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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Are health club membership and initiation fees subject to New York State and City sales tax?
No. A fitness chain's membership and initiation fees are exempt from New York State and City sales tax because its members don't control the club's activities or management (so it isn't a taxable "ath…
Does sales tax apply to a mobile-MRI company's tractor-trailers and to its imaging-equipment leases to hospitals?
The heavy tractor-trailer combinations that haul a company's mobile MRI units are exempt from sales tax under Tax Law § 1115(a)(26), but the MRI equipment installed on the trailer is not covered by th…
Is a college-operated teaching hotel's room rent exempt from New York sales tax?
Yes. Room rent at a hotel operated by a tax-exempt college as part of its educational program is exempt from New York sales tax under Tax Law § 1116(c) as long as the hotel offers fewer than 100 rooms…
Does the exemption for promotional materials cover a grocery chain's blank membership/discount cards?
No. Blank plastic membership cards a grocery chain buys and then personalizes with a customer's name and magnetic ID strip don't qualify for the promotional-materials exemption, because they're used t…
Can a New York fuel dealer import 'high sulfur diesel' from Canada and sell it for residential heating without New York fuel and sales taxes, and is any tax owed when it is imported?
No tax is due merely on importing the fuel; tax attaches at the first non-exempt sale or use in New York, and residential heating sales can be made exempt. The product — labeled 'high sulfur diesel,' …
Could purchasing-card statements and software reports replace vendor invoices for Florida sales-and-use-tax records?
Sometimes. A consolidated card statement alone was insufficient, but the statement plus software reports could substitute for vendor invoices if they identified the buyer, seller, item, sales price, s…
Does Utah require state income tax withholding from sick pay benefits when federal withholding is voluntary versus mandatory?
It tracks the federal rule. Utah does not require state withholding on third-party sick pay when federal withholding on it is only voluntary, but Utah does allow voluntary state withholding in that si…
Are transportation charges taxable when billed as part of a taxable repair service, and when are they exempt?
It depends on the primary service. If a roustabout is performing a taxable repair service, all charges tied to it — including transportation charges, whether separately stated or lumped in — are taxab…
What mineral severance tax exemptions and abandoned-well credit did Kansas add in 1998?
This 1998 legislative update summarizes new Kansas mineral (severance) tax exemptions effective July 1, 1998, plus a new income tax credit. Gas severed from a well whose average daily production has a…
How are Kansas broadcasters, cable, and subscriber and satellite TV/radio services taxed after the 1998 exemption?
Effective July 1, 1998, Senate Bill 493 added a sales tax exemption for over-the-air, free-access radio and television stations, and this notice explains four related provisions. Subscriber radio and …
As an independent distributor for a direct-sales company, am I responsible for Texas sales tax if the parent company isn't collecting it?
The direct sales company itself is legally responsible for collecting and remitting the tax -- but if it fails to do so, the distributor may still owe the tax and can pay it directly to the state. An …
Would consolidating and renewing debt held by two U.S. agencies trigger Florida documentary stamp or nonrecurring intangible tax?
No, under the proposed terms. Assigning the notes and mortgages, consolidating them, and renewing the debt remained free of documentary stamp tax because principal did not increase and the obligor sta…
Did non-broadcast FCC licenses prevent television-production subsidiaries from seeking Florida's production-equipment tax refund?
No. The production subsidiaries' Industrial/Business radio and transmission licenses did not authorize public broadcasting, so those licenses did not place them within the statutory exclusion for FCC-…
Are internet access fees and web hosting charges subject to Kansas sales tax?
No. Charges for internet access fees and web hosting are not currently subject to Kansas sales tax. But the provider is the consumer of what it buys to deliver that nontaxable service — it must pay sa…
How do Kansas county appraisers identify and value non-productive 'waste' land within agriculturally classified property?
Within agriculturally classified land, non-productive 'waste' areas are valued at $10.00 per acre. This 1998 Division of Property Valuation memo helps county appraisers identify waste land — the test …
How do Kansas county appraisers adjust the agricultural use value of farmland whose productivity is reduced by salinity or alkalinity?
Farmland whose productivity is reduced by salinity or alkalinity can have its agricultural use value adjusted, but only for specifically identified areas where the condition is hindering normal croppi…
Is a manufacturer's own aluminum casting mold taxable, and does it matter whether the mold is separately billed or the customer owns it on paper?
As of October 1, 1997, the mold used to make these particular castings no longer qualifies for the manufacturing exemption -- but the answer depends heavily on the time period and on whether there's a…
Did a condominium master association owe Florida sales tax when it passed guard payroll costs to separate member associations?
Yes. The master association was the guards' sole legal employer, while each condominium association was a separate entity receiving taxable security services. Passing through actual payroll and expens…
Did a Florida church owe tax on conference hotel rooms and meals or on the lump-sum fees charged to attendees?
No, on the stated structure. The church directly reserved and paid for lodging, assumed responsibility for attendees, and used the rooms and meals in church business. Its attendee charge also remained…
Can a company that buys bulk gas tanks to lease to customers purchase the tanks exempt from Kansas sales tax?
Yes. Because Kansas sales tax applies only to retail sales — sales to the final user or consumer — a company that buys bulk liquefied gas tanks in order to lease them to its customers is not the final…
When a company installs home theater, security, and automation equipment into a house, does each item stay taxable personal property, or does it become part of the real estate?
It depends on the item, not the whole project. Equipment that can be removed without significant damage to the house (like a bolted-on projector or cabinet-mounted components) stays personal property,…
Is installing a new swimming pool at a residence exempt from Kansas sales tax as residential remodeling?
Yes. Installing a new swimming pool (or tool shed or similar structure) near an existing residence qualifies as exempt residential remodeling when the structure is intended to serve the residence, so …
Under RR 98-14, could a South Carolina taxpayer deduct commissions paid to a foreign sales corporation instead of treating them as dividend-related expenses?
Yes, if the foreign sales corporation had economic substance and was properly formed and operated under IRC Sections 921-927. RR 98-14 treated the commissions as deductible business expenses, not expe…
Can a Texas farmer or rancher buy an advertising sign tax-free using a farm exemption certificate?
Yes -- a farmer or rancher can purchase a sign used to market their products (for example, a 'hay for sale' sign) tax-free by giving the seller an agricultural exemption certificate instead of paying …
Did filing a final federal return and liquidating operations dissolve a Texas corporation for franchise-tax purposes?
No. Although the corporation had liquidated two years earlier and filed a final 1996 federal return, Comptroller records still showed an active Texas charter. It remained responsible for franchise tax…
Was a for-profit corporation exempt from Texas franchise tax because it performed services formerly provided by government agencies?
No. Section 171.001 applied to corporations doing business or authorized in Texas, and the former law contained no exemption for a for-profit company performing services for federal, state, county, or…
Was a deed from a Canadian corporation acting only as bare trustee back to the beneficial owners subject to Florida documentary stamp tax?
No. The owners bought the Florida property with their own funds, and a declaration of trust established before acquisition showed that the corporation held only legal title for their benefit. Florida …
The state seized money from my bank account and later admitted the levy it named was invalid. Do I get the money back?
No — the bank was served two levies at the same time, and even though the one the Department pointed to was invalid, a second levy for genuinely delinquent taxes was valid and supported the seizure, s…
Can a direct payment permit holder switch to a new inventory accounting system by depleting old tax-paid parts first (FIFO) before reporting tax on new usage?
No -- the Comptroller rejected the proposed First-In-First-Out (FIFO) transition method for depleting old tax-paid inventory before reporting new tax under a direct payment permit. A brewery with a di…
Were chilled-water charges and construction of a customer-owned distribution system subject to Florida sales tax?
No, under the described agreement. Chilled water delivered through pipes was exempt water, and customer-owned water chilled by the utility was an exempt service with only incidental chemicals. The lum…
Did maintaining a company office in Texas create nexus for both former franchise-tax components?
Yes. Rule 3.546(c)(15) treated maintaining a Texas place of business as taxable-capital nexus. Rule 3.554(d)(18) treated an office paid for directly or indirectly by the company and formally attribute…
Did converting a Texas corporation to an LLC by filing articles of conversion require final franchise- and sales-tax returns?
No, if the corporation filed articles of conversion. Texas treated the converted LLC as the same legal entity, so no final franchise-tax or sales-tax return was required; the state would update its re…
How is a 501(c)(7) not-for-profit country club's real property classified and assessed for Kansas property tax?
It depends on how each part of the property is used. Following a Board of Tax Appeals decision (Manhattan Country Club, Docket No. 97-1460-PR), this memo tells county appraisers that portions of a 501…
Is a customized medical literature-search service taxable as an information service, even though each report is tailored to one client and can't literally be resold as-is?
Taxable -- customizing the search and binding results into a client-specific report doesn't make the underlying information 'proprietary' to that client, so the service is a taxable information servic…
How are a natural-gas limited partnership and its corporate general and limited partners taxed under sections 186, 186-a, and Article 9-A?
The partnership itself is not subject to Article 9-A or section 186, but as a 'person' selling gas consumed in New York and not PSC-supervised, it is a second-class utility taxable under section 186-a…
Could a first-year New Mexico resident avoid penalty and interest after reporting only New Mexico income instead of all federal adjusted gross income?
No — Jim Dodson had to report all federal adjusted gross income on Form PIT-1 and use Form PIT-B to allocate his California income, so the penalty-and-interest protest was DENIED. Dodson called the De…
Can a 501(c)(3) nonprofit buy remodeling work tax-free for a building it leases out to for-profit tenants?
Yes -- because the rental income from the leased space qualifies as related (tax-exempt) income under IRS guidelines for this organization's exempt purpose, the entire remodeling project can be purcha…
Did a Texas retailer collect limited sales tax on a utility trailer kit, or did the buyer pay motor vehicle tax when registering it?
The retailer did not collect Chapter 151 limited sales tax. The trailer kit was subject to Chapter 152 motor vehicle tax, which the purchaser paid to the county tax assessor-collector when registering…
Did independent agents soliciting Texas orders for publications create nexus for both former franchise-tax components?
They created taxable-capital nexus. Independent agents soliciting Texas orders for tangible publications made the corporation responsible for franchise-tax reports under Rule 3.546(c)(4). The corporat…
Is a television station's doppler weather radar system exempt from Texas sales tax?
Exempt only if used to generate images for broadcast -- if the same system is instead used for weather forecasting or other non-broadcast purposes, that use is taxable. A television station asked abou…
Were a city's pier leases to food-and-drink concessionaires exempt from Florida sales tax, and did the same rule cover a license?
The leases were exempt as long as each tenant actually sold both food and drink within the pier, which qualified as a recreational facility. A separate license agreement was taxable because the conces…
How is business machinery that is still being built taxed in Kansas on January 1?
As machinery, not as 'other' property -- which is the taxpayer-favorable answer. The directive holds that such property 'shall be listed at its retail cost when new and depreciation shall begin the fi…
My Kansas house was only half-built on January 1 -- is the lot still taxed as vacant land?
No -- once the construction adds value, the lot stops being vacant for tax purposes. The directive states that property with construction in progress on January 1 'shall be valued at fair market value…
In a pick-and-pack fulfillment arrangement, are the printing costs, picking fees, and packing fees subject to Kansas sales tax?
In this pick-and-pack and printing arrangement, the Department ruled that the printing costs are taxable — Kansas sales tax if the material is printed in Kansas, otherwise Kansas compensating (use) ta…
Did an investor-owned electric utility include transformers in taxable capital when GAAP required capitalization as plant assets?
Yes, if GAAP required capitalization. Section 171.109(b) required the corporation to compute surplus, assets, and debts under generally accepted accounting principles. Transformers classified by GAAP …
Did a federal Section 368(a)(1)(F) reincorporation eliminate Texas final and initial reports when state records showed one entity terminated and another was authorized?
No. Although the taxpayer viewed the state-of-incorporation and name change as a federal F reorganization with uninterrupted tax attributes and no short year, Texas records showed the old corporation …
Could one corporation receive another corporation's Texas business-loss carryover through a merger when state records still showed separate certificates of authority?
No. Comptroller records showed one corporation still had an active Texas certificate of authority, the other had received a separate certificate on December 23, 1996, and the agency had no record of t…
Does Utah tax phone calls and prepaid calling cards, at what rate, on which calls, and when is the tax actually due on a prepaid card?
Yes, Utah taxes intrastate telephone service (calls that both originate and terminate in Utah) at a combined state/local rate generally between 6.00% and 6.35%, which can be passed through as a line i…
Can a motor vehicle be titled and registered in the name of a business trust, and can beneficial interests in that trust be sold or transferred to investors without triggering a re-titling requirement?
Yes to both, with a key condition. A motor vehicle can be titled and registered in the name of a business trust, because Utah treats the LESSOR of a leased vehicle as its owner for titling/registratio…
When a city owns an airport but a private airline finances/contracts the construction, is that construction exempt from Texas sales tax -- and does it matter whether the space is public or restricted?
Yes for public-access areas -- construction of a people mover, bus stations, terminal relocation, and baggage system is exempt under Sec. 151.311 because it's owned by the City, benefits the public, a…
For the Article 9-A receipts factor, is part of a company's commission income allocable outside New York when the income-generating telemarketing is performed by an out-of-state subcontractor?
Yes. The taxpayer earns commissions when an out-of-state independent telemarketing company it hires gets a telephone company's customers to subscribe to a new service. For the receipts factor, receipt…
Is a flat monthly fee for an assigned parking space behind my office building a taxable parking service or a nontaxable real property rental in Texas?
Taxable -- a flat monthly fee for an assigned parking lot space is a taxable motor vehicle parking service, not a nontaxable real property rental. A business paid a flat monthly fee for an assigned pa…
An immigrant couple's accountant wrongly told them cleaning income wasn't subject to gross receipts tax, and paying the back interest would be a hardship. Can the interest be waived?
No — interest on late-paid gross receipts tax is mandatory and cannot be abated for bad advice or financial hardship, so the protest was DENIED. Luis Tamayo and Amanda Llerena came from Ecuador and cl…
What sales tax exemptions and changes took effect in Kansas on July 1, 1998?
This notice summarizes the sales tax legislation that took effect in Kansas on July 1, 1998. Key changes: the aircraft exemption for licensed air carriers was extended to sales made through the carrie…
Did delivering products to Texas in vehicles borrowed or assigned from a parent corporation create earned-surplus nexus for both companies?
Yes. Solicitation already created taxable-capital nexus for both foreign corporations. For earned surplus, Corporation A controlled the borrowed, assigned, or leased vehicles and used them to deliver …
Could a county buy arena construction materials tax-free through a direct-purchase program managed by its contractor?
Yes, but only after the program was amended as represented. The county had to issue exempt purchase orders, pay vendors directly, take title and liability at delivery, buy full replacement-value insur…
Is leasing hard-drive space on a computer system to store voice and fax messages subject to Kansas sales tax?
No. A business that leases space on its computer system's hard drive — used by customers to store voice or fax messages that callers can access — is providing a non-taxable service. The Department rul…
Can doctors, dentists, and veterinarians buy prescription pads and other printing tax-free using a resale certificate?
No -- doctors, dentists, and veterinarians perform nontaxable medical services and are not considered to be reselling tangible personal property, so they cannot issue a resale or exemption certificate…
Can a 50/50 joint venture between a 501(c)(3) nonprofit and a for-profit company use a direct payment permit to claim a partial (50%) sales tax exemption?
Yes -- the joint venture may issue direct payment blanket exemption certificates to its vendors, and may then claim a 50% (pro rata) exemption on taxable purchases in keeping with the exempt partner's…
Are pallet rental fees and related delivery/transfer charges taxable for a food manufacturer, given the packaging-supplies exemption for pallets?
Taxable -- the packaging-supplies exemption for pallets doesn't apply here because the pallets are leased on a short-term (daily) basis, not for a period of one year or more. A food manufacturer packe…
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