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 company running a manufacturer's sales-incentive rewards program need to register as a sales tax vendor, and is its own purchase of the reward items taxable?
The program administrator isn't required to register as a sales tax vendor because it's providing an exempt promotional service, not selling tangible property -- but as the retail purchaser of the rew…
Is the sale of orthopaedic braces to physicians, hospitals, and clinics subject to New York sales tax?
Yes -- selling orthopaedic braces to physicians, hospitals, clinics, and other health care providers is a taxable retail sale, because those buyers use the braces while performing medical or similar s…
Were a concessionaire's real-property rental payments to a qualifying Florida fair authority taxable?
No. Although Florida generally taxed leases or licenses to use real property, section 616.260 exempted the qualifying fair authority's authorized projects. The concessionaire's rental payments to that…
If a bowling center signs a contract with a charitable bowling association agreeing not to collect sales tax on league fees, does that make the fees exempt?
No. Sales tax is due on bowling league fees even though a bowling center had a contract with the charitable Utah State Bowling Association not to collect it -- because the actual sale is between the b…
Can I deduct long-term care insurance premiums as part of Utah's health care insurance premium deduction on my state income tax return?
Yes. The Utah State Tax Commission ruled that long-term care insurance falls within the definition of 'health care insurance' for purposes of the Line 17 deduction on the Utah TC-40. A taxpayer may de…
Were Gerald Thompson's profit-based payments from construction companies partnership distributions or deductible construction-service receipts?
No — Thompson was an independent contractor, not a partner, and he had no NTTCs to support a construction-services deduction, so the protest was DENIED. Thompson estimated jobs and negotiated construc…
How did Texas require a seller-financed vehicle dealer to allocate sales tax between the down payment and scheduled installments?
The dealer could not allocate tax by applying a principal ratio or push more tax into later payments. Interest was conclusively presumed to accrue straight-line for collection. The dealer first calcul…
How did Florida tax SEC-registered interests giving buyers recurring rights to use or rent hotel suites?
Florida reached mixed results. The security sale and reimbursed common expenses were not subject to sales tax, and an interest issued outside Florida escaped section 201.05 tax. But the transfer of Fl…
Can a chiropractor avoid New Mexico gross receipts and income tax with tax-protester arguments, and does the 50% fraud penalty apply if he sincerely believed them?
The tax stood but the fraud penalty was thrown out. A chiropractor's tax-protester arguments — that he was a 'citizen' not a 'resident,' that only businesses dealing with the state must register, that…
Does a high-speed door installed to maintain positive air pressure in a clean-room manufacturing facility qualify for Utah's manufacturing equipment sales tax exemption, and is it taxed as real property or personal property?
No to the manufacturing exemption, and the door is treated as real property. A high-speed door that maintains positive-pressure air containment in a clean room does not qualify for Utah's manufacturin…
Were mandatory social dues paid by homeowners to a Chapter 617 association taxable admissions?
No, on the stated facts and only if the association qualified as a Chapter 617 homeowners' association. The dues were mandatory, tied to property ownership, enforceable by a lien, and paid for qualify…
When could a master lessee use a resale certificate for Florida commercial property it planned to sublease?
Only when substantially all of the property was immediately subleased for the same lease period, apart from an incidental retained portion. More-than-incidental vacant, partnership-used, or charity-do…
Are materials sold to a contractor building on an Indian reservation in Kansas subject to Kansas sales or use tax?
Yes. Under K.S.A. 79-3603(l), sales of tangible personal property to contractors, subcontractors, and repairmen are subject to Kansas retailers' sales or compensating use tax, because contractors are …
A private owner is building an office building specifically for a governmental Appraisal District, which is contractually obligated to buy the completed, improved property for its exclusive use once construction is done. Does the contractor performing this construction qualify for the sales tax exemption for improving real property for an exempt entity, even though the contract is technically between the owner and the contractor, not the District and the contractor?
Yes. Because the improvements are being built at the exempt entity's (the Appraisal District's) request, to its specifications, and will inure entirely to its benefit — with the District contractually…
Could a mixed transportation and non-transportation consolidated group use its proposed alternative Florida apportionment method?
No. The group did not prove that Florida's statutory method was grossly distorted, arbitrary, or out of proportion to its Florida business. Transportation subsidiaries had to use the revenue-mile form…
Were coronary stents, catheters, guide wires, and angioplasty accessories exempt when sold to South Carolina hospitals?
No. The listed coronary stents, catheters, guide wires, and angioplasty accessories were taxable when sold to hospitals. Hospitals consumed them while providing medical services, and a stent was not a…
A web developer asked three questions: is monthly web site maintenance/programming taxable if the site belongs to the client; does selling software over the web to out-of-state buyers require collecting Texas tax; and is web site design/programming work split between taxable and nontaxable pieces, with HTML vs. CGI vs. WinCGI programming treated differently?
Creating and maintaining web sites using HTML is a taxable data processing service (not exempt program-modification work), taxable in Texas whenever the customer gets the benefit of the service in Tex…
When a company sells and installs custom in-ground swimming pools under a lump-sum contract, does it charge its customer sales tax on the installed pool, or does it instead pay tax itself on materials as a contractor?
The installed pool is treated as a capital improvement, not a retail sale -- the company's lump-sum charge to the customer for the pool and its installation isn't subject to sales tax, but the company…
Can a contractor escape gross receipts tax by claiming he was an employee, or because a state employee supposedly told him his income was exempt?
No — the protest was denied. A maintenance contractor who worked for Burger King under a 1099, filed a Schedule C, and paid self-employment tax was an independent contractor, not an employee, so his r…
Are chocolate and strawberry flavored Nestle Quik (drink-mix) products exempt from Texas sales tax as food products?
Yes. The Comptroller confirmed both the chocolate and strawberry flavored Nestle Quik products are exempt from Texas sales tax as food products.
A 501(c)(3) nonprofit plans to hold an annual fundraising banquet selling food, beer, wine, and liquor, prepared and served by its own volunteer members. Does the nonprofit need to collect Texas sales tax on the food and beverage sales?
Not on the food and beverages, if specific conditions are met: the sale must be an ANNUAL event lasting no more than one week; it must be a fundraising project run exclusively by the volunteers of the…
Were REMIC securities exempt from Florida's annual intangible personal property tax?
Generally no. A REMIC security represented a collateral interest in mortgage-backed securities rather than ownership of the underlying mortgages, so it was a debt instrument subject to the annual inta…
When did signing IRS Form 870 trigger Florida's deadline to report federal corporate-tax adjustments?
Signing Form 870 triggered the 60-day Florida reporting period because it waived assessment restrictions and allowed the federal deficiency to be assessed. Paying the assessed tax to pursue a refund s…
Does an out-of-state franchisor owe New Mexico gross receipts tax on the royalty and advertising fees it collects from its New Mexico franchisees?
Yes — the protest was denied in full. New Mexico treats a franchise as intangible property that the franchisor 'leases' to franchisees who use it in the state, so the royalty, advertising, initial, an…
Did Virginia residents owe a Texas individual income-tax return for their distributive share from a partnership doing business in Texas?
No. Although the Virginia residents held individual interests in a partnership doing business in Texas, the Comptroller said Texas did not impose an income tax on individuals. They therefore did not h…
A paranormal-research organization offers paid ghost investigations at homes/businesses, presentations to schools about ghost-theory research, and ghost-hunting classes (with optional textbooks). Are any of these services subject to Texas sales tax?
No — classes, seminars, presentations, and ghost investigations themselves are not taxable services. But two things are: any separately stated charge to students/participants for books or literature m…
Someone starting an Internet consignment business — selling other people's used goods online via Internet auctions and taking a commission — asked whether they need to charge sales tax, since they rarely see other online sellers doing so.
Yes, sales tax applies. Selling tangible personal property is subject to sales tax regardless of whether the goods belong to someone else and are on consignment, and regardless of whether the sale is …
Could a qualifying Texas emergency shelter buy a vehicle tax-free when it was used primarily to transport children residing at the facility?
Yes. After reconsideration, the Comptroller found that the emergency shelter met § 152.093. A vehicle used primarily to transport children residing at the facility could be purchased tax-free. The she…
Were separately invoiced trucking charges for F.O.B.-origin lime-rock sales subject to Florida sales tax?
No. The rock seller transferred title F.O.B. origin without charging freight, a separate trucking company invoiced the hauling, and the customer could choose another carrier. The separately stated and…
Which charges on a satellite/wireless cable TV bill -- programming, pay-per-view, equipment rental, fees, and a program guide -- are subject to Utah sales tax?
It's a mixed bag across the bill. Satellite/wireless-cable programming and pay-per-view charges are not taxable; equipment leases, equipment purchases, and a printed program guide magazine are taxable…
A TDI-licensed company handles subrogation claims for insurance-carrier clients — pursuing recovery from responsible third parties or third-party carriers, without doing the actual claims adjustment or appraisal work itself, and earning a contingency fee only upon recovery. The company read Rule 3.355's insurance-services definition and concluded it doesn't apply to this kind of subrogation recovery work. Is that right?
No, subrogation recovery services like this ARE taxable insurance services. Even though the company doesn't adjust claims or do appraisals itself, filing claims with third-party carriers for reimburse…
When were a subsidiary's billings to reimburse parent-company expenses excluded from former franchise-tax gross receipts?
With a written agency agreement, reimbursements no greater than the subsidiary's cost were excluded, but any excess entered gross receipts everywhere. Without a written agreement, exact dollar-for-dol…
Was the markup on Florida attraction admissions taxable when vouchers were resold to customers outside Florida?
Yes. The transaction sold the privilege of entering a Florida attraction, not merely a ticket located outside the state. The reseller had to collect tax on the full marked-up admission price and could…
How did Florida tax materials and off-site fabrication under a lump-sum real-property improvement contract?
The contractor was the ultimate consumer of materials used in the lump-sum real-property improvement and owed tax when buying them. Items fabricated at its Florida manufacturing plant for the job also…
An oil & gas well servicing company asked how Texas sales/use tax and the separate 2.42% well servicing tax apply to a specific list of services: gauging (pumping) services, fluid level service, wireline (slickline) services, gas lift equipment service, and production packer equipment service.
It depends entirely on the PURPOSE of the specific job, not the service's name — the same activity (like pulling rods) can be taxable on one job and nontaxable on another, and no single service is eve…
If you fill out a New Mexico income tax return wrong by not following the instructions, do you owe penalty and interest even though it was an honest mistake caught years later?
Yes — the protest was denied. Interest is mandatory on any late-paid tax and runs from the original due date, no matter when the state notices. And not following the clear return instructions — here, …
How did Texas handle tax when vehicles moved between long-term lease, short-term rental, and rerental, and when multiple trade-ins were used?
Texas allowed a title owner converting a taxed lease vehicle to rental to reimburse purchase tax from rental tax, and allowed rental tax to offset minimum liability when a tax-deferred rental unit mov…
Were shares of a fund holding exempt government obligations exempt from Florida's annual intangible tax?
Yes, if the portfolio held only exempt assets on the last business day of the prior year. Direct U.S. obligations were always removed as exempt; if any other portfolio asset was taxable, the fund's en…
Were the lessor's master leases, schedules, or acceptance certificates subject to Florida documentary stamp tax?
No. Neither the true-lease nor financing-lease document set created a taxable obligation on the face of the documents considered under section 201.08. Payment remained contingent until an acceptance c…
Were deeds recorded when a general partnership converted to a limited partnership taxed on the real estate's fair market value?
No. The statutory conversion left the partnership as the same entity, and each partner retained the same ownership percentage. Deeds placing the real estate in the converted limited partnership's name…
Was a standby-letter-of-credit application and agreement subject to Florida documentary stamp tax?
No. The submitted form did not contain a promise to pay a sum certain, so it lacked the elements needed for tax under section 201.08. A promissory note executed for draws or a mortgage given in connec…
Could a foreign-flag vessel return to Florida within six months of an exempt purchase without triggering use tax?
Yes, under the stated facts. The owner could return the foreign-flag vessel to Florida before six months without triggering use tax by obtaining and complying with a U.S. Customs cruising permit. A te…
When a retailer/contractor pulls resale-inventory materials to do a construction job, is Kansas sales tax due even if the job is out of state?
Yes. Under K.A.R. 92-19-66(c), a retailer whose principal business is retail selling may buy materials tax-free for resale, but when that retailer acts as a contractor and removes materials from inven…
Is a direct sales company required to collect Texas sales and use tax from its independent distributors — including both home-based distributors and distributors who operate their own retail stores/kiosks in malls or strip centers?
Yes for home-based distributors: the direct sales organization itself is treated as the retailer and must collect tax on the suggested retail price, because Texas doesn't issue sales tax permits to ho…
A notary public who prepares deposition summaries and plaintiffs' original petitions for lawyers involved in civil and criminal lawsuits asked whether these services are subject to Texas sales tax.
No, these specific services are not taxable. Tax Code Section 151.353 exempts court reporting services — preparing a document or other record in a civil or criminal suit by a notary public (or a licen…
Is a prior-period accounting adjustment that reduces a subsidiary's retained earnings (to correct a tax-expense booking error) a 'dividend paid' for the section 183 capital-stock tax?
No. The section 183 capital-stock tax is computed in part on the value of stock 'on which dividends are paid' at 6% or more. A proposed prior-period adjustment that debits retained earnings and credit…
If a New York City Police Department employee dies before collecting his pension and his surviving spouse rolls the full distribution into an IRA, is money later withdrawn from that IRA taxable as New York income?
Only in part. Because the deceased NYPD employee's pension is exempt from New York tax under N.Y. Const. art. XVI § 5 and Tax Law § 612(c)(3)(i), the portion of any future IRA distribution that repres…
If a building-cleaning company also runs payroll for a building owner's own maintenance engineers and mechanics, does the building owner owe sales tax on the payroll costs it funds through that company?
No -- the building owner doesn't owe sales tax on the payroll costs, because the maintenance engineers and mechanics remain employees of the building owner, not of the payroll-processing company; wage…
Can an event planner buy tents, chairs, tables, and catering with a resale certificate and pay no tax on its own purchases, or must it pay tax on what it buys and only charge tax on its overall bill to the client?
No -- an event planner cannot buy equipment rentals like tents, tables, and chairs tax-free with a resale certificate, because it's using those items to provide its own event-planning service rather t…
Is software licensing, plus separately stated charges for customization, testing, training, and maintenance, subject to New York sales and use tax?
Yes, the software license itself is taxable -- the modules are prewritten software even though later customized to each customer. But separately stated, reasonable charges for customization, testing, …
Are labels and tags sold to manufacturers and retailers, which they attach to products or to packaging, exempt from New York sales tax as either a resale or as packaging material?
It depends on what the label or tag actually does. Labels and tags that describe the product, identify its maker, or provide information the end customer needs (a "critical element" of the product) ca…
Who owed South Carolina sales or use tax when a retailer had a manufacturer or distributor drop-ship goods to its customer?
The retailer owed sales tax if engaged in business in South Carolina. A voluntarily licensed remote retailer collected use tax. If the retailer had neither South Carolina business activity nor a licen…
Could South Carolina withhold bingo-tax distributions from an organization it determined was a fictitious charity?
Yes. After properly notifying the organization and explaining its determination, the Department could withhold bingo-tax distributions during the dispute and appeal, seek repayment for periods when th…
A client plans to build a two-story office area inside an existing warehouse without raising the roof — installing a new second floor where none existed before, alongside remodeling the existing first floor. Does it matter whether the first and second floors are built under one contract or two, or at different times, for purposes of Texas's new-construction sales tax exemption?
No, not for the second floor's exemption. Installing a new second floor where one didn't previously exist qualifies as exempt new construction, regardless of whether it's done under the same contract …
Do employer-paid long-term disability payments count as an 'annuity' that qualifies for New York's pension and annuity income subtraction once the recipient turns 59 1/2?
Yes. Because the petitioner's long-term disability payments arose from her permanent, disability-driven cessation of active employment and formed one cohesive retirement-benefit scheme together with t…
Are cardboard compactors that a waste-removal company places at shopping centers to collect and crush cardboard for recycling exempt from sales tax as production equipment?
No -- the compactors are subject to sales and use tax. New York's production-equipment exemption only covers machinery used directly and predominantly in actually manufacturing or processing a product…
A telecommunications carrier wants to combine its new FCC Universal Service Fund (USF) pass-through charge with its existing state Telecommunications Infrastructure Fund (TIF) charge on one billing line, to keep bills simpler. The carrier also asked: (1) if it collects more TIF reimbursement from customers than it actually owes the state, must it remit that excess to Texas, and (2) are voice mail box revenues (with no paging component) subject to the Texas Telecommunications Assessment?
Combining the USF and TIF charges into one billing line is allowed — both assessments are made against the carrier, not directly against ratepayers, and there's no prohibition on collecting a single c…
Artificial Insemination (A.I.) Certificates are documents breed associations require to register animals resulting from artificial insemination, authenticating that the producer purchased the semen used. They're increasingly sold separately from the semen itself (for customer convenience) rather than always bundled together. Are these certificates subject to Texas sales tax?
No. Charges for A.I. certificates sold to purchasers of the semen, authenticating their purchase, are exempt from sales tax in the same manner as the semen itself — even when the certificate is bought…
Did an out-of-state sign manufacturer create Texas franchise-tax nexus by arranging local installation for customers?
Yes. Although signs arrived by common carrier and the manufacturer had no other Texas representatives, Texas installers acted as its agents when it arranged installation for purchasers. That activity …
Is glauconite (a naturally occurring mineral) exempt from Texas sales tax like other unprocessed natural materials such as sand, dirt, and gravel?
Yes, when sold unprocessed. Glauconite is treated the same as sand, dirt, and gravel: it's considered unprocessed — and therefore not taxable — if it has been merely sorted, sized, screened, washed, a…
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