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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Was the tenant's payment under the separate mall lease-termination agreement taxable rent?
No. The separate termination agreement ended all occupancy rights and made the payment full satisfaction of the tenant's obligations, while the landlord recorded it as other revenue rather than…
When did Chester County's 1% capital-projects sales tax end, and what local tax remained?
The capital-projects tax ended at midnight on April 30, 2000 after its $1.33 million goal was met, but Chester County's separate 1% local-option sales and use tax continued.
Is labor to clean and detail a private corporate aircraft taxable, and does it matter if the cleaning includes steam-cleaning the carpet?
No tax is due on labor charges for general cleaning/detailing maintenance of a private aircraft. But carpet cleaning specifically is its own taxable service under Tex. Tax Code § 151.0045 and Rule…
As of April 1, 2000, do retailers need to collect Texas sales tax on vitamins, minerals, and nutritional/herbal dietary supplements (including ones marketed for weight loss)?
No. Effective April 1, 2000, sales of vitamins, minerals, and nutritional supplements for humans — including herbal dietary food supplements marketed for weight loss or other medicinal purposes —…
Can a tax-exempt nonprofit organization use its exemption certificate to buy beer, wine, or liquor tax-free?
It depends on which kind of exempt organization you are. Most organizations exempt under Rule 3.322(b) are only exempt on purchases that relate to their specific exempt purpose — so a nonprofit…
Is cleaning a vacant apartment after a resident moves out taxable, and is painting that same apartment treated the same way?
Cleaning is taxable in all three scenarios asked about — vacant apartments, the leasing office, and the model apartment — because keeping a building's interior and exterior clean, orderly, and…
When a printer bills a customer for a finished product, must sales tax be charged on the whole invoice — including the design, copywriting, art direction, and printing costs built into the price?
Yes, tax the whole invoice. The Department ruled that the retailer should collect Kansas sales tax on the total invoice amount, including the recovery of design, copywriting, art direction, and…
Does a restaurant have to charge Kansas sales tax on meals it sells to a school district, or can it sell them tax-free?
The restaurant can sell tax-free with a certificate. Restaurant meals are normally taxable under K.S.A. 79-3603(d), but a school district's direct purchases are exempt under K.S.A. 79-3606(c). The…
A café couple paid their back gross receipts tax late after years of Department delay and family illness. Could New Mexico waive the interest that piled up?
Denied. Interest on late-paid tax is mandatory under Section 7-1-67 — the statute says interest 'shall be paid' with no exceptions. It compensates the state for the time value of money it was owed,…
Which diabetic supplies (test strips, insulin, needles/syringes, lancets, blood testing equipment) are exempt from Texas sales tax, and which ones need a doctor's prescription to qualify?
Blood glucose monitoring strips, insulin, and hypodermic needles/syringes are exempt from Texas sales tax without needing a prescription. Lancets and blood testing equipment (diabetic monitors), by…
Is a coupon-style discount on amusement tickets treated the same as a sales tax exemption, and does a tax-exempt organization (like a school) owe sales tax on amusement tickets bought for its own members?
A coupon or other discount taken at the time of sale reduces the taxable sales price under Tex. Tax Code § 151.007(c)(1) — but a valid sales tax exemption is a completely different thing from a…
When a business is sold to an unrelated buyer, how long can the Comptroller go back to assess unpaid sales tax against the successor, and can the successor dispute a tax bill that was really the predecessor's fault?
The four-year limitations period runs from whichever is later: the date the predecessor was assessed, or the date the buyer (successor) purchased the business, under Tex. Tax Code § 111.020(e). That…
If a Texas seller delivers equipment to a Texas customer (who then ships it out of state) and later sells maintenance contracts on that equipment, is Texas tax due on the maintenance charges even though the equipment is located elsewhere?
It depends on the timing and shipping pattern of each maintenance purchase. The original maintenance contract sold at the same time as the equipment (delivered to the customer in Texas) is taxable…
What counts as an acceptable trade-in for sales tax purposes, and what happens if a store accepts an unrelated item (not normally sold in the business) as a trade-in?
An acceptable trade-in is a "like item" — something the business normally sells in the regular course of its business — but "like" doesn't mean it has to be the exact same item. A jewelry store, for…
Are herbal dietary supplements taken for weight loss or other medicinal purposes treated as exempt "drugs or medicines" for Texas sales tax, independent of how they're classified under federal dietary supplement law?
Yes. Effective April 1, 2000, over-the-counter drugs and medicines, vitamins and minerals, and nutritional supplements — including herbal dietary supplements taken for weight loss or other medicinal…
Does a wastewater/leachate treatment system built at a former fertilizer manufacturing site — that treats storm water dissolving leftover gypsum waste and produces a sellable ammonium sulfate byproduct — qualify for the pollution control or manufacturing sales tax exemption?
Not as pollution control equipment: since the facility no longer manufactures fertilizer and the wastewater/leachate being treated comes from rain and other sources dissolving old gypsum waste (not…
Is dredging dirt, mud, silt, or sand out of a waterway to add boat slips and improve access a taxable real property repair, or nontaxable new construction?
It depends on what the dredging accomplishes. Dredging done to repair or remodel a man-made waterway, or a naturally occurring channel that's previously been widened, deepened, or otherwise…
Does using a Texas-based stockbroker to trade for an out-of-state limited partnership create Texas franchise-tax nexus for the partnership's foreign corporate general partner?
No — so long as the broker does not represent the partnership in dealing with its customers. A foreign corporation was the general partner of a foreign limited partnership that does no business in…
Is an apartment complex's manager's office and lobby treated as residential property (with nontaxable repair labor) or commercial property, for sales tax purposes?
Apartment complexes are residential property, so labor charges for repairs or remodeling there are not taxable (though materials are still taxable). Residential property under Rule 3.357(a)(10)…
What did the Department provide in response to a request about the sales tax on equipment sales, repairs, and rentals?
This ruling is a transmittal letter. In response to a request about the sales tax treatment of equipment sales, repairs, and rentals, the Department enclosed the requested completed documents along…
Did the 1999 franchise-and-excise-tax changes apply to this limited partnership's tax years ending after June 30, 1999 or beginning after July 1, 1999?
They applied to tax years beginning on or after July 1, 1999. The special earlier rule for years ending on or after June 30, 1999 did not apply because no corporation still subject to Tennessee's…
My distributors told me nutritional supplements are no longer taxable in Texas — is that correct?
Yes. Effective April 1, 2000, sales of over-the-counter drugs and medicines are exempt from Texas sales tax. To qualify, a product must be a drug or medicine — an article or substance intended for…
A network marketing company sells a specific list of vitamin/mineral/supplement products with no NDC number, some marketed for athletes, seniors, or even pets. Are all of these exempt as over-the-counter drugs and medicines under the April 1, 2000 exemption?
Yes for the human products — none of them need an NDC number. To qualify, a product must be a "drug or medicine": an article or substance intended for use in the diagnosis, cure, mitigation,…
Who is responsible for collecting and remitting state and local sales tax when a direct sales/multi-level marketing company's independent distributors sell to end consumers, and how should local tax be tracked across Texas's different city/county/district/transit rates?
The direct sales organization itself — not its individual independent distributors — is responsible for collecting and remitting state and local sales/use tax on Texas sales made through its…
Which merger and ownership-interest steps required a deed and Florida documentary stamp tax?
A Florida corporation's direct merger into a foreign LLC required a deed and documentary stamp tax, regardless of foreign law. A Florida corporation's merger into a foreign corporation did not…
Are gun club membership fees taxable, and separately, is labor to repair appliances or real property taxable?
Gun club membership fees are taxable as an amusement service under Rule 3.298. Separately, labor to repair tangible personal property (like appliances) is taxable, but labor to repair real property…
What documents are covered by South Carolina's March 2000 advisory-opinion index?
It is a subject index of South Carolina advisory opinions and informational bulletins issued from 1987 through March 31, 2000, not substantive tax guidance.
What did South Carolina's March 2000 advisory-opinion citator cover?
It identified opinions believed affected by later advisory opinions through March 31, 2000, but did not account for changes from statutes, regulations, or court decisions.
Is fluoride toothpaste, and denture toothpaste/cleaners, exempt from Texas sales tax under the new over-the-counter drugs and medicines exemption?
Yes. Fluoride toothpaste is a medicated dental product and is exempt from Texas sales tax effective April 1, 2000, under the new over-the-counter drugs and medicines exemption. Denture toothpaste…
Should a city franchise fee be included in the Kansas sales tax base on a utility's customer billings?
Generally yes — the franchise fee is part of the sales tax base. The Department ruled that a city franchise fee a utility passes on to customers is normally included in the base on which Kansas…
How does Kansas sales tax apply to leasing propane tanks and equipment and to delivering oil and miscellaneous items?
Both are taxable. The Department ruled that renting or leasing propane tanks and equipment is taxable under K.S.A. 79-3603(h), so sales tax applies to the full amount of each lease payment the…
Is an optional warranty contract to repair a leaking roof taxable, and does it matter whether the roof is on a residential or nonresidential building?
It depends on the type of property. A warranty contract to repair nonresidential realty is taxable per Rule 3.357, though the warrantor may purchase items tax-free that will be incorporated into the…
I personally paid sales tax when I bought a business's inventory in a rush with my own personal funds, then transferred that inventory to a partnership I formed the next day to run the business. Since there was no real change in ownership, can I get that sales tax refunded even though the partnership (not me personally) has the sales tax permit?
No, not without your own permit first. Texas follows the separate legal entity theory — a partner and a partnership, though related, are separate legal entities in fact and in law, and that…
A billing-services firm processes and mails account statements using computers, laser printing, and manual folding/inserting/mailing steps — which of these steps count as taxable data processing (eligible for the 20% exemption), which count as nontaxable printing/mailing, and which are just taxable sales of tangible personal property?
It depends step-by-step on what's actually happening to the data and the physical materials. Manipulating data to produce statements/notices (computing, laser printing driven by data manipulation,…
Are natural gas sales involving a municipal energy cooperative subject to the section 186-a tax, and is a 501(c)(3) cooperative exempt from the section 186 franchise tax?
The gas sales are taxable, and 501(c)(3) status is no shield from section 186. Section 186-a taxes sales of gas for ultimate consumption, not sales for resale; on the facts, the supplier's natural…
Do membership fees and monthly dues at a chain of Bally Total Fitness/Bally Sports Clubs locations in New York City -- which aren't all identical -- owe New York's social/athletic club dues tax or New York City's separate gym/health-salon tax?
Generally no, but it's location-by-location. Membership fees and dues at these Bally-affiliated clubs are not taxable as social/athletic club dues under state law, because members have no ownership…
Were the city's park, beach, and convention-center concession rents exempt from sales tax?
Yes. Florida treated the beachfront park and maintained public beach as recreational facilities and the convention center as a listed facility. The total rents and license fees for the…
Were reusable mesh bags used to move textile work in process among the manufacturer's plants subject to South Carolina sales or use tax?
No. The mesh bags were used by a manufacturer to ship tangible personal property among its plants, so their sale or purchase was not subject to sales or use tax under the wholesale-sale rule.
Were ABC, LLC's purchases under its federal facility contract exempt as purchases by an alter ego of the federal government, and was a certificate required?
Yes. On the stated contract terms, ABC, LLC was the federal government's alter ego, so its purchases were exempt. A certificate was not mandatory, but without one suppliers remained liable if tax…
Were fees for producing original commercials, television programs, training videos, and other master videotapes subject to Tennessee sales tax?
No. Tennessee treated fees for producing original commercials, television programs, employee-training videos, and other master videotapes as nontaxable personal services. The producer still owed…
An accountant wants to offer telephone technical support answering bookkeeping 'how to' questions and software questions to clients — does that require charging Texas sales tax?
Technical support answering questions about accounting or bookkeeping procedures is not subject to Texas sales tax. But a charge for software technical support IS taxable specifically if the person…
Does the April 1, 2000 over-the-counter drugs and medicines exemption relieve a direct sales organization from collecting sales tax on vitamin, mineral, and dietary supplement sales?
Yes. Effective April 1, 2000, sales of over-the-counter drugs and medicines are exempt — a qualifying product must be a drug or medicine, meaning an article or substance intended for use in the…
Are offshore feeder (Spoke) funds doing business in New York merely by being partners in a New York-present master (Hub) fund that only trades securities or commodities for its own account?
No. Under the self-trading exemption in section 209.2-a, an offshore (alien) Spoke feeder fund is not deemed to be doing business, employing capital, or maintaining an office in New York merely…
Does weighing/scale equipment at a Texas food processing facility qualify for the manufacturing exemption, and does the answer change depending on where in the process the scale is used?
It depends on the scale's specific function. A scale used as part of the manufacturing line to ensure the correct weight of ingredients going into a formula qualifies for exemption. A scale used to…
When a company sells vacation packages bundling hotel rooms, meals, amusement services, and incentive certificates, which components does it collect sales tax on, and which does it just pay tax on itself as the purchaser?
The company must collect tax from the customer on any amusement services charge that's separately stated within the travel package (or where surrounding additional costs are inconsequential), per…
Which horse, farm-equipment, trailer, and pickup sales were tax-exempt at a Texas farm auction?
Horse sales were exempt unless part of an amusement service. Qualifying equipment had to be used exclusively for listed farm or ranch purposes, and trailers had to be designed and used primarily as…
A retailer sells its credit-card receivables to a financial institution but is contractually obligated to buy back (with recourse) any accounts that go uncollectible — can the retailer still claim a sales tax bad debt deduction on those charged-back accounts?
Yes. A retailer that assigns or factors its receivables to a third party (like a financial institution financing its credit card) may claim a bad debt deduction on accounts that get written off due…
Is the 'assets minus debts minus stated capital' formula used to compute earned surplus, and do already-paid expenses count as debts?
That formula computes surplus for the taxable-capital component, not earned surplus, and expenses already paid are generally not debts. A taxpayer completing the short (no tax due) form was unsure…
After retiring and moving out of Utah, will Utah still tax the monthly income from a university pension and a charitable remainder trust set up through the university?
Once you genuinely transfer your domicile out of Utah, federal law (Public Law 104-95) bars Utah from taxing distributions from a qualified pension plan or a qualifying charitable remainder trust,…
Were an interstate carrier's tractor-mounted satellite units subject to Florida sales or use tax?
The satellite units qualified as motor-vehicle parts eligible for the interstate-mileage proration. But these units were purchased, delivered, and installed outside Florida, so Florida imposed no…
For the Texas franchise tax, can a leveraged ESOP's unpaid-shares contra account be netted against surplus, and is an ESOP counted as one shareholder for the officer/director compensation add-back?
The unpaid-ESOP account nets against surplus only if it is a statutory debt, and an ESOP is one shareholder if the shares are held in its name. A corporation with a leveraged ESOP asked how to…
Does the Texas franchise tax allow the phased-in IRC Section 179 expense deduction in computing earned surplus, and which year's amount applies to a 2000 report?
Yes - Texas allows the IRC Section 179 phase-in for earned surplus, and the amount depends on the corporation's federal accounting period. Tax Code Sec. 171.001(b)(5) ties the Texas definition of…
Which equipment-lease and dealer-financing documents owed Florida documentary stamp tax?
The master equipment lease and incorporated schedule were taxable because they fixed a sum certain, but the assignment of lease payments was not. The wholesale and business financing agreements were…
Which hotel, catering, and floral cancellation charges were taxable?
It depended on what the payment secured. A deposit that only held a reservation until a time certain was not taxable, while a deposit guaranteeing the room for the stay was taxable. Room-block…
Was a Tennessee limited partnership doing business in Tennessee when an out-of-state broker held and managed its investment portfolio?
Yes. The partnership was doing business in Tennessee because it was organized in Tennessee, all partners were Tennessee domiciliaries, and it used the broker's monthly statements to conduct and…
New Mexico estimated a closed bar's unfiled gross receipts tax using its best months from years earlier. Could the buyer who paid that inflated bill get a refund?
Partially granted. When a bar failed to file returns, the Department issued a provisional (estimated) assessment based on its highest-earning months from 1989-1992 — but receipts had since fallen…
Does microwave equipment that relays a TV news truck's signal back to the television station qualify for the manufacturing exemption?
No. Microwave equipment used to relay a signal from a television news truck to the station does not qualify for exemption under either Tex. Tax Code § 151.318 or § 151.3185, whether the signal is…
After the Governor declared Tarrant County a disaster area, is labor to repair damaged property in the area exempt from Texas sales tax?
Yes. Once the Governor declares an area a disaster area, labor to restore real or tangible personal property damaged within that area by the condition that caused the disaster declaration is exempt…
The new OTC drugs and medicines exemption covers diabetic test strips — does it also cover the lancets used in diabetic monitoring machines?
No, not automatically. Lancets are not exempt as over-the-counter drugs or medicines on their own. They do qualify for exemption, however, if sold under a doctor's prescription.
Is a water-works corporation that is an instrumentality of a town water authority and a section 1411 not-for-profit local development corporation subject to New York franchise or utility taxes?
No. Country Knolls Water Works -- whose sole member is the Town of Clifton Park Water Authority (a public benefit corporation) and which was reincorporated in 1995 as a not-for-profit local…
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