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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Were customized television and radio audience-survey reports taxable when delivered on paper or other tangible media?
No. The true object was the customized research service and data, not the delivery medium, and audience measurement was not an enumerated taxable service. Generic unmodified publications were…
Could a mortgage company exclude a reserve for possible repurchase of defaulted loans sold with recourse from Louisiana franchise-tax surplus and undivided profits?
No. The reserve depended on future borrower defaults and was not a fixed liability, depreciation, bad debt, or valuation reserve. It therefore entered surplus and undivided profits in the…
Did a corporation-taxed LLC create Florida income-tax nexus through an independent contractor performing in-state services?
Yes. The LLC had no Florida office or employees, but its independent contractor performed maintenance services for Florida customers on its behalf. Florida treated the contractor as the LLC's agent…
Could the Louisiana Department of Revenue treat electronically digitized copies of its records as originals and use them in court or administrative proceedings?
Yes. Electronic images, microfilm, and microfiche could serve as original Department records and be admitted subject to evidence requirements such as relevance and authenticity. Original source…
What conditions did a blind vendor have to satisfy for Louisiana's sales-tax exemption on business sales and purchases?
The owner had to meet the statutory blindness definition, operate as a sole proprietor, and keep stock on hand, equipment, or enterprise capital at no more than $2,000 at all times. A corporation,…
Were tenant-improvement reimbursements taxable rent, and could a property buyer inherit the seller's unpaid Florida sales tax?
Yes to both. Monthly reimbursements for landlord-built improvements were taxable rent because the lease labeled them base rent, payment was required for occupancy, and the landlord retained the…
How did Louisiana phase in its former custom-software exclusion, and how were canned-software components taxed during the transition?
The custom-software exclusion rose from 25% in 2002-03 to 50% in 2003-04, 75% in 2004-05, and 100% after June 30, 2005. Canned software used in custom programs became taxable in the opposite…
How much continuously outstanding debt under a multiyear master loan agreement entered Louisiana's corporation franchise-tax base?
The minimum balance outstanding at any point during the year was long-term borrowed capital because that amount financed the business continuously for more than a year. Qualifying vehicle, home,…
Can a large retailer avoid the negligence penalty on underpaid New Mexico compensating (use) tax by pointing to its overall compliance, netting against overpayments, or the fact that it employs in-house CPAs?
No. Condev West, a multi-state retailer, conceded it owed the compensating (use) tax and interest and disputed only the penalty. The hearing officer upheld it. Inadvertent 'human error' in not…
Did Louisiana follow the former federal extraterritorial-income exclusion and the related federal disallowance of deductions for corporations and individuals?
Yes. Properly excluded federal extraterritorial income stayed excluded for Louisiana corporation and individual income tax, and federally disallowed related deductions remained disallowed. Existing…
How did Louisiana conform to the 2002 federal 30% first-year depreciation deduction and five-year net-operating-loss carryback?
Both individuals and corporations followed the federal 30% first-year depreciation provision. Individuals followed the federal five-year NOL carryback for the covered 2001 and 2002 loss years, but…
Could a city use a construction-management direct-purchase program to buy stadium materials tax free?
Yes, conditionally. The city would select materials, issue purchase orders in its name with its exemption number, pay vendors directly, take title on receipt, and insure the materials as sole loss…
Is the federal excise tax on fuel included in the Kansas sales tax base when it is a separate line on the invoice?
Yes. The federal excise tax on fuel is part of the 'selling price' for Kansas sales tax purposes and is included in the sales tax base — even when it is billed as a separate line item on the…
Could Kansas historic-preservation tax credits be divided among multiple assignees and transferred more than once?
Yes. Earned or allowed Kansas historic-preservation tax credits could be transferred more than once, subject to the statute. The person earning the credit could assign portions to different people,…
A single-member LLC is disregarded for federal tax and shares its tax-exempt owner's status - is it exempt from Texas franchise tax and sales tax too?
The LLC is exempt from the Texas franchise tax as a public interest organization under Tax Code Sec. 171.057, but Texas sales tax has no comparable exemption, so the LLC is NOT exempt from sales and…
Are towing charges and sublet auto services like glass and dent work subject to Kansas sales tax?
It depends on the charge. Towing charges are NOT subject to Kansas sales tax if they are separately stated line items on the customer's bill. If towing is not separately stated, it is taxable when…
Was a spark-detection and fire-extinguishing system exempt as pollution-control equipment or industrial machinery?
No. The vendor did not show that pollution-control law required the system, and the equipment's primary function was preventing fires and explosions—not manufacturing products, controlling air or…
When were interior-design, procurement, and merchandise fees subject to Florida sales tax?
Procurement fees and design charges made in conjunction with furniture or other tangible-property sales were taxable, even when separately itemized, billed later, or measured by hours. Stand-alone…
How did South Carolina reorganize its sales and use tax regulations in 2002?
South Carolina repealed Article 7 and moved sales and use tax guidance into 37 subject-based regulations in Article 11, with a cross-reference from former rules to the new numbering.
Did Tennessee impose excise tax and business tax on a foreign corporation selling inventory through an independent Tennessee warehouse?
Tennessee could not impose its earnings-based excise tax because doing so created a substantial risk of international double taxation and impaired federal one-voice treatment under the tax treaty.…
Does a Kansas fulfillment center collect sales tax on books it ships for publishers, or do the publishers?
The publishers, not the fulfillment center. A Kansas fulfillment center that only warehouses and ships books it does not own is not a 'retailer' and does not collect Kansas sales or use tax on those…
Does a manufacturer's purchase of CAD software used for product engineering and design qualify for the Kansas manufacturing exemption?
Yes, if its primary use is engineering, R&D, or product design. The Department found that a manufacturer's purchase of canned AutoCAD software appears to qualify for the sales tax exemption under…
Which truck-rental invoice charges were subject to Kansas sales tax and the 3.5% vehicle rental excise tax?
For truck rentals of 28 days or less, Kansas sales tax and the 3.5% vehicle rental excise tax used the same gross-receipts base. Fuel, liability insurance, damage waivers, permits, cleaning, IFTA…
How is qualified business facility investment computed for the Kansas High Performance Incentive Program (HPIP) investment tax credit when the tax year and the certification period do not run concurrently?
This Kansas Opinion Letter is a brief transmittal note, not a substantive ruling. In response to a request about computing qualified business facility investment at an existing qualified business…
Were sales to an agricultural credit association formed by merging a federal land bank association with production credit associations exempt from California tax?
No. Production credit associations were taxable, and federal law gave merged associations no tax immunity. The association also lost reliance on contrary 1996 Board advice upon receiving the 2002 letter.
Is a nutritional product sold through a multi-level marketing company subject to Kansas sales tax?
Yes. The Department advised that the sale of the nutritional product is subject to Kansas sales tax. Unlike many other states, Kansas taxes sales of groceries and food, so the product is taxable in…
Are dietary supplements and nutritional products sold through a direct-sales company subject to Kansas sales tax?
Yes. The Department advised that sales of the two dietary supplement / nutritional products are subject to Kansas sales tax. Unlike many other states, Kansas taxes sales of groceries and food, so…
Can a New Mexico subcontractor deduct its construction receipts without the general contractor's nontaxable transaction certificate (NTTC) in hand within 60 days, and does being unable to collect the tax from the customer excuse it?
Mostly no. J.W. Jones Mechanical Contractors, a subcontractor, could deduct its construction receipts under Section 7-9-52 only if it held the general contractor's NTTC — and Section 7-9-43…
When did Florida's $2,450 documentary-stamp cap begin, and did later new money trigger more tax after the cap was reached?
The $2,450 cap took effect May 1, 2002. For qualifying renewals of notes not secured by a Florida-filed or recorded mortgage, trust deed, or security agreement, no additional documentary stamp tax…
Can a corporate partner claim Texas franchise jobs/investment credits for the partnership's jobs or investments, and must the business be in a specific industry?
No, a corporate partner cannot take the jobs creation credit (Texas Tax Code Sec. 171.752) or the capital investment credit (Sec. 171.802) based on jobs created or investments made by the…
Were a county's public-transit equipment head leases, subleases, and related loan documents exempt from Florida taxes?
Yes, under stated conditions. Sales tax did not apply when the head lessees gave resale certificates and the county gave its government exemption certificate. Public-transit leaseholds were exempt…
What must a homeowners association show to get the Texas franchise tax exemption, and when has voting control passed to the owners?
Before the Comptroller can grant a homeowners association the franchise tax exemption under Texas Tax Code Sec. 171.082, the association must show that voting control is vested in the owners of the…
Were separately stated shipping and handling charges taxable on mail-order frozen food exempt from Florida sales tax?
No. Transportation charges were not taxable by themselves, so exempt frozen food had no taxable selling price to which shipping and handling could attach. Shipping associated with a taxable item,…
What may a vehicle leasing company show a Texas county as proof that motor vehicle tax was paid to another state?
Texas law did not define acceptable proof, so each county tax assessor-collector could decide. When no state-issued proof was available, an original lease showing tax in the payments or a notarized…
Were optional, separately stated consulting, staffing, inventory, reporting, restocking, and parking-area charges subject to Tennessee sales tax?
No. The optional services were not specifically taxable and, because they were separate from merchandise sales, their separately stated charges were not part of taxable sales price. The restocking…
Could Delaware LLCs obtain Tennessee's full-liability franchise and excise tax exemption using foreign formation documents?
Yes. Copies of Delaware certificates of formation filed with the Tennessee applications for authority could serve as the required documentation because they named each member, imposed…
If New Mexico abates the penalty on a business's unpaid gross receipts tax, does that mean the interest must be abated too — and can confusion over an audit refund excuse the interest?
No on both points. Hammond Floors, a flooring business, collected gross receipts tax from customers but stopped filing and paying it from May 2000 through July 2001. The Department had already…
Does a company engaged in solar or wind energy qualify for a Texas franchise tax exemption, and what deduction or credits are available?
Yes, potentially. Texas Tax Code Sec. 171.056 exempts a corporation or LLC engaged SOLELY in the business of manufacturing, selling, or installing solar energy devices (as defined by Sec. 171.107),…
Are food-service management services at a for-profit assisted living facility taxable, and do the elderly-center or meals exemptions apply?
The management services are taxable, but direct meal sales to residents are exempt. A company that manages the food-service operation at a for-profit assisted living facility is providing taxable…
Are a fitness club's membership dues, personal-training fees, and massage-therapy fees subject to New York State and New York City sales tax?
Membership dues and personal-training fees are not subject to any State or New York City sales tax, but massage-therapy fees are subject to New York City's local sales tax (though still not State…
Are a computer company's on-site repair visits, on-site staffing arrangements, service contracts, and telephone technical-support charges subject to New York sales tax?
It depends on whether the work is done on hardware or on software, and whether any nontaxable pieces are separately and reasonably stated on the bill. Repairing or maintaining computer hardware —…
Can an off-airport parking lot avoid sales tax on part of its fee by labeling a fixed percentage of the charge as a separate, nontaxable 'transportation' charge for shuttling customers to the airport?
No. Labeling 30% of the periodic parking fee as a 'nontaxable transportation charge' doesn't make it one, because the transportation and parking were never sold separately, the transportation charge…
We're a mortgage lender developing a 'cost-plus sale' home-financing structure as an alternative to a conventional mortgage: the home-buyer contracts to buy a house, assigns us that purchase contract, we buy the house from the original seller and immediately resell it to the buyer at our cost plus a profit markup (paid off over time, economically identical to mortgage principal and interest), and the buyer gives us a mortgage securing only the amount we financed (not the profit markup). Which of these several transfers -- the original sale, the buyer's assignment of the contract to us, our resale to the buyer, and the mortgage recording -- trigger real estate transfer tax or mortgage recording tax, and on what amount?
Only one of the several transfers is taxable, and the mortgage tax applies to a narrower base than the full resale price. HSBC proposed a 'cost-plus sale' home-financing alternative to a…
We're a fuel oil distributor who didn't know some of our multi-dwelling customers' buildings had commercial space, so we under-collected tax on those deliveries for years. We got assessed and paid the back taxes ourselves -- can we now go after our customers to recoup what we paid, and whose job was it to figure out which units were residential versus commercial in the first place?
Both the distributor and its customers can be held liable, and recoupment from customers is possible but not automatic. Petro, Inc. sold fuel oil for heating multiple-dwelling structures with both…
Is a fixed fee that an antiques show promoter charges dealers and vendors for temporary booth space a nontaxable real-property rental, or a taxable sale of tangible personal property or services?
The booth-space fee itself is not subject to sales tax — it's a rental or license to use real property, which New York doesn't tax. But that exemption doesn't extend upstream: because the promoter…
Do a patient-restraint 'Security Vest' and 'Tie-Back Vest,' sold to hospitals and nursing homes, qualify for New York's under-$110 clothing exemption, or as exempt medical equipment?
The vests don't qualify for the clothing exemption, but they do qualify as exempt medical equipment in most sales. Even though patients wear them, their primary function is to serve as a safety…
In a multi-tier supply chain for prepaid telephone calling cards, who owes New York sales tax on sales made from 1998-2000, and what happens when resale certificates were never issued between the companies?
It depends on the date of sale and whether a resale certificate was properly obtained. Before March 1, 2000, New York didn't tax the sale of a prepaid calling card itself — tax applied only when the…
Are a multilevel marketer's dietary supplement capsules, powders, and bars exempt from New York sales tax, and what about its antiseptic gel and its skin-care lotions?
Most of the products are exempt, but two specific lotions are taxable. The bulk of the company's line — capsules, powders, tablets, caplets, and bars marketed as dietary supplements that substitute…
Is a company's charge to a day camp for supplying only the labor to cook meals — with the camp buying the groceries, setting the menu, and handling serving and cleanup — subject to New York sales tax?
No. The company's fee is not subject to sales or compensating use tax, because it isn't selling any food, drink, or tangible personal property, and it isn't providing catering — the camp itself buys…
Does a children's baking-party business have to register as a vendor and collect sales tax on its birthday party packages, which bundle a baking class with snacks and drinks served on-site?
Yes. Baking instruction by itself isn't a taxable service, but because Little Chefs also serves food and drinks (pizza, juice, snacks) to the children for consumption on its premises while the baked…
Is an uninstalled, portable greenhouse used to farm tilapia fish for food exempt from New York sales and use tax under the farming exemption?
Yes. Raising tilapia fish for sale as food counts as 'farming' under New York's tax rules, and the greenhouse — built over an in-ground pond to control temperature and sunlight for the fish and the…
How did South Carolina rank counties for the job tax credit for tax years beginning after June 18, 2002?
It ranked all 46 counties into distressed, least developed, under developed, moderately developed, or developed tiers for jobs created in tax years beginning after June 18, 2002.
Are charges for rehabilitative therapy, X-rays, respiratory therapy, and nurse staffing subject to Kansas sales tax?
No. The Department advised that gross receipts from providing rehabilitative therapy, taking X-rays, respiratory therapy, and nurse staffing are not subject to Kansas retailers' sales tax. Kansas…
When a hotel charges for audio/visual equipment (microphones, projectors, screens) used at a meeting, banquet, or seminar, is that sales tax or state hotel occupancy tax -- and does it matter whether the hotel is also catering the food and whether the charge is itemized separately?
It's never a tax-free equipment 'rental' either way (a hotel's A/V equipment charge is NOT treated as renting tangible personal property, since guests never get possession or control of the…
If a retired CUNY employee rolls over pension funds from the Optional Retirement Program into an IRA, is the entire IRA distribution still exempt from New York income tax?
Only in part. The portion of an IRA distribution that represents the original pension contribution rolled over from CUNY's Optional Retirement Program remains exempt from New York tax under Tax Law…
Can a New York resident who won a slot machine jackpot at an Atlantic City casino and paid New Jersey tax on it claim a New York resident tax credit for that New Jersey tax?
No. The resident credit under Tax Law § 620(a) is only available for tax paid to another state on income actually derived from that state, and casual gambling winnings are not treated as derived…
Are a swim-and-health club's membership fees subject to New York State or New York City sales tax?
No. Waterside Swim and Health Club's membership fees are not subject to any New York State or New York City sales tax. Members have no ownership interest in the club, no control over its social or…
Does the $50-per-member annual LLC filing fee under Tax Law § 658(c)(3) apply to investors who hold only a non-voting contractual economic interest in a portion of a member's interest, rather than actual LLC membership?
No. Under Limited Liability Company Law §§ 102(q), 603, and 604, a person who merely holds an assigned economic interest through a Participating Contract - without being admitted as a member or…
Do distributions from the New York State Deferred Compensation Plan, a governmental section 457 deferred compensation plan, qualify for New York's $20,000 pension and annuity exclusion starting in 2002, and can they be rolled over tax-free into an IRA?
Yes. Effective January 1, 2002, a federal law change (EGTRRA) reclassified distributions from governmental section 457 plans like the New York State Deferred Compensation Plan as pension and annuity…
Does a foreign (non-Texas) corporation that owns oil-and-gas working (mineral) interests in Texas have franchise-tax nexus, even if an independent contractor operates the interests?
Yes. The Comptroller treats mineral interests as real property for franchise tax purposes, and owning real property in Texas creates nexus for both franchise-tax components - taxable capital under…
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