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 the sale, rental, or lease of a power washer used exclusively to clean exempt farm/ranch equipment qualify for Texas's agricultural sales tax exemption?
Yes. A power sprayer/washer leased or sold for use exclusively to clean exempt farm equipment (to prevent fire hazards from dust/oil buildup or corrosion) qualifies for the agricultural exemption unde…
Were sales of tangible personal property Texas receipts when an affiliated distributor took possession at an out-of-state warehouse before shipment to customers?
No. The taxpayer retained title while an affiliate finished and stored the products outside Texas, then sold them to a distributor. The affiliate selected, packaged, and delivered the products to carr…
Did a New Jersey corporation create Texas franchise-tax nexus when independent contractors solicited consumers and merchants for its promotional program?
Yes. The independent contractors owned their territories, worked without supervision, could hire employees and represent other companies, and earned commissions from merchant billings. Even so, their …
How did Texas determine the legal domicile of grantor trusts holding leased aircraft or buildings, and what amount did the corporate beneficiary apportion?
A trust's legal domicile was its principal place of business—the location of day-to-day operations—or, if operations were fairly even across states, its commercial domicile. The letter lacked enough a…
Is photo processing equipment used by a pharmacy's photo department — cameras, enlargers, darkroom equipment, film, chemicals — exempt from Texas sales tax as manufacturing equipment?
Yes, largely. A photo processor is considered to be printing or imprinting tangible personal property for sale and qualifies as a manufacturer under Sec. 151.318. Prepress machinery, equipment, and su…
Are vent hoods over restaurant fryers and broilers exempt from Texas sales tax as manufacturing equipment?
Only in two specific situations: if the vent hood becomes a component part or accessory of a qualifying piece of manufacturing equipment, or if it's tangible personal property used in actual manufactu…
Can a Florida community college buy materials for a public construction project tax-free through a direct-purchase program?
Yes, under the procedures reviewed. The college was the actual purchaser because it issued purchase orders, was invoiced and paid vendors directly, took title and liability at delivery, carried the ri…
Does a business that arranges to sell clients' items on eBay owe Kansas sales tax on its fees, and on the items it ships to buyers?
The service fees are not taxable, but the operator must collect sales tax on items shipped to Kansas buyers. A business that photographs clients' items, lists them on eBay, and ships them to winning b…
How does Kansas sales tax apply to security equipment installation and monitoring for commercial versus residential customers?
Monitoring is not taxable; commercial installations are taxed on both labor and materials, while residential installations are taxed only on materials. A Missouri company that installs security equipm…
How do Kansas project exemption certificates work, and who can get one?
A project exemption certificate (PEC) lets a qualifying entity buy the materials and services for a specific construction project free of Kansas sales tax. The Department explained that an entity enti…
If a contract programmer bids on a job to enhance a custom software program it did not originally sell, are its charges to modify that program taxable?
No. Under Rule 3.308(b)(4), charges to modify an existing program that was not sold by the person doing the modification are not taxable. A programmer bidding on a contract to enhance and improve a co…
Does a pollution-control company that collects waste oil, filters, antifreeze, and grit trap waste owe sales/use tax on its collection trucks, truck repairs, and processing tanks/piping?
Collection and disposal of used oil, used oil filters, used antifreeze, and used brake fluid is regulated under Chapter 26 of the Texas Water Code and excluded from the definition of garbage/solid was…
Is a custom machine that prints an airline ticket and stuffs it into a mailing envelope exempt from Texas sales tax as manufacturing equipment?
No. Because the machine is used to support a nontaxable service (fulfilling ticket-by-mail orders) rather than to manufacture, process, or fabricate tangible personal property for ultimate sale, it do…
When did Florida treat a rental vehicle as a surcharge-exempt truck rather than a passenger vehicle?
Florida followed the vehicle's proper registration classification. A vehicle registered as a truck under section 320.08(3) was outside the surcharge, while one registered for hire under section 320.08…
Are membership dues a gated-community homeowners association charges for amenities like a golf course, swimming pool, and tennis courts taxable as amusement services?
It depends on the association's corporate structure. Dues charged by a 501(c)(7) social club for amusement amenities are taxable, but dues charged by an IRC Section 528 nonprofit homeowners associatio…
Does a federally tax-exempt nonprofit have to file and pay Texas franchise tax, and does its unrelated business income get taxed?
Yes, at least until it gets a Texas exemption. Texas has no income tax, but its franchise tax reaches nonprofit corporations doing business in the state. A federally exempt nonprofit corporation must …
Does a federally tax-exempt nonprofit have to file and pay Texas franchise tax, and how is its unrelated business income handled?
Yes, until it obtains a Texas exemption. Texas has no income tax, but its franchise tax reaches nonprofit corporations doing business in the state. A federally exempt nonprofit corporation must file a…
Are restaurant meals bought by school district employees exempt from Kansas sales tax, and when does the school's exemption apply?
Meals bought by school district employees are taxable; only meals purchased directly by the district are exempt. The Department advised that the Kansas Retailers' Sales Tax Act contains no exemption f…
Is repair work on oil-and-gas-field compressors taxable, and does it matter whether the compressor is used for gas processing versus moving gas through a pipeline to the plant?
It depends on the compressor's function. Compressors used with field dehydrators, heater treaters, separators, and scrubbers, or to compress processed gas to sales-line pressure, qualify as processing…
Starting a small farm to raise and breed burros for sale, can I buy fencing and other materials tax-free while I'm still building fences, clearing land, and constructing barns/sheds?
Partially. Materials to build fences that confine breeding/sale animals qualify for the agricultural exemption under Rule 3.296(a)(5) and (g)(8)-(9), but fenceposts, gates, and cattleguards enclosing …
Are prepaid paging cards and bundled pager/prepaid-service packages sold through retail stores taxable as tangible personal property or as telecommunications services, and who has to collect the tax?
Both are taxed as telecommunications services, not as TPP. Separately stated prepaid paging card charges are taxable as prepaid telecommunications services when purchased at the retail store, and the …
If I run a small sole-proprietorship selling software over the internet from Texas, do I need a Texas sales tax permit, and do I owe tax on sales to out-of-state customers?
Yes to the permit — Texas taxes the sale, lease, or license of software as tangible personal property under Rule 3.308, so a Texas-based seller soliciting taxable sales must get a sales tax permit and…
Did Florida exempt an investment fund's entire value when at least 90% of its portfolio held intangible-tax-exempt assets?
Yes. If the shares were held on January 1 through a trust registered under the Investment Company Act of 1940 and at least 90% of the corresponding portfolio was invested in exempt assets, the fund's …
Are membership dues and recreational activity fees charged by a nonprofit community service organization exempt from Kansas sales tax?
Only if the organization qualifies for a specific property-tax exemption — this one did not, so its dues and fees are taxable. The 1998 legislature exempted membership dues and recreational activity f…
Are sales of nutrition supplements exempt from Kansas sales tax?
No — nutrition supplements are taxable, and the seller must collect and remit the tax. A company selling nutrition supplements asked whether the sales are exempt. Kansas imposes sales tax on the gross…
Does Kansas sales tax apply when a seller ships tangible personal property to a buyer at a point outside Kansas?
No Kansas sales tax applies when the seller delivers the goods out of state, but an in-state pickup is taxable even if the buyer later takes the goods out of Kansas. The Department explained that when…
Are sales of shower vitalizers and liquid enhancers exempt from Kansas sales tax?
No — shower vitalizers and liquid enhancers are taxable, and the seller must collect and remit the tax. Kansas imposes sales tax on the gross receipts from retail sales of tangible personal property u…
Is an alien corporation providing international callback service through a New York switch doing business under Article 9 or 9-A, and how are its and its US subsidiary's telecommunication receipts sourced?
The alien parent (FORCO) is principally engaged in a telephone business, so it is classified under section 183 rather than Article 9-A, but on these facts it is not doing business in New York and so o…
Could an interstate railroad and its refrigerated-car subsidiary prorate Florida tax on railcar parts and fuel?
Yes. Repair parts and fuel for qualifying railcars and locomotives used in interstate commerce could use the statutory mileage proration, including the subsidiary's cars because they operated as an in…
How is the Kansas dry cleaning environmental surcharge calculated with sales tax, and how do store versus factory coupons affect the tax base?
The surcharge and sales tax share the same base; store coupons reduce it, but factory coupons do not. The Department ruled that the Kansas dry cleaning environmental surcharge and sales tax are comput…
Are charges for children to ride a nonprofit's replica train at carnivals and community events subject to Kansas sales tax?
Yes — the train-ride charges are taxable recreational fees. A nonprofit's small replica train, operated at school carnivals and community events, charged children to ride. The Department ruled these c…
Can a community center claim the Kansas sales tax exemption for religious organizations?
No. The Department ruled that the exemption applies only to 'religious organizations' that use their purchases exclusively for religious purposes, and a community center is neither a church nor an org…
Is installing a new sewage system, adding capacity to one, or repairing an existing one taxable in Texas, and does it matter whether billing is lump-sum or separated, or whether the property is residential?
Installing a new sewage system is new construction: under a lump-sum contract the installer owes tax on materials as consumer (the charge to the customer isn't taxable), but under separated billing th…
Are repair labor and repair/maintenance parts (lubricants, filters, oil) for farm and ranch equipment exempt from Texas sales tax?
Yes, if the equipment being repaired is itself exempt agricultural machinery. Tax Code § 151.316 exempts machinery/equipment used exclusively on a farm or ranch to build/maintain roads or water facili…
Can a retailer use a Monday-to-Sunday 4-5-4 fiscal calendar (instead of the traditional Sunday-to-Saturday version) to report Texas sales tax for the year 2000, and what due dates apply?
Yes. A modified 4-5-4 accounting calendar, even one running Monday-to-Sunday instead of the traditional Sunday-to-Saturday format, is an acceptable method for reporting Texas sales tax, as long as the…
If a roofing contractor rents equipment to perform installation work under a contract with a Texas school district, is that equipment rental exempt from sales/use tax?
No. Machinery and equipment used by a contractor on a contract with a school district (an exempt entity) is not exempted. The contractor owes tax on the purchase, lease, or rental of machinery, equipm…
How did Texas tax an intermediary's services and the vehicle purchases, leases, rentals, and resales in a leasing company's exchange structure?
The intermediary's limited receipt, management, and distribution of purchase and sale funds was not taxable. Retail vehicle sales were taxable, dealer-resale sales were not taxable with a resale certi…
Could a Florida financial-services group stop filing consolidated corporate income tax returns after major business changes?
Yes, subject to four redacted conditions. Florida granted permission because the group and banking industry had undergone substantial organizational and business changes, even though continued consoli…
Did a leased vehicle brought into Texas before September 1, 1999 qualify for the new-resident tax rule that took effect on that date?
No. The taxable moment occurred when the vehicle first entered and was operated in Texas. Because that happened before September 1, 1999, the earlier rule applied and required the leased vehicle to ha…
What happened to Texas franchise-tax filings, loss carryovers, nexus, and income computation when a Texas corporation converted to a single-member LLC?
The converting corporation filed no final franchise-tax report, and its Texas business-loss carryover remained available to the post-conversion single-member LLC. The corporate parent did not acquire …
Are towing-related charges like scene time and clean time taxable in Texas, and what about the gate fee for storing a towed vehicle?
Scene time and clean time charges associated with towing a motor vehicle are not subject to Texas sales tax. But the gate fee charge, associated with motor vehicle storage, is subject to Texas sales t…
Did a cemetery association qualify for the former Texas franchise-tax exemption when its activities were not exclusively providing burial places?
No. The Comptroller reaffirmed that Section 171.059 did not exempt an association whose activities were not exclusively the provision of burial places, applying the rule that tax exemptions are narrow…
Could a Florida boat-repair shop buy shop supplies tax-free for resale when it itemized them to customers?
Yes. When the shop separately identified and charged each material or overhead item to the boat owner, it could buy those items for resale and collect tax from the customer. It owed use tax on exempt-…
Is an energy-loss testing service using thermography and current readings subject to Kansas sales tax?
No — the energy-loss testing service is not taxable. A company performs thermography and current readings in homes and businesses to detect areas of energy loss, taking heat-sensitive images and givin…
When a chemical plant expands capacity by adding a new product (moving utility lines, debottlenecking), which materials and equipment qualify for the manufacturing exemption, and what stays taxable as repair/remodeling?
Activities that result in increased plant capacity qualify for exemption whether or not they're formally distinguished from 'new construction' — the sales tax treatment is the same either way. Materia…
A custom CD-ROM manufacturer buys computer hardware to process the 3-D animations/graphics it sells on the discs. Does that hardware qualify for the manufacturing exemption, and what happens if it's later used for something else?
Equipment that directly and necessarily causes a physical or chemical change to the product being manufactured (or is essential to a quality control process) qualifies for the manufacturing exemption …
For a bundled colocation package (rack/space rental plus internet bandwidth), can the rental portion be tax-exempt while bandwidth is taxed separately, and are resold DSL circuits used only for internet access subject to telecom tax?
Yes to the first: if the rack/space rental is broken out separately from the bandwidth charge, the rental is fully tax-exempt and the bandwidth is fully taxable as a telecommunications service. On the…
Is natural gas used to power a compressor that transports naturally occurring carbon dioxide (CO2) exempt from Texas sales tax?
Yes. Natural gas used to operate a compressor that transports CO2 — whether the CO2 results from processing natural gas or other hydrocarbons, or occurs naturally in ground reserves — is exempt under …
Are hotel charges paid by a federal employee with a centrally billed government credit card exempt from Kansas sales and transient guest tax?
Yes — centrally billed federal card charges are exempt, but individually billed card charges are taxable. The Department ruled that hotel accommodations a federal unit paid for with centrally billed V…
Does an antique dealer conducting estate sales for owners and their heirs have to collect Kansas sales tax?
No — the estate sales are exempt isolated or occasional sales, so no Kansas sales tax is due. An antique dealer conducts three-day, garage-sale-style estate sales at an owner's home, selling household…
Does a Kansas company owe sales tax on an internet-based, downloadable legal-information newsletter sold issue by issue?
No — the online legal newsletter is a service Kansas has not enumerated as taxable, so no state or local sales tax applies to its sale. A Kansas corporation produced an internet-based legal-informatio…
If a Texas company sells or licenses software to a customer in Canada, does it owe Texas sales tax?
No, as long as the software is used outside of Texas and the customer takes delivery — or the software is installed — outside of Texas. If the customer takes delivery in Texas, or the Texas company in…
If a manufacturer (not the original retailer) buys back a defective appliance from a customer as a settlement, can the customer get the sales tax they originally paid refunded?
Not from the state, and not automatically from anyone. Because the manufacturer — not the original retailer — bought the refrigerator back as a settlement, the original retail sale was never voided; a…
If a company delivers, sets up, and maintains its own gas compressor units at a customer's site for a single fee, is that a taxable lease of the equipment or a nontaxable compression service?
It depends on whether the customer gets possession/control of the compressor. If there's an actual lease contract for the compressors, it's a taxable lease under Rule 3.294. But if the customer never …
At a nonprofit's one-day tax-free fundraising auction, is there a dollar cap on what can be sold tax-free, and does it matter whether the item was purchased, donated, or manufactured by the organization?
It depends on how the item came to the organization. An item donated to or manufactured by the exempt organization can be sold tax-free at any price at a qualifying one-day sale/auction (regardless of…
Could a Texas vehicle seller accept a trade-in before delivering the replacement vehicle and hold the trade-in credit without a specified time limit?
Yes. The letter stated no specified time limit for holding the trade-in credit before delivery of the purchased vehicle. But the sale transaction had to occur when the trade-in was provided, and the s…
Did Florida use tax apply when a dealer loaned inventory vehicles to nonemployees as restricted demonstrators?
No additional use tax applied while the untitled vehicles remained for-sale inventory, bore dealer plates, and were used solely for the dealer's business under restrictive demo agreements. The dealer …
If a school district pays for and owns an education/video system, but part of the equipment is physically located and controlled at a private company's off-site headend facility, does that off-site equipment still qualify for the school district's sales tax exemption? Could the company itself buy that equipment tax-free instead?
Yes to the first: equipment the school district purchased and holds title to remains exempt even when physically located and controlled off-site at the company's facility, per Rule 3.322(f). But the c…
Starting an air duct cleaning business in Texas, is the service taxable, and can equipment/materials be bought tax-free?
Yes, cleaning air ducts is taxable as a real property service under Rule 3.356 — the total charge (trip/service charge, materials, stand-by charges, etc.) is taxable. Equipment you buy to perform the …
When a nonprofit hospital operates through a 50/50 limited partnership with a for-profit entity, whose charity care counts toward the partnership's sales tax exemption under the Sec. 151.310(e) charity-care requirement — the partnership's own charity care, or charity care provided separately by the individual partners?
Only charity care that the hospital partnership itself provides counts — charity care given separately by either partner (the tax-exempt partner or the for-profit partner), outside the partnership, do…
How these rulings are useful
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