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 company places its own computer-skilled staff at a customer's site to run a defined IT project, is it selling taxable personnel services or taxable computer and data processing services?
It's computer and data processing, not personnel services. A company that places its own computer-skilled staff at a customer's site to complete a prearranged, predetermined IT project is providing ta…
Is an extended warranty/service contract on residential real property taxable in Texas?
Generally no — an extended warranty on existing residential real property is not taxable in Texas. But there are exceptions: an extended warranty tied to a pest control service, or to repair/remodelin…
For a company that prewires new homes for audio/video and security systems, sells stereo equipment after the builder sells the house, and installs and monitors security systems: what's taxable, and does prewiring alone count as a security service or as ordinary contractor work?
It depends what's bundled together. Prewiring ALONE (before any keypad/alarm equipment goes in) is treated under the ordinary contractor rule (Rule 3.291) — materials taxable, labor not, depending on …
Could a Florida school board directly purchase materials for public-school construction without sales tax?
Yes. The revised program qualified when the school board issued purchase orders, received invoices and paid vendors directly, took title and liability at delivery, and bore insured risk of loss. Contr…
Did a bank create former Texas franchise-tax nexus by leasing automobiles used in Texas, despite having no Texas real property, payroll, or active solicitation?
Yes. Leasing tangible personal property used in Texas created nexus for the lessor. The bank was subject to Texas franchise tax even though it had no Texas real property or payroll and did not activel…
Can an Industrial Development Agency's leasing subsidiary buy and lease equipment and resell services tax-free through resale certificates on the agency's behalf?
Yes -- Donaldson, Lufkin & Jenrette's Leasing Corp. subsidiary can purchase IDA-Equipment directly as the IDA's agent, lease other equipment and buy installation/maintenance services from third partie…
What did Texas say about dealer tax collection, title-transfer duties, and documentary fees in 1997?
Section 152.0411 required dealers to collect motor vehicle sales tax. The letter understood the Transportation Code to require dealer handling of title transfer and registration and to permit a docume…
Is a manufacturer's purchase of reusable wood/metal shipping containers, plus the rings and fixtures used to secure product inside them, tax-exempt if the containers are returned and reused to move product between the manufacturer's own facilities? Is repair work on those containers exempt too?
No. Sales tax is due on the shipping containers, shipping rings, and shipping fixtures used to move product between the taxpayer's own facilities, and sales tax is also due on repair charges for those…
Can a mechanical contractor buy or rent temporary boilers tax-free for resale when installing them at a customer's building during a boiler replacement job?
Yes -- because Dierks' temporary boilers are installed and operated solely to provide heat and hot water for a building's tenants (not to serve Dierks' own construction work), and Dierks itself never …
Are installation-services payments and computer software acquisitions made through an Industrial Development Agency's disclosed agents exempt from New York sales tax?
Yes, with conditions -- payments by Travelers' disclosed agents for installing IDA-owned equipment, and for acquiring or maintaining computer software (including software delivered electronically or u…
Are a disaster-recovery service's monthly subscription fees and usage fees subject to New York sales tax?
It's split -- Petitioner's monthly subscription fee, which merely grants customers a contingent right to access backup computer equipment if a disaster ever strikes, is a nontaxable sale of an intangi…
Were a Florida property owners' association's mandatory annual assessments taxable as club admissions or membership fees?
No. The regular assessments were not taxable because they were mandatory, paid to a homeowners' association as a condition of property ownership, and supported recreational facilities that were part o…
Did hiring a promoter for some performances prevent a Florida 501(c)(3) theater from exempting its admission charges?
No. The nonprofit remained the event sponsor and its admissions qualified for the nonprofit exemption because it planned and conducted events, bore liability and losses, owned the proceeds, and paid t…
Did an amusement operator owe Florida sales tax on ride tickets sold as a fair association's agent under a revenue-sharing contract?
No. The operator did not collect sales tax on the fair association's admissions when the association owned all ticket proceeds and paid the operator 40% for rides, shows, food, and games. Food and oth…
Were carnival ride admissions exempt when the carnival operator sold tickets as a Florida fair association's agent?
Yes. Admissions sold on behalf of the fair association under the agency agreement were exempt. Admissions for rides or attractions the operator ran on its own behalf, plus its food and concession sale…
Did a ride operator have to collect Florida sales tax when it sold fair admission tickets as the fair association's agent?
No. Ride-ticket sales were exempt when the operator sold them as the fair association's agent and remitted all proceeds to the association. Tickets sold on the operator's own behalf would be taxable, …
Is a consulting firm's service of physically inspecting a company's buildings, updating its CAD floor-plan/systems database, and maintaining cost-allocation codes for floor space subject to Texas sales tax?
No. All three parts of this consulting arrangement — (1) inspecting buildings and updating the floor-plan CAD database, (2) updating other building-systems layers (electrical, plumbing, etc.) in the s…
Is diesel fuel sold for use in locomotives exempt from Utah tax, and can the Commission exempt railroad fuel from sales tax to match neighboring states' prices?
Dyed diesel fuel sold and used in locomotives (an off-highway use) isn't subject to Utah's special fuel tax, but fuel exempt from special fuel tax is still subject to sales tax -- so locomotive fuel i…
Is selling software via a free preview CD plus a paid 'electronic key' a taxable Utah sale, and are web design, web hosting, and internet-access charges taxable too?
Mixed answers on three questions. Selling a password/'electronic key' that unlocks full software already sitting on a free preview CD is a taxable Utah sale if the buyer is in Utah. Web page design, h…
Does the industrial-use fuel exemption apply to a real property contractor (plumbing/HVAC installer) that also claims to run a separate manufacturing operation making the parts it installs?
The Commission declined to resolve the specific question for lack of adequate facts, but gave general guidance that undercuts the taxpayer's theory. Sales tax applies to fuel sold for commercial use, …
Is renting a race track to a professional driving school (to instruct drivers) or to race teams for practice sessions taxable as an amusement service?
No. The Comptroller reversed an earlier (October 29, 1997) letter that had said these track rentals were taxable. Renting the track to a driving school or to race teams for practice is not the provisi…
Is a $15 fee a business charges customers for a check returned due to insufficient funds subject to Texas sales tax as a debt/claim collection service?
No. There is no sales tax owed on charges by a bank, or by a business, for a returned/insufficient-funds check — the charge is an overdraft-type charge, not payment for a service performed for the cus…
An insurance agent also charges a separate hourly or flat fee to review a client's existing retirement and health plans and propose new plans. Is that consulting fee subject to Texas sales tax as a taxable insurance service?
No. Reviewing existing retirement/health plans and proposing new plans doesn't fall within the definition of taxable insurance services in Rule 3.355(a)(1) through (6) — the Comptroller found these ac…
Is the charge/fee to dispose of produced salt water (brine) from oil/gas exploration in a saltwater disposal well subject to Texas sales tax as a waste removal service?
No. Rule 3.356(a)(3)(B) excludes waste materials resulting from the exploration, development, or production of oil, gas, geothermal resources, or any other substance regulated by the Railroad Commissi…
Could a borrower claim a trade-in deduction after selling the old vehicle to the lender for the balloon-payment amount?
No. When the borrower sold the old vehicle to the lender for the balloon amount, that vehicle was not delivered to the new-car seller as consideration for the replacement purchase. A later purchase of…
Did a corporation need to file another public information report with its 1997 final franchise-tax report after filing one with its 1997 annual report?
No. Section 171.203(b) required the public information report once a year. Because the client had already filed a PIR with its 1997 annual franchise-tax report, it did not need another PIR with its 19…
For a contractor working on an exempt entity's job site: is a portable toilet rental tax-exempt because the contract requires it, and is the transportation/delivery charge for hauling dirt, sand, caliche, or rock to the site taxable?
Portable toilet rentals are NOT exempt, even when the contract with an exempt entity requires them — Sec. 151.311 only exempts tangible personal property incorporated into the realty or completely con…
An engineering/CAD services company asked about eight separate activities: (A) revising client drawings, (B) creating new designs, (C) scanning documents, (D) plotting, (E) computer consulting/installation/troubleshooting, (F) software training, (G) furnishing employees to clients, and (H) accepting direct pay permit numbers. Which of these are subject to Texas sales tax?
Mixed answers across all eight: (A)/(B) drafting FROM client-supplied specifications is taxable (a "draftsman" sale of tangible personal property), but genuine professional engineering — developing th…
Is a risk management consulting firm's fee-based work — exposure analysis, insurance program design/negotiation, policy review, claims reporting/management, due diligence, and statistical reporting — subject to Texas sales tax, even though the firm doesn't sell insurance or earn commissions?
Yes. Even though the firm is paid strictly in fees (no insurance sales, no commissions), its risk-management activities fall within taxable insurance inspection services (Rule 3.355(a)(2)) and insuran…
Who owed Texas use tax on an Oklahoma-leased vehicle operated in Texas, and what happened if the lessee later exercised the purchase option?
The Texas operator owed use tax calculated on the out-of-state lessor's purchase price; the lease contract itself was not taxed, and returning the vehicle produced no refund. Exercising the operating-…
If New Mexico assesses gross receipts tax because a store reported far higher receipts to the IRS than it did to the state, can the taxpayer beat the assessment without records to explain the gap?
No. The protest was denied. Because a New Mexico assessment is presumed correct, the store had to produce evidence that its actual 1993 gross receipts were lower, and with no business records to expla…
Is a standard reclining chair exempt from Texas sales tax when purchased with a doctor's prescription for back support?
No. A reclining chair does not meet the definition of a therapeutic appliance or device (an item designed to alleviate pain or for use in treating/curing sickness, disease, suffering, or deformity) — …
Is replacing a race track's surface taxable real property repair/remodeling (labor and materials both taxable to the customer), or is it new construction (only materials taxed, to the contractor, under a lump-sum contract)?
It depends on the scope of work. Merely RESURFACING the existing track or a portion of it is real property repair or remodeling under Rule 3.357(a)(8) — the ENTIRE charge is taxable to the customer, a…
Could a Florida intangible-tax filer discount publicly traded shares whose sale was restricted by SEC Rule 144 because the filer was a company director?
Yes. For the director's 2% holding and insider restrictions, the Department said a 25% discount from current market value was not unreasonable. The discount stopped applying when the stock's restricte…
Could a Florida intangible-tax filer discount publicly traded shares whose sale was restricted by SEC Rule 144 because the filer was a company director?
Yes. For the director's 2% holding and insider restrictions, the Department said a 25% discount from current market value was not unreasonable. The discount stopped applying when the stock's restricte…
A building manager remodels office space (moving/removing walls, adding doors/locks, electrical work, carpet/paint) for a taxable tenant that subleases the space to a Texas state agency (TDH). Who pays sales tax on the remodeling — the building manager, the taxable tenant, or the exempt state agency — and does it matter that the state agency requested the work and is the primary beneficiary?
The remodeling charge is taxable in general, but WHO owes it depends on who is billed and who is the ultimate consumer. The building manager may issue the general contractor a resale certificate (sinc…
Are balloon angioplasty catheters and stents taxable when sold to doctors or hospitals, including when used in clinical studies, and what happens if they're sold together as a package?
Balloon angioplasty catheters are taxable when sold to doctors or hospitals, even for use in clinical studies. Stents are exempt as a prosthetic device under Rule 3.284(a)(10)(C). If the two are sold …
Were purchases from an airport duty-free store exempt from Florida sales tax when international passengers took possession inside a restricted departure area?
Yes. The sales qualified as exports when only ticketed international passengers could buy, sealed goods stayed in the secured departure area, disrupted-flight goods were surrendered, and the items act…
Were duty-free goods exempt from Florida sales tax when an international passenger received them on the jetway at the aircraft door?
Yes. Delivery after the passenger surrendered the boarding pass and reached the aircraft door began a continuous and highly certain export journey. If the flight failed to depart, the retailer reclaim…
A survey company did construction staking for road contractors and deducted the receipts using the contractors' exemption certificates. Was the deduction valid even though the tax department first said no?
Yes — construction staking is a construction service, so the deduction was valid and the protest was GRANTED. Dawson Surveys did construction staking (locating sites, setting elevations and grades) fo…
Can New Mexico deny an income-tax refund and tax your wages when you report zero federal adjusted gross income, without waiting for the IRS to act?
The protest was denied. A New Mexico couple reported zero federal adjusted gross income on their state return and claimed a full refund of the $1,516 withheld — but the husband's W-2s showed nearly $4…
Were motorhomes and other qualifying recreational vehicles subject to the Harris County-Houston Sports Authority's short-term rental tax?
Yes. The Authority said motorhomes and other recreational vehicles fitting the quoted definition were self-propelled vehicles designed principally to transport people or property on public roads. Beca…
Were mandatory dues paid to a private recreational club exempt from Florida admissions tax as homeowners-association dues?
Only conditionally. The club had not established that it was a homeowners association. If it was one, and the dues were mandatory as a condition of owning or occupying real property with the facilitie…
How did Florida treat a consolidated group's gains and sales-factor receipts from major stock and operating-asset dispositions?
The gains were business income, but the stock and asset sale prices were excluded from the Florida sales factor. The group could not split the year and apply separate pre-sale and post-sale apportionm…
Could a new Florida desalination business buy its production machinery and equipment without sales tax?
Yes, after satisfying registration and permit requirements. Qualifying equipment ran from the seawater intake through the product-water storage tank. The outbound pipeline did not qualify, and purchas…
Could a Florida school district directly buy materials for an elementary-school project without sales tax while using a construction manager?
Yes. Purchases were exempt when the district issued purchase orders, held title, received invoices and paid vendors directly, and was insured against loss before installation. Contractor purchases and…
Which hearing-aid-related products (ear wax removal system, Eargene, dry aid kits/dehydrators, telephone foam pads, hearing aid batteries) are exempt from Texas sales tax, and does a prescription matter?
An ear wax removal system, Eargene (for itching), dry aid kits (dehydrators), and foam pads for the telephone are all exempt from Texas sales tax ONLY when sold to an individual WITH a doctor's prescr…
If an out-of-state mother rents or buys a New York City apartment so her minor son can attend a NYC high school, and both spend more than 183 days a year in the city, does she become a New York statutory resident?
No. Because the apartment was maintained only for the fixed, four-year period until the son's high school graduation and only for the particular purpose of his religious high school education (and, fo…
Is a law firm's floor-by-floor office reconstruction (including asbestos removal and re-fireproofing) an exempt capital improvement or a taxable repair service?
Mostly exempt -- the wall, HVAC, plumbing, millwork, and fireproofing work on Petitioner's headquarters build-out (including redoing failed fireproofing) qualifies as an exempt capital improvement bec…
When must an equipment finance company remit sales or use tax on its healthcare-equipment fair market value leases versus its conditional sales agreements?
It depends on which type of transaction it is -- under a genuine fair market value (true) lease, DVI must collect sales tax on each monthly rental payment as it's received, but under a conditional sal…
Must a funeral livery service collect New York's 5% special passenger car rental tax, in addition to ordinary sales tax, on its car-and-driver charges to funeral homes?
Yes -- Petitioner is correctly collecting both ordinary New York sales tax and the additional 5% special short-term passenger car rental tax on the fees he charges funeral homes for cars and drivers, …
Is a dual-licensed insurance adjuster and private investigator's fee income taxable as a 'detective service,' or does it depend on which license the work required?
It depends entirely on which hat Petitioner is wearing for a given assignment -- fees for work requiring his independent adjuster's license (investigating and adjusting insurance claims on an insurer'…
Could a Florida seawater desalination plant buy electricity tax-free for machinery that converted seawater into potable water?
Yes, subject to the statute's conditions and phase-in. Electricity used directly and exclusively for desalination and related qualified equipment was exempt. Mixed-use meters received only a 50% exemp…
A financial-printing company itemizes typesetting, graphic design, proofing, alteration/correction, printing, and post-printing distribution/mailing/postage/storage services on customer bills. Which of these are taxable, and does separately stating them on the invoice change the answer?
Typesetting, graphic design, proofing, alteration/correction, and printing (items 1-5) are ALL taxable in total as charges for a printed item, whether billed as one price or separately. Mailing servic…
Is installing, monitoring, servicing, or repairing a burglar alarm/security system taxable as a security service, even if the system becomes part of a new-construction improvement to real property?
Yes. Installation of a security system is taxable if the installer is required to be licensed under the Private Investigators and Private Security Agencies Act, Sec. 13 — and the ENTIRE charge for sec…
When did RR 97-17 require a bingo promoter to hand over session proceeds, and when did the nonprofit have to deposit the proceeds and entrance fees?
The promoter had to deliver net session proceeds to the nonprofit's representative at the end of the session. The nonprofit had to deposit those proceeds and the entrance fees no later than the day af…
Could a nonprofit use the Department's share of bingo-card-charge distributions to pay bingo expenses under RR 97-16?
No. RR 97-16 said the Department's distribution from bingo-card charges had to remain separate and be used for charitable or organizational purposes. Promoter compensation and other reasonable bingo e…
A financial-document company converts customer documents into electronic format and transmits them to government regulatory agencies, and separately offers software and training so customers can format their own documents. Is the electronic formatting/transmission service taxable, does it matter if the customer is inside or outside Texas, and how is the software/training service taxed?
The electronic formatting service is taxable as data processing under Sec. 151.0035, and the transmission fee is part of its taxable sales price (Sec. 151.007(a)(2)). But Sec. 151.330(e) exempts servi…
Is an automated medication dispenser machine — leased to elderly patients with medication non-compliance problems, prescribed by their doctors — exempt from Texas sales tax?
No. The automated medication dispenser (a machine that organizes complex pill regimens, is lockable/tamper-proof, dispenses into a removable drawer, and has audio/visual reminders) is taxable — there …
Did an Arkansas seller create former Texas franchise-tax nexus when its Texas salesperson provided customer service and occasionally delivered small items?
Yes. The salesperson's Texas customer-service activity subjected the corporation to the former taxable-capital component. The salesperson's occasional deliveries went beyond protected solicitation und…
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