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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If a New York resident owns a Delaware LLC that only trades securities for its own account, and the LLC's other member is a trust with an out-of-state trustee, does New York tax the LLC or the trust?
Neither the LLC nor Petitioner (its NY-resident managing member) is 'carrying on a business' in New York, because trading and managing assets solely for one's own account under Tax Law § 631 doesn't…
When two construction companies form a joint venture and each contributes equipment plus an operator under a subcontract arrangement, is that a taxable equipment rental to the joint venture, or a non-taxable service, and how does 'dominion and control' over the equipment decide which?
It depends on who actually keeps control of the equipment. A joint venture is treated as a separate entity from its corporate partners for sales tax purposes, so a partner furnishing equipment and…
Is a monthly real-estate magazine that's almost entirely advertising and property listings, with only a handful of short articles, an exempt 'periodical' under New York's sales tax law?
No. Even though 'Showcase of Homes' is published monthly and contains a few short articles by different authors, the Department found it doesn't qualify as an exempt periodical because it's devoted…
Does a building-cleaning company have to pay sales tax on the paper towels, garbage bags, rock salt, and cleaning agents it buys to perform its cleaning services, even though it separately bills customers for supplies?
It depends on what happens to the item. Supplies a cleaning company uses up performing its own service -- like garbage bags, rock salt, and general cleaning agents -- are taxable purchases, even if…
Is a fuel surcharge added to a customer's bill subject to Kansas sales tax?
Yes. The Department ruled that a retailer should collect and remit Kansas sales tax on the total invoice amount, which includes fuel surcharges. A fuel surcharge is part of the 'selling price' /…
A company sold half its employees to a new, commonly-owned company and now leases those employees back at cost plus a markup — is that lease of employees exempt from sales tax as staff leasing?
This arrangement appears to qualify as exempt staff leasing under Rule 3.364, but only if the leasing company meets the legitimate staff-leasing-company requirements in Rule 3.364(a)(5), and the…
A contractor doing improvement-to-realty work for a tax-exempt entity (an airport) rents equipment for the job — is that equipment rental taxable, even though the airport's own purchases would be exempt?
Yes, equipment rented or leased by the contractor for use in performing the contract is taxable — the exempt-purchaser status of the airport doesn't flow through to the contractor's own equipment…
A Laredo communications center lets customers make collect long-distance calls and also buys items online on customers' behalf for in-store pickup — how is each service taxed, and do local taxes apply the same way to intrastate versus interstate/international calls?
Charges to customers for using a phone to make collect long-distance calls are taxable telecommunications services either way, but the tax rate depends on the call type. Intrastate collect calls…
Some insurance companies (especially out-of-state ones) refuse to pay Texas sales tax on medical case management services performed for a Texas resident — is that tax actually owed, and who's on the hook if it isn't collected?
Case management services are taxable as insurance claims adjusting/claims processing services under Tex. Tax Code §§ 151.0039 and 151.0101(a)(9) and 34 Tex. Admin. Code Rule 3.355(a)(5) and (b).…
Is sales tax due on a mail-in rebate a retailer pays through a third-party clearinghouse, even though the rebate coupon says 'sales tax is not refundable'? And does a manufacturer's rebate tied to a specific retailer's receipt work the same way?
For the retailer-funded rebate: no additional tax analysis needed to exclude it — a cash discount rebated to the customer after the sale by the retailer is excludable from the tax base, even when a…
Who qualified for the temporary South Carolina college-tuition income-tax credit guidance, and how much was the credit?
An eligible student meeting detailed historical conditions could generate a refundable credit of 25% of qualifying tuition, with different caps for two- and four-year schools.
A company operates private phone systems in office buildings and hotels, buying telecom service wholesale and reselling it to tenants/guests -- plus charging separately for wiring, phone jacks, moving/installing phones, and equipment maintenance. Which of these charges are taxable, which can be bought tax-free for resale, and does bundling vs itemizing change anything?
A multi-part breakdown for a private telephone system operator reselling telecom service to tenants/guests. The operator must collect sales tax on its ENTIRE charge to tenants/guests for…
Did South Carolina's historical $300 maximum tax apply to all-terrain vehicles and legend race cars?
No. Because the described ATVs and legend race cars could not be licensed for South Carolina highway use, the bulletin did not treat them as qualifying motor or recreational vehicles.
When did a factory-built home on a permanent chassis count as a manufactured home or modular home for sales tax?
Classification depended on dwelling design and size; if a home met both historical definitions, the bulletin treated it as a manufactured home for sales-and-use-tax purposes.
Can another state independently audit a Utah-based trucking fleet's trailer mileage under the International Registration Plan, and can Utah force that fleet to register its trailers separately from its power units?
Yes to the audit question: another IRP member jurisdiction can independently audit a Utah-based registrant's mileage and fees for that jurisdiction, even without a joint-audit agreement with Utah,…
When a nail technician sells a customer three custom-molded sets of fingernails and applies one set as part of the visit, is that a taxable sale of nails or a nontaxable personal service, and does the wholesale manufacturer owe tax on its sale to the technician?
The nail technician's sale to the customer is a taxable sale of tangible personal property (the nails), not a nontaxable service -- so the technician must collect and remit sales tax on the FULL…
Were fees for memberships in a third-party discount buying service subject to Utah sales tax when the product-and-service retailer received part of each membership fee?
Yes, when the discounted goods or services were taxable. The Commission treated the retailer's share of each membership fee as part of the purchase price for the discounted products or services. It…
Does Kansas publish a list of businesses that are exempt from sales tax?
There is no such list — Kansas does not publish one. The Department advised that, unlike many other states, Kansas 'does not publish a list of businesses that are allowed to claim resale exemption'…
Are sales, parts, and repair services for fire extinguishers provided to Kansas churches taxable?
They are exempt. The Department ruled that sales to Kansas churches for use in places like their sanctuaries and administrative facilities are exempt from sales tax — and this covers the fire…
Is a foreign parent's election to become a financial holding company under Gramm-Leach-Bliley a registration under the Bank Holding Company Act for section 1452(a)(9)?
No. A foreign parent corporation that owns a foreign bank and elects to be treated as a 'financial holding company' under the Gramm-Leach-Bliley Act has not thereby 'registered under the federal…
Can a multi-state corporate group get Utah to use a different apportionment formula instead of the standard three-factor UDITPA formula when it distorts the group's Utah income?
Partially granted. The Commission refused to let the group use separate accounting, but agreed to modify the standard three-factor UDITPA apportionment formula so that securities held in inventory…
Are concrete cutting and coring labor services on sidewalks, steps, and walls subject to Kansas sales tax?
Yes, generally taxable. The Department ruled that concrete cutting and coring labor services are subject to Kansas sales tax under K.S.A. 79-3603(q), because concrete is tangible personal property…
Is a regional education service center exempt from Texas sales and use tax the same way a school district is, and does that exemption extend to the center's employees?
Yes for the center itself, no for its employees. Regional education service centers — and all other regional education service centers statewide — are exempt from paying Texas sales and use taxes,…
Is a nonprofit senior center exempt from Kansas sales tax, and does it have to collect tax on its fundraising sales?
Not exempt. The Department ruled that a nonprofit senior center does not enjoy an exemption from Kansas sales tax — not every nonprofit does. An exemption for senior centers would require a change…
Which tire-disposal and recycling charges were included in a retailer's taxable gross receipts?
The statutory purchaser fee was not taxable; mandatory retailer charges above it were taxable, while truly optional disposal-only charges were not.
Was an over-the-counter drug or medicine exempt from Texas sales tax in 2000 just because it had an NDC (National Drug Code) number, even if the number didn't appear on the label?
As of this March 2000 email response, yes — an OTC drug or medicine with an NDC number was exempt from Texas sales tax even if the number wasn't printed on the label. STAR has since attached a…
A New Mexico resident cashed out 'phantom stock' he had earned over years of work in Illinois. Could he allocate most of that payment away from New Mexico?
Denied. Because the couple were full-year New Mexico residents in the year the phantom-stock payment came in, they had to allocate the entire payment to New Mexico. The payout was deferred…
Were repairs to the scrap-metal company's shredding and sorting equipment exempt?
No. Although the company used industrial machinery to shred and sort scrap metal, its full operation was classified under wholesale-trade SIC code 5093, which was not one of the codes eligible for…
A contractor bought materials for a New Mexico State Library project and was reimbursed. Did the reimbursements owe gross receipts tax, or were they tax-free agency pass-throughs?
Denied. Reimbursements for expenses are taxable gross receipts unless the person spent the money as a disclosed agent — and agency requires the power to bind the principal so the vendor could…
Did Walton County's surtax apply to furniture later shipped to a buyer in a nonsurtax county?
Yes. All four items were subject to Walton County's 1% discretionary sales surtax because title and possession passed to the buyer at the Walton County store. The buyer, not the retailer, hired and…
When was Florida sales tax due on a health-studio membership paid in monthly installments?
The full tax was due when the membership agreement was entered into, not as each monthly payment was received. The one-to-three-year agreement obligated the member for the full price and functioned…
Is cable television installation subject to Kansas sales tax when done at a residence versus at a commercial building?
It depends on the location. The Department ruled that cable television installation performed at a residence is exempt from Kansas sales tax under the 1998 residential-services exemption (K.S.A.…
What South Carolina interest rate applied to tax underpayments and overpayments from April through June 2000?
The rate was 9% for April 1 through June 30, 2000, compounded daily except that simple interest applied to underpaid declarations of estimated tax.
Could a corporation use the remainder of a 1996 Texas franchise-tax business loss on its 2000 final report after using part on its 2000 annual report?
Yes. Section 171.110(d) allowed a business loss to offset net taxable earned surplus for up to five taxable years after the loss year. On the facts presented, a loss created on the corporation's…
Did amendments to a real-property financing arrangement turn the parties' stated lease into a taxable lease?
No. Considering all agreements together, Florida continued to treat the arrangement as mortgage financing rather than a real-property lease. The increased borrowing, added property, loan…
Was Florida documentary stamp tax due when a foreign corporation's Florida real estate passed to a foreign partnership by statutory merger?
No, on the stated facts. Delaware law vested the corporation's Florida real estate in the surviving limited partnership by operation of law, and no deed or other conveyance instrument would be…
Are subscriber access fees and advertising space on an online 'electronic bulletin board' subject to Kansas sales tax?
No, those fees are not taxable. The Department ruled that fees subscribers pay to access a nationwide 'electronic bulletin board' — an online data bank of information, articles, and advertising,…
Were promissory notes and mortgages involving Agricultural Credit Associations exempt from Florida documentary stamp tax?
Yes, for the described Agricultural Credit Associations. Florida's rule treated mortgages and notes between nonexempt parties and specified federal agencies or instrumentalities, including…
When a company charges donors a separate fee to notify a recipient (by letter or by e-mail) that a charitable gift was made in their name, is that notification fee taxable in Texas?
It depends on how the notification is sent. A separately stated charge to notify the recipient by e-mail is a taxable telecommunications service under Rule 3.344. A separately stated charge to send…
When did a strategic-investment-area project qualify for Texas's former capital investment credit, and could pre-2000 costs enter the credit calculation?
Property first placed in service in a strategic investment area on or after January 1, 2000 could qualify, and eligible expenditures incurred before that date could be included in the credit…
Could a Florida county buy materials for airport-terminal renovations tax exempt while its contractor handled requisitions and delivery?
Yes, if the county was the purchaser in substance: it had to use its own purchase orders and exemption number, receive direct invoices, pay vendors directly, take title and liability at delivery,…
Could a Florida county buy airport-construction materials tax exempt while its contractor handled requisitions and delivery?
Yes, for purchases made under the described amendment on or after December 7, 1999, if the county—not the contractor—used its purchase orders, gave vendors its exemption certificate, took title and…
A plumbing subcontractor overpaid gross receipts tax for 1993-1994 and its accountant never filed the refund claim. Could New Mexico still refund the money years later?
Denied. A gross receipts tax refund claim must be filed within three years of the end of the year the tax was originally due (Section 7-1-26). The plumber's 1993-1994 overpayments became time-barred…
Is a golf course's 'trail fee' — charged to a member who brings and uses his own golf cart on the club's cart paths — subject to Texas sales tax?
Yes. A country club's trail fee, charged to a golfer for using his own privately owned cart on the club's cart paths, is taxable as a sale of an amusement service under Rule 3.298(b).
Did a Texas pharmacy need a doctor's prescription on file to sell diabetic test strips and lancets tax-free, and did that change in 2000?
As of this March 2000 letter, yes — diabetic test strips and lancets were exempt therapeutic devices only when sold to an individual with a licensed practitioner's prescription on file; without one,…
How do Kansas religious organizations claim the sales tax exemption on their purchases and construction projects?
This notice explains the K.S.A. 79-3606(aaa) sales tax exemption for religious organizations, combining the 1998 direct-purchase exemption and the 1999 project-exemption and refund provisions (and…
Was a hotel reservation service's per-night voucher fee separately taxable from the room rental?
No tax was due when the service sold the voucher because the guest obtained no room-occupancy right until presenting it to the hotel. The voucher fee nevertheless formed part of the hotel's gross…
Who owed Florida transient-rental tax on a hotel voucher deposit retained by a reservation service?
The reservation service did not collect tax when it sold the voucher because the guest gained no right to occupy a room until presenting it to the hotel. But the deposit was part of the hotel's…
A dairy-cow hoof trimmer thought his work was a tax-exempt livestock service. Were his receipts exempt from New Mexico gross receipts tax, and did a Department employee's advice protect him?
Denied. Hoof-trimming receipts are taxable. The livestock-selling exemption (Section 7-9-18) covers selling animals and products, not services, and the trimmer sold neither. The exemption for…
Must a voluntarily dissolved corporation that merely holds record title to real property file Article 9-A franchise tax returns?
No. A voluntarily dissolved corporation that is merely the record title holder of real property, and is otherwise inactive, is not doing business in New York under section 209.3, and is not subject…
In a PSC-driven utility restructuring, are spin-off transfers subject to the real estate transfer tax, and do they generate section 186 gross earnings, 186-a gross income, or excess dividends?
A spin-off that is a mere change of identity with no change in beneficial ownership is exempt from the real estate transfer tax under section 1405(b)(6); a spin-off that does change beneficial…
If a commercial lender that finances a retailer's inventory later seizes a blocked lockbox bank account that happens to contain sales tax the retailer collected from customers, does the lender become liable to New York for that sales tax money?
Yes. Even though a commercial finance company isn't a 'vendor' with its own duty to collect sales tax, once it takes control of a bank account it knows contains sales tax collected by the retailer…
Are the single-use 'fistula needles' used to connect a hemodialysis patient's blood vessels to the dialysis machine exempt prosthetic aids, or taxable medical supplies?
Exempt. Fistula needles -- the two short, sharp, single-use needles connected to tubing that link a hemodialysis patient's surgically created arteriovenous fistula to the dialysis machine -- qualify…
Does a defense contractor owe sales tax on the materials and services it buys to maintain and caretake Navy-owned facilities under a cost-reimbursement government contract?
Yes, generally. Even though the contractor performs caretaker maintenance under contracts with the Navy (a tax-exempt federal agency) and gets reimbursed for its costs, the contractor -- not the…
If a New York municipal bond mutual fund invests its short-term cash in a money-market mutual fund that also pays exempt-interest dividends, do those dividends stay exempt from New York State and City income tax as they pass from the money-market fund up to the bond fund and then out to the bond fund's own shareholders?
Yes. As long as each fund in the chain (the money-market "lower-tier fund" and the municipal bond "upper-tier fund") independently qualifies under IRC § 852(b)(5) to pay exempt-interest dividends,…
For a DSL Internet provider, which billing components are taxable in Kansas — Internet access, installation labor, or leased customer equipment?
It splits by component. The Department ruled that Internet access charges are not subject to Kansas sales tax (never enumerated as taxable, and protected by federal law), but the underlying…
What property could reduce the Texas sales-tax base or motor vehicle tax base as a trade-in?
A dealer could allow a trade-in credit for a motor vehicle or customer-dismantled vehicle parts against a sale of tangible personal property. But when the dealer sold a motor vehicle, only another…
When a Texas-permitted seller (Company A) drop-ships an item to a Texas customer (Company C) on behalf of a reseller (Company B), who is responsible for collecting the Texas use tax?
Texas use tax is owed on the sale, but the drop-shipping seller (Company A) doesn't have to collect it as long as it gets a properly completed Texas resale certificate from the reseller (Company B).…
Is a security guard service — hiring a guard from a security company to walk a business's premises at night — subject to Texas sales tax?
Yes. Charges for providing security services to property or persons located in Texas are subject to Texas sales tax, so the security company was correct to charge sales tax on its hourly…
When the Port Authority charged an airline its pro-rata share of common-area guard services and a federally mandated armed 'Boarding Security Program' at JFK Airport's international terminal, were those charges subject to sales tax?
No, on both counts, but for different reasons. The airline's pro-rata share of the Port Authority's common-area guard service charges is treated as 'additional rent' under the lease rather than a…
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