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 the original May 2000 advisement tax nonprofit gifts of unencumbered property?
No, but this May 22, 2000 advisement was later revised. It found no documentary stamp tax on gifts of three unencumbered properties between nonprofit nonstock corporations because no consideration was…
Did a disregarded LLC's sales to its owner enter Florida's corporate sales factor?
Only if the related income was reported. Because the single-member LLC was treated as a division of its owner, its sales to the owner entered Florida's sales apportionment factor when the income appea…
Can a retailer buy decorative wrapping items like colored tissue and ribbon tax-free for resale on the theory that they're 'part of the gift,' and does the same rule apply to the wicker or straw baskets the gift is arranged in?
Decorative wrapping items (colored tissue, ribbon, etc.) may NOT be purchased tax-free for resale — the Tax Code makes no distinction between 'decorative' and 'common' wrapping/packaging supplies, and…
Were charges for personalized billing statements and notices subject to Florida sales tax?
No. Florida treated the customized billing statements, letters, and notices as nontaxable data-processing services because each report was personal to one customer's account and the printed material w…
Do stickers sold through a bulk vending machine qualify for the same sales tax exemption as candy and toys, and does it matter whether the customer can choose which sticker they get?
Stickers qualify for the bulk vending machine exemption (50 cents or less, effective July 1, 1999, up from the prior 25-cent threshold) ONLY if the sticker machine dispenses stickers randomly, with no…
When a 501(c)(7) social/country club merges into an IRC Section 528 nonprofit homeowners association (with the homeowners association as the surviving entity), does the surviving entity have to collect sales tax on green fees, swimming pool fees, dues, and similar amusement charges?
No sales tax collection is required — but only because the 501(c)(7) social club entity ceases to exist after the merger. If, after the merger, only the IRC Section 528 nonprofit homeowners associatio…
Is natural gas and electricity used to perform failure-analysis testing on metals, plastics, coatings, and other materials exempt as utilities used in manufacturing or processing?
No. The sales tax law exempts utilities (gas and electricity) used in manufacturing or processing tangible personal property FOR SALE as tangible personal property — but a failure-analysis testing ser…
Is landscaping a taxable real property service in Texas, and is hardscape work like retaining walls, ponds, or sprinkler systems taxed the same way?
No, not the same way. Landscaping and lawn/yard maintenance (planting, mowing, pruning, fertilizing) are taxable real property services on which you collect tax from the customer. Hardscape work (reta…
Are herbal dietary supplements taken for weight loss or other medicinal purposes exempt from Texas sales tax as over-the-counter drugs and medicines?
Yes. Effective April 1, 2000, Texas exempts over-the-counter drugs and medicines, vitamins, minerals, and nutritional supplements — including herbal dietary supplements taken for weight loss or other …
Is a multi-level marketing company required to hold a Texas sales tax permit and collect state and local sales tax on the sales its distributors make, and how should it account for local tax across different jurisdictions?
Yes. A direct sales organization (including a multi-level marketing company) is responsible for collecting and remitting Texas sales and use tax — state and all applicable local taxes — on taxable sal…
Were 99-year co-op leases issued to the original bankruptcy-plan purchasers subject to deed tax?
No, for the original purchasers who funded or became obligated for the acquisition before closing. Florida treated the co-op's later issuance of their 99-year proprietary leases as an agent-to-princip…
Did two out-of-state merger steps trigger Florida documentary stamp tax on real property?
No, if title vested by operation of law. The revised advisement found no documentary stamp tax when a Florida corporation merged into a Delaware corporation and the Delaware corporation then merged in…
Were payments under the synthetic lease taxable as real- or personal-property rent?
No. Florida treated the arrangement as a mortgage substitute rather than a lease of real or tangible personal property. The bank trust held bare legal title as part of a financing mechanism, and the l…
Can I get a negligence penalty refunded if I underpaid tax because I misunderstood a general answer a state employee gave me?
No — the protest was DENIED. R&R Professional Pharmacy did not pay gross receipts tax on sales to Medicare patients because its treasurer believed Medicare sales were tax-exempt sales to the federal g…
In a Section 338(h)(10) deemed asset sale of an S corporation holding QSSSs, which entities recognize gain for Texas franchise tax, and how is the goodwill gain sourced?
The QSSS subsidiaries recognize the deemed-asset-sale gain, the holding parent recognizes none, and goodwill is sourced to the payor's legal domicile. In a proposed sale of a Texas S corporation (ABC …
Is a computer vendor's 'price update service' — reformatting a manufacturer's electronic price/part-number data and selling it to dealers on tape or diskette — a taxable data processing service, an information service, or exempt, and does the 20% partial exemption apply?
It's a taxable information service (not data processing), but that distinction doesn't matter here: the update service qualifies for the 20% partial exemption that applies to both data processing and …
When an engineering and design firm creates original plans for a client and also produces a prototype, is the prototype production taxable, and does it matter whether the client later requests identical or altered copies?
It depends on what's being produced. The original prototype tied to the firm's nontaxable engineering/design service (even if separately invoiced) is not taxable — but once the client asks for additio…
If a corporation files the No Tax Due Information Report, does it keep its business-loss carryover, and what is the difference between franchise-tax extension forms 05-141 and 05-110?
A no-tax-due filer keeps its remaining loss years but still must apply the loss against earned surplus, and the two extension forms are interchangeable. On the business-loss questions, Tax Code Sec. 1…
When a city secures vacant buildings from unauthorized entry or demolishes them under its police powers (as opposed to hiring an outside security company), does it owe sales tax on those charges?
No. A city's charge for securing vacant buildings from unauthorized entry, exercised under its police powers, is not a taxable security service — the same reasoning that made a city's mowing of vacant…
Are nutritional supplement drinks and dietary products sold to hospitals and nursing homes for their patients exempt from Texas sales tax?
Yes. Texas exempts food products, meals, soft drinks, and candy served to a patient or inmate of a state-licensed hospital or care institution, or to a permanent resident of a retirement facility hous…
For the franchise-tax throwback rule on partnership sales, do you look at whether the corporation or the partnership is taxable in the destination state, and does general- versus limited-partner status matter?
You look at whether the corporation, not the partnership, is subject to tax in the destination state, and general- versus limited-partner status changes the answer. Addressing the throwback rule for g…
Must a non-licensed captive insurer that pays the Texas insurance premium tax also pay Texas franchise tax, or is it exempt?
The insurer is exempt from franchise tax, and its franchise-tax payments are credited against the premium-tax assessment. Following an audit, the Comptroller assessed a non-licensed Vermont captive in…
If a company leases its employees to an affiliated business partnership through a staff leasing arrangement, are the otherwise-taxable services performed by those leased employees exempt from Texas sales tax — even if the leasing company turns out to be exempt from state licensing because of common ownership?
Yes, either way. Whether the leasing company (Lessor) is licensed as a staff leasing company under Labor Code Chapter 91, or is exempt from that licensing requirement under the Labor Code § 91.001(14)…
Does a company that collects and processes human blood plasma for sale to out-of-state pharmaceutical manufacturers qualify for Texas's manufacturing exemption on its equipment, packaging, and utilities purchases?
Yes. A company that processes human blood plasma for sale to pharmaceutical manufacturers qualifies for Texas's manufacturing exemption (Tax Code § 151.318) on machinery and equipment that physically …
Could an expanded and diversified corporate group stop filing Florida consolidated returns?
Yes. Florida permitted the affiliated group to stop consolidated filing because its size and operations had changed substantially since the election, even though continued filing did not cause a mater…
Are semi-trailers sold to farmers and ranchers exempt from Kansas sales tax as farm machinery and equipment?
Yes, if they qualify as farm trailers. The Department ruled that semi-trailers (grain, flatbed, dump, tank, van) are exempt from Kansas sales and compensating tax when they are designed for farm or ra…
A Gallup jewelry partnership's bank account mixed loan money, out-of-state sales, and taxable sales. With records in disarray, how much of it owed New Mexico gross receipts tax?
Partially granted. The Department may assess tax on all business deposits when a taxpayer's records can't show what's taxable, because an assessment is presumed correct and all receipts are presumed t…
When a Texas racetrack pays a totalisator company to process betting data for simulcast races, is that charge taxable, and does it matter whether the race is hosted in Texas or out of state?
Yes, taxable either way. A Texas guest track owes tax on the service charge a totalisator company assesses for processing wagering data, whether the race is hosted at another Texas track or an out-of-…
Are private sports lesson fees — for example, ice skating, swimming, gymnastics, golf, or tennis instruction — taxable as amusement services in Texas?
No. Lessons and classes are not amusement services under Rule 3.298. Neither private ice skating lessons taught by independent contractors nor group lessons/skating school taught by the rink's own emp…
Is stress testing of metal, plastic, or concrete taxable as an insurance service in Texas, and does it matter whether the client is an insurance company, a policyholder, or an unrelated third party like a law firm?
It depends on whether an insurance policy is involved, not on who hires the tester. Stress testing metal, plastic, or concrete on behalf of an insurance carrier, its insured, or others in connection w…
Does an internet company that markets vehicles for licensed dealers, and earns a per-sale fee from those dealers, need its own Utah motor vehicle dealer license?
Yes -- the internet company needed a Utah motor vehicle dealer license. Even though the Website argued it was merely providing e-commerce marketing technology with no agency relationship, no pricing c…
Does Utah's sales tax exemption for 'locally grown' seasonal crops apply to an out-of-state farm's sales into Utah?
No. The Utah State Tax Commission interprets 'locally grown' in the seasonal-crop exemption to mean grown within Utah's state boundaries, not merely nearby or within some reasonable radius. An out-of-…
Is a separately labeled 'surcharge' for water delivery subject to Kansas sales tax, or does calling it a surcharge keep it out of the tax base?
Yes, it's taxable. The Department ruled that a water-delivery surcharge is subject to Kansas sales or use tax because it is part of the 'selling price' under K.S.A. 79-3602(g), which includes freight …
Can a company that manages and coordinates real property surveys for its customers buy the underlying surveying services tax-free for resale, and does it matter that the company itself isn't a licensed surveyor?
No, not to escape tax on resale — the total amount the company charges its customers for coordinating real property surveys is taxable, because it's buying and reselling a taxable real property servic…
Can a business get a refund of sales tax it paid when buying decontamination trailers and brush chippers that it now rents out to customers, and how does that differ from using the same equipment to provide a service?
Yes, if the equipment is genuinely rented to customers who get operational control (not used by you to perform a service) and doesn't carry a manufactured-home label. A decontamination trailer and a b…
Were separately itemized pipeline charges for delivered natural gas taxable in Florida?
Yes. The out-of-state vendor sold both the gas and its delivery to the buyer's Florida city-gate point, where title passed. Florida treated the separately stated pipeline charge as part of the taxable…
Do donations tied to a purchase from the donor qualify for the Kansas community service contribution tax credit?
No — those transfers are not qualified contributions. The Department ruled that donations tied to a same-day purchase from the donor are not 'true' donations and do not earn the community service prog…
Does a Laryngeal Mask Airway (LMA) — a device inserted through the mouth to keep a patient's airway open during anesthesia — qualify for Texas's sales tax exemption for prosthetic devices?
Yes. The Laryngeal Mask Airway qualifies for exemption as a prosthetic device under Tex. Tax Code § 151.313, because it functions like an endotracheal tube — providing an unobstructed airway from the …
Is a company that brokers advertising space on school buses — finding advertisers, arranging printing/installation, billing advertisers, and paying the school district a revenue share — required to charge sales tax on its charges to advertisers?
No, the broker's charge to advertisers is not subject to sales tax. But the broker must pay sales tax on all the supplies, materials, and equipment used to provide the service — including graphic arts…
Can a web design/Internet development company's consulting charges (client meetings, strategy discussion, marketing research) be sold tax-free and separately from its taxable HTML production and data entry work?
Yes, if the consulting is genuinely separable. Entering information and creating HTML documents are taxable data processing services, but expert/professional consultation (client meetings, strategy di…
Are used auto parts bought from a junkyard subject to sales tax again when resold or incorporated into a repair, even though sales tax was already paid when the part was first sold as new?
Yes. Sales tax applies every time a taxable item is sold for consideration, regardless of whether it's new or used and regardless of whether tax was already paid on an earlier sale of the same item. W…
When a company sells an item but hires an independent contractor to deliver and install it from the contractor's own inventory, who collects sales tax, and does the contractor owe use tax on the inventory it uses?
The company that made the retail sale to the customer remains the 'vendor' ultimately responsible for collecting and remitting Utah sales tax, even if an unrelated independent contractor actually deli…
Are personal and corporate concierge services — like picking up dry cleaning, planning parties, setting up tee times, ordering flowers, or getting car registrations — taxable in Texas?
Generally not taxable, if the concierge is only providing a transportation/delivery or planning service. Charges to plan parties, set up tee times, or get car registrations are not taxable. Picking up…
Are anti-static grounding wristbands and anti-static floor mats/carpeting, used by circuit board manufacturing workers to prevent static electricity damage, exempt from Texas sales tax as manufacturing safety apparel?
Split answer. Grounded anti-static wristbands qualify for the safety apparel/work clothing exemption under Tex. Tax Code § 151.318(a)(9) because the circuit board manufacturing process couldn't happen…
Can someone buy an aircraft tax-free with a resale certificate if they plan to lease it to both a certificated carrier and, occasionally, private individuals?
Yes, buy the aircraft tax-free with a resale certificate. Leases to a certificated or licensed carrier of persons or property are tax-exempt under Tex. Tax Code § 151.328(a), if the carrier issues an …
Is the labor to repair a manufacturing machine — like a threading machine directly used to manufacture products for sale — exempt from Texas sales tax the same way the machine itself is exempt?
Yes. Under Tex. Tax Code § 151.3111(a), a repair service on property that would itself be exempt because of its nature or use is exempt too — so the repair of a threading machine used directly in manu…
Did federal-agency propane vehicles need Florida alternative-fuel decals or pay the fuel tax?
No. Florida found the federal agency exempt from buying alternative-fuel decals and from the associated alternative-fuel tax because state and local government vehicles received the exemption and fede…
Were railcar lease charges under car service agreements exempt for a nonrailroad lessee?
Yes. Florida concluded that the statutory exclusion for charges under car service agreements applied regardless of whether the lessee was a railroad. The Department agreed that a rule continuing to ta…
Is individual house cleaning or maid service taxable in Texas, and does it matter whether you're an independent solo cleaner, a janitorial company, or hired by a builder for construction cleanup?
It depends on your business structure. A single individual cleaning private residences with no employees is treated as a household employee, not a taxable service provider. But a cleaning business (wi…
Which eyewear and eye-care products are exempt from Texas sales tax when dispensed by an optometrist or ophthalmologist, and does the same exemption apply to opticians?
An eye doctor asked whether frames, lenses, and contact lenses sold in a new optical office are taxable. Under Tex. Tax Code § 151.313, corrective lenses and necessary related supplies dispensed or pr…
If a corporation has under $150,000 in gross receipts and owes no franchise tax, must it file the regular (long) form to keep using a business-loss carryover, and does a no-tax-due year still consume the loss?
A no-tax-due year still consumes the loss, and filing the long form is how you preserve or add to the carryover. A taxpayer with a business-loss carryover and under $150,000 in gross receipts everywhe…
Are software royalty payments exempt from Texas sales tax just because they're labeled a 'royalty' rather than a sale, lease, or license fee?
No, not automatically. Tax is due on the sale, lease, or licensing of software under Rule 3.308, and calling the charge a 'royalty' instead of a sale, lease, or license fee doesn't change that. There'…
Are enteral and parenteral feeding systems — nasogastric/gastrostomy tubes and related supplies — exempt from Texas sales tax as prosthetic devices, and what about the liquid food delivered through them?
Yes. Nasogastric and gastrointestinal (enteral and parenteral) feeding devices and their directly related supplies qualify as prosthetic device 'systems' under 34 TAC Rule 3.284, exempt whether or not…
Is moving existing gas or telephone lines to accommodate a building addition treated as a taxable real property service, or as nontaxable relocation?
Not taxable. Moving gas lines and telephone lines to make room for an addition to an existing building is treated as a relocation of the lines, and relocating gas and telephone lines is not taxable.
Is a charge for an asbestos survey to determine whether asbestos is present in a building taxable in Texas?
Generally not taxable. A charge for an asbestos survey (to determine if asbestos is present) is not taxable unless it's performed for an insurance investigation or claim under 34 TAC Rule 3.355 — in w…
Does the equipment that loads scrap metal into a shredder qualify for Texas's manufacturing exemption, or is it excluded as intraplant transportation equipment?
No, it doesn't qualify for the manufacturing exemption. A caterpillar material handler used to put scrap metal into a shredder is intraplant transportation equipment — moving product or raw material i…
When a manufacturer bills a customer separately for the die (mold/tooling) used to make the customer's product, but keeps possession of the die itself, is that a taxable sale of the die?
It depends on whether there's a written agreement making the customer the actual owner of the die. With a written ownership agreement, the die charge is a taxable sale (unless the customer is a manufa…
Now that the long-form requirement is gone, must a short-form filer still reduce its business-loss carryover, and does using the short form extend the loss carryforward period?
A short-form filer still must use its loss each year, and the short form does not extend the carryforward period. After the instruction requiring the long form to preserve a business-loss carryover wa…
Does acetone used to flush catalyzed resin out of fiberglass spray equipment (chopper guns) qualify for the sales tax manufacturing exemption?
Yes. A custom fiberglass manufacturer's acetone, used in a built-in flush system to purge catalyzed resins from spray-equipment lines and guns during the manufacturing process, qualifies for exemption…
Did Sunshine Law coverage exempt the county-linked association from intangible property tax?
No. Being subject to Florida's Government in the Sunshine Law did not make the county-linked 501(c)(9) employee-benefit association a state political subdivision, municipality, or qualifying charitabl…
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