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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Should the Kansas cigarette tax be included in the base when calculating retailers' sales tax on cigarettes?
Yes. The Department advised that the Kansas cigarette tax should be included in the taxable base when calculating retailers' sales tax on cigarettes. The reason is that the legal incidence of the…
When a Canadian company designs, engineers, and fabricates structural steel and sells the finished steel to a New York vendor for use in a NY construction project, is New York use tax based on the whole price, or can the design/engineering portion be carved out?
New York's compensating use tax applies to the entire price paid for steel fabricated outside the state and brought in for a construction project, including the cost of design and engineering — even…
Did the 2002 historic-preservation credit amendments apply to a project begun in 2001 but placed in service during the taxpayer's 2002 tax year?
Yes, on the stated facts. The 2002 amendments applied to tax years beginning after December 31, 2001 and changed the earning event from when project costs were incurred to when the rehabilitation…
How is Nebraska sales tax charged on cell phone, paging, and other wireless service, and which state gets the tax?
Charges are taxed at the customer's place of primary use. Under Revenue Ruling 01-02-2, Neb. Rev. Stat. §77-2706.02 (Laws 2002, LB 947) imposes Nebraska sales and use tax on mobile…
Was an out-of-state operating subsidiary doing business in Tennessee when Tennessee-based parent personnel managed it and its employees trained here?
Yes. Tennessee-based management performed substantial work for the subsidiary, major decisions and records were located here, board members and officers acted here, and the subsidiary's employees…
Were per-unit charges for operating a portable plant at a customer's site nontaxable equipment-with-operator services?
No. Keeping control of the plant and furnishing its operators meant there was no taxable equipment rental, but the taxpayer was still fabricating tangible personal property for the customer from…
Which boilers, compressors, sanitation supplies, and pallets qualified for Tennessee manufacturing sales-tax exemptions?
The boilers and plant air compressors were exempt industrial machinery because they were necessary and primarily used for manufacturing and packaging. Cleaning chemicals and supplies were taxable…
Did Florida documentary stamp tax apply when a loan check and note-and-security agreement were separate and did not expressly incorporate each other?
No. The negotiated check supplied the fixed loan amount, while the separate note-and-security agreement supplied the promise to repay. Because neither document expressly incorporated the other, the…
Can New Mexico waive a late-payment penalty when a business's ACH tax transfer posted one day late because its office closed for Thanksgiving and its clearing house gave it wrong advice?
No. The negligence penalty stood. Gencon Corporation, a Las Cruces construction company, paid its October 2001 CRS taxes one day late when an ACH transfer initiated on the Saturday after…
Was a supplemental indenture executed in Florida taxable when it added a subsidiary guarantor but did not amend the indenture or notes or state a sum certain?
No. The described supplemental indenture did not amend the indenture or notes, state that it was an amendment, contain a sum certain, or make an unconditional promise to pay. The Department warned…
Could a medical supplier keep refunded tax on newly exempt feeding tubes when Medicare and other payers had reimbursed tax-included charges?
Only to the extent the supplier itself bore the tax. The Board could require repayment to Medicare and other payers that funded tax reimbursement; Medicare payments were likely tax included.
Which of a campground and recreation center's charges — sports, rentals, cabins, tents, RV sites — are subject to Kansas sales tax?
It varies by charge. Miniature golf and roller skating are taxable as participation in sports (K.S.A. 79-3603(m)); racket and basketball rentals are taxable rental charges. Cabin, hotel, and similar…
Is a subcontractor's charge to a general contractor for temporary protective pedestrian walkways at a capital-improvement construction site subject to New York sales tax?
It depends on how the arrangement is structured. If the subcontractor is simply renting the walkway equipment to the general contractor (with installation and dismantling as part of that rental),…
If a curling club converts from a taxable social/athletic club to a tax-exempt organization, does that change whether its membership dues are subject to New York sales tax?
Yes, the change matters a great deal. Once the club qualifies and is certified as a tax-exempt organization under New York's exemption for charitable/educational/amateur-sports organizations, its…
Is a contractor's lease of fuel-distribution equipment from the Port Authority — used to fuel and defuel commercial aircraft it doesn't own — exempt from New York sales tax?
Yes. Fueling and defueling services are activities that keep commercial aircraft in a condition of fitness, efficiency, readiness, or safety, so they qualify as exempt aircraft maintenance services…
Is a candy manufacturer's wastewater pipeline, metering/sampling equipment, and holding tank exempt as manufacturing waste-treatment equipment, or taxable as building materials?
The pipelines carrying wastewater from the plants to the holding tank, the flow metering and sampling equipment, and the holding tank itself all qualify as exempt manufacturing equipment, because…
Which of a securities printer's corporate documents — prospectuses, proxy materials, SEC forms, offering circulars — qualify as exempt 'promotional materials' when mailed free to shareholders?
It depends on the specific document type. Prospectuses, red herring prospectuses, offering circulars, tender offer documents, private placement memorandums, and Forms 10-K and 10-Q all qualify as…
Is freshly extracted wheat grass juice and vegetable juice sold at a health food store's juice bar exempt from New York sales tax as food, or as a health-preservation product?
The juices are not exempt as a special health-preservation product — that exemption is meant for drug-like items, not nutrient-rich foods and beverages. But they are exempt beverages under the…
Can a cable manufacturer treat the scrap value of a customer's used cable as a tax-reducing 'trade-in' credit against the price of new cable, where the used cable is shipped straight to a third-party scrap dealer instead of back to the manufacturer?
It depends on how the deal is papered. Crediting a customer for the scrap value of its used cable against the price of new cable can qualify as a tax-reducing 'trade-in,' even though the used cable…
Was documentary stamp tax due on a nonprofit's deed transferring mortgaged real estate as part of a program merger?
Yes. The special warranty deed was taxable because the grantee provided funds to pay off the property's mortgage at closing. The ruling measured consideration at 70 cents per $100 of the mortgage…
Can a homeowners association get the Texas franchise-tax exemption if its deed restrictions let some lots be used for commercial or business purposes?
No. The Sec. 171.082 franchise-tax exemption for certain homeowners associations applies only to residential property and does not allow for commercial use. Because this association's original deed…
Are a corporate aircraft division's aircraft purchases and maintenance services exempt from New York sales tax as commercial aircraft, and are its cost-based intercompany flight charges to affiliates exempt air transportation rather than a taxable aircraft rental?
Yes. The Department ruled that Tropicana's aircraft operations division (SoBe) owns aircraft used over 90% for transporting PepsiCo affiliates' employees and customers for cost-based compensation,…
Are an aircraft-owning subsidiary's purchases of its aircraft and maintenance services exempt from New York sales tax, and are the operating-cost charges it bills to affiliates for flights exempt as air transportation rather than a taxable aircraft rental?
Yes, once the lease ends. The Department ruled the subsidiary's aircraft qualify as tax-exempt 'commercial aircraft' because over 90% of flight time transports affiliates' employees and customers…
How is an LLC running a telephone business, and its corporate members, taxed in New York -- under Article 9-A, sections 183/184, or section 186-e?
The LLC, treated as a partnership for New York tax purposes, is not subject to Article 9-A or sections 183/184, but as a provider of telecommunication services it owes the section 186-e tax. Its…
How do the transitional depreciation rules apply to a utility's or power producer's depreciable property held under a synthetic lease?
The synthetic lessee (a qualified public utility or qualified power producer) is treated as owning the transition property, so the transitional depreciation rules apply. For Article 9-A it must add…
Can a nonprofit museum get a project exemption for exhibitry materials, and are audio-visual purchases exempt?
Mostly no, with one exemption. A nonprofit museum or historical society does NOT qualify for a Project Exemption Certificate, so a contractor's materials for a museum exhibitry project are taxable —…
Are a carrier's reciprocal compensation receipts excluded from the section 186-e tax, and are they subject to the section 184 local telephone tax?
Both apply differently. A competitive local exchange carrier's receipts from reciprocal compensation arrangements with other carriers qualify for the sale-for-resale exclusion under section…
Is a trailer-mounted nurse tank exempt from Texas motor vehicle tax when it is used primarily for controlled burning to improve cattle grazing?
Yes. Because the tank was mounted on a trailer and would be used primarily for controlled burning to enhance grass production for cattle, the Comptroller treated it as an exempt farm trailer. The…
Are time-deposit placements by a corporation with an affiliated bank treated as cash on deposit for Article 9-A investment capital purposes?
It depends on the instrument. Time deposits (30 days or more) placed by a corporation with an affiliated bank generally qualify as cash on hand and on deposit under section 208.7(a), so the…
Did a successor LLC owe documentary stamp or nonrecurring intangible tax on a consolidated renewal note and mortgage after a merger?
Not on the unchanged outstanding principal, if the ruling's conditions were met. The merger successor was not treated as a new obligor for documentary stamp tax. The original taxed note had to be…
Was formulated racing gasoline with four grams of lead per gallon subject to Florida motor-fuel tax?
No motor-fuel tax applied. The product had more than 75 octane but four grams of lead per gallon, so it was not gasoline under the standard the Department applied. It also was used in track-only…
Are admission fees, shop sales, reproduction charges, and 'Charter Founder'/'Sustaining Member' contributions collected by the Statue of Liberty-Ellis Island Foundation's American Family Immigration History Center subject to New York sales tax?
It depends on the charge. Admission fees to the genealogy research center are exempt as an exempt organization's museum/historic-site admissions, but sales of shop items and reproductions of records…
Does a manufacturer have to collect Utah sales tax when its customer resells the goods online, or when a no-nexus out-of-state reseller has the manufacturer drop-ship straight to the reseller's Utah customer?
It depends on who has nexus and what documentation is on file. A manufacturer selling to a Utah reseller does NOT have to collect sales tax on that sale if it obtains a valid resale exemption…
How did the July 1, 2002 Kansas state sales tax rate increase work, and how are transitional sales reported?
Under 2002 Senate Bill 39, Section 6, the Kansas state sales and use tax rate rose from 4.9% to 5.3% on July 1, 2002, applying to sales subject to tax on and after that date; local rates were…
What penalties and interest applied to late Kansas sand-royalty reports and payments beginning July 1, 2002?
Beginning July 1, 2002, delinquent Kansas sand-royalty payments accrued interest at 0.667% per month and a tax penalty equal to 10% of the royalty due; fraud increased the penalty to 50% of the…
Were payments under a real-property lease agreement taxable as commercial rent when the overall transaction functioned as financing?
No. Considering all transaction documents, the Department found a mortgage-like financing arrangement rather than an operating lease. The special-purpose lessor held title as security, payments…
What documents and dates are covered by South Carolina's June 2002 advisory-opinion index?
It is a subject index of South Carolina advisory opinions and informational bulletins issued from 1987 through June 30, 2002, not substantive tax guidance.
If a state-contracted nonprofit pays a vendor directly for equipment that becomes a grant recipient's property, does the government sales tax exemption apply?
No. Even though the association pays the vendor directly and briefly holds a lien on the property, the government exemption under § 59-12-104(2) doesn't apply because the association never takes…
If a motor-vehicle leasing company uses a Qualified Intermediary to structure its vehicle sales as an IRC Section 1031 like-kind exchange, does the Qualified Intermediary have to register as a New York sales tax vendor?
No. Because the Qualified Intermediary only manages the escrowed sale proceeds and never takes title to or possession of any vehicle, it isn't a sales tax 'vendor' and doesn't have to register or…
Can a mail-order company that used to have traveling sales representatives in New York, but no longer has any physical presence there, stop collecting New York sales tax and surrender its vendor registration?
Yes. Once a mail-order company has no employees, independent sales representatives, or other physical presence in New York, catalog and website solicitation alone doesn't create nexus, so it may…
Is a highway contractor's purchase of steel materials to build a temporary traffic-detour crossover for a state expressway interchange exempt from sales and use tax?
Yes. Because the steel crossover becomes the property of the New York State Department of Transportation upon installation and functions as an integral, if temporary, part of the state highway, the…
Do the fork trucks used to unload raw materials and the storage racking that holds them before production qualify for New York's manufacturing exemption from sales tax?
Yes, both do. Because the manufacturer only visually checks and counts raw materials without weighing, testing, or measuring them, production is considered to begin at unloading -- so equipment used…
Can interest from cash items other than bank deposits be allocated by a zero investment allocation percentage when cash is treated as investment capital?
Yes for cash items other than bank deposits. When a taxpayer treats its cash on hand and on deposit as investment capital under section 208.7(a), the interest is investment income under section…
Were Canadian Registered Retirement Savings Plans exempt from Florida's annual intangible personal property tax?
No. Although Canadian RRSPs resembled U.S. individual retirement accounts, they did not qualify under Internal Revenue Code section 408(a), as required by Florida's exemption. The taxpayers had…
How did 2002 changes affect the Kansas estate tax, and what is the new succession tax?
Two things changed for 2002. First, the Kansas estate tax stays tied to federal law as it existed on December 31, 1997, so the 2001 federal cuts (higher exclusions, phase-out of the state death-tax…
Could rewritten or incorporated FAR title clauses in subcontracts and supply contracts pass materials through a prime contractor to the United States before use?
Yes, if the prime contract itself passed title to the government before use. Without that upstream clause, some party remained taxable when use occurred.
Is a VEBA subject to New York's Article 13 tax on unrelated business income because it received and invested insurance demutualization proceeds?
No. Although a voluntary employees' beneficiary association (VEBA) has unrelated business taxable income for federal purposes under IRC section 512(a)(3), it is not regularly carrying on an…
Who is responsible for collecting and remitting New York sales tax when an insurance administrator sells extended service contracts on automobiles through credit unions and dealerships?
Both. When credit unions and dealerships sell extended service contracts on behalf of an out-of-state administrator, they become co-vendors jointly and severally liable, with the administrator, for…
Is a hotel relieved of its duty to collect sales tax on a New York State employee's room just because the employee pays with a credit card embossed 'tax exempt'?
No. A credit card embossed 'tax exempt' issued to a New York State employee is not, by itself, enough to relieve a hotel of its duty to collect sales tax on the room, because the card's receipt…
Are Vitoss and Cortoss, two synthetic bone void fillers, exempt from New York sales tax as prosthetic aids when sold to hospitals and physicians?
It depends on the product. Vitoss, which dissolves and is gradually replaced by the patient's own bone, does not qualify as a prosthetic aid and is taxable when sold to a for-profit medical practice…
Are charges for web site design and development services subject to New York State sales tax?
No. Web site design and development services are not subject to New York sales tax, whether the finished site is delivered by uploading it to a hosted server or by sending the client a CD-ROM,…
Is the labor to install landscaping and build ponds during original construction of a building exempt from Kansas sales tax?
The labor is exempt, but the materials are taxable. The Department advised that labor services for installing landscape materials and constructing ponds are exempt from Kansas sales tax when they…
Are a business's purchases of bills of lading and packing slips subject to Kansas sales tax?
Yes. The Department advised that a business's purchases of bills of lading and packing slips are subject to Kansas sales tax. Purchases of sales tickets, cash-register receipt paper, invoice forms,…
What four changes did 2002 Senate Bill 39 make to Kansas withholding tax?
2002 Senate Bill 39 made four changes to the Kansas Withholding Tax Act, effective June 6, 2002. First, it extended withholding to distributions distributable to nonresident shareholders or partners…
How does Kansas apply local tax to in-state vehicle sales and long-term leases after July 1, 2002?
Effective July 1, 2002, 2002 House Bill 3032 imposed a local compensating use tax so that buyers of vehicles sold within Kansas pay the higher of the sales tax rate at the seller's location or at…
What South Carolina interest rate applied to tax underpayments and overpayments from July through September 2002?
The rate was 6% for July 1 through September 30, 2002, compounded daily except that simple interest applied to underpaid declarations of estimated tax.
How much did the Kansas cigarette tax increase in 2002, and what inventory (floor-stocks) tax applied?
2002 Senate Bill 39 raised the Kansas cigarette tax to $.70 per pack of 20 (or $.875 per pack of 25) effective July 1, 2002, and to $.79 per pack of 20 (or $.99 per pack of 25) in January 2003.…
What cigarette and tobacco compliance and reporting changes did 2002 legislation impose on Kansas wholesalers?
Under 2002 House Bill 2982, Kansas licensed cigarette wholesalers and tobacco distributors are prohibited from stamping or paying tax on products from manufacturers not in compliance with the Master…
Is a company's purchase of reports subject to Kansas sales or use tax, or is there an exemption?
No exemption — the purchase is taxable. The Department advised that Kansas sales and use tax law provides no exemption for the sale of the Reports at issue, so the company must pay the appropriate…
Do a Texas corporation's franchise-tax business loss carryovers survive converting to a Texas LLC, and then converting that LLC to an out-of-state (Nevada) LLC?
Yes to both steps. A Texas corporation's Texas business loss carryovers remain available for use on the future franchise tax reports of the Texas LLC it converts into, and they continue to be…
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