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 club requires patrons to buy a "dance token" before an independent-contractor dancer will perform a table/couch dance, is the sale of that token a taxable admission to an amusement service -- even though the dancers are independent contractors and the club already collects tax on a separate cover charge?
Yes. A club that requires patrons to purchase a "dance token" -- then exchange it with an independent-contractor dancer for a table dance or couch dance -- is selling a taxable admission to an amuseme…
When a manufacturing plant's waste haul-off is 95% or more industrial solid waste (nontaxable) mixed with a small amount of taxable garbage like office trash, does the Comptroller's "five percent rule" exempt the whole haul-off charge from sales tax?
No. The five percent rule does NOT exempt the whole charge just because 95% or more of a manufacturing plant's hauled-off waste is industrial solid waste. Rule 3.356(a)(3)(E) excludes industrial solid…
Was an extended warranty or service contract taxable when sold for a motorcycle, dirt bike, or ATV?
It depended on the vehicle. A service contract for a highway motorcycle was not taxable because motor vehicle repair labor was not taxed. A contract for a dirt bike, ATV, or other non-highway vehicle …
Did the original TAA impose documentary stamp tax when a credit union's standing credit agreement and later advance request together created an open-end loan?
The original ruling said yes. The standing credit agreement contained the repayment promise, while each signed advance request supplied the approved sum certain. Construed together, the two unrecorded…
Is an employer's reimbursement of my moving expenses taxable New Mexico income, and can the state charge interest even though it missed my error for years?
The protest was denied. When David Hawkinson moved from Tennessee to New Mexico for a job, his employer reimbursed $23,628 of moving expenses and reported it as compensation on his W-2. He left it off…
Was a separately stated scheduled-maintenance contract included in the Texas motor vehicle tax base?
No. The separately stated scheduled-maintenance contract was not part of the vehicle's taxable sale price and was not subject to motor vehicle tax. Repair and replacement parts used under the contract…
Is a third-party service that uses Interactive Voice Recognition (IVR) technology to independently verify a consumer's phone-service-switch instructions -- billed to the telemarketing company, not the consumer -- a taxable data processing service?
Yes. A company's independent, IVR-based verification service -- confirming a consumer's instruction to switch long-distance telephone carriers after a telemarketing call, matching the phone number and…
Did recording a corrective leasehold mortgage and future amended renewal mortgages trigger additional Florida documentary stamp tax?
No. The corrective and future amended renewal mortgages qualified as exempt renewals because the original documentary stamp tax had been paid, the same obligor executed them, and they only continued t…
Did recording a corrective leasehold mortgage and future amended renewal mortgages trigger additional Florida documentary stamp tax?
No. The corrective and future amended renewal mortgages qualified as exempt renewals because the original documentary stamp tax had been paid, the same obligor executed them, and they only continued t…
If a company performs auto damage appraisal (insurance) services for a self-insured client, are those services taxable, and does the client need to provide anything to document the exemption?
The client (referred to as CORPORATION X) was correct: auto damage appraisal services performed on behalf of a self-insured entity are NOT taxable. Rule 3.355(b) taxes insurance services performed for…
Was Sallie Mae exempt from Texas motor vehicle sales and use tax on a vehicle purchase in 1997?
Yes. The Comptroller said the federal exemption in 20 U.S.C.A. § 1087-2 exempted the Student Loan Marketing Association from Texas motor vehicle sales and use tax, so its Texas vehicle purchase was ex…
Under the superseded RR 97-3, how were hotel room charges, mandatory fees, optional guest services, and tourist packages taxed?
Room charges and mandatory customary services generally used the ruling's 7% accommodations rate. Optional services often used a 5% guest-charge rate or another tax rule. RR 98-21 expressly superseded…
Did using independent contractors for computer programming in Texas create franchise-tax nexus for an out-of-state corporation?
Yes. The corporation employed its own programmers outside Texas but used independent contractors to perform programming services in Texas. Those in-state services subjected it to both former franchise…
How did the former Texas franchise tax define taxable capital and surplus?
Taxable capital was the corporation's stated capital plus surplus. Section 171.109(a)(1) defined surplus as net assets minus stated capital and said it included unrealized, estimated, or contingent lo…
If a family moves their domicile out of New York mid-year and empties out their only New York home, are they still taxed as full-year statutory residents just because they spent more than 183 days in New York that year?
No. Even though they spent more than 183 days in New York during 1996, the Kukulkas moved all their household furnishings, clothing, and personal effects out of their New York home by August 17, 1996 …
I had (or later got) nontaxable transaction certificates for my construction jobs, but didn't show them until after the audit — can I still keep the deductions?
No. To keep a New Mexico gross receipts tax deduction that needs a nontaxable transaction certificate (NTTC), you must both hold a valid NTTC at the required time and prove you held it within 60 days …
Is a $30 donation to a school booster club, given in exchange for having a name stamped on a commemorative brick placed at the school, subject to Texas sales tax?
No. A $30 donation to a high school fine arts booster club, given in exchange for having a brick stamped with the name of a student, alumnus, or other requested name and placed at the school, is not s…
When a strip-mining company is legally required to reclaim mined land by planting it with grass for future livestock grazing, does the grass seed -- and the fertilizer and heavy equipment used in reclamation -- qualify for the Texas agricultural exemption?
Partly. Grass seed used to revegetate strip-mined land as part of the legally required reclamation process DOES qualify for the agricultural exemption under Tax Code § 151.316, which exempts seeds and…
Which parts of a print-and-mail company's letter-printing and mailing service are taxable printing versus exempt mailing, and does the tax rate depend on where the letters are mailed to?
A company that prints and mails specialized notices and letters must charge sales tax on its printing of letters, envelopes and address labels (taxable under the printing/imprinting rules), but not on…
How does New York sales tax apply to the many different services and equipment rentals an executive office suite provider bills to its tenants -- phone answering, copying, word processing, mail handling, catering, and pass-through charges?
An executive office suite operator's tenant services are taxed item-by-item depending on their end result: telephone answering and equipment-based copying/faxing are taxable, word processing is not, e…
If my company performs services (like research) entirely in another state but delivers the finished product — a report — to a customer in New Mexico, does New Mexico get to tax those receipts?
The protest was sustained in part and denied in part. Lockheed Missiles & Space Company performed research and development on four missile-defense contracts largely at its California facilities, then …
When is a multimedia presentation on CD-ROM or diskette taxable as a computer program in Texas, versus a non-taxable production service?
It depends on whether the production contains "source code." This follow-up letter clarifies an earlier ruling: "source code" means any series of instructions -- whether originally written by the prog…
Could a chain of purchases, leases, and subleases of semiconductor equipment qualify as tax-exempt resale transactions before the equipment reached the operating joint venture?
Yes, for the intermediate transactions. Each registered dealer acquired or leased the equipment solely to resell, lease, or sublease it and supplied a resale certificate, so those steps were exempt. T…
Is a pager company's self-insured product replacement program (monthly charge plus deductible) exempt from Utah sales tax the same way ordinary insurance is?
It depends on whether the customer bought or leased the pager. For a purchased pager, the separately stated PRIP (pager replacement insurance program) charge is nontaxable, since Utah's tangible perso…
Could a used-car dealer buy a customer's vehicle tax-free and finance its resale to that same customer?
Yes, the licensed dealer could buy the vehicle tax-free if it was held strictly for resale. But reselling it to the same customer for $700 was taxable. The dealer needed a seller-financing permit and …
Was an FDOT contract for a statewide electronic toll-collection system a public-works construction contract or a tax-exempt sale of equipment to the state?
It was a public-works construction contract. The contractor, not FDOT, was the ultimate consumer and owed sales or use tax on tangible personal property that went into or became part of the state-owne…
Is a flood zone determination service -- checking FEMA flood hazard maps and certifying whether property is in a flood zone for mortgage lenders -- taxable in Texas as an information or insurance service?
No, it's not taxable. A service company that consults flood hazard boundary maps (FHBMs) and certifies on a FEMA form whether property is in a flood zone -- helping mortgage lenders meet a federal not…
Could a county's direct purchases of materials for a design-build governmental-center renovation qualify for Florida's government-sales exemption?
Yes. Materials bought under the county-furnished procedure were exempt because the county chose the purchases, issued purchase orders, paid vendors, retained title, assumed risk of loss, maintained bu…
Could a county buy stadium construction materials tax-free when its development consultant and contractor identified what the project needed?
Yes. The proposed owner-furnished-material procedure produced exempt direct county purchases because the county issued the purchase orders, paid vendors, took title and possession before incorporation…
Was a city-owned pier's lease to a concessionaire exempt from rental tax, and were separately charged electricity and gas also exempt?
The lease was exempt because the publicly owned pier qualified as a recreational facility and the lessee provided both food and drink concession services. The city still had to collect tax on separate…
If Utah's sales tax rate changes between when a fixed-price construction contract is signed and when the work is delivered, which rate applies?
The rate in effect when the sale is actually completed — when title to the goods passes, ordinarily at delivery — controls, not the rate in effect when the fixed-price contract was signed. A rate incr…
Did installing an emergency-vehicle alerting device for a deaf or hard-of-hearing driver qualify the vehicle for Texas's disability exemption?
No. The motor vehicle tax statute described in the letter exempted vehicles modified for people with orthopedic disabilities, defined by limited movement of body extremities. A hearing deficiency did …
Are manufactured buildings and their construction materials exempt from Utah sales tax when sold to agricultural producers for farming use, even though the building becomes part of real estate?
Yes, exempt -- if the building is used primarily and directly in commercial farming operations. Utah Code § 59-12-104(21) exempts tangible personal property used or consumed primarily and directly in …
As a contractor installing commercial kitchen fixtures and equipment, who pays Utah sales tax — me or my customer — and does it matter whether the item becomes part of the building?
It depends on whether the item becomes part of the real property. When a contractor installs construction materials or real property fixtures (built-in ovens, built-in appliances, sinks) that get conv…
How did Florida treat a retail parent company's investment interest and intercompany dividends in its corporate sales-factor apportionment?
The investment interest was business income but stayed out of the sales factor because the taxpayer was not a financial organization and the amount was under 1% of gross receipts, so exclusion caused …
Were commissions earned in Texas and shoe sales delivered in California Texas receipts under the former franchise tax?
The commissions were Texas receipts for both former franchise-tax components because the taxpayer performed the customer service in Texas. The shoe-sale receipts were not Texas receipts because delive…
Did Public Law 86-272 protect a Texas-authorized corporation from both former franchise-tax components?
No. The certificate of authority made the corporation subject to the former taxable-capital component even if its only Texas activity was protected solicitation. If the stated activities qualified und…
What initial and later former Texas franchise-tax reports followed a merger into a newly formed surviving corporation?
The surviving corporation's initial report was due May 7, 1997 and covered the privilege period from February 8, 1996 through December 31, 1997. Its December 31, 1996 year-end supplied both initial co…
Do a TV broadcaster's transmitters, related repair labor/parts, and the electricity used to run them qualify for Texas's manufacturing sales tax exemption?
No. Transmitters, their associated repair labor and parts, and the electricity used to broadcast are NOT exempt from Texas sales tax, even though broadcasters can qualify as manufacturers for their pr…
Could a corporation use federal net operating losses from before 1991 to reduce later former Texas earned surplus?
No. Former Texas earned surplus began with federal taxable income before federal net operating loss deductions. Texas instead allowed its own apportioned business-loss carryforward for up to five year…
When an unredeemed towed vehicle is sold at a New York City Marshal's auction, are the towing charges paid to the towing company out of the auction proceeds subject to sales tax?
No -- towing charges that a New York City Marshal pays to a towing company out of the proceeds of an unredeemed vehicle sold at a Marshal's auction are not subject to sales tax, because the Marshal pu…
Did a section 501(c)(3) nonprofit have to collect Florida admissions tax on live theater performances it actively sponsored?
No. The nonprofit qualified as a sponsoring organization because it actively planned and conducted the performances, was responsible for safety and success, received the gross and net proceeds, and bo…
Did forming a Texas corporation create former franchise-tax liability even before considering its business activity?
Yes. Section 171.001 subjected a Texas-chartered corporation to the former franchise tax. The corporation calculated taxable capital and earned surplus, apportioned each, and paid the greater amount a…
Does equipment like routers, servers, and hubs used by an Internet service provider to deliver service qualify for Texas's manufacturing sales tax exemption?
No. Equipment such as routers, servers, and hubs used by an Internet service provider (ISP) to provide its service is taxable at the time of purchase. The Comptroller explained the equipment can't qua…
Is a check-guarantee service's per-check fee, which merchants pay to have a customer's check backed against non-payment, subject to New York sales tax?
No -- a check guarantee service's fees, including its per-check charge and its minimum monthly account fee for low-volume merchants, are not subject to New York State or New York City sales tax, becau…
Who has to collect New York sales tax on towing charges and vehicle auction sales when a New York City Marshal tows away cars for unpaid parking tickets -- the Marshal or the independent towing company?
The New York City Marshal, not the independent towing company, must collect and remit sales tax on towing charges paid by a vehicle owner reclaiming a car towed under the Parking Violations Bureau pro…
Our client, a publicly traded corporation that owns New York real estate, is being acquired by another publicly traded company through a reverse triangular merger structured as a tax-free reorganization -- our client's shareholders will exchange their stock for less than 50% of the acquirer's voting power and value. Since our client itself is a real-estate-owning entity being acquired via its shareholders exchanging stock, is our client (the acquired company) primarily and jointly liable, along with its own shareholders, for New York's Real Estate Transfer Tax on this controlling-interest transfer -- or is that liability solely the acquiring company's?
Yes -- the acquired company and its shareholders are jointly liable as grantor, with the acquirer secondarily liable as grantee. Company X, a widely held, publicly traded C corporation owning New York…
Is the Ceprate Stem Cell Concentration System, used to prepare a patient's stem cells before high-dose chemotherapy, exempt from Texas sales tax as a health care supply?
No. The Ceprate Stem Cell Concentration System does not qualify for Texas's health care supplies exemption under Tax Code Section 151.313. The product is used in a process called immunoadsorption to r…
When is an oil drilling workover rig exempt from Kansas vehicle registration, and how do you claim it?
Only single-purpose rigs that meet specific design tests, and only from registration -- not from property tax. This 1997 Division of Vehicles memo says an oil drilling workover rig is exempt from vehi…
Could a buyer reduce a new vehicle's Texas tax base when the old vehicle went to someone other than the seller?
No. The old vehicle's value was excluded from total consideration only when the seller of the new vehicle took it as consideration. If someone else received the old vehicle, the letter said there was …
Did a minority beneficial interest in a trust doing business in Texas create franchise-tax nexus for a foreign corporation?
No. The foreign corporation held less than a majority beneficial interest, did not effectively control the trust or trustee, and had no other Texas activity. On those facts, Texas said the corporation…
Was the ultimate parent limited to a U.S. corporation for the former earned-surplus officer-compensation add-back?
No. Neither Section 171.110(c) nor Rule 3.558(h) limited the parent to a U.S. corporation. Texas interpreted the ultimate parent as any corporation exercising ultimate control over the subsidiary, inc…
Is a monthly standby retainer fee paid to a security firm (to be available if needed, billed separately for hours actually worked) subject to Texas sales tax?
Generally no. A monthly retainer fee paid to a security firm just to be on standby -- separate from hourly billing for services actually performed -- is treated as the sale of an intangible and is not…
Do compressors used in oil and gas processing qualify for Texas's manufacturing exemption, and how does a company refund sales tax collected in error on exempt equipment?
It depends on what the compressor does. Effective January 1, 1995, a manufacturer or processor can claim exemption on machinery and equipment necessary and essential to manufacturing, processing, or f…
Under the superseded RR 97-1, when did firefighting equipment share a fire truck's $300 maximum sales or use tax?
Equipment shared the truck's $300 cap only when necessary for it to be a fire truck, sold by the same vendor, and mounted or stowed before the buyer took title or possession. Otherwise the equipment w…
If I start a new company and take over a tax-delinquent business's location, staff, and customers without any formal sale, can the state make me pay its back taxes?
The protest was denied. Salvo Beachwear, Inc. (doing business as New Mexico Carpets) owed the Department about $1.1 million in taxes and was being forced to close. Its president formed a new corporati…
Was a Florida simple-interest automobile retail installment contract subject to documentary stamp tax, and did its tax base include a loan processing fee?
Yes. The contract had a promise to pay, a sum certain, and the borrower's signature. Tax applied to the amount financed over the loan term; a processing fee was excluded only if actually paid in advan…
Accidents and computer failures made me pay my gross receipts tax late — can New Mexico's negligence penalty be waived for hardship?
The protest was denied. Rio Rancho Pharmacy fell behind on the gross receipts and other CRS-1 taxes for December 1992 through February 1993 after a run of misfortunes — its owner and its bookkeeper we…
Do the foundations and support structures for rock-crushing-plant equipment (a crusher, screens, a logwasher) qualify for Texas's manufacturing exemption?
No. Support foundations for manufacturing equipment -- reinforced concrete slabs, sometimes with concrete piers and anchor bolts to fasten equipment in place -- are considered real property, not machi…
What happened when a Texas corporation failed to file its initial franchise-tax and public-information reports?
The corporation's Texas privileges had already been forfeited under Section 171.251. If it did not file its overdue initial franchise-tax report and Public Information Report, its charter would be for…
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