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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Did three free advertising publications qualify for Florida's shopper exemption?
Yes. The apartment, new-home, and automobile publications were distributed free through newsstands, published regularly, and primarily contained advertising by unrelated businesses. Each met the shopp…
How did House Bill 2013 change Kansas bingo laws and taxes effective July 1, 2000?
Effective July 1, 2000, House Bill 2013 overhauled Kansas bingo regulation and its taxes. The 3% bingo enforcement tax on the sale of bingo (hard) cards was replaced by a $0.002 (2/10 of a cent) per-f…
If I do accounting work in New Mexico for a local business owned by an out-of-state parent, can I skip gross receipts tax as an out-of-state sale of services?
No — the protest was DENIED. Santa Fe Business Services (a Santa Fe accounting firm, then a sole proprietorship) was assessed gross receipts tax on two chunks of receipts it had not taxed: contract wo…
How is land enrolled in the federal Wetlands Reserve Program valued for Kansas property tax?
For the 2000 valuation year and after, land enrolled in the federal Wetlands Reserve Program (WRP) or emergency Wetlands Reserve Program (EWRP) is classified as native grassland and valued that way un…
When a taxable (non-exempt) lessor remodels facilities it leases to an exempt entity, how does the Comptroller decide whether the exempt lessee has 'primary use and benefit' of the remodeling services (making them exempt) versus the taxable lessor (making them taxable) — specifically, how is the 'long-term lease' prong measured?
The Comptroller applies a two-prong test: (1) the lessee must be an exempt entity under § 151.309 or § 151.310, and (2) the lease must be long-term in reasonable relationship to the LIFE of the improv…
A company runs a subscription website where college students pay to access professor-posted class content, pay extra to print pages, and pay a copyright surcharge to view certain copyrighted articles. Which of these charges are taxable Texas information services, and how does the company determine Texas vs. out-of-state tax treatment for students located both inside and outside Texas?
Mostly taxable, with multistate nuance. Student subscription fees, printing fees, and copyright surcharges are ALL taxable information services (20% exempt per § 151.351). A separate copyright clearan…
Did Florida let a diversified corporate group stop filing consolidated returns?
Yes. Florida permitted separate corporate income tax returns because the group had expanded beyond Florida, developed distinct business lines and management strategies, and wanted to separate an expan…
Did Florida allow a reorganized corporate group to stop filing consolidated returns?
Yes. Florida permitted the group to file separate corporate income tax returns for 1999 and later years because its business had substantially changed and its newly acquired group used a different acc…
Does a 501(c)(3) nonprofit that serves troubled youth qualify for exemption from Kansas sales tax on its purchases?
No. The Department ruled that a 501(c)(3) nonprofit organized to provide alternatives to institutional placement of troubled youth does not qualify for exemption from Kansas sales tax. Reviewing the e…
A company runs a broad errand-service business — document delivery, transporting seniors and pets, personal/grocery shopping, dry cleaning pickup/delivery, lunch delivery, notary services, and process serving. Are any of these services subject to Texas sales tax?
None of the nine services described are taxable. Delivering documents/x-rays/medical records, transporting seniors or pets, grocery/gift shopping, dry cleaning pickup/delivery, lunch delivery, notary …
Does an out-of-state company that sells customizable web-center subscriptions to Kansas customers, with no property or employees in Kansas, have to file Kansas income tax or collect Kansas sales tax?
No, on these facts. The Department ruled that an Arizona-based company selling customizable 'web center' subscriptions, with no real or personal property, inventory, or employees in Kansas, is not req…
Does a pagination system — computer hardware and software used to design, edit, and assemble page layouts for commercial printing and newspaper production — qualify for Texas's manufacturing exemption from sales and use tax?
Yes. A pagination system — a combination of computer hardware and software that lets a printer/publisher design, edit, and assemble page layouts before the files are sent to pre-press to make negative…
Was replacement equipment built to meet pollution rules exempt from Florida sales and use tax?
Yes. Florida found the condensate collection system and the integrated chlorine-dioxide facility and replacement bleach plant exempt because they were installed to meet environmental requirements and …
Is a corporate 'in-house bank' that mainly lends to its own affiliates a 'financial service company' for Connecticut corporation business tax -- even though the loans are to related parties?
Yes. A corporate 'in-house bank' subsidiary that derives more than 50% of its gross income from loans is a 'financial service company' under Conn. Gen. Stat. § 12-218b(a)(6)(J) -- and it does NOT lose…
Which medical products in the company's item list were taxable?
It depended on the item. Florida marked each of approximately 250 listed products as taxable or exempt. Prescription-dispensed products and specifically exempt categories could qualify, while medical …
Was a hotel tradename fee taxable, and how was taxable rent allocated?
The separately stated tradename fee was not taxable because the name had independent value and the arm's-length lease reasonably allocated 30% of the payment to it. For the real-property rent, Florida…
I paid income tax on my contractor income but didn't know New Mexico gross receipts tax applied — can I get back the penalty and interest?
No — the protest was DENIED. Johnny Griego spent 18 years as an independent contractor delivering bulk mail for the Post Office, paying income tax but never gross receipts tax, unaware it applied to h…
When a single invoice includes items taxed at two different combined local tax rates (e.g., because they ship to different taxing jurisdictions), should the seller compute and round tax separately for each rate group, or add all the taxable amounts together first and round once at the end?
Round separately by rate group, not combined. Rounding tax due is generally prohibited — tax must be added to the sales price using the statutory bracket system (Rule 3.286(d)(5)). When an invoice has…
When a company leases construction equipment (with its own employees as operators) from its parent, and uses that equipment to unload, transport, and rough-set heavy generators for a general contractor, who owes Texas sales/use tax at each step — and should equipment bought for this purpose be purchased under a resale certificate or with tax paid up front?
It depends on what the equipment is actually used for. A company that uses leased equipment and its own employees to receive, unload, transport, and rough-set items for a customer is providing a nonta…
Can I move real estate into an LLC, partnership, or corporation without paying Connecticut real estate conveyance tax, if my beneficial ownership doesn't change -- even though I might transfer interests later?
Yes. A transfer that merely changes the form or identity of ownership -- with no change in beneficial ownership -- is exempt from Connecticut real estate conveyance tax under Conn. Gen. Stat. § 12-498…
If a vendor refuses to accept a properly completed Texas resale certificate, can the buyer still avoid paying sales tax on items it intends to resell?
Yes, indirectly. A vendor is not required to accept a resale certificate even if it is properly completed. If a supplier refuses one, the buyer can reimburse itself for the Texas sales tax it paid on …
Could a seller initially rely on a nonresident dealer's export statement instead of charging Florida tax?
Yes. The seller could accept a nonresident dealer's statement and initially ship without Florida tax, including for multiple shipments, foreign dealers, and goods temporarily stored in Florida before …
Does an independent contractor who performs state-required accessibility (TAS) plan reviews and inspections on buildings, and also does related consulting, owe Texas sales tax or need a sales tax permit?
No sales tax is due on the review and inspection fee charged to determine compliance with the Texas Accessibility Standards (TAS), and expert or professional consultation services are not taxable eith…
Can an architecture firm get a Texas sales and use tax permit to buy computer equipment for a project, and avoid paying tax on that purchase by reselling the equipment to a tax-exempt government customer (a municipal airport)?
Yes. An architecture firm — even one not typically in the business of reselling equipment — can obtain a Texas sales and use tax permit in order to purchase computer equipment that will be resold, and…
When an advertising agency has printed folding advertisement cards made and places them in racks at hotels/motels for tourists to take, and charges restaurant clients a flat fee to be featured on the cards, is the agency selling a nontaxable advertising service or a taxable sale of tangible personal property?
It's a taxable sale of tangible personal property, not a nontaxable advertising service. Rule 3.321(c) treats an advertising agency in this fact pattern as a retailer of the advertising cards it produ…
When a commercial-production company gives its raw daily footage ('dailies') to the client at no extra charge, alongside the paid final production, does it owe sales tax on that transfer?
No. Sales tax is not due on the transfer of dailies (raw, unedited daily footage from filming) to the client when the client pays nothing extra for them and receives no separate consideration in retur…
Is the ink-jet addressing equipment a mailing house uses to address envelopes exempt from tax, and does charging sales tax on a single combined bill for printing and mailing services matter?
The ink-jet addresser itself does not qualify for a tax exemption, because it's used to provide a nontaxable mailing service rather than to manufacture a product for sale. But a separately stated char…
Can a designated Enterprise Project get a state sales/use tax refund on building materials where the tax was paid by its contractor under a cost-plus construction contract, if the invoices separately itemize the material cost and tax passed through to the client?
It depends on whether the underlying contract is genuinely lump-sum or separated — the Comptroller couldn't answer definitively without reviewing the actual contract and billings, but cautioned that a…
If a tax-exempt nonprofit hires a for-profit company to produce a carnival-style amusement event on its behalf, does the for-profit company's ownership of the amusement rights and share of any profit make the event's admission charges subject to Texas sales tax?
No. A nonprofit (non-governmental) organization can hire a for-profit company to produce an amusement event without losing its sales tax exemption, as long as the nonprofit holds itself out as the pro…
Can a private boat/yacht club buy the floating drums for its members' boat-slip docks tax-free under a resale certificate, since the club already charges its members sales tax on boat slip rental? And can it buy free-to-use member boats tax-free the same way?
No for the floating docks, yes for the boats transferred to members. A private boat/yacht club cannot buy the floating drums and materials for its members' boat docks tax-free under a resale certifica…
When is a portable building, prefabricated steel shelter, or similar item like playground equipment or picnic tables just taxable tangible personal property, and when does installing it turn the deal into a real-property improvement contract instead?
It depends on the installation. Items sold free-standing or that only need above-ground mounting/anchoring (like playground equipment, picnic tables, benches, and outdoor athletic equipment) stay tang…
Does simply exhibiting at a trade show in Texas create nexus, requiring an out-of-state exhibitor to hold a Texas sales and use tax permit?
Yes, if the exhibitor sells taxable items at the show, takes orders there that are later accepted out of state, or uses the show to promote future sales. Per Comptroller Publication 96-276, any exhibi…
Can an engineering firm doing work for tax-exempt entities (like municipalities) buy surveying/CAD services, software, and testing materials tax-free, on the theory that those items end up transferred to the exempt client as part of the engineer's service?
No — the engineer must pay tax on those items when it buys them, even though they end up transferred to the exempt client after the engineer uses them. Under Tax Code § 151.151, a purchaser may only u…
For a software/hardware consulting company doing internet-era work — rendering vs. creating HTML documents, server co-location/administration tasks, and charging for access to a database it maintains online — which of these services are taxable in Texas, and how?
A mixed bag. Rendering (reformatting) an existing HTML document is taxable data processing, same as creating one (Rule 3.330(a)); as of October 1, 1999, 20% of data processing/information service char…
When a company leases GPS units to golf courses that in turn charge golfers a fee to use them, who owes Texas sales tax — the company leasing to the course, or the course charging the golfer?
The golf course collects the tax, on the rental payment from the golfer — not the leasing company on its lease to the course. The golf course may issue the leasing company a resale certificate for GPS…
Is power/pressure washing taxable in Texas, and does it matter whether you're washing a motor vehicle, other tangible personal property, or a building/sidewalk/parking lot?
It depends on what's being washed. A charge for power washing a motor vehicle (including tractor-trailer rigs, commercial vans, armored vehicles, tree-trimming vehicles, and bread vans) is NOT taxable…
Were privately funded stadium furnishings exempt because a public authority placed the orders?
No. Florida treated the private team as the real purchaser because it funded and selected the furnishings, bore insurance and other ownership costs, and had exclusive use for their useful life. The pu…
A consultant reported business income on his federal Schedule C, then said it was really tax-free expense reimbursements. Could he use the lower figure for New Mexico gross receipts tax?
Denied. The consultant reported $14,958 of business income on his 1994 federal Schedule C and took the benefit of the resulting loss, but never amended the return. New Mexico law requires a taxpayer t…
How is Texas sales tax reported on coin-operated bulk vending machines that dispense toys, stickers, candy, or soft drinks, and is there an exemption for cheap toys sold this way?
A bulk vending machine is a coin-operated device that dispenses unsorted items randomly, in roughly equal amounts, with no customer selection of a particular item or type. Toys or similar items design…
Is a personal errand service — shopping, transportation to appointments, picking up/returning videos or dry cleaning, charging a fee plus reimbursement for items bought — taxable in Texas?
No — as described, an errand service is not taxable, because it's a transportation or delivery service. Using the letter's own example: if a customer gives you a list of videos, you rent them and deli…
Does a waste transportation broker that arranges hauling of both hazardous and non-hazardous waste, and rents out roll-off boxes/tankers/vans as part of the job, need a Texas sales tax permit — and can it buy or rent that equipment tax-free?
Yes, a sales tax permit is needed — the business is a seller of a transportation service (garbage/waste collection). Charges for transporting NONHAZARDOUS waste are taxable under Rule 3.356; roll-off …
We're ESDC. Our subsidiary QWDC is developing the Queens West waterfront project in Hunters Point. A private developer will borrow from outside lenders, and QWDC will be named mortgagee -- alone or as co-mortgagee -- before assigning its interest to the real lenders, with the mortgage likely severed, refinanced, and even converted from leasehold to fee financing over many years as multiple parcels are built out in stages. Is all of that exempt from mortgage recording tax?
Exempt for mortgages naming ESDC or QWDC as mortgagee; later increases in debt remain taxable. In 1989, ESDC (then the NYS Urban Development Corporation) joined the City of New York, the city's Econom…
If a family member with dementia or another serious illness is moved into a New York nursing home by a relative acting under power of attorney, does that make the person a New York resident for income tax purposes?
No. Because Rosa Schmitz's 1998 move into New York adult care facilities resulted from advanced Alzheimer's disease, bladder cancer, and breast cancer rather than her own voluntary intent to make New …
Do membership fees at two different Manhattan health-club facilities -- one with a full range of participant sports, the other with only traditional gym equipment -- owe New York State club-dues tax or New York City's separate tax on gyms and health salons?
It depends on the facility. Membership fees at both facilities escape New York's state/local social-athletic-club dues tax, because members have no ownership interest or control over either club. But …
If a pest-control company gives customers a 10% discount for paying an entire year's service contract up front instead of paying after each visit, can it exclude that discount from the receipts it charges sales tax on?
Yes. Because the 10% discount is offered at the moment the contract is signed -- in exchange for prepaying the full year rather than paying after each visit -- and isn't a reward for paying a set pric…
Does a newly formed golf and social club owned by a for-profit LLC have to charge sales tax on membership dues and a one-time initiation-fee deposit, when members hold no ownership stake in or control over the club?
No. Because members of the club won't own any proprietary interest in it, won't control its management or activities, and the only cap on membership is the physical capacity of the golf course and clu…
Are gastrostomy feeding tubes, the 'spike set' tubing kit, and feeding machines/pumps used for tube-feeding patients exempt from sales tax as prosthetic devices?
Yes. A gastrostomy tube -- which carries nourishment through the abdominal wall directly into the stomach for patients whose esophagus can no longer function -- qualifies as an exempt prosthetic aid b…
When a contractor rents scaffolding to perform a construction project (including for a tax-exempt entity), is the labor to erect/assemble the scaffolding taxable, and does it matter who does that labor — the rental company, a third party, or the contractor's own employees?
It depends who does the erection work. If the scaffold rental company itself charges for labor to erect/assemble the scaffolding, that charge is taxable as part of the total rental/lease price — even …
Can a retailer buy the shopping bags it hands out to customers tax-free from its bag supplier, treating them as wrapping/packaging supplies purchased for resale?
No. Texas sales tax law does not exempt wrapping and packaging supplies for retailers, and the resale exemption does NOT apply to shopping bags a retailer provides to customers who are buying other it…
When repairing property damaged in a governor- or president-declared disaster area (like tornado damage), does the Texas labor-to-restore-property exemption cover the cost of scaffolding or other equipment rented to do the repair work?
No — the exemption does not extend to rented scaffolding or other equipment. Tex. Tax Code § 151.350 exempts separately itemized LABOR ONLY to restore real or tangible personal property damaged by the…
When a software consultant charges for a business 'assessment or discovery service' that may (or may not) lead a customer to later buy software, is that assessment charge taxable, and what does it mean for the charge to be 'unrelated' to a taxable sale?
Software installation, modification, and technical support charges on software you sold, leased, or licensed are taxable; a separately stated training charge is not (Rule 3.308(b)(3)). For a broader c…
Could a group stop consolidated filing after Florida changed its treatment of a disregarded LLC?
Yes. Florida allowed separate returns for years ending on or after December 31, 1999, after a law change required the parent to combine a disregarded single-member LLC's income and apportionment facto…
When two corporations consolidate portions of their businesses into a joint venture through a multi-step reorganization — forming and merging several single-member LLCs and a limited partnership along the way — does any step trigger Texas sales or use tax?
No Texas sales or use tax applies to any step of the described reorganization. Two corporations consolidating parts of their businesses into a joint venture — through forming wholly-owned LLCs, contri…
Can a jewelry retailer buy the gift boxes it delivers merchandise in tax-free, on the theory the box cost is baked into the item's sales price and the box is effectively purchased for resale?
No. A retailer that buys boxes to deliver jewelry or other items to customers cannot buy those boxes tax-free, even though the box cost is effectively included in the item's sales price. Prior to Octo…
Which of the many services and fees a hotel or motel charges its guests are subject to Kansas sales tax, and which are exempt?
It depends on the charge. The Department provided a chart of common hotel and motel charges. Guest room rental (taxable as sales tax plus transient guest tax), food and catering, alcohol, car rental, …
Is a fee paid to a contract draftsman who is hired only to review/check the work of a company's own staff draftsmen, without producing any drawings themselves, taxable in Texas?
No. A charge for a contract draftsman hired solely to check the work of a company's staff draftsmen — where the contract draftsman does not produce any drawings or other tangible personal property — i…
Were separately stated service charges taxable when the club kept part for payroll costs?
The fully distributed service fee was not taxable, but the two charges from which the club retained about 10% were taxable. Using part of a mandatory service charge for the employer's payroll taxes or…
If a customer sends its own trucking company (common carrier) to pick up an order at a Utah distribution center and haul it out of state, is that sale exempt from Utah sales tax as interstate commerce?
Yes, this qualifies as an exempt interstate commerce sale, not subject to Utah sales tax -- as long as three conditions in Utah Admin. Rule R865-19S-44 are all met: (1) the property actually and physi…
Can a large automotive finance company title all its leased vehicles in the name of a purpose-built, business-activity-free titling trust for a lease securitization program, and does the trust itself bear licensing and tax responsibilities, or do the trust's beneficiaries?
Yes to titling, and licensing/tax duties shift to the trustees/beneficiaries. A large automotive finance company can title all its leased vehicles in the name of a specially created titling trust that…
Is renting reusable/returnable pallets and containers in Utah exempt from sales and use tax, the way one-time-use packaging is exempt?
No, rentals of reusable/returnable pallets and containers are taxable, and only the Legislature — not the Commission administratively — could change that. Utah's packaging exemption under § 59-12-104(…
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