase card and a monthly summary sales tax report generated by software), is that summary report enough to satisfy Texas's sales tax recordkeeping requirements for an audit?
No, not as described. A monthly summary tax report that doesn't describe each item purchased, state the tax rate, identify the taxing state/local jurisdictions, or show the taxable amount does not sat…
Is a telecom company's 'backhauling' service -- transporting foreign-originated internet and voice/data traffic from a U.S. cable landing station or satellite earth station to a U.S. destination -- taxable New York telephony, or exempt international telephony?
Not taxable. Even though the physical transport happens entirely within the United States -- from a cable landing station or satellite earth station where the traffic first enters the country to an in…
If a hospital controlled my hours and patients but paid me on a 1099 as a contractor, do I owe gross receipts tax on that pay?
Partly — the protest was GRANTED IN PART and DENIED IN PART, with a condition. Dr. Gilmour, a psychiatrist, worked for St. Vincent Hospital starting in late 1995. Until May 15, 1996 the hospital treat…
Does a company that services and repairs manufacturers' machine tools have to register as a sales tax vendor, collect tax, and file returns on its repair charges?
Yes, generally -- but with a key exemption. Repairing and servicing machine tools is a taxable service, so the repair company must register as a sales tax vendor, collect tax on its taxable receipts, …
When a utility just delivers electricity or natural gas that a customer bought from a competing third-party supplier, is the utility's delivery/transportation charge itself a taxable 'electric service' or 'gas service'?
Yes, for now. Even when a customer buys electricity or natural gas from a competing third-party supplier under New York's retail-access programs, the utility's separate fee for transporting, transmitt…
If I pay my New Mexico gross receipts tax just a few days late, does the state charge interest for the whole month or only for the days I was late?
The whole month — the protest was DENIED. Rioja, Inc. paid its January 2000 gross receipts tax 11 days late and was charged a full month's interest. It argued interest should be prorated to the 11 day…
Are over-the-counter hair regrowth products like Rogaine (minoxidil) exempt from Texas sales tax under the OTC drug and medicine exemption?
Yes. Effective April 1, 2000, sales of over-the-counter drugs and medicines are exempt in Texas, and a medicated product used to promote new hair growth qualifies as a drug or medicine under that exem…
What Texas motor vehicle use tax applied to a vehicle purchased overseas and later brought into Texas?
A Texas resident, including military personnel with Texas as the home of record, generally owed use tax on the overseas purchase price. A new resident could qualify for the reduced new-resident tax on…
I overpaid gross receipts tax for years on income that was actually deductible. Can I get all of it refunded?
Only partly — the protest was DENIED. Bienvenidos Resort had paid gross receipts tax for years on its apartment-rental income, even though that income was deductible (and a landlord with three or fewe…
My tax payment was only one day late by accident. Can the hearing officer waive part of the penalty and interest to be fair?
No — the protest was DENIED. Wolf Corporation, a large taxpayer required to use New Mexico's special large-payer procedures under Section 7-1-13.1, paid its February 2000 combined-reporting (CRS) taxe…
A company plans to build a free web-site directory for educators, paid for by local businesses that sponsor it in exchange for advertising space. Is the sponsor's fee for building, hosting, and maintaining the directory subject to Texas sales tax — and how does Texas generally tax internet-related services?
Yes, taxable. Charging advertisers/sponsors for creating (via HTML), hosting, and maintaining the educator directory website is a taxable data processing service under Tax Code § 151.0035, because it …
A company buys fly ash and bottom ash — leftover residue from a utility burning coal to generate electricity — and spreads it on drilling sites for stability. The utility told the buyer these purchases aren't taxable if used as-is without further processing. Is that right?
No, the utility's advice was wrong. Purchases of fly ash and bottom ash are taxable. Coal itself is exempt only because of how the utility uses it (to produce electricity for sale) — that use-based ex…
When a rental customer returns damaged equipment and gets billed for the repair labor and parts, is that repair charge taxable — and does it matter if the renter is a tax-exempt organization?
Generally taxable. A charge to a lessee for labor and parts to repair rental equipment the lessee damaged is a taxable service under Rule 3.294 — but if the entity that rented the equipment provided a…
When a company builds a power plant, can it buy the fuel and equipment tax-free -- fully as a utility 'furnishing electricity,' and partially as machinery used in 'processing'?
Both exemptions apply, at different levels. Generating electricity for sale counts as 'furnishing electricity' under Conn. Gen. Stat. § 12-412(18), so materials, tools and fuel used directly in genera…
Did gifts of unencumbered property between nonprofit nonstock corporations require deed tax?
No. The revised advisement found that deeds transferring three unencumbered properties as gifts between nonprofit nonstock corporations were not taxable. The recipient issued no money, stock, promisso…
Which charges in Florida hunting and fishing packages were taxable?
Charges for hunting or fishing access to the substantially agricultural property, and separate guide services, were not taxable. Lodging and prepared meals were taxable. If a package included taxable …
A Texas resident ordered software from an out-of-state (Colorado) company that charged sales tax but is no longer permitted to collect Texas sales tax. Does the buyer still owe Texas tax on the software, and if so, to which state — Texas or Colorado?
Texas use tax is owed. Texas sales or use tax is due on software delivered to a customer for use in Texas, regardless of where the seller is located. Here, the seller was no longer permitted (as of 12…
Are a Nebraska city, county, or joint airport authority's purchases exempt from sales and use tax?
Mostly exempt, starting October 1, 2000. Under Laws 2000, LB 557, purchases by a Nebraska city, county, or joint airport authority are exempt from sales and use tax, except purchases for use in the bu…
Does the federal law shielding nonresidents' pension income from state tax (Public Law 104-95) cover a pension distribution a nonresident received back in 1995?
No. The federal preemption in 4 U.S.C. § 114(a) applies only to retirement income received after December 31, 1995, so a nonresident's 1995 pension distribution remains taxable New York source income …
Is a section 186 gas utility's distribution of subsidiary stock in a PSC-driven restructuring treated as a dividend subject to the excess dividends tax?
No. Where Brooklyn Union Gas, as part of a regulator-driven holding-company restructuring, distributes the common stock of certain subsidiaries (its 'Interests'), that distribution does not represent …
Is a registered limited liability partnership that elects to be taxed as a corporation federally also taxed as a corporation under New York Article 9-A?
Yes. Under section 208.1, the term 'corporation' includes an association taxable as a corporation, so a registered limited liability partnership (RLLP) that elects under the federal check-the-box rule…
If I buy supplies and services in my own name and bill my clients for them, do I owe New Mexico gross receipts tax on the reimbursement?
Yes — the protest was DENIED. Patricia Young's environmental-consulting business bought laboratory services, equipment, and supplies in her own name, then billed her clients for those costs plus a 10%…
A systems-integration company partners with a software vendor to implement software the vendor sold directly to a third-party customer. The integration company handles installation/configuration, business consulting, and integration programming — but didn't sell the software itself. Is the installation and configuration work taxable?
Not taxable. Charges for installing and configuring software that the installer did not itself sell to the customer are not taxable in Texas.
A company shifting from pure consulting into internet services asks three things: (1) is ASP programming (which generates HTML) taxable contract programming or a taxable data processing service? (2) is building a webpage using client-supplied graphics taxable? (3) can consulting and custom programming stay nontaxable if separately invoiced from taxable website development?
Mixed answer. Contract programming that creates custom software with exclusive rights transferred to the client is not taxable — but ASP programming that generates HTML documents is a taxable data pro…
A lab calibrates and certifies test/measurement equipment for oil, gas, and petrochemical companies. Louisiana doesn't tax this service when only minor adjustments are needed. Does Texas have a similar exemption for calibration/certification services involving minor adjustments?
No, Texas has no minor-adjustment exemption like Louisiana's. Making adjustments to equipment so it operates within specified tolerances counts as taxable maintenance in Texas, even if the adjustment …
Does an Air Force base have to collect Texas sales tax when it sells a utility system, and more generally, is the U.S. Air Force required to collect Texas sales tax on sales of taxable items?
No collection required, for two independent reasons. First, utility systems (water, wastewater, electric, gas) are improvements to realty, and Texas doesn't impose sales/use tax on real property sales…
Were inside-wire maintenance and separately stated gross receipts tax taxable to residential customers?
No. Monthly repair and maintenance of inside telephone wiring and jacks was real-property work, not a taxable service warranty or other taxable service. For exempt residential telephone service, a sep…
Who had to prove Florida's residential electricity exemption, and who owed tax after misuse?
The account owner had to establish that electricity was used exclusively for residential-household purposes. If a utility followed its tariff and relied in good faith on the customer's declaration, th…
A Texas manufacturer takes items out of its tax-free resale inventory, ships them out of state for use (no Texas tax due at that point), and later brings them back into Texas. Does it owe use tax if the items come back after more than a year, and does it matter whether the items go back into inventory for sale versus get used?
It depends on what happens to the item when it comes back, not how much time has passed. Rule 3.346(c)(5)'s one-year rule applies only to items purchased OUTSIDE Texas and brought in. For items made o…
Is labor for slab sawing and hydrohammer breaking taxable in Texas when performed as part of a new construction contract?
No tax on the labor. Slab sawing and hydrohammer breaking labor performed on a contract that qualifies as new construction is not taxable. However, the contractor must still pay sales and use tax on a…
Which machinery for a natural-gas electricity and steam facility qualified for Florida's exemption?
Qualifying integrated machinery and systems used to generate electricity or steam for sale were exempt at purchase because the facility burned natural gas rather than residual oil. The exemption cover…
An operator rents booth space to vendors at a computer trade show/flea market and separately charges the general public admission to attend. Is that public admission charge subject to Texas sales tax?
Yes, taxable. Admission charges to attend a flea market or trade show are taxable amusement services under Rule 3.298, regardless of whether any entertainment is provided as part of the admission — a …
Did an arena owner's reserved estate for years create taxable rent after conveying the property?
No. The owner's occupancy right came from the estate for years reserved in the warranty deed. Because the sports authority did not grant that right through the document labeled a lease, it was not ren…
Does a retailer have to charge Kansas tax on the shipping and handling it bills to customers?
Yes. The Department ruled that shipping and handling charges are subject to Kansas sales and use tax as a matter of statutory definition. For sales tax, the base is 'gross receipts' / 'selling price,'…
How did Senate Bill 226 change Kansas withholding tax for payments other than wages effective July 1, 2000?
Effective July 1, 2000, Senate Bill 226 brought Kansas withholding into closer conformity with federal law by requiring withholding on 'payments other than wages' made by 'payors' (anyone other than a…
What restrictions and monthly reports apply to Kansas cigarette wholesalers on gray-market and imported cigarettes?
Under K.S.A. 79-3321(u)-(w) it is unlawful to sell or distribute in Kansas cigarettes packaged for foreign or export markets (for example labeled 'For Export Only,' 'U.S. Tax-Exempt,' or 'For Use Outs…
If an outside company merely stores a business's physical data-storage media (magnetic tapes, computer discs) off-site and off-line — providing no electronic access to the data and no other services — is that off-site storage taxable as a data processing service?
No. When an outside company merely stores physical data media (tapes, discs, etc.) off-site and off-line — with no electronic access provided and no other data processing services performed — that sto…
A clothing manufacturer uses spreading tables with an attached cutting blade to spread and cut fabric. Does the whole table qualify for the manufacturing exemption because the blade is attached to it, or does only the blade itself qualify?
Only the blade qualifies, not the table. The spreading table itself does not qualify for the manufacturing exemption because it doesn't directly cause a chemical or physical change to the product. The…
A medical device manufacturer sells a range of electrotherapy and rehabilitation products (TENS units, muscle stimulators, incontinence devices, iontophoresis systems, dynamic splints, cervical traction units, knee rehab devices, and related accessories) both to health care providers and directly to patients on prescription. How does Texas sales tax treat each product, and does it matter who buys it?
It varies by product and by buyer. For most of these therapeutic electrotherapy devices (TENS, NMES, sEMG, Innova incontinence device, Pronex cervical traction), the pattern is the same: taxable when …
A new business installs automatic insecticide spray systems in homes. Does it need a Texas sales tax permit and have to collect tax on its charges, and can it buy the spray equipment it installs tax-free?
Yes to collecting tax, yes to buying equipment tax-free. Installing an automatic home insecticide spray system is a structural pest control service — a taxable real property service under Rule 3.356. …
Am I liable for New Mexico gross receipts tax on my deceased spouse's business income if I never worked in the business?
Partly — the protest was GRANTED IN PART and DENIED IN PART. Kay Raines never worked in her husband James's appliance-installation business, but New Mexico gross receipts tax on income earned by eithe…
Did a nursing-home vending machine void the facility's residential electricity exemption?
No. Electricity used in nursing-home areas connected to residents' care and daily life remained within the residential-household exemption. A vending machine used by staff, residents, and their guests…
Was a mandatory, separately itemized waste-removal reimbursement taxable as rent?
Yes. Tenants had to pay the landlord's waste-removal charge to remain in possession. The mandatory lease charge lost its separate identity and became part of taxable total rent, even when separately i…
Were rents for municipal beach concession buildings exempt when the tenant sold food and drinks?
Yes. The tenant used municipally owned beach buildings to sell food and drinks, and the beach was a recreational facility under the ruling. The statutory exemption applied to payments for the right to…
Is the Safehip hip protector — an undergarment designed to prevent hip fractures and injuries — exempt from Texas sales tax, and does it matter whether it's sold to an individual or to a hospital/nursing home?
It depends on the buyer. The Safehip hip protector qualifies for exemption as a therapeutic device and may be purchased tax-free by an individual with a doctor's prescription. But the same product is …
Does a soy-based powdered beverage mix marketed as a milk substitute ('Better than Milk') qualify for Texas's sales tax food exemption?
Yes. "Better than Milk," a soy-based powdered beverage mix, qualifies for exemption from Texas sales tax as a food product milk substitute, based on the label the taxpayer submitted.
Can an insurance carrier calculate its Utah workers' compensation premium tax on a deductible policy using the self-insured employer's formula instead of the pre-deductible full premium?
No. An admitted insurer selling a deductible workers' compensation policy must calculate its premium tax on the full policy premium it would have charged without the deductible reduction, as required …
How is Kansas tax applied to items a Kansas contractor buys for use in out-of-state construction projects?
It depends on how and where the items are bought. The Department ruled that items a Kansas contractor buys from an out-of-state vendor for a specific out-of-state job, then ships to its Kansas locatio…
Does clothing that provides UVA and UVB sun protection qualify for Texas's over-the-counter drug or medicine exemption (effective April 1, 2000)?
No. Clothing, even clothing that provides UVA and UVB sun protection, does not meet the definition of an over-the-counter drug or medicine, so it doesn't qualify for the exemption effective April 1, 2…
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