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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Can a Texas Internet service provider buy telecommunications services (like leased lines) tax-free for resale, even though part of its Internet access revenue becomes exempt from sales tax starting October 1, 1999?
Yes. Telecommunications services purchased to provide Internet access, data processing, or information services still qualify as a sale for resale under Tax Code Section 151.006(1), because each of th…
How does Texas apply state, city, and MTA (Metropolitan Transit Authority) sales tax to cellular roaming charges, including calls that originate or terminate outside Texas?
A call is subject to Texas tax only if it both originates in Texas AND is billed to a telephone number/billing or service address within Texas. Intrastate calls (originating and terminating in Texas) …
Could a commercial landlord separate electricity at year-end, refund rent tax, and buy required cleaning services for resale?
The year-end reconciliation adequately separated utility charges from rent, and the landlord could claim a credit after refunding the tenant's erroneously collected rent tax. Required cleaning remaine…
Are a nonprofit's recurring fundraising sales exempt as isolated or occasional sales in Kansas?
Taxable — a 501(c)(3) nonprofit's recurring fundraising sales are not exempt in Kansas. The organization is not a "religious organization" under K.S.A. 79-3606(aaa) (it is not composed exclusively of …
Can a New Mexico resident avoid state income tax with tax-protester theories — that wages paid in federal reserve notes are exempt, that the Sixteenth Amendment was never ratified, or that wages are not income?
No. The protest was denied. The Padillas skipped their own hearing, so they never overcame the legal presumption that the Department's income-tax assessments are correct, and the tax lien stood. The H…
Did a Texas floor-plan lender owe motor vehicle sales tax when it repossessed a defaulting dealer's vehicle inventory and took title?
No. Repossession was not a taxable transaction, so the floor-plan lender owed no tax when it took title to the defaulting dealer's vehicles. Motor vehicle sales tax was due on the lender's later sales…
Is building a brand-new structure on a lot where the old one was demolished exempt as original construction?
Exempt labor — erecting a totally new building on a lot where the original building was torn down is "original construction," so the installation labor is not subject to Kansas sales tax; the contract…
On a project that adds a new addition to an existing grocery store and remodels the old space, which labor is exempt and which is taxable?
Split result — the labor to build a brand-new addition (a new front entry, deli, bakery, and seating area) onto an existing grocery store is exempt original construction under K.S.A. 79-3603(p), becau…
Does an out-of-state publisher have Kansas use tax nexus because of a joint venture with a Kansas law firm?
Yes. The Department concluded that the Tennessee publisher has nexus with Kansas for compensating (use) tax purposes. Under K.S.A. 79-3702, a 'retailer doing business in this state' includes one with …
What special fireworks sales period did Kansas allow for the year 2000, and what did retailers need to do?
The 1999 Kansas Legislature authorized the sale of fireworks during December 28, 1999 to January 1, 2000 to celebrate the year 2000, in addition to the standard Independence Day selling period. Retail…
How did House Bill 2071 raise Kansas fuel tax rates starting July 1, 1999, and what inventory tax applied?
House Bill 2071 (1999) increased all Kansas fuel tax rates by $.02 per gallon effective July 1, 1999, with further increases of $.01 per gallon on July 1, 2001 and $.01 per gallon on July 1, 2003, and…
How did a Texas bank treat mortgage-security principal payments and interest on federal funds for the former franchise tax?
Principal repayments on available-for-sale debt securities were excluded from both Texas and everywhere receipts. Interest on federal funds was excluded under the federal-obligation rule only if the f…
Did Texas motor vehicle tax apply when trucks and trailers were transferred to newly formed corporations for stock and then to new partnerships for interests?
No. A vehicle transfer to a newly formed corporation for no consideration other than its stock was not taxed, and neither was a transfer to a newly formed partnership for no consideration other than a…
How is a dividend that a New York S corporation receives from its foreign (alien) subsidiary sourced for a nonresident shareholder's New York personal income tax?
The dividend is New York source income only to the extent of the alien subsidiary's issuer's allocation percentage under Article 9-A of the Tax Law (Tax Law § 210.7 and § 210.3(b)(1)). Because that pe…
If a professional service corporation shareholder had to add back excess pension contributions to New York income before 1988, can later withdrawals from a rollover IRA be excluded from New York income until that add-back amount is recovered?
Yes. Because the taxpayer's entire aggregate section 612(b)(7) add-back could be recovered within three years, the Department applied the three-year rule from TSB-M-82(3)-I(Rev.): the amounts the taxp…
Do monthly payments a retiree receives for life under a former employer's non-qualified deferred compensation plan qualify as an 'annuity' eligible for New York's $20,000 pension and annuity income subtraction?
Yes. Because the retiree's monthly payments are paid in money, at a fixed percentage of his final average compensation, for life (or 10 years certain if longer) under a written employer plan, they mee…
Can a janitorial-services company buy its plastic trash can liners tax-free as a 'resale,' since some of them stay in the customer's trash cans?
No. Plastic trash can liners purchased by a janitorial contractor -- whether used to carry trash off the premises or left in office and restroom trash cans on the customer's site -- are treated as ord…
When an asbestos-removal contractor buys disposable plastic bags, poly sheeting, and protective clothing for a job at a tax-exempt organization's property, does the contractor owe sales tax on those supplies, and can it get that tax back?
The contractor's purchases of the plastic bags, plastic poly, and protective clothing are taxable retail sales when bought. But because the exempt organization's site is where the service is performed…
When a building owner lets another company occupy a whole floor for a monthly fee to store its own equipment, is that a taxable 'storage service' or an exempt real-property lease?
Not taxable, on these facts. New York taxes the service of storing goods in space the storage company controls, but it does not tax a genuine real-property lease -- and giving a tenant a specific floo…
Is the Article 9-A exclusion for dividends received from subsidiary capital limited to the amount of those dividends excluded for federal income tax purposes?
No. In computing entire net income under Article 9-A, the exclusion for dividends received from subsidiary capital under section 208.9(a)(1) is not limited to the amount the corporation excluded (or d…
How is Kansas sales tax handled when a dealer buys aircraft for resale and the buyer is an out-of-state resident?
A corporation that buys aircraft in Kansas for the purpose of resale takes delivery here tax-free by giving the aircraft vendor a completed Kansas resale exemption certificate, which means it must reg…
Did converting a Florida general partnership into a limited partnership trigger deed, renewal-note, or nonrecurring intangible tax?
No. The converted limited partnership was the same entity as the general partnership, so the conversion deed was not taxable. A qualifying renewal of the existing note and mortgage also avoided docume…
Does a multi-level marketing company owe Kansas sales tax on sales of stressless, pain-relief, and stop-smoking capsules?
Taxable — Kansas sales and use tax law provides no exemption for stressless capsules, pain-relief capsules, or stop-smoking (smokers help) capsules, so the multi-level marketing company selling them m…
Is a civic organization sponsoring community youth activities exempt from Kansas sales tax on its purchases and its fundraising sales?
Not exempt — a civic organization that sponsors community youth activities does not qualify for a Kansas sales-tax exemption just because it is nonprofit, so it must pay sales tax on its purchases of …
What did House Bill 2549 do to the Kansas estate tax lien effective July 1, 1999?
The Kansas Estate Tax Act applies to estates of decedents who died on or after July 1, 1998, and originally imposed a lien on the gross value of the estate (attaching to proceeds if property was sold)…
If a 501(c)(3) nonprofit is the general partner (not the sole owner) of a limited partnership that hires a contractor to build affordable housing, how much of the construction materials can be bought tax-free?
Only a proportional share. The Comptroller treats the limited partnership the same as it would treat the individual partners -- so the exempt general partner's percentage ownership interest in the par…
If an electric cooperative buys items tax-free under a valid exemption certificate but then uses them in a way that isn't actually exempt (divergent use by a for-profit entity), how is the tax calculated -- on the fair market rental value or the original purchase price?
The default is fair market rental value (FMRV): under Rule 3.287(e), tax is due on the ongoing fair market rental value of items purchased under a valid exemption certificate but used in a divergent m…
Is a dirt scraper designed for use with farm tractors exempt from Kansas sales tax as farm machinery and equipment?
Exempt — a dirt scraper designed for use with farm tractors falls within the Kansas farm machinery and equipment exemption in K.S.A. 79-3606(t), so its sale is exempt from Kansas sales tax. That subse…
Does a nonprofit organization owe Kansas sales tax on its purchases of medical supplies, durable medical equipment, office supplies, and building repairs?
Taxable — this nonprofit organization does not qualify for a Kansas sales-tax exemption just because it is nonprofit, so it must pay sales tax on its purchases, including medical supplies, the purchas…
Are materials and services to repair railroad rolling stock used in interstate commerce exempt from Kansas sales tax?
Exempt — under K.S.A. 79-3606(y), all sales of materials and services used to repair, service, alter, maintain, manufacture, remanufacture, or modify railroad rolling stock for use in interstate or fo…
Did a foreign investment corporation create Texas franchise-tax nexus by hiring a Texas company to provide investor-relations services?
Yes. The foreign corporation invested only for its own account, but contracted with a Texas company whose employees received and answered inquiries from investors and potential investors. Those Texas …
How did a bank report swap proceeds, repurchase-agreement securities, and federal-fund transactions under the former Texas franchise tax?
Swap gross proceeds were receipts when no capital asset or invested principal was involved, sourced to the payor; an unknown exchange buyer triggered a 6.5% Texas factor. A repo sale recorded as a lia…
Does an independent distributor of a Texas direct sales organization need their own sales tax permit to sell that company's products at a trade show?
No. Direct sales organizations, not their independent distributors, are responsible for collecting and remitting sales and use tax on Texas sales made by distributors, and sales tax permits are not is…
Does a Nebraska retailer owe use tax on discounted cell phones given out to land service contracts?
The retailer owes consumer's use tax on the shortfall. Under Revenue Ruling 01-99-2, which supersedes Revenue Ruling 1-98-1, a retailer who furnishes cellular telephones at a substantially reduced pri…
Can a library buy books free of Kansas sales tax, and does it get a tax-exempt number?
It depends on the library's legal status — libraries as such do not qualify for a Kansas sales-tax exemption, but a library that operates as a political subdivision enjoys the exemption K.S.A. 79-3606…
Do a manufacturer's transformer, rectifier, and bus bars qualify for the sales tax manufacturing equipment exemption, or are they taxable real-property electrical fixtures?
It depends on the wiring, not just the intent. A transformer, rectifier, and bus bars can qualify for Utah's manufacturing equipment exemption, but only if they sit on a supply line installed solely t…
Could a reused hand-control extension installed on a new vehicle's emergency brake qualify the sale for Texas's disability exemption?
Yes, assuming the new vehicle itself was modified. The customer needed a hand control for the emergency parking brake because he had limited or almost no movement in his left leg. Reusing an extension…
Is the labor to replace a city's overhead electrical wiring with new underground wiring exempt from Kansas sales tax as original construction?
Exempt labor — replacing a city's aboveground electrical wiring with new underground wiring qualifies as "original construction" of a municipal utility facility, so the installation labor services are…
How does a retailer/contractor that both sells and installs equipment handle Kansas sales tax when working for an exempt entity like a school or nonprofit hospital?
Use a project exemption certificate — a business that both sells and installs boilers, burners, and related equipment is a retailer/contractor, and when it does an installation job for an exempt entit…
Does a private elementary or secondary school qualify for a Kansas sales-tax exemption on its purchases and construction projects?
Exempt — a qualifying private elementary or secondary school is exempt from Kansas sales tax on its direct purchases of tangible personal property and services under K.S.A. 79-3606(c), provided the it…
Does Texas treat a direct sales organization's distributor with a physical retail store in a mall or shopping center the same way it treats a home-based independent distributor, for sales tax permit and resale-certificate purposes?
No. Home-based independent distributors of a direct sales organization are never issued sales tax permits and may not give a resale certificate -- they pay tax on the suggested retail price, with a re…
For a bank's Texas franchise tax, are 'available-for-sale' securities treated as inventory, and how are proceeds from called or matured securities counted as gross receipts?
Yes — available-for-sale securities are generally treated as inventory, and proceeds from calls or maturities are gross receipts to the extent they are revenue under GAAP or federal tax rules. For a b…
Is a custom software developer's work for clients subject to New York sales tax, and does it matter whether the software, artwork, or a web site is delivered on disk or transmitted electronically?
It depends on what's actually built and how it's delivered. Genuinely custom software designed to one client's specifications is exempt regardless of delivery method, but software built by modifying o…
Were separately bid engineering, setup, movement, and placement services for production sets and trade-show booths taxable?
No. The separately bid and itemized labor was outside the taxable sales price because customers could reject each service, buy the set without labor, or buy labor independently, and the work was perfo…
Are Internet-based click-to-call and voice mail services taxable as telephone or telephone-answering services in Kansas?
No. The Department's opinion is that the described Internet-based services -- a click-to-call feature that connects a web-page owner with a website visitor, billed per minute, plus related voice mail …
Did an out-of-state company create Florida tax nexus by buying auto sales contracts through a Florida-based employee?
Yes. The company conducted financing activity through a Florida employee and earned income from Florida auto sales contracts, creating corporate-income-tax nexus and a Florida business situs for taxab…
Does a nonprofit spouses' club have to collect Kansas sales tax on its fundraising sales?
Taxable — a nonprofit enlisted spouses' club does not qualify for a Kansas sales-tax exemption just because it is nonprofit, so it must register, collect, and remit both state and local sales tax on i…
Are sales of truck tarps to interstate common carriers exempt from Kansas sales tax?
The Department's opinion is that the truck tarps come within the sales tax exemption in K.S.A. 79-3606(f), so their sale is not subject to Kansas sales or use tax. That statute exempts tangible person…
For a Texas-based interstate trucking company, does it matter whether repair parts are bought in-state or out-of-state, and whether they go on the tractor (truck) versus the trailer?
Yes, both distinctions matter. Repair/replacement parts (including tires and tubes) bought OUTSIDE Texas and affixed in Texas to the self-propelled vehicle (the tractor/truck) of a licensed, certifica…
Can a New Mexico worker escape state income tax with the 'Section 861' theory — that wages for U.S. labor aren't taxable income, that a private employee isn't an 'employee,' or that Form 1040 isn't really required?
No. Wages for services performed in New Mexico are taxable income, and the protest was denied on that core point. An Intel technician relied on a 'Taxgate' website claiming that only income tied to In…
Is an annual fee a company charges its independent sales agents to access their own personal sales data on a company web page a taxable service in Texas?
Yes. The storage of a sales agent's sales information on a web page is a taxable data processing service, even though the company isn't providing general Internet access and the agents aren't download…
Were deeds transferring utility property to counties or a public authority under threat of condemnation exempt from Florida documentary stamp tax?
Yes. Written county decisions to acquire the utility assets for public use, backed by the stated prospect of eminent-domain proceedings if no voluntary sale occurred, made the deeds exempt even when t…
Is the first Connecticut sale of No. 2 heating oil exempt from the petroleum products gross earnings tax when the buyer burns the oil to make steam that it pipes to customers to heat their buildings?
Exempt. When a petroleum distributor makes the first Connecticut sale of No. 2 heating oil to a business that burns it to heat water into steam and pipes that steam to customers to heat their building…
What refundable income tax credit did Senate Bill 45 give Kansas oil lease working interest owners?
Senate Bill 45 gives working interest owners a refundable Kansas income tax credit for property tax paid on the working interest of an oil lease whose average daily production per well is 15 barrels o…
Can a warehouse get a refund of tax on the electricity it uses to refrigerate and store already-finished products, based on a predominant-use exemption certificate claiming the electricity is used in manufacturing/processing?
No. Warehouses generally provide a storage commodity/service rather than sell tangible personal property, so their electricity use generally does not qualify for the manufacturing/processing exemption…
Did a Texas customer owe motor vehicle sales tax again when refinancing required selling the vehicle through a dealer and buying it back?
Yes. Assigning the vehicle to the dealer and moving it through dealer inventory was a sale, and reassigning it to the customer under the new financing contract was another taxable transaction. The fac…
Is power-washing a restaurant's kitchen vent hood taxable in Texas?
It depends on what the vent hood legally is. If the vent hood is affixed to the building as an improvement to realty (part of the ductwork), cleaning it is a taxable real property service under Rule 3…
How did Florida calculate the taxable portion of rent when a hotel lease included guest areas, operator space, and subleased commercial space?
Florida multiplied total rent by a square-footage fraction: space the hotel operator consumed for its own business went in the numerator, while all leased space went in the denominator. Guest dwelling…
Were separate charter-boat operating-license fees taxable as part of rent for boat slips, a kiosk, and pushcart space?
Yes. The operating-license fees were taxable rental consideration because the license and dock lease shared terms and cross-default provisions, and neither the leased space nor the charter right had p…
Is concrete cutting, coring, drilling, and repouring taxable in Texas, and does it matter whether the job is new construction, residential, or nonresidential repair/remodeling?
Charges for cutting/coring concrete tied to a repair or remodeling job on NONRESIDENTIAL real property are fully taxable, including any repouring charges afterward. But labor charges for the same cutt…
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