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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Does a school owe Kansas sales tax on tickets to school dances and on t-shirts it sells to athletes, and are dinner-theatre group purchases taxable?
Yes to all three. The Department ruled that a school must collect Kansas sales tax on tickets to school dances, because the tickets are admissions to a place providing amusement/entertainment/recreati…
After a corporate merger, can the surviving company take a sales-tax credit for taxes the non-surviving predecessor paid in error before the merger?
Yes. Where a Texas corporation was merged into a Delaware corporation (a tax-free reorganization under IRC § 368(a)(1)(F), keeping the same federal ID), the surviving corporation -- as the entity now …
Which parts of a bulk mailing/fulfillment business's services (data processing, collating, printing, postage, labels, set-up fees) are subject to Texas sales tax?
It depends item-by-item on what's actually done, per the Comptroller's category-by-category breakdown: data services (database design, de-duplication, CASS certification) are nontaxable when they rela…
Are a Nebraska Natural Resource District's purchases exempt from sales and use tax?
Yes, starting October 1, 1999. Under Laws 1999, LB 232, purchases by a Nebraska Natural Resource District are exempt from sales and use taxes. To buy tax-free on and after October 1, 1999, the Distric…
Can a retail company buy paper, ink, photography, and printing/mailing services tax-free when they're used to produce free promotional mailers sent to customers inside and outside New York?
Yes. The materials Corporation X buys and supplies to its printers, and the photography, modeling, and mailing services it purchases, are exempt from New York sales and use tax to the extent the finis…
Did federal tax deferral for an I.R.C. Section 1031 exchange also defer the exchange gain in the earned-surplus component of the former Texas franchise tax?
Yes, for the earned-surplus component described. Because that component began with federal net taxable income, a corporation's federal Section 1031 tax deferral was reflected in taxable earned surplus…
Did federal tax deferral for an I.R.C. Section 1031 exchange also defer the exchange gain in the earned-surplus component of the former Texas franchise tax?
Yes, for the earned-surplus component described. Because that component began with federal net taxable income, a corporation's federal Section 1031 tax deferral was reflected in taxable earned surplus…
Did a Virginia corporation create Texas franchise-tax nexus by selling merchandise from a trailer at one Texas NASCAR event?
Yes. Assuming the company was a corporation without a Texas certificate of authority, its merchandise sales from a trailer at one Texas NASCAR event in 1998 were sufficient to subject it to both the t…
Which of a community theatre's fundraising receipts — golf fees, auctions, concessions, ride and admission charges, gift certificates — are subject to Kansas sales tax?
Most of them are taxable. For a community theatre's fundraisers, the Department ruled that golf tournament fees, auction gross proceeds, and concession stand receipts are taxable (no nonprofit exempti…
Are digital certificates (Digital IDs) sold and delivered over the Internet subject to Texas sales tax as software, data processing, information services, or telecommunications services?
Not taxable under any of four theories tested. A company that sells Digital IDs (digital certificates used to authenticate identity for secure online commerce) delivered electronically over the Intern…
Does a chiropractor collect sales tax from patients for therapeutic devices used in treatment, and can a practitioner buy prescribed dietary supplements/vitamins tax-free?
A licensed practitioner of the healing arts (like a chiropractor) pays sales tax itself on the purchase price of therapeutic appliances or devices used in treating patients, but does NOT collect sales…
Did a Delaware corporation create Texas franchise-tax nexus by keeping a Texas checking account and hiring a Texas resident as president?
No, not by themselves. A Delaware corporation's Texas checking account and employment of a Texas resident as president did not subject it to franchise tax. If the president conducted the corporation's…
Are portable, bolted-together steel-frame shelter buildings (and their foundations) taxable as tangible personal property in New York, or exempt as a real-property capital improvement or farm-use equipment?
The prefabricated steel-frame shelters themselves are not capital improvements -- they're bolted together and designed to be portable, so their sale and installation stay fully taxable -- unless a far…
Does an online auction platform that lets independent dealers list and sell collectibles -- handling the website, bidder registration, and credit-card processing, but never taking title to the goods -- become a New York sales-tax vendor itself, or create nexus for the dealers who sell through it?
No, on all three points. The platform itself is not a sales-tax vendor because its role -- hosting listings and handling order/payment logistics for independent dealers -- is internet advertising plus…
Did a relocatable modular asphalt plant qualify as a fixed-location new business when some asphalt was used in the owner's contracts?
Yes. A plant intended to operate at least six months met the fixed-location rule, even though it could later be relocated. The exemption did not require every unit of asphalt to be sold, so producing …
Can a Texas sales tax filer report on a 4-4-5 (or similar) fiscal accounting calendar instead of a strict calendar-month basis?
Yes, with mechanical limits. Texas requires sales tax reports on a calendar basis by default, but permits filing based on a business's own fiscal calendar (such as a 4-4-5 or 5-4-4 accounting system) …
When a company with multiple Texas offices rents and erects scaffolding at a customer site in a different city, which city/district's local sales tax applies -- the office that took the order, or the site where the scaffolding is used?
The seller's ORDER-TAKING place of business controls, not the job site. A scaffolding company with multiple Texas offices owes city sales tax and crime control district sales tax based on which office…
Is a furniture trade-in taxed on the full new-item price, or only on the trade-up difference?
It depends on the direction of the trade. An even trade of like items has no sales tax due at all. If a customer trades up (gets a more valuable item and pays the difference), tax is due only on that …
Does an out-of-state company create Texas nexus just by hiring a former employee, now living in Texas, as an independent contractor to do customer support?
Yes, nexus is created -- twice over. An out-of-state company whose only link to Texas is a single independent contractor (a former employee who relocated to Texas and now answers customer-support e-ma…
Is the 'finish-out' work completing an unfinished ('green') aircraft -- installing interior, avionics, and paint -- exempt manufacturing, or taxable repair/remodeling labor?
Exempt manufacturing, not taxable repair. When a seller's original sales contract obligates it to complete an unfinished ('green') aircraft's 'finish-out' -- custom interior, painting, avionics, commu…
Did Florida's rental-car surcharge apply when a repair dealer paid for a customer's replacement car but the customer bought extras or an upgrade?
No surcharge applied when the repair dealer paid the entire vehicle charge, even if the customer separately bought insurance, a damage waiver, or cell-phone rental. The exemption failed when the custo…
Is mowing, clearing brush, or cutting undergrowth on ranch or timberland a taxable real property service in Texas?
ALERT (see note below): mowing, cleaning, clearing, or brush-cutting to maintain and clear ranch land or timberland of undergrowth -- performed by independent contractors for a land manager -- is NOT …
Is a time-based fee for playing networked computer games (not coin-operated, charged by the hour rather than per game) a taxable amusement service in Texas?
Yes, taxable in both business models the taxpayer proposed. Charging customers by time (e.g., $1 per 15 minutes per computer) to play games on networked computers -- even though it's not coin-operated…
Is a stock photo agency's fee for selling customers unlimited reproduction rights to 'royalty free' images -- delivered either on CD-ROM or by internet download -- subject to New York sales tax?
It depends entirely on delivery method, not on what the customer is buying. Selling unlimited reproduction rights on a physical CD-ROM delivered in New York is a taxable license to use tangible person…
When a company buys communications towers and equipment buildings, are those assets taxable tangible personal property or exempt real property, and are the fees it charges other carriers to attach antennas subject to sales tax?
The communications towers themselves are taxable tangible personal property, not exempt real property -- even 400-foot towers -- because they're bolted to a concrete pad and can be unbolted and remove…
Is a community-service organization exempt from Kansas sales tax just because it operates on federal or state grant funds?
No. The Department ruled that a community-service organization is not exempt from Kansas sales tax simply because it operates on federal or state grant funds. Kansas grants only certain, specific exem…
Are credit reporting, employment verification, title insurance, escrow closing fees, and appraisal services subject to Kansas sales tax?
No, those services are not taxable. The Department ruled that credit reporting, employment verification, sale of title insurance, escrow closing fees, and appraisal services are not subject to Kansas …
Can a reseller of telephone service buy telecommunications service tax-free using a resale certificate, and who pays the old Telecommunications Infrastructure Fund (TIF) assessment?
PARTIALLY SUPERSEDED (see note below). As of 1999, a reseller of local and long-distance telephone services could issue a resale certificate to its telecommunications provider instead of paying sales …
Is an hourly charge for on-premise use of computers, memory typewriters, or printers -- for tasks like data entry, retrieval, or business accounting -- a taxable data processing service?
Yes. Charging customers for on-premise use of computers, memory typewriters, and printers -- for data entry, data retrieval, data search, information compilation, payroll and business accounting, data…
Does the manufacturing or video/audio production sales tax exemption cover motor vehicles rented to transport movie production equipment?
No. Motor vehicles are taxed under a completely separate statute, Tax Code Chapter 152 (Motor Vehicle Sales and Use Tax), not Chapter 151 -- so the manufacturing exemption (§ 151.318) and the video/au…
Is it legal for Texas to charge sales tax on cigarettes when the price already includes federal and state cigarette excise taxes?
Yes, it's legal. A consumer asked whether it's proper for Texas to assess sales tax on cigarettes when the price already reflects federal and state cigarette excise taxes baked in. The Comptroller con…
Are membership and initiation fees at a large multi-activity health and fitness club chain subject to New York State's social/athletic club dues tax or New York City's separate gym/health-salon tax?
No, on both counts. Crunch Fitness's membership and initiation fees are not taxable as dues to a state-defined 'social or athletic club,' since members don't control the club's activities, membership,…
Can an HVAC ductwork fabricator get a sales or use tax refund or credit for the sheet steel that becomes scrap or gets returned to inventory during the cutting process?
No. There is no statutory or regulatory provision allowing a refund or credit for the portion of sheet steel that ends up as scrap or is returned to inventory during the duct-cutting process. The fabr…
Is a foreign life insurer doing business in New York only through investment partnerships subject to Article 33 (not Article 9-A), and must it file a return if its Article 33 tax is capped at zero?
Yes to Article 33, and yes it must still file. A foreign life insurer doing business in New York only through its interests in general and limited partnerships and LLCs is subject to the Article 33 fr…
Did transferring Florida assets to a single-member disregarded LLC terminate the corporate parent's consolidated filing election?
No. The disregarded LLC's income and apportionment factors remained attributed to the parent. The election continued if the parent had nexus when it elected, every member consented, and the Florida an…
For a new Christmas tree farm, are fencing materials, a farm-use ATV, private road construction, and the eventual tree sales subject to Texas sales tax?
ALERT (see note below): a new Christmas tree farmer can buy fencing materials tax-free with an exemption certificate under the agricultural exemption (Tex. Tax Code § 151.316, Rule 3.296) -- covering …
Is bulldozer work for landowners, ranchers, and oil/gas seismic companies (clearing right-of-ways, repairing damaged roads, clearing brush, building or repairing a ranch tank) a taxable real property service?
It splits cleanly along a new-work-vs-repair line across five scenarios. NONTAXABLE: using a bulldozer to cut/clear/stack/burn/disk right-of-ways for a seismic or oil/gas company (with the landowner's…
Can a bakery buy proofing cabinets (which provide the heat and humidity that makes bread dough rise) tax-free under the manufacturing exemption?
Yes. Proofing cabinets -- which provide the uniform heat and humidity needed to cause bread dough to rise -- qualify for Texas's manufacturing exemption when purchased by a business in the business of…
Is installing propane piping and equipment for a meat smoker and water heater in a food-processing plant taxable, and does a water heater used for both smoker humidification and equipment wash-down qualify for the manufacturing exemption?
Split answer across two work orders. For the smoker installation: the propane piping, regulators, flex connector, and other materials are taxable, but the LABOR to install this equipment is new constr…
Is the sale, lease, or rental of a hearing aid subject to Texas sales tax?
No. The sale, lease, or rental of a hearing aid is exempt from Texas sales tax, under Tex. Tax Code § 151.313(a)(4) and Comptroller Rule 3.284(a)(5).
How were a bank's interest and dividend receipts sourced for Texas franchise-tax reports due on or after January 1, 2000?
They were apportioned to the payor's legal domicile. House Bill 2067 repealed Section 171.1031, which had sourced a bank's or savings and loan association's interest and dividends to Texas when the re…
On an exempt project, are repairs to a contractor's own equipment tax-exempt like repairs to equipment it rents for that job?
No — the two are treated differently. On an exempt project, equipment a contractor rents specifically for that job is exempt, and repair parts and repairs to that rented machine (paid by the owner) ar…
Does a custom pump manufacturer's test-lab equipment (electric motors, discharge heads, overhead cranes) used to test sub-assemblies and finished pumps qualify for the manufacturing exemption?
Splits three ways based on WHEN and WHAT the equipment does. Test lab equipment used to test semi-finished or fully assembled pumps AFTER the manufacturing process has started and BEFORE the product i…
Is artwork and packaging material sold to manufacturers (for their packaging, containers, labels, and displays) exempt from Texas sales tax, and how can a client get a refund for tax already paid?
Split by category, with a refund path. Sellers should accept an exemption certificate in lieu of tax when selling wrapping/packaging materials to manufacturers. A manufacturer that creates its own wra…
Is selling and installing a modular semiconductor cleanroom exempt from Texas sales tax, and what about repairing or remodeling the building around it?
It depends on who the customer is. Selling and installing a modular cleanroom (including installation labor) is exempt only when the customer is a semiconductor manufacturer who gives a properly compl…
Is sales tax due on drilling rigs docked in Texas, and on repairs/maintenance performed on them, while they wait for offshore oil-and-gas contracts?
It depends on how the rigs are used and built. Renting a rig with an operating crew for a single charge is a nontaxable service, not a taxable rental. Separately, purchasing the rigs and repairing/mai…
Is an above-ground swimming pool exempt from Texas sales tax if a doctor prescribes water exercise in it as physical therapy?
No. Even with a doctor's prescription for water exercise as therapy, an above-ground swimming pool does not qualify as an exempt therapeutic device under Tex. Tax Code § 151.313(a)(5) and Rule 3.284(c…
Can a seller take a sales tax credit for cash rebates it pays back to customers after the sale, based on volume of business?
Yes, if properly documented. Cash rebates paid back to customers after the sale are excludable from the sales tax base as long as the tax is refunded to the customer in proportion to the rebated sales…
Do fabric swatches, computer equipment, and color printers/supplies used by a clothing manufacturer's design department to sketch new clothing lines qualify for New York's research and development sales tax exemption?
No. Fabric swatches, color printers, printer cartridges, and paper used by a clothing manufacturer's design department to sketch and print new product designs are used in the preliminary conceptual st…
Does a one-person repair business owe sales tax on parts and labor when it repairs and refurbishes farm mixers that its customer received as trade-ins and will resell to farmers, and does the repairman need to register with the Department?
The parts Petitioner buys to repair the mixers are exempt (bought for resale, since they become part of the property later transferred to the customer) as long as he gives his supplier a timely Resale…
Are hotel room rentals purchased directly by a school exempt from Kansas sales tax, and does the transient guest tax still apply?
Direct purchases are exempt from sales tax, but transient guest tax still applies. The Department ruled that hotel room rentals purchased directly by a public or private elementary/secondary school or…
Can New Mexico add a 50% fraud penalty when a business owner simply stops filing gross receipts tax returns, without forging documents or hiding assets?
Yes — the 50% penalty was upheld and the protest denied. A forensic document examiner charged her customers gross receipts tax for years but never remitted it, kept no books, and cancelled her tax reg…
When a customer gives a supplier a blanket resale certificate, must the supplier still figure out and separately tax individual items in the order that the customer probably won't actually resell?
No, generally. A supplier who accepts a properly completed resale or exemption certificate in good faith within 90 days has no duty to investigate or debate with its customer over whether particular i…
After its spin-off from General Motors, is Delphi a new business eligible to elect a refund of its investment tax credit under section 210.12(e)?
Yes, for the period after the spin-off. For the short period while Delphi was still more than 50% owned by GM (a 9-A taxpayer) it was not a new business under section 210.12(j)(1). After GM's May 28, …
Is a gain under a residual sharing agreement -- compensation for market information provided from New York to help an affiliate price a vessel sale -- excluded from gross earnings for section 184 purposes?
No, it is not excluded. A Great Lakes shipping corporation's receipt under a residual sharing agreement -- its 20% share of the proceeds when an affiliate sold a vessel, in return for market and opera…
For a parent-teacher organization, which fundraiser sales are exempt tangible-property sales and which are taxable services under the PTA/PTO exemption?
It splits between goods and services. The Department ruled that a parent-teacher organization's sales of tangible personal property — food/drink tickets, silent auction proceeds, school supply kits, t…
Is an on-site-built glass-melting furnace ('Tank') tangible personal property that qualifies for the manufacturing exemption, or a taxable improvement to realty?
It's tangible personal property, not realty, because the facts showed no intent to permanently affix it (semi-temporary, no mortar, demolished after 3-5 years). As TPP used directly to cause a physica…
Can a wedding/portrait photographer buy cameras, flashes, batteries, and similar equipment tax-free using an exemption certificate, or only film and processing supplies?
Yes, more than just film. Photographers are treated as manufacturers under Sec. 151.318, and the 1999 addition of Sec. 151.318(t) lets them give an exemption certificate for cameras (conventional and …
Is labor to repair or remodel a building listed on the National Register of Historic Places exempt from Texas sales tax?
Yes, but only the labor. A contractor may accept an exemption certificate in lieu of collecting Texas sales tax on charges for labor to repair or remodel a building that is listed on the National Regi…
Is a service that inspects vehicle body-shop repairs and reports on their quality subject to Texas sales tax?
No, unless the service is performed for an insurance company. Post-repair inspection and reporting is not taxable in general, but the same service becomes a taxable insurance service (requiring collec…
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