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 bank deduct interest earned on federal funds from its earned surplus (or taxable capital) for Texas franchise tax under Sec. 171.106(h)?
No. Texas Tax Code Sec. 171.106(h) is an apportionment provision only: it requires a banking corporation to exclude from the numerator of its apportionment factor the interest earned on federal…
Are advertising space and subscriber access fees on an online 'electronic bulletin board' subject to Kansas sales tax?
No, for the online service itself. The Department advised that the sale of advertising space on a nationwide data bank or 'electronic bulletin board' is not subject to Kansas sales or use tax, and…
What Florida tax returns and claim priorities applied when the Department of Insurance liquidated insurers as receiver?
The receiver had to file required corporate income-tax returns for pre- and post-receivership periods. Insurer assets were exempt from intangible tax for 1999 and later, but earlier returns remained…
What county per-capita income figures did South Carolina publish for the qualified-service-facility job tax credit in June 2002?
It listed the most recently available per-capita income for all 46 counties to test compensation thresholds for qualified service facilities under the job tax credit.
What South Carolina per-capita income figure did RIB 02-10 publish for the corporate-headquarters credit?
It published $24,594 as the most recently available South Carolina per-capita income figure for testing the personal-property component of the headquarters credit.
Are the food, beverage, and lane-rental charges for a bowling alley's 'bowling party' packages subject to New York sales tax?
It's split. The lane-rental charge for a bowling party is exempt from sales tax as a participatory-sporting-activity admission charge, but the food and beverage charges (and any gratuities paid over…
How did South Carolina's historical sales-tax-holiday rules handle online orders, delivery charges, exchanges, rain checks, and retailer reporting?
Qualifying sales during the three-day holiday were exempt under detailed timing and delivery rules, but layaways and purchases completed outside the holiday were not.
Which purchases did South Carolina's historical sales-tax-holiday bulletin treat as exempt or taxable?
The historical holiday exempted listed clothing, footwear, school supplies, computers, printers, supplies, and software, subject to statutory exclusions.
Does a New Mexico estate owe interest on estate tax paid late under a valid filing extension, when a botched by-pass trust and confusion over the estate's obligations caused the delay?
Yes. The Estate of Inez Van Tubergen paid $22,284.23 of New Mexico estate tax on December 15, 2000 under a valid six-month extension, after the tax was originally due June 15, 2000. The Department…
Are stock options granted to a corporation's officers and directors added back to earned surplus for Texas franchise tax, and in what year?
Yes. Under Texas Tax Code Sec. 171.110(a)(1), a corporation that is not exempt from the add-back must add officer and director compensation back to its earned surplus to the extent that compensation…
Is a 'core charge' on a replacement part taxable, and is the tax refunded when the customer returns the old part?
Yes, the core charge is taxable — and the tax is refunded on the return. Kansas treats a 'core charge' (an added fee when the customer has no old part to trade in) as part of the selling price, so…
Were automobile appearance-reconditioning charges exempt processing for resale, and which materials used in the work were taxable?
The service charges were taxable. Tennessee treated buffing, cleaning, refinishing, dyeing, painting, and protective treatment as repair or cleaning services, not exempt processing for resale.…
Were fees for remotely hosted web-application functionality taxable, and when did sales to web developers become taxable software transfers?
Generally no. Clients who only used functionality and output from software kept on the company's servers received a nontaxable hosting service, not transferred software. A client that actually…
When does a homeowners association's Texas franchise-tax exemption take effect, and what must it still file to reinstate its charter?
A homeowners association qualifies for the Texas franchise-tax exemption under Tax Code Sec. 171.082 only once voting control of the organization is vested in the owners of the individual lots or…
Are repair labor and repair parts for manufacturing machinery taxable when the customer and delivery are out of state?
Labor is taxable; the parts are not, on these facts. The manufacturing machinery exemption in K.S.A. 79-3606(kk) applies only to machinery 'used in this state,' so a repair job for a customer…
What qualifies for Kansas's ingredient-or-component-part sales tax exemption, and when are containers and packaging exempt?
An item qualifies for the ingredient-or-component-part exemption (K.S.A. 79-3606(m)) only if it is (1) necessary and essential to the finished product, (2) used in or on it, (3) becomes a physical…
We're a 501(c)(3) nonprofit running four different disability-services programs at one leased building -- only one of which (a Diagnostic and Treatment Center) is a licensed 'hospital' under state law. We took out one leasehold mortgage to renovate the whole building. Does the mortgage recording tax exemption for nonprofit hospital corporations cover the WHOLE mortgage, or only the part used for the hospital program?
Only partially exempt -- apportioned by actual use. Tax Law section 253.3 exempts mortgages executed by a "voluntary nonprofit hospital corporation" from mortgage recording tax, and Petitioner -- a…
When can a venue accept an exemption certificate for tickets, drinks, and desserts bought by hospitals, religious groups, schools, PTAs, or government?
Any direct purchase — including tickets, meals and drinks — by a not-for-profit hospital, religious organization, school or educational institution, or parent-teacher association (in state or out of…
Are gross receipts from cleaning a customer's equipment (chains) subject to Kansas sales tax?
No. The Department advised that cleaning a customer's chains is not subject to Kansas sales tax. K.S.A. 79-3603(q) taxes repairing, servicing, altering or maintaining tangible personal property, but…
Are gross receipts from cleaning a customer's pans, frames, and racks subject to Kansas sales tax?
No. The Department advised that cleaning a customer's pans, frames, and racks (soaking, drying, and re-coating them with oil) is not subject to Kansas sales tax. K.S.A. 79-3603(q) taxes repairing,…
Could a controlled entity use a resale certificate for prepaid mall rent, and was refunded unearned rent taxable?
Yes. Because the controlled entity would sublease nearly all the mall and lease any remaining space back to the owner, it could give the owner an annual resale certificate and avoid tax on prepaid…
How did Tennessee apply franchise and excise tax, financial-institution rules, and apportionment to an out-of-state mortgage-banking LLC?
The LLC's stated activities did not establish nexus standing alone if it lacked physical presence under the 2002 analysis, but Tennessee registration still required a return and the $100 minimum…
Were collector-club membership fees taxable when each membership included a club kit containing collectibles and other tangible property?
Yes. Because each membership included a contemporaneous club kit with independently valuable tangible personal property and the charge was not separated, Tennessee taxed the full membership fee. No…
Would Tennessee tax asset transfers to a corporation's federally disregarded single-member LLC, or tax the LLC separately?
No, for the taxes the Revenue Commissioner administered. Tennessee treated the federally disregarded, corporate-owned single-member LLC as a division of its owner. Transfers of aircraft, vehicles,…
Would transferring business aircraft to a wholly owned QSSS or disregarded single-member LLC trigger Tennessee sales or use tax?
It depended on the entity. The aircraft transfer to a qualified subchapter S subsidiary was taxable because Tennessee treated the subsidiary corporation as a separate person. The transfer to a…
Were subscription fees, live market quotes, and commissions of an online agricultural commodity exchange subject to Tennessee sales tax?
No. Subscription access and separately priced live market quotes were neither tangible personal property nor specifically taxable services. Commissions were part of the sales price of agricultural…
We're the Battery Park City Authority. We sublease-back a developer's leasehold so we can be named co-mortgagor on their construction financing -- without pledging our own fee interest -- and this mortgage will be split, modified, and refinanced many times over the years as buildings are completed and converted to permanent financing. Is all of that exempt from mortgage recording tax?
Exempt for mortgages naming the Authority as co-mortgagor; later increases in debt remain taxable. The Battery Park City Authority, a public benefit corporation of New York State formed to redevelop…
What Florida documentary stamp, intangible, and sales taxes applied when a mortgage was restructured as a synthetic lease?
The deeds into and out of the bare-title entity were not subject to deed tax, but the synthetic lease was subject to documentary stamp tax on the acquisition cost and nonrecurring intangible tax as…
How does a homeowners association apply for the Texas franchise-tax exemption, and does it also cover sales tax?
A homeowners association has two routes to a Texas franchise-tax exemption. Under Tax Code Sec. 171.063, if it has obtained a federal exemption under IRC Sec. 501(c)(2), (3), (4), (5), (6), (7),…
Is a company's licensed equity-trading software, along with its customer support, training, and customization charges, subject to New York sales and use tax?
It depends on whether the software is 'prewritten' or truly custom. If the FLEXTRADE software (or its updates) wasn't designed and developed to each specific customer's own specifications, it's…
Does a professional membership association get the Texas franchise-tax exemption, and does calling itself 'educational' qualify it - or exempt it from sales tax?
A professional membership association that holds a federal 501(c)(6) exemption qualifies for the Texas franchise-tax exemption under Tax Code Sec. 171.063 - here effective January 1, 1998. It does…
Is a court-ordered litigation settlement fund a corporation or trust subject to New York State or City franchise or personal income tax?
No. A court-ordered litigation settlement fund that is a qualified settlement fund under IRC section 468B is not a corporation subject to Article 9-A (its activities are not the conduct of a…
Does Public Law 86-272 protect a company whose New York salespeople solicit free-publication subscriptions and sales of advertising space?
No. Public Law 86-272 only protects soliciting orders for sales of tangible personal property. The company gives its publications away free (no sale, no receipts) and earns its money selling…
Are prospectuses, proxy materials, offering circulars, and SEC forms that a securities printer mails free to shareholders exempt from New York sales tax as promotional materials?
It depends on the document. Prospectuses, red herring prospectuses, offering circulars, tender offer materials, private placement memorandums, and Forms 10-K/10-Q qualify as exempt promotional…
Are telephone answering services subject to Kansas sales tax?
Yes. The Department advised that telephone answering services are subject to Kansas sales tax. Kansas imposes sales tax on telephone services under K.S.A. 79-3603(b) and specifically on answering…
When must a New Mexico corporation make quarterly estimated income tax payments, and does a regulation excuse it just because its tax was under $6,000 in the two prior years?
A New Mexico corporation must make quarterly estimated corporate income tax payments whenever its tax for the year 'can reasonably be expected to be $5,000 or more' (Section 7-2A-9.1). Malcolm…
Is a hotel's floor-by-floor reconstruction project -- including wall demolition, skimming, painting, wall coverings, and new carpet -- exempt from New York sales tax as a capital improvement?
Mostly yes, with one exception. Hilton's multi-million-dollar floor-by-floor reconstruction -- demolishing and re-plastering walls, painting, and installing wall coverings -- qualifies as an exempt…
Can a member-owned private ski club avoid sales tax on members' ski lift passes by billing them separately from annual dues instead of bundling them together?
No. Because the ski club is a member-owned social/athletic club, any charge to members for use of its ski lifts and slopes counts as taxable club 'dues' under New York law regardless of how it's…
Is an out-of-state company that hires New York subcontractors to do janitorial work, with no office or employees here, doing business in New York?
No, if the subcontractors are genuine independent contractors. A foreign corporation with no office, employees, representatives, or inventory in New York that merely hires New York subcontractors as…
Is Subpart F income and section 956 inclusions from a controlled foreign corporation treated as income from subsidiary capital excluded from entire net income?
Yes. A taxpayer's pro rata Subpart F income under IRC section 951(a)(1)(A) and its section 956 investment-in-U.S.-property inclusions under section 951(a)(1)(B) from a wholly owned controlled…
When was a vehicle, vessel, or aircraft first functionally used under Regulation 1620?
It depended on design. Personal-use property was functionally used when first driven, sailed, or flown; commercial property generally required carrying or dispatch for specific cargo or passengers.
Are a new media company's web site development, design, consulting, and maintenance services subject to New York sales and use tax?
Web site development, design, implementation, consulting, and content maintenance are not subject to sales tax, even when the site is delivered on a CD-ROM. But the company's own purchases of…
How much did Kansas motor fuel tax rates increase in 2002, and what inventory tax applied?
2002 House Bill 3011 increased all Kansas motor fuel tax rates by $.02 per gallon effective July 1, 2002. The new rates were: gasoline $.23, gasohol $.23, special fuel (diesel) $.25, and L.P. gases…
Did returnable berry containers qualify for the food-container exemption when they only moved berries within the same farm?
No. Same-farm field or facility movement was not 'shipment'; movement from the farm to a separate processing location could qualify.
Were employee fees for mandatory airport ID badges and parking decals subject to Florida sales tax?
Badge fees were not taxable because the badge transfer was incidental to a required condition of airport employment. Parking fees were taxable because employees paid for parking spaces, and a…
Were a building-material seller's delivery and rooftop-loading charges part of the taxable sales price?
Delivery charges were taxable because they were included in the materials' unit price instead of separately stated. Rooftop-loading charges were not taxable because they were separately stated and…
May a Texas vehicle rental company accept a photocopy of a motor vehicle rental exemption certificate from a school district?
Yes. A rental company could accept a photocopy when the renter was a qualified exempt entity, such as a school district, and the original certificate had been properly completed and signed by an…
How were Florida nonrecurring intangible and documentary stamp taxes calculated on a loan secured by real and personal property?
The closing calculations were correct. Nonrecurring intangible tax applied only to the portion secured by Florida real property and could not use a tax base above that property's fair market value.…
Does a steel-and-pipe retailer's new cutting machine qualify for the Kansas integrated plant (production) exemption?
No. The Department advised that a new cutting machine bought by a steel and pipe retailer/wholesaler does not qualify for the integrated plant (integrated production) exemption at K.S.A.…
Could an HPIP credit passed through from an S corporation offset a shareholder's total Kansas income-tax liability, including tax on other income?
Yes. When an S corporation or other flow-through entity qualified for an HPIP credit, the credit passed to its shareholders, partners, or members. A recipient could apply the credit against total…
Could a Louisiana corporation deduct expenses allocated to an IRC § 78 foreign-dividend gross-up that Louisiana excluded from corporation income tax?
No. The gross-up was income for Louisiana purposes but was specifically excluded from tax, so expenses attributed to that untaxed income were disallowed in computing Louisiana taxable income.
When was accrued vacation pay included in surplus and undivided profits rather than treated as a fixed liability for Louisiana franchise tax?
A pooled estimate subject to forfeiture was not a definitely fixed liability and entered surplus and undivided profits. Employee-level accruals guaranteed to be paid in addition to regular pay could…
Did California violate the bankruptcy automatic stay by renewing notices that extended already existing pre-petition state tax liens?
No. The letter treated the renewals as acts maintaining or continuing perfection of existing property interests, which section 362(b)(3) excepted from the stay.
How does Kansas sales tax apply to propane sold for residential heating, for commercial use, and to power forklifts?
It depends on the use. Propane sold to heat or light a residence is exempt from Kansas state sales tax but still subject to local sales tax, sourced to the customer's location (K.S.A. 12-191); small…
Is Texas motor vehicle sales tax due when vehicle titles transfer between corporations in a statutory merger or consolidation?
No. The Comptroller said vehicle transfers between corporations resulting from a statutory merger or consolidation were not subject to motor vehicle sales tax, including both corporate division and…
Was Georgia IRT due when an Eleventh Supplemental Indenture was recorded for an instrument beneficially held by the Federal Financing Bank?
No. Georgia found the Eleventh Supplemental Indenture exempt because the instrument's beneficial holder was the Federal Financing Bank, an instrumentality of the United States government.
When did a foreign trademark holding company have Louisiana corporation-income-tax nexus from licensing intangible property used in the state?
Nexus existed when the intangible purposefully generated Louisiana income and the company's Louisiana connection was more than de minimis. Public Law 86-272 did not protect licensing or continuing…
Were airport passenger-screening services taxable when the Federal Aviation Administration contracted and paid the provider directly?
No. Security services under the Federal Aviation Administration contract were exempt because the United States government paid the provider directly. The same services would be taxable if a private…
Were custom concrete floating docks fabricated and installed under lump-sum contracts real-property improvements for Florida sales tax?
Yes. The custom floating docks were fixtures and real-property improvements under the proposal reviewed. The contractor could pay tax on materials and fabricated cost rather than collect tax on the…
Does being a not-for-profit organization by itself make an organization's purchases exempt from Kansas sales tax?
No. The Department advised that being a not-for-profit organization does not by itself exempt an organization's purchases from Kansas sales tax. Exemptions are narrowly construed, and a group must…
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