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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When a hotel — building, land, and all its furnishings (artwork, silverware, linens) — is sold for one lump-sum price and then immediately leased back out as a hotel for a single lease amount, is any of that subject to Texas sales tax? What about tangible property a partner trades with the partnership before the sale closes?
The lump-sum sale and the lump-sum leaseback are both treated as real property transactions and are not subject to Texas sales or use tax — the furnishings are incidental to the realty (and the sale m…
How did Texas's child-care licensing agency describe an emergency shelter for purposes of the Comptroller's residential child-care vehicle exemption analysis?
The licensing agency explained that a Chapter 42 emergency shelter was a residential child-care facility licensed for 24-hour care and could serve children with no special needs, emotional disturbance…
Our public utility is restructuring into a holding company structure, as regulators are requiring utilities to separate their generation, delivery, and marketing functions. We'll form a new, wholly-owned holding company, then do a binding share exchange under New York Business Corporation Law Section 913 (structured as a tax-free reorganization under IRC Section 351): our existing shareholders will automatically become shareholders of the new holding company on a one-for-one basis, and we'll become the holding company's subsidiary -- with no physical stock certificate exchange required. We own real property in New York State. Does this share exchange trigger New York's Real Estate Transfer Tax (as a transfer of a controlling interest in a real-property-owning company) or the Stock Transfer Tax?
Both taxes are avoided, though for different reasons. Consolidated Edison Company of New York, Inc. ('Petitioner'), a regulated utility supplying electricity, gas, and steam across New York City and W…
Did a qualified Subchapter S subsidiary file separately from its parent, and how did it compute taxable earned surplus?
The QSSS and its parent S corporation had to file separate franchise-tax reports because Section 171.001 taxed each corporation and Rule 3.544(c) barred consolidated reporting. But the Comptroller did…
Are membership dues, an initiation fee, and an annual assessment charged by a private yacht club subject to New York's club dues tax?
Yes -- the yacht club's $600 initiation fee, $300 annual dues, and $200 capital-improvement assessment are all subject to sales tax, because the club is formally organized and controlled by its member…
Are membership dues and an initiation fee paid to a recreational boating club subject to New York's club dues tax?
No -- the boating club's $350 initiation fee and $300 annual dues are not subject to sales tax, because the club's material purpose is purely recreational boating and fishing (with no tournaments, con…
Is the sale of software source code exempt from Texas sales tax when the buyer will fold it into another software program and resell the combined product?
Yes. Because the source code becomes a component part of another software program that will be sold at retail, the seller may accept an exemption certificate under Rule 3.300(d)(2) instead of collecti…
Is a DEXA (dual energy x-ray absorptiometer) machine, used by a doctor to diagnose osteoporosis and measure bone mineral density, exempt from Texas sales tax as an orthopedic appliance?
No. A doctor must pay sales tax on a DEXA machine and cannot issue an exemption certificate for it under Rule 3.284(a)(9), because the orthopedic appliance exemption covers devices used to correct or …
When did RR 97-20 treat a local fee or tax as part of gross proceeds subject to South Carolina state sales tax?
A local hospitality tax or qualifying local accommodations fee was included in gross proceeds when imposed on the retailer and passed through as the retailer's receipt. It was excluded when imposed on…
Was a vehicle transfer to an investor lessor followed by a required end-of-term repurchase a nontaxable sale-leaseback financing arrangement?
Yes. Because the initial lessor was required to repurchase the vehicles at the end of the lease, the contract qualified as a conditional sale or lease-purchase agreement and the overall transfer was a…
Did six single-member Texas LLCs treated as divisions of a Colorado corporation file separately, and did ownership alone tax the parent?
Each Texas-organized LLC had to file its own franchise-tax report even though federal law treated all six as divisions of their sole corporate member; consolidated or combined reporting was not allowe…
Which Texas agency handled used auto dealer licensing in 1997, and did a seller-financing dealer also need a Comptroller tax permit?
The Texas Department of Transportation's Motor Vehicle Division handled used auto dealer licensing. A dealer that financed the motor vehicles it sold also needed a tax permit from the Comptroller and …
How does a Nebraska estate or trust recompute the 1997 federal credit for prior year minimum tax to claim the Nebraska credit?
Recompute the federal credit on Nebraska terms, then take 29.6% of it. Under Revenue Ruling 23-97-2, Neb. Rev. Stat. §77-2717 requires an estate or trust to recompute the 1997 federal credit for prior…
How does a Nebraska estate or trust recompute the 1997 federal alternative minimum tax to figure the Nebraska minimum tax?
Recompute the federal AMT on Nebraska terms. Under Revenue Ruling 23-97-1, Neb. Rev. Stat. §77-2717 requires estates and trusts to recalculate the 1997 federal alternative minimum tax (Federal Form 10…
How does a Nebraska individual recompute the 1997 federal alternative minimum tax to figure the Nebraska minimum tax?
Recompute the federal AMT on Nebraska terms. Under Revenue Ruling 22-97-1, Neb. Rev. Stat. §77-2715 requires an individual to recalculate the 1997 federal alternative minimum tax (Federal Form 6251, o…
Does an out-of-state direct-sales company owe Utah corporate franchise tax just because independent-contractor 'Members' solicit and make sales in Utah?
No, not under these facts. An out-of-state direct-sales/network-marketing company whose independent-contractor 'Members' only solicit and make sales of tangible personal property in Utah, with no Utah…
Are fees paid to a third-party adjusting company that inspects plumbing damage claims and coordinates repairs under a national class action settlement taxable 'insurance services' in Texas?
No. Because the adjusting company's services are performed under a court-supervised class action Settlement Agreement rather than under an insurance policy, they don't count as taxable insurance servi…
How were zero Texas receipts, an apportionment ratio over 100%, and weekend due dates handled on 1997 Texas franchise-tax reports?
On Form 05-147, zero Texas gross receipts meant entering zero in Item 23 and leaving lines 17-22 blank. Texas receipts could not exceed receipts everywhere, so the apportionment factor could not excee…
Is a charge for training customers on how to use software subject to Texas sales tax?
It depends on whether the training is bundled with the sale of the software or billed separately. Training provided in connection with the sale of the product is part of the taxable sales price under …
How did a same-day multi-entity restructuring affect OldSub's final report, business-loss carryforward, merger credit, and transitory subsidiaries?
OldSub had to file a final report and could use its existing business-loss carryforward against its own final taxable earned surplus. Any remaining loss disappeared and did not transfer to NewSub2. Ne…
Are the dies a printer uses for diecutting, foil stamping, embossing, and engraving exempt from Texas sales tax as manufacturing equipment, regardless of how long the dies last?
Yes. Diecutting, foil stamping, embossing, and engraving are processing activities, so dies used in them are exempt as accessories to exempt processing equipment under Rule 3.300 — with no requirement…
Could an S corporation using the federal-income-tax method value a management contract at zero for taxable-capital surplus when its balance sheet showed $2 million?
Only with documentation. The balance sheet's $2 million value appeared to be the asset's cost unless the corporation proved that the management contract had zero federal-income-tax value when recogniz…
How does a Nebraska individual recompute the 1997 federal credit for prior year minimum tax to claim the Nebraska credit?
Recompute the federal credit on Nebraska terms, then take 29.6% of it. Under Revenue Ruling 22-97-2, Neb. Rev. Stat. §77-2715(2) requires an individual to recompute the 1997 federal credit for prior y…
Was cash transferred under a lease-defeasance payment undertaking subject to Florida intangible tax?
No. The payment undertaking was treated as an exempt deposit of money. The corporation transferred cash equal to the net present value of scheduled lease and option payments to an out-of-state defeasa…
Does a company that transports disabled people and developmentally-delayed preschoolers qualify as an omnibus carrier 'in local transit service' eligible for New York's motor fuel, petroleum business, and sales tax refunds?
Partly. The company is an 'omnibus carrier' for the Article 12-A motor fuel tax, Article 13-A petroleum business tax, and Article 28 sales tax, but only some of its fleet is 'in local transit service.…
Are a company's natural gas meter chart calculation, chart audit, consulting, and training services taxable as data processing, given that a computer is used to help calculate the final figures?
No. After an on-site audit review, the Comptroller reversed its earlier position: chart calculations, chart audits, consulting, and training are not taxable data processing services because they depen…
Did Texas's 1997 sports-arena car-rental tax exemption apply when a state agency was billed directly, and what if an employee used a personal charge card?
A state agency was exempt when billed directly because the new venue-tax statute incorporated Chapter 152's public-agency rental exemption. The letter found no exemption for an individual state employ…
Can a general contractor holding an owner's direct payment permit pass that permit or exemption certificate on to its subcontractors and vendors?
No. A direct payment certificate is nontransferable — only the permit holder named on it may issue it. The general contractor that receives it from the owner uses its own resale certificate when buyin…
Can New Mexico hold a corporation's officers and directors personally liable for withholding taxes the company deducted from employee paychecks but never paid over, even if a dishonest bookkeeper was actually responsible?
Yes. New Mexico's Withholding Tax Act makes any 'employer' with control over the payment of wages personally liable for payroll taxes the company withheld from paychecks but failed to remit — no willf…
Were cruise tickets taxable admissions when passengers could disembark at a stop before returning?
Cruise charges were exempt transportation when passengers could disembark at a destination other than the starting point before returning. Charges were taxable admissions when passengers could not dis…
Could a newspaper printer refund tax after its customer supplied an exemption certificate late?
Yes, if the shopper or community newspaper actually met the exemption requirements and the customer supplied a proper certificate covering the earlier purchases. The printer then reimbursed the custom…
How did a federal Section 338(h)(10) stock acquisition affect the target's former Texas earned-surplus and taxable-capital franchise-tax calculations?
For the former earned-surplus component, the target included the Section 338(h)(10) deemed asset-sale amounts and apportioned receipts according to the assets sold. Texas did not recognize the electio…
When rebuilding fire-damaged spaces in a strip center — where two spaces will have all walls and the roof replaced, leaving only the foundation — is the work taxable nonresidential repair, or untaxed new construction?
It depends on whether the spaces share a common foundation, wall, or roof with the rest of the complex. If they do, replacing the walls and roof is still nonresidential real property repair and remode…
When a customer leasing a new vehicle uses a trade-in and/or a cash down payment to reduce the cost, which one actually reduces the amount subject to Utah sales tax?
Only trade-in equity reduces the sales tax base — a cash down payment does not. On a vehicle lease, sales tax is due on the net cost (capitalized cost) of the vehicle. A trade-in reduces that taxable …
Our bank, as trustee, manages a tax-exempt commingled pension trust fund that pools real estate investments for qualified pension and governmental plans. Some of the fund's real estate investments have matured from 'unstabilized' start-up properties to 'stabilized' performing ones, and we want to split the fund in two -- spinning off the unstabilized properties into a brand-new, identical trust fund -- with every participant getting units in the new fund exactly proportional to what they hold in the original fund. Some of these properties are held through New York corporations and a partnership interest. Does this pro-rata spin-off trigger New York's Real Estate Transfer Tax on the controlling interests being transferred to the new fund?
Exempt -- the pro-rata spin-off doesn't change anyone's beneficial ownership. Morgan Guaranty Trust Company of New York, as trustee of a tax-exempt Commingled Pension Trust Fund pooling real estate in…
Can a wholesale supplier accept a resale certificate from a contractor buying materials for capital improvement or repair jobs?
No -- a wholesale supplier cannot accept a resale certificate (Form ST-120) from a contractor buying materials and supplies to use in performing capital improvement work or repairs on real property, b…
Are the film and processing supplies used in coin-operated photo booths exempt from New York sales tax as production supplies?
Yes -- because the amusement park's photo booths develop the customer's own negatives and print the photographs from raw film and chemicals, the whole process counts as manufacturing tangible personal…
Is a soy-based sports-nutrition supplement sold through a multi-level marketing network exempt from New York sales tax as a dietary food?
Yes -- Reliv's "ProVantage" soy-protein sports-nutrition product is exempt from sales tax as a dietary food and health supplement, because its label describes special dietary properties (boosting ener…
Does a car importer owe sales or use tax on vehicles used in a free, six-month test-drive program before they're sold?
XYZ can import and register the vehicles tax-free for resale, but once it lets outside "evaluators" and its own employees drive them under the test-drive program, the vehicles become taxable "mixed-us…
Is equipment used to make both soft-serve and prepackaged ice cream exempt from New York sales tax as production machinery?
It depends on which product the equipment makes -- machinery used more than half the time to produce prepackaged ice cream for sale (like Petitioner's hardening cabinet) can qualify for the production…
Which of a mail house's printing, sorting, inserting, and mailing services for financial-institution statements are subject to New York sales tax?
It splits by service and by destination -- sorting, inserting, sealing, postage/metering, and mailing charges (and reimbursed postal charges) all escape sales tax if separately stated, but the actual …
Can the distortion requirement for filing a combined report be satisfied by substantial intercorporate transactions among two or more corporations, and does one member's lack of federal income preclude a distortion finding?
Yes. The distortion requirement for a combined report (20 NYCRR 6-2.3) is presumed met when there are substantial intercorporate transactions -- which can exist among two or more corporations, and may…
Is a corporation that holds bare record title to real property as nominee, and was later dissolved by proclamation, subject to Article 9-A -- for the years it was incorporated, after dissolution, or both?
Two periods, two answers. A corporation that was incorporated and held record title to New York real property in a corporate capacity is subject to the Article 9-A franchise tax under section 209.1 fo…
Is a federal S corporation that is a corporate member of an LLC doing business in New York subject to the Article 9-A franchise tax, and is it taxed as a C corporation?
Yes, with the tax computed as a C corporation. An LLC treated as a partnership for federal income tax is a partnership for New York; its corporate members are corporate partners. If the S corporation'…
How did Florida's $5,000 discretionary-surtax limit apply to a combined direct-mail coupon campaign?
The entire combined mailing was one item for the discretionary-surtax limit. Because coupons for multiple advertisers were placed in one envelope and billed to the franchisee on one invoice, the surta…
Can a New Mexico contractor that builds dairy-farm barns and structures claim the 50% agricultural-implement gross receipts tax deduction on the materials it builds into those facilities?
No. Construction materials that a contractor builds into dairy barns and structures become part of a taxable construction service, not deductible 'agricultural implements,' so the 50% deduction under …
Can a property management company buy materials and services tax-free on behalf of an exempt entity it manages property for, and from what date does that entity's tax exemption take effect?
A property management company acting as the exempt entity's designated agent under a written management agreement may issue exemption certificates on the entity's behalf, and the entity's exemption ap…
Was a federally recognized private foundation exempt from Florida intangible tax?
Yes. Because the foundation itself held a valid federal section 501(c)(3) charitable designation, Florida treated it as a nonprofit charitable institution and exempted its intangible personal property…
Could a reorganized corporate group stop filing Florida consolidated returns?
Yes. The Department found good cause in the group's long-running reorganization, expansion into new business lines, and possible apportionment changes. It allowed separate filing beginning with the ye…
Could a printing business buy onsite photocopies tax-free when it intended to resell the printed material?
Yes. Onsite reprographics that included equipment, an operator, and materials was treated as a sale of printed tangible personal property. A customer reselling all copies could use a valid resale cert…
Could a dealer buy new medium-duty Chevrolet trucks tax-free for resale when its law and franchise agreement did not authorize it to sell them as new?
No. Under the recent legislative change described in the letter, only a dealer authorized by both law and franchise agreement to offer the particular vehicle as new could acquire it tax-free for resal…
Is a county's fee for letting the public access county documents and records through a computer link a taxable information service in Texas?
No. Rule 3.342(d)(3) excludes information that must be furnished under the Texas Public Information (Open Records) Act, Government Code § 552, from the definition of a taxable information service — so…
Were an S corporation and its wholly owned qualified subchapter S subsidiary treated as one taxpayer or as separate corporations for former Texas franchise tax?
They were separate Texas franchise-tax entities even though federal income-tax law treated the QSSS as a division of its S-corporation parent. Section 171.001 imposed tax on each corporation, and Rule…
Is a country club's optional 'buyer's club' membership fee (which gives members a discount on Pro Shop purchases) subject to Texas amusement services sales tax?
Yes. The buyer's club membership fee is taxable as an amusement service because Rule 3.298(b) taxes fees charged for a special privilege, status, or membership classification in a private club — and t…
Were computer-repair labor charges taxable when customers could buy parts separately from another company?
Labor-only computer repair was not taxable when no tangible property was provided. The same applied when customers independently chose to buy parts from a separate company that invoiced them directly;…
Are country club membership dues taxable as an admission/user fee, and does it matter whether the membership carries voting rights over how dues are set?
It depends on whether the membership is 'equity' or 'nonequity,' not narrowly on voting rights over dues. The Commission held that its own administrative rule (R865-19S-33, which exempted only dues th…
Does executing a guaranty create additional Florida documentary stamp tax, and is tax due on a mortgage that secures the guaranty?
No. A mere guaranty created no additional documentary stamp tax. Effective July 1, 1997, a mortgage securing a guaranty also avoided additional tax when tax had been paid on the primary obligation.
Was a convention-center food concession agreement an exempt lease or a taxable license?
It was an exempt lease, not a taxable license. The concessionaire had long-term, assignable, exclusive possession of identified food-service, pantry, and storage areas, made substantial permanent impr…
Was an electric utility's capacity-reservation prepayment part of the taxable electricity sales price?
Yes. The $3.5 million generation-capacity prepayment was consideration for the utility's reserved firm capacity and reliable power supply, so it was included in the taxable electricity sales price. Ev…
Did Texas impose more tax when a tax-paid vehicle was re-leased, and what happened when an out-of-state leased vehicle was brought into Texas?
Re-leasing a vehicle whose lessor had already paid Texas tax caused no additional motor vehicle tax because the lessor's purchase, not the lease, was taxable. An out-of-state vehicle brought into Texa…
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