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 a tax-exempt nonprofit senior-housing operator have to collect sales tax on the meal portion of its residents' monthly rent, even though the nonprofit itself is exempt from sales tax?
Yes, taxable. Even though the nonprofit operator is itself exempt from sales tax, providing meals to residents in a dedicated dining room -- billed as a defined portion of their monthly rent, whether …
Are subscription voice mail services subject to Kansas retailers' sales tax?
Yes. The Department ruled that a monthly-subscription voice mail service is a taxable 'telephone answering service' under K.S.A. 79-3603(t), which also covers mobile phone, beeper, and other similar s…
Is the labor to complete a building left unfinished by a defaulted contractor exempt from Kansas sales tax as original construction?
Yes. The Department ruled that labor services to complete a building — where the original contractor defaulted partway through and a new contractor finishes the work under the original plans — are dee…
Must an out-of-state internet seller register and collect Kansas sales or compensating (use) tax on goods shipped to Kansas customers?
It depends on nexus. The Department ruled that an out-of-state internet seller has Kansas sales/use tax nexus if it has an office or place of business in Kansas, has people soliciting sales in Kansas,…
Does a school support group that acts as the functional equivalent of a parent-teacher organization qualify for the Kansas 79-3606(yy) exemption?
Yes, on these facts. Where a school has no PTA or PTO and the group is the sole parent organization functioning as a parent-teacher organization — raising funds for curriculum materials and equipment …
Is installing tangible personal property a taxable service in Kansas, and can a reseller buy that installation service free of tax?
Yes to both, with conditions. The Department's opinion is that Kansas imposes sales tax on the service of installing tangible personal property (K.S.A. 79-3603(p)), and the person performing the insta…
I'm a fixture contractor installing cash register stations, clothing racks, display cases, and gondolas in a newly built retail store — the store owner supplies all materials and I just assemble and install them. Is my labor taxable?
Yes. Even though the fixtures are bolted to the floor of a brand-new store, they remain tangible personal property — not improvements to realty — because they don't lose their identity as personal pro…
We want to split our sales company into a separate delivery-truck company (owned by the same family, run as a limited partnership) so that the delivery charge isn't part of our taxable sales price. Does spinning off a related delivery entity — and using either of two proposed joint-invoice formats — keep the delivery charge out of Texas sales tax?
No. Splitting delivery into a related entity and jointly billing the customer through either proposed invoice format still leaves the delivery charge taxable, because the seller is still the one billi…
Did offering an over-limit video-game-machine jackpot count as a prohibited inducement under SC RR 99-7?
No. The ruling said an excessive jackpot was not a prohibited special inducement and carried no specific criminal penalty under the Video Game Machines Act, but an excessive payment could trigger a $5…
Can a lubricating-oil distributor buy drums and drum reconditioning tax-free as ingredient or component parts of the oil it sells?
No. The Department ruled that the distributor's drums are returnable containers, so they don't qualify for the ingredient-or-component-part exemption under K.S.A. 79-3602(l)(2). The distributor must p…
Which health-care and sports-medicine products are exempt from Kansas sales tax as prosthetic or orthopedic appliances?
It depends on the product. The Department ruled that braces, blood flow equipment, and blood circulation equipment are exempt prosthetic or orthopedic appliances under K.S.A. 79-3606(r) when sold on a…
Did out-of-state sales solicitation and warranty repair make an ATM manufacturer subject to tax there for Texas throwback purposes?
For taxable capital, yes: sales representatives promoting goods and subcontractors performing contracts or warranty repairs were activities that made the corporation subject to taxation in the other s…
Does a nonprofit child advocate group qualify for a Kansas sales tax exemption?
No. The Department ruled that a nonprofit child advocate group does not have a Kansas sales tax exemption. Not every nonprofit organization is exempt — the Legislature grants exemptions to specific li…
Does the religious-organization exemption cover a church's purchases for a reading room that is also used as a retail store?
Not exempt — the religious-organization exemption in K.S.A. 79-3606(aaa) exempts a 501(c)(3) religious organization's purchases only when the item or service is used exclusively for religious purposes…
How did a money-transmission processor apportion service charges when Texas agents began transactions and New Jersey personnel completed them?
The corporation included the entire customer service charge in gross receipts and could not subtract the amount retained by Texas agents as a cost. Texas receipts included the fair value of services t…
One of our distributors resold product to a customer in Michigan, and a separate distributor sells to a retail store with its own storefront in a mall. In both cases the distributor already paid us Texas tax up front on the product. How do we handle refunding or crediting that tax without double-paying the state?
In both cases, the company can recoup the tax by taking a credit on its own current sales tax return (adjusting reported taxable sales) rather than filing a separate refund request. For the out-of-sta…
Are mowing, hauling, snow plowing, and grading taxable in Kansas, and what about welding or log splitting?
Mowing, dirt and tree-branch hauling, snow plowing, and grading are not currently subject to Kansas sales tax, because Kansas taxes only enumerated services (the provider pays tax on its inputs). But …
We run a distribution warehouse that stores finished products made elsewhere, and we use gas-fired air conditioning to cool the space. Does that natural gas qualify for Texas's manufacturing utility tax exemption?
No. Cooling a warehouse that only stores already-finished products (not manufactured on site) is a taxable commercial use under Tax Code Section 151.317, not exempt processing. The exemption only cove…
Were shares of a business-trust investment fund exempt from Florida intangible tax when its January 1 portfolio held only exempt assets?
Yes. The fund's shares or units were exempt when its portfolio on January 1 consisted solely of assets that were themselves exempt from Florida intangible tax.
Were wholesale electricity purchases and sales exempt from Florida sales, use, and gross receipts tax?
Yes, when properly documented. Resale certificates prevented sales and use tax, while qualifying electrical interchange agreements prevented gross receipts tax. The result did not depend on whether th…
Are snow removal services subject to Kansas retailers' sales tax?
No. The Department ruled that snow removal services are not currently subject to Kansas sales tax, because Kansas taxes only enumerated services. However, the provider must pay sales tax on all tangib…
Is hauling or transporting sand and gravel subject to Kansas retailers' sales tax when the hauler doesn't sell the material?
No. Kansas taxes only enumerated services, and the Department ruled that transporting services are not currently subject to Kansas sales tax when the hauler is not engaged in selling the gravel or san…
Is transferring motor vehicles to a company solely in exchange for equity a taxable sale in Kansas?
No. Kansas taxes the retail and isolated or occasional sale of motor vehicles and trailers, but K.S.A. 79-3603(o) excepts a transfer 'by a person to a corporation solely in exchange for stock or secur…
Does a school group that is the functional equivalent of a parent-teacher organization qualify for the Kansas 79-3606(yy) exemption?
Yes, on these facts. The school had no PTA or PTO, and the group was its functional equivalent — raising funds for curriculum materials and equipment and encouraging parental participation. The Depart…
Is a nonprofit hospital gift shop exempt from Kansas sales tax?
No. Kansas has no general sales tax exemption for not-for-profit organizations, and a hospital gift shop is not a nonprofit hospital, so the 79-3606(b) hospital exemption doesn't apply. The gift shop …
Is the sale, or the sale and installation, of farm machinery and equipment subject to Kansas sales tax?
The sale of qualifying farm machinery and equipment (and the service of repairing it) is exempt from Kansas sales tax, but the installation of farm equipment is taxable unless it is done in connection…
Could a county facilities manager buy janitorial services for resale and provide repair materials tax-free?
The manager could not buy janitorial services for resale because it was not primarily a janitorial seller or registered dealer. County-paid tangible-property repairs could be exempt with a valid certi…
Does a youth organization qualify for the Kansas 79-3606(ii) sales tax exemption for a comprehensive multidiscipline youth development organization?
Not here. To qualify under K.S.A. 79-3606(ii), an organization must show it is a 'comprehensive multidiscipline youth development organization.' Reviewing the group's Articles of Incorporation, the De…
If corporate officers personally guarantee a tax installment agreement that later defaults and is replaced, are they still on the hook when the state levies their personal bank accounts?
Yes. Two officers of a Roswell corporation who signed personal guarantees for the company's first tax installment agreement remained personally liable even after that agreement defaulted and was repla…
How do Kansas sales and use taxes apply to an out-of-state manufacturer that sells and refurbishes stadium seating installed in Kansas?
Selling manufactured seating is a taxable sale of tangible personal property; if the seller has Kansas nexus it collects sales tax, otherwise the buyer owes compensating (use) tax. Refurbishing is a t…
Does Kansas law require a Homestead taxpayer to sign the Certificate of Eligibility in the county's presence, so that a power-of-attorney form is needed?
The Department declined to approve the power-of-attorney form because it is unnecessary. A county office wanted to use a limited power of attorney so homebound elderly or disabled taxpayers would not …
Do a political party committee's bumper stickers, postcards, and signs mailed free to constituents qualify for New York's exemption for promotional materials mailed free to customers?
No. New York's promotional-materials exemption only applies to items mailed to a purchaser's own customers or prospective customers, defined as people who purchase (or might purchase) property or serv…
How is Kansas sales tax handled when a third party performs repairs for a retailer under a warranty or service contract?
Under K.A.R. 92-19-62(d), if a third party performs the repairs for a retailer under a warranty, maintenance, or service contract, the third party's receipts from the retailer aren't taxed — the third…
Could a Kansas retailer store exemption certificates only as scanned electronic images under the 1999 recordkeeping rules?
Not at that time. In 1999 the Department ruled that Kansas record-retention regulations (K.A.R. 92-19-4a), written in terms of microfilm and microfiche, did not clearly cover electronic images, so ret…
Could a dissolving corporation claim the former enterprise-zone deduction on its final Texas franchise-tax report?
Yes, if the corporation maintained its Texas Department of Economic Development enterprise-project designation during the final report period. A December 31 dissolution produced a January 1-December 3…
We electronically scan our resale and exemption certificates instead of keeping paper copies. Does the Comptroller still require us to keep the original hard copies for audit purposes?
Generally yes for signature-bearing records — the Comptroller requires resale/exemption certificates and other documents requiring a signature to be kept in original or microfilmed form so the signatu…
Does the Kansas sales tax base on cable television billings include the franchise fee and FCC fee passed through to subscribers?
Generally yes. Where a cable operator passes the municipal franchise fee and FCC fee through to subscribers as a line-item cost — rather than the fee's legal incidence being placed on the subscriber —…
Must a company selling fund-raising items to groups that resell them charge Kansas sales tax?
It depends on the buyer. A company selling fund-raising items to entities that resell them to consumers must collect Kansas sales tax unless the buyer issues a resale exemption certificate -- which re…
Are transfers of tangible personal property between two related companies subject to Kansas sales tax?
Yes. The Department advised that transfers of tangible personal property and taxable services between separate legal entities for their own use or consumption -- not for resale -- are subject to Kansa…
We're adding a fourth floor to a 3-story building and need to modify the existing elevator to reach it. Is extending the elevator to the new floor new construction, and is modifying the existing elevator equipment in the first-floor shaft area new construction or taxable remodeling?
Split answer. Installing new elevator tracks and support structures on the brand-new fourth floor is new construction (not taxable). But adding or modifying equipment like jacks and pumps in the exist…
If an unlicensed design company and a separately owned, licensed architectural firm split up an office-design engagement under one contract, which of their combined services are subject to New York sales tax?
It depends on licensing, not on which entity performs the work. Space planning, layout, design development, and drawing preparation stay untaxed only if they're an integral part of drawings that a lic…
When a trucking corporation moves from Article 9 (sections 183/184) to Article 9-A, may it deduct a net operating loss carryforward from its Article 9 years?
No. A trucking corporation that was taxed under sections 183 and 184 of Article 9 through 1997 and became subject to Article 9-A on January 1, 1998 may not claim an Article 9-A net operating loss dedu…
Are textbooks sold by a banking-industry trade school's local chapter exempt from New York sales tax as college textbooks?
No. New York's exemption for college textbooks only applies to books required for a course at an institution of higher education that is either recognized by the Regents of the State of New York or ac…
Is an out-of-state manufacturer with two New York sales representatives, one working from a home office, subject to Article 9-A, or is it protected by Public Law 86-272?
Protected. An out-of-state paper-products manufacturer whose only New York activities are two sales representatives soliciting orders -- one working from his New York home -- is not maintaining an off…
How does New York sales tax treat a hotel's complimentary drinks, staff-meeting food, discount coupons, and gift certificates -- including certificates given to dissatisfied customers or donated to charity?
It depends on the item: complimentary food and drink bundled into a paid conference package are bought tax-free for resale; free items given away with no revenue behind them are a taxable purchase by …
Are textbooks sold by a banking-industry trade school's local chapter exempt from New York sales tax as college textbooks?
No. New York's exemption for college textbooks only applies to books required for a course at an institution of higher education that is either recognized by the Regents of the State of New York or ac…
Are telecommunications devices, signaling devices, and other assistive products for people with hearing, vision, or physical impairments exempt from New York sales tax?
Mostly yes. TTY devices, television decoders, telephone amplifiers, answering machines, assistive listening devices, vibrating clocks, and home signaling devices for people with disabilities all quali…
Are discounts a supermarket gives customers who present a loyalty card excluded from the sales price that New York sales tax is based on?
Yes. A supermarket's card-triggered discounts work the same as a store-issued coupon, so the customer pays sales tax only on the discounted price actually paid, as long as the supplier discount progra…
We signed a ground lease with a 25-year term plus two 10-year renewal options (45 years total), but before the lease term even starts, there's an 'interim term' where we get site access only to run engineering studies and pursue building permits -- we can't occupy or build yet, and we've already had to pay $150,000 to extend that interim due-diligence period once, with more extensions likely. Does that due-diligence interim period count toward the lease's total term for purposes of New York's 49-year Real Estate Transfer Tax threshold, potentially pushing us over 49 years and making the lease taxable?
The interim due-diligence period doesn't count, so the lease stays under the 49-year taxable threshold. Waldbaum, Inc. entered a ground lease with Sears, Roebuck & Company for a shopping center site i…
Could a Florida vessel contractor prorate sales tax on dyed diesel used to transport property from another state and retrieve property from the high seas?
Yes. Florida treated the out-of-state transport voyages as interstate commerce and the high-seas retrieval voyages as foreign commerce, allowing the contractor to prorate sales tax on the vessels' dye…
When a private club automatically adds a service charge to members' food and drink bills, does that money belong to the club or to the servers?
It belongs to the club. Under the club's own compensation arrangement, servers are paid a flat wage and get no share of the automatic service charge, so the charge is the club's income — not tips or w…
Is the rental of portable toilets subject to Kansas sales tax?
Yes. In Kansas, a sale of tangible personal property is taxable, and a 'sale' includes a rental. Furnishing a portable toilet is treated as a taxable rental of property, and the delivery and waste dis…
Were optional delivery charges taxable, and which county's discretionary sales surtax applied when nursery stock was delivered across county lines?
Optional delivery charges were not taxable when separately stated and avoidable by customer pickup. County surtax followed the actual delivery location—not the seller's county or the point where title…
Are a church-run day care center's purchases (such as water utilities) exempt from Kansas sales tax?
It depends on how the day care is organized and where it operates. Sales to a non-profit, nonsectarian day care that provides a comprehensive multidiscipline youth development program are exempt under…
Are charges for Internet service subject to Kansas sales tax?
No. Charges to customers for Internet use are not subject to Kansas sales tax. Kansas taxes a service only if it is specifically listed (enumerated) in K.S.A. 79-3603, and Internet services are not on…
Is a taxable service performed in Kansas exempt if the customer is in another state and the contract was signed out of state?
No. Kansas retailers' sales tax applies to taxable services performed in Kansas. Where the purchaser is located and where the contract is accepted or executed are irrelevant — what matters is that the…
If you're an independent contractor whose services get resold, can you still claim the resale deduction after presenting the wrong type of certificate — or one that arrives too late?
No. A fly-fishing guide who worked as an independent contractor for an outfitter owed gross receipts tax on his own receipts, and his protest was denied. He mistakenly believed the outfitter's tax pay…
Our company provides a huge bundle of contracted facilities-management services to malls and shopping centers — janitorial, HVAC upkeep, roof/electrical/plumbing repair, painting, parking lot work, landscaping, equipment repair, snow removal, pest control, and more — all separately itemized on our invoices. Which of these services are taxable, and how do we handle sales tax on the supplies and parts we buy to perform them?
It splits into two legal categories with very different rules. Rule 3.356 "real property services" (janitorial/custodial work like restrooms, building lighting, landscaping, parking lot lights, snow r…
My client is an FAA/JAA-certified repair station that overhauls jet engines and other aircraft parts for commercial airlines and the military, using one shop with both engine and non-engine work happening under a single utility bill. Is the electricity and natural gas used there exempt?
Partially, and it depends on a predominant-use study. Natural gas and electricity used specifically in off-wing processing, overhaul, or repair of a jet engine (or its parts) for a certificated or lic…
Does a nonprofit support group qualify for a Kansas sales tax exemption?
No. The Department ruled that a nonprofit support group does not have a Kansas sales tax exemption. Not every nonprofit is exempt — the Legislature grants exemptions to specific listed organizations (…
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