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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Could a corporate group stop filing Florida consolidated returns after 15 years of reorganization, divestitures, acquisitions, and changed business lines?
Yes, subject to four conditions. The group had fundamentally changed its business and apportionment profile, had independent business reasons, expected separate filing to produce the same or more…
When is software, a content database, or hosting taxable under Utah sales tax — and does it matter whether the customer downloads it or just accesses it online?
Canned (prewritten) software and content databases are taxable whenever the customer takes possession of them — by disk, electronic download, or delivery to a server the customer controls —…
How did California apply an IRS Form 906 closing agreement and compliance fee for errors on Forms 1099-B issued to fund shareholders?
FTB accepted the taxpayer's California-adjusted amount as a section 19183 penalty arising from the Form 906 closing agreement. California followed the federal settlement to the extent its law…
Which natural-gas generating-plant equipment and reclaimed-water or wastewater-treatment purchases qualified for Florida sales-tax exemptions?
Machinery and equipment consistent with the integrated-plant authorities qualified when used in natural-gas electricity and steam production, not distribution, and properly documented.…
Must New Mexico settle a state income tax bill on the same ability-to-pay terms the taxpayer got from the IRS, and does an attorney's advice not to file excuse the late-filing penalty?
No on both points, so the protest was denied. Howard Bancroft, on his attorney's advice during divorce litigation, did not file 1992–1994 New Mexico income tax returns; after the IRS resolved his…
How did Texas tax rentals of manufactured homes, trash trailers, and trailer-mounted septic systems used at oilfield sites?
The answer depended on the equipment. Manufactured-home rentals fell under hotel occupancy tax; trash-trailer charges were part of a taxable waste-disposal service, with vehicle tax due when buying…
An oilfield-services rental company rents out three different things -- mobile homes, trash trailers used to collect and remove jobsite garbage, and septic systems mounted on trailers. What tax (if any) applies to each, and who's on the hook if the customer doesn't pay it?
Three different taxes for three different rentals. (1) Renting a manufactured (mobile) home is subject to STATE HOTEL OCCUPANCY TAX (6%, Chapter 156), not sales tax -- rentals under 30 consecutive…
Would Tennessee follow federal liquidation treatment for a subsidiary asset distribution made with a Section 338(h)(10) stock-sale election?
Yes, subject to the stated assumptions. Because Tennessee excise-tax net earnings began with federal taxable income and supplied no contrary adjustment, Tennessee would follow federal treatment if…
Which sterilization, lighting, HVAC, and air-cleaning equipment qualified for Kansas's integrated production exemption?
Equipment sterilizing bottles or containers for the finished product qualified as exempt packaging equipment, and its operating electricity was exempt. General plant lighting, heating, cooling,…
When could a Tennessee trailer dealer treat a farm trailer as exempt, omit the tire fee, or sell tax-free to an out-of-state buyer?
A dealer needed a valid farm-equipment certificate for a qualifying production-use trailer. The $1 tire fee did not apply to a tire that was part of the trailer, but applied to a separate optional…
Did Tennessee sales tax apply when customers redeemed purchase-based reward points, with or without cash, for merchandise delivered outside Tennessee?
No, under the stated delivery terms. Merchandise obtained with reward points—or points plus cash—was a retail sale, but Tennessee sales tax did not apply because both title and possession passed to…
If a carpet installer holds the wrong type of nontaxable transaction certificate and can't get the right one within the Department's 60-day deadline, can he still deduct his resale receipts — and do 'double taxation' or 'another installer got the deduction' arguments help?
No — the deduction was lost and the protest was DENIED. Southwest Flooring Installations sold carpet-installation services to carpet retailers, which resold those services to their customers and…
Are multi-level marketing commissions taxable New Mexico gross receipts when they are measured by the phone charges of out-of-state customers but earned for sales services performed in New Mexico?
His commissions were taxable New Mexico gross receipts to the extent his sales and recruiting services were performed in-state, so the protest was denied. Wayne Gaede earned multi-level marketing…
Are a utility's connection, reconnection, damage-claim, name-change, and similar service charges taxable as part of the sales price of electricity or gas, and when did utilities have to start collecting tax on them?
Taxable, with transition relief. Charges for services like connection/reconnection, damage claims, and name changes are taxable as part of the sales price of electricity or gas when the customer's…
For a $1.3 billion JFK Airport terminal rebuild, is an airline's purchase of construction materials, furniture, computers, and equipment exempt from sales tax through the Port Authority/City of New York's exempt status or through an Industrial Development Agency agency arrangement?
Yes, through two separate paths. Construction materials that become part of the new terminal are exempt because title to each improvement passes immediately to the City of New York (an exempt…
Are medical-record copying, storage, digital database, and file-management services subject to Kansas sales tax?
No, the services are not taxable. The Department ruled that no imposition exists in Kansas law to tax a company's medical-record copying, monthly storage, virtual (digital) file-room database, or…
Is a nonprofit senior center exempt from Kansas sales tax?
No. The Department ruled that this nonprofit organization is not exempt from Kansas sales tax. Although 1998 Senate Bill 493 added sales-tax exemptions for several deserving organizations —…
Do construction materials bought with a political subdivision's bond proceeds stay exempt from Kansas sales tax if a private company buys the industrial revenue bonds?
Yes, they remain exempt. This ruling confirms an earlier Department ruling (issued August 30, 2001) that construction materials for the project are exempt from Kansas sales tax because they will be…
Must a newspaper collect Kansas sales tax on subscriptions, and does it still owe use tax on the free copies it gives away?
Yes, Kansas newspaper subscriptions are taxable. The Department ruled that a publisher must collect Kansas sales tax on subscriptions delivered by mail to a Kansas address (the specific rate is…
Which medical supplies and equipment — including rentals and delivery fees — are exempt from Kansas sales tax?
It depends on the item, a prescription, and the buyer. Under K.S.A. 79-3606(r), prescribed prosthetic and orthopedic appliances are exempt — from the items listed, only wheelchairs, shower/commode…
Can a company buy ATVs and watercraft tax-free if it modifies them and resells them?
Yes, the purchases are exempt. The Department agreed that a company buying all-terrain vehicles and watercraft to modify and then resell — to a dealer or an end user — may acquire them without…
Are hand tools sold to a Kansas manufacturer exempt from sales tax if the manufacturer uses them in production?
Exempt when the manufacturer's use test is met. The Department explained that Kansas law changed after the seller's 1999 inquiry: under the current integrated production exemption, K.S.A.…
Can someone avoid New Mexico income tax by reporting zero income on tens of thousands of dollars of wages and arguing he isn't a 'taxpayer,' that Federal Reserve Notes can't be taxed, or that a self-styled 'private judgment' cancels the tax?
No — every argument failed and the protest was DENIED. Patrick Youngman reported zero income on his 1999 New Mexico return despite $60,502.47 in wages shown on his withholding statements, and the…
May a California corporation make a California-only IRC section 59(e) election to amortize research costs over 10 years while deducting them federally?
Yes. FTB ruled that the taxpayer could make a separate, valid California election under IRC section 59(e) to capitalize and amortize qualifying research and experimental expenditures over 10 years…
A company's licensed insurance adjuster works full-time at an insurance company's office, under that company's total supervision, on an open-ended assignment -- is billing for that adjuster still taxable after the 2001 law change?
Still taxable. Even though the licensed insurance adjuster works at the insurance company's own office under its total day-to-day supervision, with the insurance company furnishing all supplies and…
What Utah sales taxes apply to a company handling Olympic athlete food services, its food sales to the Olympic Organizing Committee, and the restaurant equipment used and later transferred as compensation?
Multiple issues, multiple answers. Sales tax rates vary by Olympic venue location and combine up to three components (a base sales/use rate, a 1% tourism-restaurant tax, and, in resort areas, a 1%…
If New Mexico wrongly told a business it owed gross receipts tax and it overpaid for years, can it get all of that money back — or does the three-year refund deadline bar the older years even though the state admits no tax was due?
The older years were barred, so the protest was DENIED. Raven Wolf Communications, a consulting astrologer serving only out-of-state clients by phone, was wrongly told by a Department counter…
Is a company that supplies licensed insurance adjusters to insurance companies after a catastrophe providing exempt temporary help, or a taxable insurance service?
Taxable. A company that supplies its own licensed insurance adjusters to insurance companies on a temporary basis after catastrophes is performing a taxable insurance…
What tax and regulatory changes did South Carolina's 2001 legislative update summarize?
Use it as an October 19, 2001 finding aid to significant enacted changes involving income and withholding, property and fee-in-lieu rules, sales and use tax, administrative procedure, miscellaneous…
If a customer redirects a software delivery into Texas for installation, is Texas sales tax due even though the customer's employees only ever use the software remotely from outside Texas?
Yes, tax is due. Where software (treated as tangible personal property) is physically delivered and installed controls Texas sales/use tax -- not where the customer's employees are physically…
On a taxable installation contract, what is included in the Kansas sales-tax base — and can a contractor deduct overhead and profit?
Overhead and profit are part of the taxable base. Addressing contracts to install or apply tangible personal property — which the ruling cites K.S.A. 79-3606(p) as taxing — the Department explained…
Did Tennessee tax billboard vinyls produced, delivered, and installed outside the state for a Tennessee advertising agency?
Not on the stated out-of-state installation or the agency's client invoice. The agency was the vinyls' user and consumer, so its vendor purchase was taxable only if title passed to the agency in…
If a retailer switches to having a third-party fulfillment house pay customer rebates (funded by manufacturer reimbursements) instead of paying them itself, does the retailer get to reduce its taxable sales price and claim a sales tax refund?
No sales tax adjustment. Rebates that a third-party fulfillment house pays to a retailer's customers -- funded by the retailer billing the manufacturers, not by the retailer's own funds -- are not…
For an advertising agency's retainer fees, ad campaigns, ad revisions, and sales materials, what parts of the bill are taxable, and what records does the agency need to keep to prove it?
It depends on the line item. A pure monthly retainer fee is a nontaxable service. Charges for employee-fabricated property (finished art, photographs, etc.) are taxable. Preliminary art (concepts,…
Was a seller's certificate in a revolving master trust holding trade receivables exempt from Florida intangible tax?
Yes, if the master trust was registered under the Investment Company Act of 1940. The Department treated the common-law trust as a business trust and the seller's certificate as an undivided…
Did a corporation owe Florida annual intangible tax on contingent residual interests retained in two automobile-receivable trusts?
The corporation owned taxable residual interests in both trusts, but its current intangible-tax liability was zero because distributions depended on excess spread-account balances after superior…
Was hay-grade baling twine exempt from Florida sales tax when a farmer used it for another agricultural purpose, such as staking tomatoes?
Yes. Twine of the same type or caliber appropriate for baling hay remained exempt when a farmer used it to contain, produce, or process an agricultural commodity. The Department expressly included a…
Did a Tennessee pool contractor collect sales tax on permanent above-ground and in-ground pool or spa installations?
No, when the installed pool or spa became real property. The contractor did not collect tax on the customer price, labor, profit, or installation, but owed sales or use tax on pool kits, spas,…
What South Carolina tax assistance did RPB 01-9 provide to people and businesses affected by the September 11, 2001 terrorist attacks?
Affected taxpayers received matching state extensions for specified federal deadlines, temporary collection relief, and related penalty and interest waivers.
What approval procedure did South Carolina require before bingo cards could be manufactured, distributed, sold, or used in the state?
The manufacturer, distributor, organization, or promoter had to obtain Department approval before a bingo card was manufactured, distributed, sold, or used.
Must a nonprofit historical society collect Kansas sales tax when it sells books?
Yes. The Department ruled that a historical society must collect the appropriate Kansas sales tax on its sales of books whenever the purchaser cannot provide a properly completed exemption…
Could restaurants buy disposable napkins, straws, utensils, and similar meal accompaniments for resale without Tennessee sales tax?
Yes. A restaurant could buy disposable paper and plastic items on a valid resale certificate when it furnished them to customers as part of taxable food orders. The exemption did not cover items the…
Was a nonresident's payment for dismissing a wrongful-termination lawsuit taxable by California when the right had no California business situs?
No. FTB concluded that none of the amounts the nonresident received for dismissing the wrongful-termination lawsuit were taxable by California. The payment was income from an intangible—the right to…
Did Texas's tax-law definition of "person" change when the tax statutes were recodified in 1981?
No substantive change. Before the 1981 recodification, former Tex. Tax.-Gen. Ann. art. 20.01(A) broadly defined "person" to include individuals, firms, partnerships, corporations, trusts, and…
Was leasing all or part of parcels assessed as agricultural property subject to Florida sales tax on real-property rentals?
No. Because the county property appraiser had assessed the parcels as agricultural property under section 193.461, leasing the parcels or portions of them was not subject to Florida sales tax under…
Are disposable medical electrodes exempt from Kansas sales tax as prosthetic or orthopedic appliances?
No. The Department ruled that disposable electrodes do not qualify for the prosthetic and orthopedic appliance exemption in K.S.A. 79-3606(r), and so are subject to Kansas sales tax. That exemption…
Who owed state tax on newspaper advertising inserts while Louisiana's newspaper exemption was suspended through June 30, 2002?
An advertiser buying printed flyers for free delivery to a newspaper owed tax on the full flyer and printing cost at the stated 4% rate. A commercial publisher selling the newspaper could continue…
When were roustabout or work-as-directed company charges taxable repairs, fabrication, or property sales rather than nontaxable supervised personnel services?
Independent responsibility for a specific repair, fabrication, or delivered product made the full charge taxable regardless of invoice format. Charges might be nontaxable when personnel functioned…
When were freight or delivery charges excluded from the taxable price of tangible personal property, and when were they taxable seller overhead?
Optional, avoidable, separately stated delivery from the completed place of sale to the buyer's destination was excluded. Mandatory or bundled delivery was taxable, and freight incurred to bring…
When must a Louisiana diving service company collect sales tax on underwater repair work?
Repairs performed in Louisiana on movable property—including ships, barges, boats, and vessels—were taxable unless an exemption applied. Repairs to immovable property were not taxable services,…
When a racetrack sells corporate sponsors hospitality-tent passes with closed-circuit race viewing, catered food, and rented tents/furniture, which charges are taxable, and can the racetrack buy the tent equipment tax-free for resale?
All three charges are taxable, and no resale certificate applies to the tent equipment. Admission to a racetrack's hospitality tents (with closed-circuit race viewing) is a taxable amusement…
In which income-tax and franchise-tax periods did a taxpayer claim Louisiana's inventory tax credit?
For income tax, the credit belonged to the period when the inventory tax was paid, not the assessment year. For franchise tax, the payment entered the immediately following franchise-tax period…
Did a private nonprofit corporation operating a leased public hospital inherit the hospital service district's governmental sales-tax exclusion?
No. The exclusion applied to the public hospital service district and specified governmental bodies, not to the private nonprofit lessee. Operating the district-owned hospital did not exempt the…
Did Louisiana corporation franchise tax apply to an unincorporated workers' compensation group self-insurance fund?
No. A fund organized under La. R.S. 23:1195 that was unincorporated and did no business independently of its members did not meet the definition of a domestic or foreign corporation and was not…
Were port-authority lease payments, ad valorem taxes, and pass-through utilities exempt for refrigerated and non-refrigerated transient-cargo storage?
The lease payments and ad valorem taxes were exempt while the port space was used exclusively to store transient cargo. Pass-through utilities were exempt only if the authority paid tax to the…
Did extension options in a separate loan commitment make a note long-term even though the promissory note and security deed omitted them?
Yes. Georgia denied the refund because borrower extension options in a separate loan commitment could push maturity beyond three years, making the note long-term even though the note and deed omitted them.
Did Florida tax payments on a 1995 New York vehicle lease after the lessee moved and registered the vehicle in Florida in 1996?
Yes. The later exemption for qualifying long-term leases taxed in another state took effect July 1, 1998 and did not apply retroactively to this 1995 lease. Florida also taxed the full monthly…
Did a city's direct-purchase procedures make construction materials for its utilities expansion project exempt from Florida sales tax?
Yes, except for contractor or subcontractor off-site fabrication. The city qualified as the purchaser when it issued documented purchase orders, took title and liability at delivery, was invoiced…
Does an organization that sells coupons or discount cards redeemable by third-party merchants have to collect Kansas sales tax?
Yes, the seller must remit sales tax. The Department's policy is that an organization engaged in the retail sale of coupons or discount cards that are redeemable by third-party merchants is the…
Was an investor's deed of real property to his wholly beneficially owned common-law business trust subject to documentary stamp tax?
Yes. The beneficial trust units received by the investor were property with exchangeable value and therefore consideration for the deed; the existing mortgage was consideration too. Tax was based on…
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