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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How did Texas tax a total-loss vehicle sale, its later resale after repair, and an insurer's receipt of the vehicle after paying a claim?
A vehicle declared a total loss lost its motor-vehicle identity for sales tax purposes, so its sale was taxed under Chapter 151. After repair, later sales returned to Chapter 152 motor vehicle tax. An…
Is sushi sold from a supermarket's in-store sushi bar subject to New York sales tax?
Yes. Sushi packs and platters sold from a sushi counter inside a grocery store are taxable, because they're prepared, ready-to-eat meals arranged for individual or multiple servings -- not the kind of…
How could affiliated Florida banks allocate one consolidated intangible-tax liability when claiming credits on separate franchise-tax returns?
The holding company and five wholly owned banks qualified as an affiliated group for a consolidated 1998 intangible-tax return. For their separate bank-franchise-tax returns, they had to allocate the …
What Florida sales, documentary stamp, intangible, and property taxes applied to a county facility lease-and-leaseback financing?
No sales tax applied to the described lease payments if the two intermediate trusts registered as Florida dealers before closing and issued resale certificates. Prepaid rent avoided documentary stamp …
Could a licensed South Carolina bingo operation sell a bingo card for more or less than its printed face value under RR 98-13?
No. RR 98-13 said a licensed bingo operation could neither mark a card up nor discount it: every bingo card had to be sold to the player at its printed face value.
Can an out-of-state contractor use a resale exemption certificate to buy materials tax-free in Kansas?
No, in general. An out-of-state contractor cannot use a resale exemption certificate to buy materials (such as carpet) tax-free in Kansas — under K.S.A. 79-3603(l), contractors are the final users of …
For a Texas aircraft engine repair company, which charges are taxable, and does it matter whether the customer is a commercial airline, a repair shop, or a privately/corporately owned aircraft?
It depends heavily on WHO the customer is and HOW the charge is billed (lump-sum vs. separately stated) -- commercial-airline and licensed-carrier work is largely nontaxable, private/corporate aircraf…
Could a Texas state agency grant a license to a corporation that was not in good standing for franchise-tax purposes?
No. The Comptroller confirmed that a state agency could not grant a license to a corporation that was not in good standing with respect to franchise tax. The letter attributed that requirement to Arti…
Does hosting a web page on a server located in Texas create Texas sales tax nexus, and is server space itself a taxable service?
Yes -- an individual or company that owns, leases, or rents a server located in Texas has nexus in the state because of that substantial tangible property, and must collect Texas tax on taxable sales …
Is Texas sales tax due on teleconferencing/bridging fees when the conference is arranged by an out-of-state company but participants call in from Texas?
It depends entirely on how participants connect: standard dial-in (callers pay their own long distance) has no Texas tax on the bridging fee, toll-free dial-in IS taxable to the extent calls originate…
If a Texas printer stores finished brochures/catalogs in its own warehouse before shipping them to the client's out-of-state customers, is the printing taxable?
Yes, taxable -- storing the printed materials in Texas after printing, even before they're ultimately shipped out of state, counts as a taxable use in Texas by the printer's customer. A printing compa…
Could a corporation eliminate transactions between partnerships by applying consolidated-reporting principles under the former Texas franchise tax?
No. The Tax Policy Director said eliminating transactions between the partnerships would effectively allow consolidation contrary to the statute and agency rulings. Partnership receipts were includabl…
When a utility buys its publicly traded parent's stock from a third party and keeps it, is that a constructive dividend to the parent subject to the section 186 excess dividends tax?
No. When Consolidated Edison directly purchases the publicly traded common stock of its parent (CEI) on the open market and continues to hold it, there is no distribution of property to shareholders. …
Is residential and commercial telephone service — both intrastate and interstate — subject to Kansas retailers' sales tax?
Yes. The Department ruled that gross receipts from intrastate residential and commercial telephone service, and from interstate residential and commercial telephone service, are subject to Kansas reta…
Is installing audio/video (home theater/surround sound) wiring and equipment taxable in Texas, and does it matter if it's new construction, residential, or commercial remodeling?
It depends on the type of job: cabling/wiring LABOR is not taxable for new construction (residential or commercial) or for residential repair/remodeling, but IS taxable for nonresidential (commercial)…
Which cardiovascular surgical products (mesh, grafts, blood bags, chest drains, catheters, software) are exempt from Texas sales tax as implanted medical devices?
Only the items actually implanted in the patient's body are exempt -- the mesh and vascular graft qualify, but blood bags, chest drainage units, thoracic catheters, and patient database software are a…
Is a Texas recording studio's charge to musicians taxable as equipment rental, or nontaxable as a manufacturing/production service -- and does it depend on who operates the equipment?
It depends on who operates the equipment: if the studio hands over full operational control to the producer/musician with no studio personnel operating it, that's a taxable equipment rental; if studio…
Was holder-redeemable preferred stock debt when the certificate of incorporation allowed the corporation to refuse redemption under legal, charter, or lender restrictions?
No. Although holders could request redemption at $1,000 per share, the certificate of incorporation allowed the corporation to refuse a request when redemption was prevented by law, the certificate, o…
Could a parent corporation reduce the taxable price of new aircraft or vessels using trade-ins owned by its subsidiary?
Yes. The trade-in allowance could reduce the taxable price when the dealer accepted the subsidiary-owned aircraft or vessel as part of the parent's same purchase transaction. But the advisement did no…
Were a residential contractor's sales of three houses he built, briefly lived in, and sold exempt as isolated or occasional transactions?
No — the three home sales were part of M. L. Roush Construction's taxable business, not isolated or occasional transactions, so the protest was DENIED. Mark Roush was a licensed residential contractor…
When did RR 98-12 treat a resident's or nonresident's boat as subject to South Carolina property tax?
Tax depended on domicile, the boat's December 31 location, whether an absence was temporary, and whether the boat had a more permanent tax situs elsewhere. Business and interstate-commerce boats requi…
Did a New Mexico commodities broker owe gross receipts tax on commissions when the futures trades were executed on out-of-state exchanges?
Yes — Charles Forkner's commissions were taxable receipts from brokerage services he performed at his Albuquerque office, so the protest was DENIED. Forkner advised clients, placed their orders by tel…
Did a federal waiver of estimated-tax penalties excuse Centex's late New Mexico corporate estimated payments, and could the state offset a refund before issuing an assessment?
No — the federal waiver did not change New Mexico penalty or interest, and the Department could offset Centex's refund against an accrued but unassessed liability, so the protest was DENIED. A 1993 fe…
Which of an armored transport company's many services (ATM cash replenishment, ATM repairs, vault storage, coin wrapping) are taxable in Texas?
Mostly taxable as security services, with two notable exceptions: coin wrapping and true maintenance (as opposed to repair) of real-property ATMs are not taxable if separately billed. An armored trans…
Can a Texas retailer refuse to accept a foreign shopper's export certificate from any customs broker except the one it exclusively works with?
Yes -- Texas law does not require a retailer to accept every licensed customs broker's export certification, and does not prohibit a retailer from having an exclusive arrangement with one particular b…
Are gaming lessons, casino-themed practice time, private casino-night party rentals, and a 'High Roller Club' membership taxable in Texas?
It varies by activity: gaming lessons are not taxable, informal practice time IS taxable as an amusement service, renting the whole facility for a private casino-night party is a nontaxable real prope…
Does New York sales tax apply to a recording studio's ISDN transmission of radio commercials, studio rental time, hook-up fees, or backup dubs?
Mostly untaxed, with two exceptions: transmitting finished radio commercials by ISDN to out-of-state destinations is a nontaxable interstate service (and its hook-up fee rides along untaxed), and bare…
Are purchases made by New York City teachers under the Teacher's Choice Program exempt from sales tax?
Yes. Purchases teachers make under the New York City Board of Education's Teacher's Choice Program are exempt from sales tax because they're made on behalf of a tax-exempt government entity, as long a…
Can New York City school custodians buy supplies for the Board of Education tax-free, and what paperwork do they need?
Yes, but with the right paperwork. School custodians buying supplies on behalf of the New York City Board of Education -- a tax-exempt government entity -- can make those purchases tax-free, but only …
Could a reunion planner buy meals and printed materials tax-free for resale when they were included in a taxable event ticket?
Not for a mandatory lump-sum reunion package. The planner sold a taxable admission and remained the consumer of meals, books, decorations, and other inputs. It could use resale certificates only for r…
Is a teleconferencing company's bridging fee taxable in Texas when its bridging equipment is located entirely out of state, even though Texas participants call in?
Not taxable -- because the bridging equipment that actually links participants together is located entirely outside Texas, the company's bridging service charges are not subject to Texas sales tax, ev…
Is building, equipping, and repairing an agricultural greenhouse exempt from Texas sales tax, and does an agricultural exemption certificate cover the repair labor too?
New construction of the greenhouse itself is not taxable (labor) and its materials can be bought exempt, but once built, repair LABOR on the greenhouse is always taxable -- only the separately-billed …
If a taxpayer's spouse dies during the year while receiving a pension, can the surviving spouse claim two separate $20,000 pension and annuity subtractions on their final joint return?
No. Because Petitioner did not have her own separate qualifying pension or annuity in 1997 — she only received her deceased husband's TIAA annuities as beneficiary — the joint return is limited to a s…
Does a Canadian manufacturer owe New York sales or use tax on custom window-washing equipment sold to a contractor and permanently installed on a New York high-rise?
Yes. Selling custom window-washing and maintenance equipment to a general contractor who permanently installs it on a New York high-rise is a taxable retail sale (or a taxable use if bought out of sta…
Does New York sales tax apply to executive-education course materials, textbooks, and licensing fees charged alongside teaching services?
It depends on what's actually sold: teaching fees are never taxable, but a course textbook physically transferred to the customer is a taxable sale of tangible personal property, while a true license …
Is designing a bank's retail interior a taxable design service or an exempt advertising service?
Taxable. Designing the interior space of a commercial retail establishment like a bank branch is a taxable interior decorating and design service, even though the goal is to attract customers and prom…
Is the sale of a prepaid phone card subject to New York sales tax?
No, not at the point of sale. Selling a prepaid phone card isn't subject to New York sales tax; tax is instead imposed later, on the charge for each intrastate call the customer makes using the card.
Is an advance payment under a prepaid annual services plan taxable when received, or only when the customer actually uses a taxable service?
The advance payment itself isn't taxed when received. Under an Annual Discount Plan where a customer prepays for a bucket of services to be drawn down over the year, sales tax is triggered only when t…
Could financial hardship or an accountant's bad advice excuse interest on Connie Schaekel's late-paid New Mexico gross receipts tax?
No — interest was mandatory regardless of hardship or the reason for late payment, so the protest was DENIED. Schaekel worked part time as an independent contractor setting up sales displays in 1993 a…
Which credit-union open-end loan forms triggered Florida documentary stamp tax on advances?
The signed disclosure, open-end agreement, and credit application was taxable on an initial advance made when it was executed because it contained a promise to pay, a sum certain, and the borrower's s…
Is a telephone company's Universal Service Fund (USF) surcharge passed on to customers subject to Texas sales tax?
Yes, taxable -- the USF reimbursement charge is part of the sales price of the telecom service itself and is taxed the same way the underlying service is. A telephone cooperative that owns a cellular …
Did Texas treat troops and branches of the named national youth organizations as exempt from motor vehicle tax?
Yes. The 1998 letter said all troops or branches of the Boy Scouts, Girl Scouts, Camp Fire Girls, Boys Clubs, and Girls Clubs had been determined to be federal-government instrumentalities and were ex…
Did a contractor owe Florida tax on materials for a turnkey automated transit subsystem sold to a government authority?
Yes. The publicly bid turnkey agreement required the contractor to design, supply, install, test, insure, and deliver a fully operating transit subsystem while bearing risk until acceptance. It was a …
Did prior New York tax prevent Florida sales or use tax on a leased car later registered and garaged in Florida?
No. Once the leased car was registered, garaged, and used in Florida, the monthly lease was taxable there regardless of its earlier New York use or the tax paid when the lease began. The lessor was co…
Could an Alaska Native jewelry maker avoid back gross receipts tax on sales at Santa Fe's Palace of the Governors because payment would cause severe hardship?
No — Maize Elford-White's museum-portal jewelry sales occurred outside her native lands and were subject to New Mexico's nondiscriminatory gross receipts tax, while hardship did not authorize abatemen…
Did a corporation owe a payment with its 1998 annual-report extension request when its prior initial report showed zero taxable capital and zero taxable earned surplus?
No. The electronic-funds-transfer taxpayer chose the option requiring 100 percent of the tax reported for the previous year. Because its previous report was an initial report showing zero net taxable …
Were supplier delivery charges for custom precast piles and beams taxable when risk stayed with the seller through destination acceptance?
Yes under the original purchase order. The supplier bore all risk until destination delivery, acceptance, and payment, so delivery was mandatory and part of the taxable sales price even when separatel…
Could a licensed CPA sign a Texas franchise-tax extension as an authorized agent after receiving verbal authorization from a corporate officer?
Potentially, but CPA status and verbal authorization did not make the answer automatic. The letter said an authorized agent was a person legally empowered to act for the corporation, and a CPA was not…
Was a member's transfer of funds to an LLC excluded from stated capital and surplus as debt?
Only if the transfer was debt under Section 171.109: a legally enforceable obligation for a certain amount of money payable within an ascertainable period or on demand. Funds intended as contributed c…
How does a Texas bank treat interest from, and gains and losses on the sale of, U.S. government obligations for franchise tax?
Interest from federal obligations is excluded from the earned-surplus base and gross-receipts factor, but is included in the bank's taxable-capital gross receipts. For a Texas-domiciled bank, interest…
Does Texas's manufacturing exemption for water-reduction/wastewater equipment cover the connecting piping, and are lubricants used to maintain exempt manufacturing equipment also exempt?
Piping only qualifies for the water-use-reduction exemption if it's a genuine component PART of a single piece of exempt equipment (not general intraplant transport piping), and lubricants/chemicals u…
Were a furniture retailer's separately stated delivery charges subject to Florida sales tax when customers could avoid delivery?
No. The retailer separately stated a reasonable delivery charge, and each customer could avoid it by picking up the furniture or hiring another carrier. That made delivery optional and outside the tax…
Was rent under a long-term motel ground lease fully exempt as property used exclusively for dwelling units?
No. Guest rooms, lobbies, hallways, guest common areas, and one parking space per room qualified as dwelling-unit space. Equipment and mechanical rooms, the housekeeping office, and parking spaces bey…
What corrections did Florida make to TAA 98A-006 about direct sales to distributors and end consumers?
The clarification replaced four statements in TAA 98A-006: a buyer could be an end consumer and/or distributor; orders could be transmitted rather than only mailed; state tax on end-consumer sales use…
Are gross receipts from selling internet disk space (server storage) and web-page design subject to Kansas retailers' sales tax?
No. A company planning to form an LLC to resell disk space and access on a server and to design World Wide Web pages asked whether those internet services are taxable. The Department ruled that gross …
For a company selling check-processing hardware/software to Texas banks and government agencies, which specific charges (hardware, software, installation, training, maintenance, travel) are taxable?
Most charges are taxable, but a few specific ones are not: installation performed by an unrelated third party (for software that party didn't sell), on-site or out-of-state training (if separately sta…
How did Florida value investment-fund shares holding exempt government securities for annual intangible tax?
Fund shares were generally valued at net asset value. The portion attributable to direct U.S. obligations was exempt; if every remaining portfolio asset was also exempt, the rest was exempt too. But i…
Did a condominium association have to collect Florida tax on extra resident parking and mandatory valet parking for residents or visitors?
Yes. Tax applied to an extra assigned resident space, an unassigned resident space with valet service, and mandatory visitor or guest valet parking. When valet service was inseparable from the right t…
Is a restaurant's ice machine exempt from Texas sales tax if it makes ice served directly to customers in drinks?
Yes, exempt -- but only if the ice machine is used exclusively to produce ice served to customers in their drinks; any other use (like ice for a salad bar or drink coolers) is a divergent use that tri…
Can a company leasing purifier/vaporizer/piping/storage-tank equipment to a semiconductor manufacturer buy it tax-free and lease it tax-free too?
Yes on both ends -- the equipment can be purchased tax-free with a resale certificate, and the monthly facility fee charged to the semiconductor manufacturer can also be exempt if the manufacturer pro…
How these rulings are useful
- See how the rule applies: A letter ruling shows how a state revenue department actually applied the tax law to a specific business and set of facts.
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