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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Can a direct sales organization accept a resale certificate from one of its independent distributors, and does it matter whether that distributor works from home or runs a retail store/kiosk?
It depends on whether the distributor has a retail outlet. Home-based independent distributors are not issued Texas sales tax permits — the direct sales organization is treated as the retailer and mus…
Does a free-standing support bridge for hydrogen piping leading into a semiconductor cleanroom qualify for Texas's manufacturing equipment exemption, even though the bridge itself sits outside the cleanroom and isn't attached to the building?
Yes. The manufacturing exemption for cleanroom equipment covers piping and related equipment used in connection with manufacturing/processing/fabrication in the cleanroom, and that equipment does not …
Is the Texas Workers' Compensation Insurance Fund (successor to the Workers' Compensation Facility) exempt from sales tax on insurance services because it's a state-created entity?
No. Neither the Texas Insurance Code nor the Texas Tax Code exempts the Fund from sales tax, and Insurance Code § 12(c) actually requires the Fund to pay all taxes in the same manner as any other lice…
Which limited South Carolina contacts did RR 98-3 say would not, by themselves, create income-tax nexus?
Many isolated contacts did not create income-tax nexus by themselves, including remote product sales, an out-of-state website, South Carolina bank accounts, certain passive loans, temporary purchasing…
Do xerox-type copying machines used to sell copies as part of a commercial printing business qualify for Texas's manufacturing equipment exemption, and does it matter if the machines are acquired through a lease-purchase arrangement?
Yes to both. Copying machines used to produce copies sold as part of a commercial printing business qualify for the manufacturing exemption, and the exemption extends to leased equipment — the busines…
Is a scrap tire shredder's gate fee (charged to the hauler who brings in waste tires) taxable, and does it matter whether the shredded tire pieces end up in a landfill, get reused as landfill cover, go to a septic drain field, or get burned for energy recovery instead of a landfill?
Yes, the shredder's gate fee to accept tires from the hauler is taxable in all four scenarios — regardless of what ultimately happens to the shredded tire pieces (landfill burial, alternate daily cove…
If a business misses the 30-day deadline to protest a New Mexico tax assessment because the notice went to an old address of record, can it still challenge the assessment?
No — not through a protest. A New Mexico assessment mailed to the taxpayer's address of record is legally effective even if it is never actually received, so the 30-day protest clock ran and a protest…
If someone reports handyman income on a federal Schedule C but actually only fixed up their own home for free, do they owe New Mexico gross receipts tax on it?
No. The assessment was abated. New Mexico gross receipts tax applies only to services performed for other people for consideration, so a man who reported handyman income on his federal Schedule C but …
Could a qualified Subchapter S subsidiary and its parent S corporation file one consolidated Texas franchise-tax report?
No. The QSSS and parent S corporation each had to file a separate franchise-tax report because Section 171.001(a)(1) imposed tax on each corporation and Rule 3.544(c) prohibited consolidated reporting…
Does an out-of-state publisher have Utah sales tax nexus just because it owns a subsidiary that is already registered and collecting tax in Utah?
No, not on these facts. An out-of-state publisher whose only Utah contact is direct-mail sales does not have Utah sales tax nexus merely because it owns a subsidiary that is registered and collects ta…
What amount is the Kansas 10% tobacco products tax charged on — and can a distributor deduct discounts?
The 10% Kansas tobacco products tax is charged on the wholesale sales price — the amount shown on the manufacturer's original invoice. Under K.S.A. 79-3371 the tax is 10% of the wholesale sales price …
Were dog-show registration, puppy-match, parking, and instructional class fees taxable in Florida?
Dog-show and puppy-match registration fees were taxable participation charges when spectators paid no taxable admission. A separately imposed vehicle fee was parking, not spectator admission, under th…
Did a vehicle-loan co-signer owe Texas motor vehicle sales tax when the buyer defaulted and the co-signer paid the loan and took title?
Yes, assuming the person was only a co-signer rather than a co-borrower or co-purchaser. A true co-signer merely guaranteed the financing and was not an original purchaser or initially liable on the n…
Is a city's fee for accepting used tires at its 'landfill' taxable, when those tires are actually just stored there temporarily and then hauled away by a contractor to a different disposal site rather than being buried at the landfill itself?
Yes. Even though the site is called a landfill, functionally it's acting as a transfer station for the tires — they're staged there until there's enough volume, then hauled elsewhere for actual dispos…
Did a foreign corporation have Texas nexus because it was the general partner of a partnership doing business in Texas?
Yes. Although the foreign corporation described itself as a passive pass-through entity with no direct Texas business, its business questionnaire showed that it was general partner of a partnership do…
How did an LLC that elected out of federal partnership treatment compute earned surplus when members had different asset bases and depreciation methods?
It used a pro forma Form 1065. The LLC had to make the federal elections required of an LLC treated as a partnership and compute asset basis as though it had not elected out of partnership treatment. …
Is a stand-alone traffic-directing charge (by a police officer or valet parker) taxable in Texas, separate from any charge for parking or valet parking the vehicle?
No. Traffic directing provided on a truly 'stand alone' basis — with no connected parking or valet parking charge — is not taxable. It only becomes an issue if the traffic-directing charge is bundled …
Could a Florida corporate group stop filing consolidated returns after a major banking reorganization?
Yes. The Department found good cause in the banking group's substantial reorganization and allowed separate Florida returns beginning with the year ending December 31, 1997. Permission was subject to …
Was dyed diesel used in citrus-harvesting 'goat' vehicles exempt from Florida fuel and sales taxes?
Yes. Dyed diesel sold for use in citrus-harvesting 'goats' was exempt from Chapter 206 fuel taxes and Chapter 212 sales and use tax. The vehicles were agricultural equipment used principally inside ci…
If a business pays its New Mexico CRS taxes one day late because its sole bookkeeper was sick, can it avoid the late-payment penalty and interest?
No. Both the penalty and interest were upheld. Running a one-person office with no backup for the bookkeeper — and routinely waiting until the last possible day to pay — was negligence for penalty pur…
How did Texas treat income from in-state and out-of-state municipal bonds under the 1998 franchise tax?
For taxable capital, municipal-bond revenue entered surplus and the gross-receipts factor. For earned surplus, bond income excluded from federal taxable income because it was exempt also stayed out of…
Did a Pennsylvania online retailer create Texas franchise-tax nexus by placing link and icon code on a Texas company's server and paying sales commissions?
No, on the stated facts. The retailer's own website, headquarters, offices, property, payroll, and representatives were outside Texas. A Texas online magazine displayed the retailer's link and buy-now…
Is drilling a rathole or mousehole (holes in the rig floor used to hold drill pipe and hoisting equipment during oil/gas well drilling) subject to Texas sales tax or the separate 2.42% oil well services tax?
No. Drilling a rathole or mousehole in preparation for drilling an oil or gas well is not subject to sales tax or the 2.42% oil well services tax. However, the company performing this nontaxable servi…
Could corporations claim a Texas franchise-tax manufacturing credit for sales taxes paid by a related partnership?
The Tax Policy Director said no. Texas consistently treated a partnership as an entity rather than an aggregate of its partners, and Section 171.0021's tax-credit language controlled even if an aggreg…
Is charging Utah customers for internet access subject to Utah sales tax?
No, not in 1998. The Utah Tax Commission said it was treating internet access charges as nontaxable under the statutes in place at the time, while cautioning that a future legislative change could ove…
How did one taxable asset affect Florida intangible tax on shares of a fund otherwise holding exempt securities?
Direct U.S. obligations remained exempt. If every other fund asset was also exempt on the last business day of the prior year, the whole share was exempt. But if even one remaining asset was taxable u…
After Florida's 1997 express-incorporation amendment, were a credit union's separate open-end credit agreement and advance request subject to documentary stamp tax?
No, effective July 1, 1997. The credit agreement contained the promise to pay and the advance request supplied the approved sum and signature, but neither document expressly incorporated the other. Be…
Was a Florida automobile retail installment contract taxable, and did financed loan-processing charges belong in the documentary-stamp tax base?
Yes. The signed retail installment contract was a taxable written obligation. Every dollar the lender financed, including a loan-processing fee labeled prepaid but not actually paid in advance, belong…
Is Texas sales tax due on a separately stated, refundable $10 deposit charged on a returnable pallet — whether the underlying product is sold to the end user or to a retailer for resale?
No. A refundable pallet deposit that is separately stated to the customer and identified as refundable is not subject to sales tax, whether the sale is to the end user (with tax charged on the product…
Were bank drive-up windows, night depositories, pneumatic systems, and security equipment real or personal property for South Carolina property tax?
They were generally real property. Installed drive-up windows, night depositories, pneumatic systems, and security equipment could be treated as personal property only if removal would not be costly, …
Who counted as an immediate family member for South Carolina property-tax purposes under RR 98-1?
An immediate family member was a relative within the third degree by blood or marriage: parents, children (including adopted children), grandparents, grandchildren, siblings, great-grandparents, great…
Are implantable medical devices like filters, stents, and vascular grafts exempt from Kansas sales tax as prosthetic and orthopedic appliances?
Yes. K.S.A. 79-3606(r) exempts sales of prosthetic and orthopedic appliances prescribed in writing by a person licensed in the healing arts, dentistry, or optometry — apparatus, instruments, devices, …
Did buyers have to pay Texas vehicle tax again when a failed dealer collected the tax but did not remit it or transfer title?
No, when evidence showed the purchaser had paid the dealer. If the dealer was no longer in business and failed to transfer title or remit the tax, the buyer's documented payment prevented a second col…
Does a company that delivers and sets up appliances for a retailer collect Kansas sales tax, or does the retailer?
The delivery firm does not collect the tax; the appliance retailer does. The Department found that a company that merely delivers, uncrates, sets up, and test-runs appliances for a retailer is providi…
Did a Florida corporation's intangible assets have Florida tax situs if it had no local office or employees?
Yes. Incorporation in Florida made the company domiciled in Florida, so its intangible assets had Florida situs despite having no local office or employees. Accounts receivable and a short-term loan w…
Did on-site Texas software training create nexus for both the service subcontractor and the software company promising the training?
Yes. Corporation A provided on-site training and consulting in Texas, creating nexus under Rule 3.546(c)(2), whether it used its own staff or subcontractors. Corporation B also had nexus when its cust…
Can a Utah manufacturer sell tax-free to an out-of-state (Colorado) retailer who resells to a Utah customer, when the goods are drop-shipped directly to the Utah jobsite?
Yes. A Utah manufacturer may sell a building tax-free for resale to an out-of-state (Colorado) retailer, using a resale exemption certificate on which the out-of-state retailer's own state sales tax l…
Under the 1998 physical-presence nexus test, did an out-of-state internet retailer create Texas sales tax nexus merely because its website was linked from an unrelated third party's website that happened to be hosted on a server located in Texas — and is that charge for maintaining the link itself taxable?
Under the physical-presence rule this 1998 letter applied, no — a retailer with no physical presence in Texas, taking orders through an out-of-state server, did not have Texas sales tax nexus just bec…
Could a C corporation inherit an LLC's franchise-tax credits or business loss when the LLC merged into it?
No. Franchise-tax credits could not transfer from one corporation or LLC to another through merger for either former tax component, and the survivor could not use the nonsurvivor's business loss in co…
What interest rate did Kansas charge on tax liabilities for 1998, and how is it set?
For 1998, Kansas interest on tax liabilities is 0.833% per month (10% per year). The notice gives the historical rates -- 1.5% per month (18% per year) before January 1, 1995, and 1% per month (12% pe…
When were CD-ROM software licenses, customization, training, maintenance, and updates taxable in Florida?
A CD-ROM software license was exempt when the licensor analyzed the customer's needs and customized the program. It was taxable when an independent consultant—not acting as the licensor's agent—perfor…
Does a pathology-testing company that analyzes patient specimens for physicians qualify for Connecticut's biotechnology sales-and-use-tax exemption on its purchases?
No. A company that performs pathology testing on patient specimens to help physicians diagnose, prognose, or monitor disease does not qualify for Connecticut's biotechnology exemption in Conn. Gen. St…
Does a pathology-testing company qualify as a 'biotechnology company' entitled to the 15-year carryforward of Connecticut's research-and-experimental-expenditure corporation business tax credit?
No. A pathology-testing company does not qualify as a 'biotechnology company' under Conn. Gen. Stat. § 12-217j, so it cannot use the special 15-year carryforward of the corporation business tax resear…
If a New Mexico store wrongly claimed the out-of-state (interstate commerce) sales deduction and later concedes the tax, can it still get the negligence penalty removed?
No. The negligence penalty was upheld. A New Mexico assessment — including the penalty — is presumed correct, and the Taos art store that had wrongly deducted in-store cash and check sales as out-of-s…
Is a restaurant's fryer filter machine — which cleans and recirculates shortening/oil so it can keep frying food — exempt from Texas sales tax as manufacturing equipment?
It depends on the date. Before October 1, 1997, the filter machine, its parts/accessories, and repair labor were exempt because the shortening it processed became part of the fried product. Effective …
Are a professional recruiting firm's placement fees, and its separate contract-labor billings for secretarial/consulting help, subject to Texas sales tax?
Placement fees for recruiting are not taxable. Contract labor billings may be taxable, though, depending on whether the arrangement qualifies as an exempt 'employee' or 'temporary help service' under …
Are a Web-development company's charges for domain registration, host site maintenance, Web page design, and interactive games -- and its own purchases from programmers -- subject to New York sales and use tax?
No -- none of the Web-development company's charges to its clients (domain and InterNIC registration, passed-through host site maintenance, Web page design, or custom interactive games) are subject to…
Is the per-transaction fee an ATM network operator charges member banks for processing electronic banking transactions subject to New York's tax on telephone service?
No -- the roughly 10-cent per-transaction fee an ATM network operator charges its member banks is not subject to New York's tax on telephony and telegraph service, because the network operator is prov…
Is a waste-management consulting company's fee for auditing, designing, and monitoring a client's waste program -- without ever hauling or disposing of waste itself -- subject to New York sales tax?
No -- receipts from the waste-management consulting company's services are not subject to New York sales tax, because auditing a customer's waste stream, designing a waste-management program, soliciti…
Can a cellular reseller buy phones it later gives away 'free' or at a discount with a service contract tax-free as a purchase for resale, rather than paying tax on the phones upfront?
Yes -- the cellular reseller can buy the phones tax-free as a purchase for resale, using a resale certificate, even though some customers receive the phone for "free" or at a discount as part of a bun…
Is a commercial tenant's 'additional rent' charge for lawn, common-area, and complex maintenance subject to New York sales tax, and can the landlord charge tax only on its mark-up?
The lessor's additional-rent charges for maintaining the areas directly tied to the tenant's own leased premises (adjacent lawn, shrubbery, driveways, parking) are not subject to sales tax, because th…
Are architectural and interior design drawings, specifications, and rental-space plans taxable interior decorating and design services, or are they exempt when performed by a licensed architect or engineer?
It depends on who performs the work and what the drawings are for. Drawings that require a licensed architect's or engineer's certification under the Education Law -- whether drawn personally by the l…
If an out-of-state mother rents or buys a New York City apartment for the roughly four years her minor son attends a religious high school there, and as a result they spend more than 183 days a year in New York City, does either of them become a New York statutory resident for income tax purposes?
No. Because the apartment is maintained only for the fixed, ascertainable period needed for her son to finish high school (a 'particular purpose'), it is not a 'permanent place of abode' under 20 NYCR…
Under RR 97-23, was buying a prepaid telephone calling card taxable, and when did tax apply to calls made with it?
The card purchase was not taxable because it represented an intangible future right to telephone service. Under the ruling's 1997 rules, tax arose when the card was used: local South Carolina calls we…
Did RR 97-22 impose South Carolina accommodations tax on membership and timeshare exchanges even when no cash rent changed hands?
Yes. RR 97-22 treated the reciprocal promise to furnish accommodations as taxable consideration and based the tax on reasonable rental value plus reservation, upgrade, or similar fees. RR 98-5 later e…
Could airplanes, trucks, boats, cars, or other mobile property qualify for South Carolina fee-in-lieu-of-property-tax treatment under RR 97-21?
Only if the property stayed at the qualifying project site. Mobile property used both on and away from the site was not considered located in the required county, multicounty park, or contiguous tract…
Could counties share only the revenue from new property in a joint industrial park while excluding revenue from pre-existing property added to the park?
No. Once pre-existing property was incorporated into a joint industrial or business park, its revenue became park revenue and had to be included in the percentage allocation between participating coun…
Is a remanufactured drilling rig, built exclusively for use by a foreign customer, exempt from Texas sales tax if it's stored in Texas for up to six months after completion while the customer decides on its foreign destination?
No. Sales tax is due when title transfers at completion. Because the customer plans to store the rig until needed rather than remove it forthwith, the rig can't be treated as for exclusive use outside…
If a company designs its products, buys the raw materials and packaging, and controls production, but has a third-party subcontractor actually assemble the goods, can the company still buy its packaging materials tax-free as a manufacturer?
Yes. Because the company designs the product, supplies the raw materials and packaging, and controls the production process — even though a subcontractor's employees do the physical assembly — the Com…
What did a September 1, 1997 Texas law change do to dealer tax collection on motor vehicles over 11,000 pounds?
The letter said dealers were no longer required to collect motor vehicle sales tax on units with gross weight over 11,000 pounds, effective September 1, 1997. It believed the separate Transportation C…
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