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 a hospital's contribution of operating property to a new wholly owned subsidiary taxable when the subsidiary issued stock and assumed debt above 80% of value?
No. The transfer was an exempt isolated sale and capital contribution, even with the debt assumption, because it involved qualifying noninventory property and no motor vehicles.
Can sales tax, freight, and installation charges be included in the 'retail cost when new' used to value commercial and industrial personal property in Kansas?
Sales tax is never part of it, and separately stated freight and installation can be excluded. This 1997 Division of Property Valuation memo explains the Kansas Supreme Court's decision (Board of Coun…
Were city or county cable-franchise fees included in taxable gross proceeds when passed through to South Carolina cable customers?
Yes. RR 97-10 said a city or county cable-franchise fee calculated as a percentage of the cable system's gross receipts was included in taxable gross proceeds, whether the customer bill stated the fee…
Can a company avoid a New Mexico negligence penalty for claiming gross receipts deductions on the wrong non-taxable transaction certificates if it says it acted in good faith?
The protest was denied and the negligence penalty stood. Newman Outdoor Advertising — a North Dakota billboard company with offices in Roswell and Las Cruces — had claimed gross receipts tax deduction…
Does the NATO Status of Forces Agreement exempt foreign (e.g., UK) military personnel stationed in Texas from Texas sales tax on their personal purchases?
No. The Comptroller's legal staff reviewed Article X of the NATO Status of Forces Agreement (Treaty) and determined it does NOT exempt foreign military personnel covered by it -- including a UK citize…
Is a voice-activated environmental control system, prescribed by a doctor for a quadriplegic individual to independently operate a telephone, TV, lights, and electric hospital bed, exempt from Texas sales tax?
Yes. The Comptroller treated the voice-activated environmental control system -- which lets a quadriplegic individual with no use of his upper or lower extremities independently control his telephone,…
Is a legal-support business that obtains records from non-parties via subpoena and deposition-by-written-questions (issued through a notary public) exempt from Texas sales tax, and are its various fees and shipping charges taxable?
The entire service is exempt. Section 151.353 exempts court reporting services related to preparing a document/record in a civil or criminal suit by a notary public or licensed court reporter, as long…
Is the sale of flat-rate Internet access subscription services to New York customers subject to New York sales and use tax or the section 186-e telecommunications excise tax?
No. Under the Department's Internet policy effective February 1, 1997, Internet access charges are an unenumerated service that is not subject to New York State and local sales and use taxes (Articles…
Are a patent draftsman's formal drawings sold to patent attorneys subject to New York sales tax?
Yes -- Peter Cotsis's formal patent drawings, sold to patent attorneys for submission with patent applications, are tangible personal property subject to sales tax, because his drafting service isn't …
Is a special assessment that a country club charges members to build a safety tunnel subject to New York's club dues tax?
Yes -- even though the tunnel Mount Kisco Country Club built under a state highway is a genuine capital improvement built for members' safety, the special assessment the club charged members to fund i…
Which items a plumbing supplier sells to contractors working for tax-exempt organizations are exempt from New York sales tax as building materials, and which stay taxable as contractor supplies?
It splits item by item -- materials that physically become part of the exempt organization's building, like flux, solder, pipe joint compounds, Teflon tape, PVC cement and primer, oakum, and lead used…
Is custom bank-interface software still taxable as "prewritten" if the developer reuses some prewritten subroutines, like a standard print routine, inside an otherwise custom program?
It depends on how the prewritten pieces are used: if the developer's prewritten subroutines (like a standard print routine) are merely incidental to writing an otherwise custom, start-to-finish progra…
Does New York sales tax apply to a public relations firm's satellite media tour coordination fees, its purchases of studio time and crew, and its website maintenance service?
Mostly not taxable, but it splits by item: coordinating satellite media tours and speaking tours, consulting, scripting, and website maintenance are all nontaxable services, but studio and camera rent…
Are a Web design agency's web-site development, media placement/advertising, ad-network, and site-tracking consulting services subject to New York sales tax?
No -- an "Interactive Advertising Agency"'s from-scratch web-site development (design plus programming), traditional advertising and web-site-network media placement services (as long as no tangible p…
Are a business-cycle forecasting firm's monthly research publications exempt from New York sales tax as periodicals, and is its related consulting service taxable?
Yes -- the firm's two monthly newsletters qualify as exempt periodicals because they're published at regular intervals, don't amount to a book, are open to public subscription, and carry ongoing artic…
Is designing customized web pages and placing them on the Internet subject to New York sales tax?
No -- designing customized web pages and placing them on the Internet isn't one of New York's enumerated taxable services, so the charge is untaxed as long as no tangible personal property is sold alo…
Is a can/bottle recycler's pickup service taxable as real-property maintenance, and do its can-sorting machines and electrical transformer qualify for the production-equipment sales tax exemption?
All three ways: the recycler's container-pickup and recycling service isn't taxable real-property maintenance, its can-sorting machines qualify for the production-equipment exemption because they hand…
For an internet service provider selling email, web hosting, CGI access, secure server access, and disk space, which charges are taxable Texas data processing/telecommunications services, and is an out-of-state customer's billing address enough to avoid Texas tax?
It splits by service type. EMAIL is a telecommunications service, and telecommunications services that originate outside Texas are not subject to Texas sales tax. WEB HOSTING, CGI access, secure serve…
Could reinstated or related nonprofit organizations immediately qualify for separate South Carolina bingo licenses under RR 97-9?
Not automatically. A reinstated organization's South Carolina domicile could remain uninterrupted, but it still had to be active and operated for qualifying nonprofit purposes for the three years imme…
Did RR 97-7 require a South Carolina resident partner to report personal-service income earned by the partnership in other states?
Yes. A South Carolina resident partner had to report the full distributive share of personal-service income from all states, not only the South Carolina-apportioned amount, with a credit for qualifyin…
Under the superseded RR 97-6, what material-handling equipment and investments qualified for South Carolina's sales-tax exemption?
The exemption covered systems, equipment, racks, and repair parts used in distribution or manufacturing facilities when the taxpayer gave advance notice and invested at least $35 million in South Caro…
A 1997 law change removed the private-investigator license requirement for obtaining public records as of September 1, 1997 -- does that also make a pre-employment background screening service tax-exempt after that date?
No. The 75th Legislature's amendment to the Private Investigators and Private Securities Agency Act (Article 4413(29bb), § 3(a)) removed the licensing requirement for obtaining information classified …
A mobile MRI provider believed its own arrangement with medical providers was a taxable equipment lease/rental -- but is furnishing a mobile MRI unit with a technician and full operational support actually a taxable lease, or a nontaxable medical service?
Contrary to what the company itself argued, this is a NONTAXABLE medical service, not a taxable equipment lease/rental. Rule 3.294(c)(2) presumes that furnishing tangible personal property WITH an ope…
When a seismic-data library company sells exempt geophysical information but separately bills for copying it onto tapes, the tapes themselves, and shipping, are those add-on charges also covered by the geophysical-services tax exemption?
Yes for the customer's price, but the provider still pays tax on its own supplies. The sale of nontaxable geophysical/seismic data under Rule 3.342(d)(2) includes the tapes in its sales price, so the …
Does a motel's hotel occupancy tax reporting (showing how many room-nights were long-term stays) have to match, or can it be used to second-guess, the motel's separate claim that over 50% of its gas/electricity usage is residential for sales tax exemption purposes?
No, the two don't have to match, because they're governed by different statutes measuring different things. Under Tex. Tax Code § 151.054(c), a utility seller is relieved of tax liability if it accept…
Can a customer who rents an aircraft in Texas and flies it out of state sign a Texas Aircraft Exemption Certificate, Out-Of-State Registration and Use, to avoid paying sales tax on the rental?
No. Tax Code § 151.328(a)(4) exempts aircraft SOLD for use and registration in another state or nation, before any use in Texas beyond flight training and transporting the aircraft out of state -- but…
If a college professor accepts a 'buyout' paying 50% of salary for three years, and separately draws periodic payments from his TIAA defined-contribution pension plan, do either of those payments qualify for New York's $20,000 pension and annuity income exclusion once he turns 59 1/2?
No for the buyout, yes (conditionally) for the TIAA pension. The buyout payments are wage/severance compensation reported on the professor's W-2, so they do not qualify for the Tax Law § 612(c)(3-a) e…
When a homeowner buys a pest/termite warranty from a warranty company, and later pays a trade fee (deductible) directly to the pest control company doing the actual work, who owes sales tax on what -- the initial warranty fee, the deductible, and the warranty company's pass-through payment to the pest control company?
It splits by who pays whom. The pest control company may accept a resale certificate from the warranty company instead of collecting tax on services it bills to the warranty company (since the warrant…
Is labor to mow, weed, edge, and trim cemetery grounds taxed the same way as ordinary residential/commercial lawn care in Texas?
No -- cemetery grounds maintenance labor is treated differently from ordinary lawn care. Building and grounds keeping, landscaping, and lawn maintenance services are generally taxable real property se…
Is a newly formed LLC that buys the assets of a former Article 9-A taxpayer a new business eligible for the refundable economic development zone investment tax credit?
Yes, on the assumed facts. An LLC treated as a corporation federally is a corporation for New York and is a new business under Tax Law section 210.12(j) -- and so eligible for the refundable economic …
Is advertising space sold in a monthly community newsletter subject to Utah sales tax?
No. Advertising space sold in the newsletter is not subject to Utah sales tax. Utah Admin. Rule R865-19S-65(C) exempts advertising space sold in newspapers, magazines, or otherwise. A monthly communit…
Can a New Mexico worker leave their wages off their state income tax return and claim a refund on the theory that wages are not taxable income?
The refund was denied. Anthony Cordova, an Intel Corporation employee who belonged to a 'law study group' that believed wages are not taxable, left his $42,144 of 1995 Intel wages off his New Mexico r…
Is installing a permanent, built-into-the-eaves insecticide spray system in a home a taxable real property service, and is the concentrate insecticide refill taxable too?
Both the installation and the insecticide refills are taxable, though the installation's tax treatment depends on which framework applies. If installing the permanently-mounted insecticide spray unit …
In a janitorial cost-plus contract where the vendor buys and amortizes cleaning equipment over three years but the equipment stays at the customer's site under the customer's access and risk of loss, should the vendor pay tax on the equipment itself, or collect tax on the amortized charge to the customer?
The vendor should collect tax on its total charge (including the separately stated amortized equipment cost) to the customer, rather than paying tax itself when purchasing the equipment -- because und…
Was an annual HVAC technical-support agreement, including customized software services, taxable as a Florida service warranty?
No. HVAC maintenance covered equipment that had become real property, and service on customized software was also outside the warranty tax. Separately sold parts and unmodified software updates remain…
Did a staffing company provide taxable nonresidential cleaning services when temporary employees performed cleaning under the customer's direction?
No, when the customer directed genuine temporary employees and the employment-tax indicia were present. The staffing company became a taxable cleaner if it supplied supervision, know-how, or cleaning …
Did a timeshare receivables loan qualify for Florida's wholesale warehouse mortgage exemption, avoiding added tax on collateral assignments?
Yes. Recorded assignments of already-taxed consumer notes and mortgages incurred no added stamp or nonrecurring intangible tax, and the out-of-state receivables note and advances were also untaxed.
Were a motor-vehicle floorplan security agreement and vehicle advices subject to Florida documentary stamp tax when no document promised a sum certain?
No, if the agreement was not filed or recorded. Neither the agreement nor the advices promised a sum certain, and they did not expressly incorporate one another, so they were untaxed separately and to…
Were braille scanners, screen-reading software, video magnifiers, and similar devices for blind users exempt from Florida sales tax as prosthetic appliances?
No general prosthetic exemption applied. Retail sales were taxable unless made under a qualifying prescription; dealers needed resale certificates, and government or nonprofit buyers needed exemption …
Can Utah's rental car tax be challenged as unconstitutional before the Tax Commission, and does an airport concession fee reduce the taxable rental price?
The Tax Commission won't declare Utah's new 2.5% rental car tax unconstitutional — it has no authority to invalidate a legislative enactment, which is presumed constitutional until a court says otherw…
Did a Section 332 liquidation create former Texas earned surplus or receipts for the parent or subsidiary?
No. Based on the Comptroller's understanding of Sections 332 and 337(a), the parent excluded the deferred gain from former earned surplus and receipts because it was not federal taxable income or fede…
Could a Texas corporation transfer vehicles tax-free to a newly formed LLC for only a membership interest?
Yes, if ownership did not change, the LLC continued the same business, and the corporation received only a membership interest. Sales and gift tax did not apply. Debt forgiveness, debt assumption, or …
After Texas's scrap tire recycling program was set to expire, an industry association planned to keep charging the same amount but rename it a 'disposal fee' -- would that renamed fee still be taxable as part of the price of a tire?
Yes, the renamed 'disposal fee' is still taxable as part of the sales price of the tire. Tax Code § 151.007(a)(2) defines the sales price of a taxable item as the total amount the item is sold for, wi…
Did a Texas lessee owe tax again when buying a vehicle from the lessor at the end of an operating lease?
Yes. The lessor's original purchase was the first taxable transaction, even if the lessee paid that tax for the lessor. The lessee's later operating-lease buyout was a second taxable sale, and tax app…
Could a Florida nonprofit directly buy building materials tax-free for contractor-built low-cost farmworker housing?
Yes. The nonprofit could buy project materials tax-free when it issued its own purchase orders and exemption certificates, was billed and paid vendors directly, took title at job-site delivery, and bo…
A semiconductor fabrication EQUIPMENT manufacturer uses various gases to test and clean its machines in a cleanroom, then packages the finished machines for shipping -- are the test/clean gases exempt, does the packaging materials exemption apply, and does the broader cleanroom exemption for semiconductor manufacturing cover this manufacturer's own cleanroom?
It splits by step. The gases used in steps 1 through 5 (vacuum leak testing, flow regulation testing, characterization testing, marathon reliability testing, and purge cleaning) -- all performed BEFOR…
Was a fee for electronically transmitted cable-subscriber lead information subject to Florida sales tax?
No, because the cable operator received no tangible personal property. The lead company owed tax on free brochures it bought, and a commercial fax service's printed copy charge was taxable.
When a hotel leases both the building and its furniture from its landlord, is the portion of the rent allocated to the furniture subject to New York sales tax?
Yes -- when a hotel leases a building together with beds, dressers, tables, and chairs, the portion of the lease payments reasonably allocable to that furniture is subject to New York sales and use ta…
Does a two-step corporate restructuring -- merging one subsidiary into another, then merging the survivor into a newly created holding company -- reduce or eliminate the group's Connecticut corporation business tax operating loss carry-overs?
No -- the loss carry-overs survive. Neither step of the planned restructuring reduces or eliminates the group's Connecticut corporation business tax operating loss carry-overs under Conn. Gen. Stat. §…
When a Connecticut state bank converts to a national bank, does the conversion reduce or eliminate its corporation business tax operating loss carry-overs?
No -- the loss carry-overs survive. When a Connecticut state bank converts to a national bank (a change represented to qualify as a type F tax-free reorganization), its corporation business tax operat…
Does a 10-year motorhome timeshare, where each customer gets 6 days of vehicle use per year, qualify for the 30-day exception to Utah's Tourism Tax and Motor Vehicle Rental Tax?
No, the 30-day exception doesn't apply -- both taxes are owed. Even though a motorhome timeshare customer signs a single 10-year contract committing to 60 total days of vehicle use (6 days per year fo…
Is a Pueblo member's business exempt from New Mexico gross receipts tax when it operates from tribal trust land that a federal law says is NOT 'Indian country'?
The refund was denied. Val Tech & Associates — a private-investigation business owned by a Laguna Pueblo member, working from an office at the Indian Pueblo Cultural Center in Albuquerque — could not …
Is the fee a wood-products manufacturer charges a land-clearing contractor to remove and process cleared trees/wood taxable, and does it matter whether the land is for new residential construction or where the wood is actually processed?
Generally taxable, with a residential-construction exception. The fee a wood-products manufacturer bills a land-clearing contractor to remove trees/wood materials is taxable as a real property service…
How did a parent LLC account for an investment in a subsidiary LLC under the former Texas franchise tax?
Texas treated an LLC as a corporation for the former franchise tax. A parent LLC used the cost method for its subsidiary investment under the taxable-capital component. For earned surplus, it excluded…
Does a commissioned salesperson owe New Mexico gross receipts tax on their commissions, even though the company already pays gross receipts tax on the product sold?
The protest was denied. An independent-contractor salesman who sold adjustable beds for Craft-Matic Pacific owed gross receipts tax on the commissions he earned — even though the company itself charge…
Is an independent insurance/risk-management consultant -- who reviews clients' insurance policies for coverage adequacy and risk retention -- required to hold a sales tax permit and charge sales tax, even though the consultant doesn't think this work fits within the tax code?
Yes -- services provided by risk managers are taxable, and risk managers must apply for a sales tax permit and collect sales tax on their service charges. The taxpayer, newly self-employed reviewing c…
How did Florida treat an electric utility's planned lease assignment, head lease, intermediate lease, and sublease of plant equipment?
The assignment was untaxed; the head and intermediate leases could be for resale with certificates; and the final utility sublease was exempt only for equipment meeting the electricity-production crit…
Did a nonprofit religious group's sales and lump-sum spiritual-retreat fees qualify for Florida sales-tax exemptions?
Yes. The group qualified as a church, its tangible-property sales and qualifying admissions were exempt, and a single retreat fee was not lodging rent when the price stayed the same without accommodat…
What rights do taxpayers have during a Kansas tax audit under the 1997 Tax Equity and Fairness Act?
Effective July 1, 1997, this directive from the Secretary of Revenue tells all Department auditors to give taxpayers three protections required by the Kansas Tax Equity and Fairness Act of 1997 (H.B. …
If you keep using old resale certificates and can't prove you paid another state's tax on out-of-state equipment, will New Mexico deny the deductions and charge use tax plus a penalty?
The protest was mostly denied. A Deming tortilla and tamale maker lost its gross receipts tax deductions on wholesale sales because it kept honoring outdated resale certificates instead of getting the…
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