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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Is an outside vendor's service of cleaning (waterblasting) a storage tank at a manufacturing facility subject to Kansas sales tax?
No — tank cleaning is a nontaxable service. The Department ruled that the gross receipts from cleaning storage tanks are exempt from Kansas sales tax. Although K.S.A. 79-3603(q) taxes the service of…
Is a federal government contractor's training service taxable in Kansas, and how does it buy parts and maintain federal equipment tax-free?
The training is not taxable, and the maintenance goes through a project exemption certificate. The Department ruled there is no imposition in the law to tax the training services the contractor…
When exempt nutritional supplements are packaged and sold together with taxable business tools for a single charge, how is the bundle taxed?
It depends on which item is the package's 'essential character.' If the taxable business tools are the PRIMARY component of a package sold for one price, the ENTIRE sales price is taxable. If the…
Is natural gas sold for residential use subject to a special purpose district's local sales tax, even though the utility had been advised to collect it?
No. Natural gas consumed for residential use is exempt from ALL layers of Texas sales and use tax on the transaction -- state, county, metropolitan transit authority/city transit department…
How could a nonprofit hospital buy materials tax free for additions to its hospital and emergency outpatient center?
The hospital could use a retail-sale-plus-installation contract with every property sale stated before execution, or the approved direct-purchase procedures. Under the latter, it issued documented…
Can a single-member LLC that is a federally disregarded entity get its own Texas franchise-tax exemption based on its tax-exempt sole member?
No. A single-member LLC treated as a federally disregarded entity cannot obtain its own Texas franchise-tax exemption. Tax Code Sec. 171.063(b) exempts a corporation that is exempt under IRC Sec.…
A company monitors customers' Wide Area Networks (WAN) from Texas for a flat monthly fee per monitored device, occasionally performing remote repairs itself (about 10% of the time) at no extra charge, with other repairs referred to third-party carriers or equipment vendors who bill the customer separately. Is the monthly monitoring charge taxable, does it matter that the customer isn't charged extra when a repair happens, and how does location (Texas vs. out-of-state customers) affect the answer?
It depends on where the repair happens, not on billing structure. Monitoring related to a repair of a customer's LAN or WAN is subject to Texas state and local sales tax if the repair is performed…
Can a wholesale power plant buy natural gas tax-free in Utah when it burns that gas to generate electricity that it sells only to other utilities, not directly to end users?
Yes, the natural gas used to generate electricity is exempt under the 'compounding' exemption (§ 59-12-104(28)), and this holds true regardless of who ultimately buys the electricity or whether that…
Are concert ticket sales and food/beverage sales at the concert taxable when the concert is put on by a 501(c)(3) tax-exempt organization?
Generally, concerts (amusement services) are taxable under Tax Code Sections 151.0101(a)(1) and 151.0028 and Rule 3.298(a)(1)(A), and food/beverage sales are separately taxable under Section…
Can an insurance settlement or a total-loss vehicle reduce the taxable value of a replacement car in Texas?
No. Cash insurance proceeds did not reduce the replacement vehicle's taxable value. A vehicle declared a total loss also no longer met the motor-vehicle definition for this trade-in rule, so…
Is a farm bale-hauling attachment taxable when bought separately versus when mounted on a pickup before delivery, and are its repair parts taxable?
It depends on how it's sold. A pickup that is not used exclusively for farming is taxable when the farmer buys it. A bale-hauling attachment bought as a separate sale is exempt as farm equipment,…
Can a nonprofit with a federal 501(c)(3) exemption obtain a Kansas sales-tax exemption, and how?
No — a federal 501(c)(3) does not create a Kansas sales-tax exemption. The Department ruled that Kansas law does not contain a sales-tax exemption for the requesting organization. Even though the…
Are the gross receipts from an online information service that sells downloadable teaching ideas subject to Kansas sales tax?
No sales tax. The Department ruled that no imposition exists in Kansas law to tax the information service described - selling downloadable teaching ideas (delivered as PDF or PowerPoint files) over…
Is nitrous oxide and other medical gas sold to a dentist exempt from Texas sales tax the same way it is when sold to a hospital?
Yes. Nitrous oxide and other medical gases sold to a dentist qualify for the same sales tax exemption as sales to a hospital, because the Comptroller treats dentists as licensed practitioners of the…
Could a Florida resident buy a motor coach from a Florida dealer without Florida tax if delivery and the first six months of use occurred outside Florida?
Yes, under the stated plan. Title and possession passed outside Florida, the parties completed the delivery affidavit, the coach was registered and taxed in North Carolina, and it did not enter…
Could a Florida consolidated group file separately after a foreign parent acquired it and included the companies in a different federal consolidated group?
Yes. The former affiliated group ceased to exist when the foreign parent acquired it and included the companies in a new federal consolidated group; Florida could not accept a return for only a…
If a tax preparer never warned me about New Mexico gross receipts tax, am I excused from the penalty and interest for not paying it?
No — the protest was DENIED. Randall Summers, a race-track consultant, was paid $24,925 as an independent contractor by Pojoaque Tribal Enterprises to advise on the Downs of Santa Fe during the 1996…
After the Bandag decision, does a foreign corporation's Certificate of Authority to do business in Texas, by itself, create franchise-tax nexus?
No - not any more. The Comptroller had historically treated a foreign corporation's Certificate of Authority (COA) to transact business in Texas as sufficient nexus for the franchise tax under Tax…
Were single-use physician-order tools for treating vertebral compression fractures exempt from Florida sales tax?
Yes. The single-use introducer tools, inflatable bone tamp, inflation syringe, and bone-filler device were exempt when federal law required the physician-order legend. The exemption did not extend…
What South Carolina interest rate applied to tax underpayments and overpayments from July through September 2001?
The rate was 7% for July 1 through September 30, 2001, compounded daily except that simple interest applied to underpaid declarations of estimated tax.
Can the state assess me gross receipts tax on out-of-state income just because I later moved to New Mexico, if I can't find the paperwork years later?
No — the protest was GRANTED and the assessment abated in full. James Brown taught political science at Southern Methodist University in Texas for 34 years and did outside consulting, none of it in…
Are 'Hollywood 48-Hour Miracle Diet' and 'Hollywood Daily Miracle Diet' weight-loss products subject to Texas sales tax?
No. Neither the Hollywood 48-Hour Miracle Diet nor the Hollywood Daily Miracle Diet is subject to Texas sales tax. The Comptroller's official STAR subject line for this letter notes the products…
How did South Carolina administer online orders, delivery, exchanges, rain checks, and reporting during the 2001 sales-tax holiday?
Qualifying sales completed under the bulletin's holiday timing and delivery rules were exempt, while layaways and purchases completed later generally were not.
Which items did South Carolina's 2001 sales-tax-holiday bulletin list as exempt or taxable?
The historical holiday exempted listed clothing, footwear, school supplies, computers, printers, supplies, and software, subject to statutory exclusions.
Did a two-step timeshare receivables securitization trigger documentary stamp or nonrecurring intangible tax on note and mortgage transfers?
Generally no. The first true sale was an assignment of notes and mortgages, and the second financing qualified as a wholesale warehouse mortgage agreement backed by previously taxed receivables.…
Is installing a flag pole at a residence subject to Kansas sales tax, and does the answer change at a commercial building?
Not taxable at a residence. The Department ruled that installing a flag pole - and similar installation services performed at a residence - is exempt from Kansas sales tax under K.S.A. 79-3603(p),…
Did a HUD-insured refinancing qualify for Georgia's unpaid-principal IRT exemption when the refinanced note had a different lender?
No. Georgia denied the refund because the original and refinanced notes had different lenders. HUD's insurance guarantee did not make HUD the lender or satisfy the original-lender requirement.
Was Georgia IRT due when the lender's main office and principal place of business were outside Georgia but the deed was recorded against Georgia real property?
Yes. Georgia upheld the $25,000 tax because the deed was recorded against Georgia real property. The lender's out-of-state main office and principal place of business did not avoid IRT.
Did borrower-held options extending a construction loan to 2004 and 2005 make the February 2001 note long-term for Georgia IRT?
Yes. Georgia denied the refund because the borrower could extend the February 2001 construction loan to 2004 and then 2005, allowing maturity beyond three years and making the note long-term.
Under Texas's deregulated electric utility market, which separately stated charges on a retail customer's electric bill (transition, nuclear decommissioning, system benefit fund, competition transition, transmission/distribution) are subject to sales tax?
It depends on the specific charge. Transition charges, nuclear decommissioning charges, and system benefit fund fee charges are NOT taxable when separately stated on a retail electric customer's…
Were chicken, potato, and pasta salads taxable when prepared elsewhere, delivered to grocery stores in bulk, and repackaged for deli sale by weight?
Yes. The salads were prepared food available for immediate consumption and were removed from their original bulk containers, repackaged by the stores, and sold by weight. The off-premises…
Were transdermal flea, tick, and other parasite medications for dogs and cats exempt from Florida sales tax?
They were exempt when a licensed veterinarian sold or dispensed them in connection with treating an animal, including prescribed flea and tick products used to prevent or cure disease or suffering.…
Were city and county impact fees passed through by a manufactured-home park developer included in the homes' taxable sales price?
Yes. The city and county imposed the fees on the developer for improving leased lots, not on buyers' acquisition of the manufactured homes. They were therefore seller costs that could not reduce the…
Are charges for recruiting and placing foreign-educated nurses with hospitals -- including visa processing, document handling, medical exams, and travel arrangements -- subject to Texas sales tax?
No. Charges for providing recruitment and placement services of foreign-educated nurses to hospitals -- including advertising, recruiting, pre-selecting, processing/documenting applicants, handling…
Are the mileage, labor, and parts charges to repair a freestanding farm platform scale used to weigh grain exempt from Texas sales tax the same way the scale itself is?
Yes, as of this 2001 ruling: a freestanding above-ground platform scale used exclusively to weigh grain before storage on a farm qualifies for the agricultural exemption as tangible personal…
Can a meat processing plant buy aprons/frocks, refuse receptacles, and liquid soap/disinfectants tax-free under the public-health-compliance manufacturing exemption?
Mixed result across three items. LIQUID SOAP AND DISINFECTANTS for hand/equipment cleaning ARE exempt under Section 151.318(a)(10), because 9 C.F.R. Section 307.2(f) affirmatively requires them for…
Does Texas motor vehicle tax apply when an interstate bus carrier buys or rents charter buses from a foreign manufacturer?
Partially superseded. A rental beginning in Texas for 31 days or more was subject to 6.25% motor vehicle rental tax even if the bus operated interstate. The old purchase-exemption statement changed…
Are pasture cleaning, barn cleaning, excavation, and fence installation performed with a skid-steer subject to Kansas sales tax?
Mostly not taxable. The Department ruled that land clearing/maintaining, barn (or any structure) cleaning, and excavation - digging, drilling, and boring in soil or rock - are not subject to Kansas…
Are green fees taxable at a city-owned golf course when the course is actually operated day-to-day by an independent contractor, even though revenue flows to the city and the city closely controls operations?
Yes, taxable. Amusement services are exempt from Texas sales tax only when EXCLUSIVELY provided by a governmental entity (the state, a municipality, county, school district, special district, or…
Is a charge to play a for-fun blackjack table at a bar -- where players buy chips but can't win money, keep chips, or receive prizes -- taxable as an amusement service?
Yes. A charge for admission to play blackjack, or a charge for the chips used to play, is subject to Texas sales tax as an amusement service under Rule 3.298 -- even though the game is purely…
Could two Florida corporations deconsolidate after a reverse cash merger placed them in a new federal group headed by a parent without Florida nexus?
Yes. The new federal consolidated group included a parent without Florida nexus, so the two Florida corporations could not file a state return for only a subset of federal members. Separate filing…
I'm buying a cooperative apartment unit for over $1 million that has been used exclusively as doctors' offices for at least 40 years, is configured with exam rooms instead of a kitchen or residential bathroom, and whose certificate of occupancy only permits professional-office use -- even though I plan to convert it to a residence after closing. Do I owe New York's 1% 'mansion tax' (the additional residential conveyance tax) on this purchase?
No mansion tax due -- what matters is the property's actual use and legal occupancy status at the moment of conveyance, not the buyer's future plans. Petitioner purchased a cooperative unit for over…
Are the services of procuring temporary workers and management services over the internet subject to Kansas sales tax?
Not taxable. The Department ruled that Kansas, unlike a number of other states, does not impose sales tax on the services of temporary-service providers. A company (Temp-X) that procures temporary…
May a New York-chartered trust company allocate its entire net income within and without New York based on custodial services performed outside the state through agents and sub-custodians, and how are the custody fees sourced?
It may allocate within and without New York, and may use sub-custodian costs to source the out-of-state fees. If Sumitomo performs custodial services outside New York through agents or…
Were free monthly advertising publications exempt when distributed at newsstands in Florida or shipped by the printer to other states?
Yes. Both monthly periodicals were distributed free through newsstands and consisted primarily of advertising, so they met section 212.08(7)(w). Printer shipments by common carrier to other states…
How much did Kansas motor fuel tax rates rise on July 1, 2001, and what inventory tax applied?
1999 House Bill 2071 increased all Kansas motor fuel tax rates by $.01 per gallon effective July 1, 2001. The new per-gallon rates were: gasoline $.21, gasohol $.21, special fuel (diesel) $.23, and…
Does a restaurant owe sales tax on a gift certificate that expires unredeemed, and does charging a monthly maintenance fee that reduces the certificate's value to zero change the answer?
No sales tax liability in either scenario. A restaurant does not owe sales tax when a sold gift certificate expires unredeemed, because Tax Code Section 151.051(a) taxes sales, and Section…
Can a nonprofit like a Friends of the Library group get a Texas franchise-tax exemption, and does that also exempt its purchases from sales tax?
The organization qualified for a franchise-tax exemption but not a sales-tax exemption. The Comptroller confirmed that the nonprofit (a library-support group that had requested exemption under Tax…
Does incinerating waste into ash for disposal count as tax-exempt 'processing' or 'manufacturing' of tangible personal property, or is it a nontaxable waste-disposal service instead?
Not processing/manufacturing, as structured in this case. A limited partnership that incinerates waste into ash, where the operation's purpose is waste disposal (not creating a marketable product)…
Can a telecommunications company claim the manufacturing machinery exemption for equipment used to provide phone service?
No -- the refund denial was sustained. The manufacturing machinery and equipment exemption in K.S.A. 79-3606(kk) requires that the taxpayer process tangible personal property for resale. A…
Is a separate annual vehicle registration fee that a SUNY college charges students, faculty, and staff subject to New York sales tax as a parking charge?
No. SUNY College at Oneonta's separate $5 annual vehicle registration fee is not subject to sales tax as a parking, garaging, or storing charge, because it is legally and financially distinct from…
If a telephone answering service passes through the cost of its dedicated phone lines to customers as part of its bill, does New York sales tax apply to that charge too, on top of the tax already paid when the service bought the lines?
Yes. New York taxed the answering service's purchase of its dedicated phone lines as a taxable expense it consumes in its own business, and separately taxed the full charge it bills customers…
If a delicatessen sells frozen pizzas and made-to-order sandwiches wholesale to bars for resale to their patrons, does it have to charge sales tax on those wholesale sales?
It depends on the item. The delicatessen's uncooked frozen personal-size pizzas are exempt because they're commonly sold unheated, in the same form, by ordinary food stores. But its cold-cut,…
Are the gross receipts from selling market research reports and consulting - delivered in binders with diskettes and maps - subject to Kansas sales tax?
No sales tax. The Department ruled that no imposition exists in Kansas law to tax the information service described - selling market research reports (printed in 3-ring binders with computer…
We're RIOC, developing the Southtown Project on Roosevelt Island. Private developers will borrow from outside lenders to fund construction, and we'll be named mortgagee before assigning our interest to the real lenders. Is that mortgage -- and its later refinancings and modifications -- exempt from mortgage recording tax?
Exempt, if RIOC is named mortgagee and presents the mortgage for recording. The Roosevelt Island Operating Corporation (RIOC), created by the state Legislature in 1984 as successor to the Urban…
A housing development fund company (HDFC) financed a whole subdivision with one exempt construction loan mortgage on its fee interest, then severed it into separate substitute mortgages as individual houses are sold to buyers who assume permanent financing. Are those substitute mortgages, and the later buyer assumption/extension agreements, still exempt from mortgage recording tax?
Exempt at every stage. Housing development fund companies (HDFCs), organized under Private Housing Finance Law Article XI to develop affordable housing on a nonprofit basis, commonly secure project…
Are lump-sum distributions from a nonqualified deferred compensation plan to terminated nonresident employees exempt from New York personal income tax, and when must the paying company withhold tax on such distributions?
Yes - because the plan is a nonqualified deferred compensation arrangement under IRC § 3121(v)(2)(C) whose lump-sum payments meet the federal 'retirement income' definition, distributions to…
Is a health and sporting facility's membership fee subject to New York's social/athletic club dues tax, or to New York City's separate tax on gyms and health salons?
No, on both counts. La Palestra's membership charges are not taxable as social/athletic club dues under state law, because members have no control over the club's activities, membership selection,…
Is a VEBA that receives and invests demutualization proceeds subject to the New York Article 13 tax on unrelated business taxable income?
No. Although a VEBA's demutualization proceeds are federal unrelated business taxable income under section 512(a)(3) and the VEBA is subject to the federal section 511 tax, the VEBA is not regularly…
Is a motorcycle escort service for funeral processions — where the escort provider supplies both the motorcycle and driver — subject to New York sales tax as a vehicle rental?
No. Because the escort provider keeps full dominion and control over the motorcycle and driver — hiring and firing the driver, choosing the route, and paying all operating costs — the funeral…
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