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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Is the labor to build a new mezzanine floor inside an existing building taxable real property repair/remodeling, or non-taxable new construction, under Texas law?
It's non-taxable new construction. Building a new mezzanine floor -- adding usable floor space where only non-usable empty space existed before -- inside an existing building qualifies as "new constru…
Is admission to a sports card and memorabilia show, the vendor table fees, and autograph sales all subject to New York sales tax?
Admission to a sports card and memorabilia show and the fee charged to vendors for table space are not subject to New York sales tax, but a promoter must collect sales tax on autographed products it s…
Is artwork a fabric manufacturer buys and scans to design a computer-generated weaving blueprint for upholstery fabric exempt from New York sales tax as production equipment?
Yes -- artwork a textile manufacturer purchases and scans into a computer to design a weaving blueprint for upholstery fabric qualifies for New York's Statewide production machinery and equipment exem…
Is an integrated CAD/CAM/CAE computer system used both to develop generic product designs and to configure specific customer orders exempt from New York sales tax as research and development or production equipment?
A fully integrated CAD/CAM/CAE hardware, software and maintenance system qualifies for the research and development exemption when used to create documented, generic marketable product designs, and se…
How is a New York corporation and its shareholders taxed when the shareholders of a federal S corporation make a section 338(h)(10) election on a sale of the company's stock?
The target corporation (X) is subject to Article 9-A whether or not it is a New York S corporation, and the section 338(h)(10) deemed asset sale is reflected in its franchise tax. X files two short-pe…
Could a Florida county buy construction materials tax-free for its county-owned civic arena while a private developer and contractor built the project?
Yes. Materials bought under the agreement were exempt because the county issued purchase orders, paid suppliers directly, held title, assumed the risk of loss, and provided its exemption certificate. …
Which periods did a December 11, 1996 corporation use on its initial former Texas franchise-tax report?
The initial report was due March 10, 1998 and covered the privilege period from December 11, 1996 through December 31, 1998. Because December 31, 1997 met both timing tests, taxable capital, earned su…
Did a Texas certificate of authority create franchise-tax liability when a corporation had no physical presence and took only customer-initiated phone orders?
Yes for taxable capital. The certificate of authority made the corporation subject to the former franchise tax even though it reported no Texas property, payroll, employees, or physical presence and t…
Did Florida transient rentals tax apply when DOT charged former occupants rent for two or three months after acquiring their homes through eminent domain?
No. DOT acquired the homes for a public road project, not to enter the rental business, and used two- or three-month leases only to give displaced occupants time to relocate. Section 212.03 therefore …
Did a used-car dealer owe Texas motor vehicle tax after operating a new vehicle on a metal dealer tag?
Yes. The dealer did not hold the new vehicle exclusively for resale and was not eligible to operate it on a metal dealer tag, so taxable use occurred. The dealer had to pay tax when applying for title…
Which of a health-care management company's many services -- managed care advice, credentialing, quality assurance, claims processing, member services, contract, pre-certification, and utilization review -- are taxable in Connecticut, and under which service category?
It's service-by-service. DRS classified each service a health-care management company sells against Conn. Gen. Stat. § 12-407(2)(i)(J). Because the customers' core business is providing health care, s…
Does a rubber-tired, electrically-powered 'people mover' passenger transportation system, guided by a steel guidebeam rather than running on rails, qualify for Texas's rolling stock sales tax exemption?
No. A rubber-tired, electrically-powered "people mover" passenger transportation system -- guided and powered by a steel guidebeam/rail system rather than running on rails -- does not qualify as tax-e…
Could a Florida school district buy equipment and materials tax-free for a K-12 construction project managed by a private construction manager?
Yes. Purchases made under the submitted contracts were exempt because the school district issued purchase orders, paid vendors directly, held title, and bore the risk of loss. Each vendor also needed …
I reported my pay as business income on my federal Schedule C, but I think I was really an employee — do I owe New Mexico gross receipts tax on it?
The protest was denied. Ruth Dilts worked as a live-in nurse-companion and, after 1982, was paid on a Form 1099 as 'nonemployee compensation' — about $100,849 in 1988. She reported that money as busin…
Is a drugstore's free monthly newsletter for senior customers exempt from sales tax as a periodical or shopping paper, or is its cost a taxable purchase by the store?
No -- a drugstore's free monthly newsletter for senior customers is not exempt from sales tax, because giving a publication away free for promotional purposes is a taxable retail purchase by the store…
Are dues paid to a private beach club association that's limited to residents of a specific housing development exempt from sales tax as a homeowners association?
Yes -- dues and initiation fees paid to a private beach club association whose membership is limited to residents of a defined housing development, and which operates recreational facilities (a pool, …
Is electricity used in the common areas of a residential condominium complex (sprinkler systems, pools, clubhouses, exterior lighting) exempt from Texas sales tax as residential use?
Yes, if the complex is genuinely residential. Electricity used in common areas (sprinkler systems, swimming pools, clubhouses, exterior lighting) of a residential condominium complex -- one where unit…
Must a forensic engineering firm charge sales tax on fees for investigating the cause of a fire or explosion for a law firm or insurance company pursuing subrogation, as a taxable insurance service?
Yes, these are taxable insurance services. A forensic engineering firm retained by law firms and/or insurance companies to determine the cause of a fire or explosion -- and to provide expert testimony…
Which city's local sales tax applies when an itinerant janitorial service vendor (no fixed place of business) performs services at a homebuilder's job site?
Local tax is due based on the job site. A janitorial service provider that has no place of business where it receives orders -- and instead receives its orders for services at the job site itself -- m…
Is electricity used to pump treated municipal effluent to a pond, and then pump that pond water to irrigate a golf course, exempt from Texas sales tax?
No, it's not exempt. A private country club used one electric meter exclusively to pump effluent from a municipality to a pond, and a second meter exclusively to pump water out of that pond to irrigat…
Are purchases made by federal employees using a government I.M.P.A.C. (GSA SmartPay) Visa credit card exempt from Texas sales and use tax?
Yes, if three conditions are met. Purchases made by federal government employees using a Government Visa credit card (I.M.P.A.C.) are exempt from Texas state and local sales and use tax when: (1) the …
Did a Texas certificate of authority subject a corporation to both former franchise-tax components despite no Texas activity or employees?
Yes. The corporation reported no Texas business activity, employees, or other nexus for the period, but its certificate of authority meant it was authorized to do business in Texas. Section 171.001 th…
Is a long-established out-of-state manufacturer a new business eligible for the refundable EDZ investment tax credit when it acquires a New York Article 9-A taxpayer it was not previously affiliated with?
Yes. A corporation is a new business under Tax Law section 210.12(j) -- and so eligible for the refundable economic development zone investment tax credit -- unless it is over-50% owned by an existing…
New Mexico took over a year to refund my approved manufacturing investment credit — does the state owe me interest for the delay?
The protests were granted. General Mills held an approved $3.5 million manufacturing investment credit and filed claims to have parts of it refunded, measured by gross receipts tax it paid vendors and…
My insurance brokerage sometimes charges clients a fee instead of taking a sales commission, and we serve both Texas and out-of-state clients -- when is that fee taxable as an 'insurance service,' and what happens with multi-state customers?
Insurance placement and servicing work is not a taxable insurance service when your only compensation is the commission you'd normally earn on the policy (or a fee charged purely in place of that comm…
Did cumulative preferred securities tied to 49-year debentures qualify as debt under the former Texas surplus rules?
No. Texas concluded that the preferred securities failed at least one of Section 171.109(a)(3)'s three debt criteria. Mandatory redemption when the related 49-year debentures matured or were redeemed …
Is a loss-consulting firm's investigative reports, built from subcontracted private investigators and other experts, subject to sales tax as protective and detective services?
Yes -- a loss-consulting firm's investigative reports built from surveillance and background-investigation work by subcontracted private investigators and other experts are taxable protective and dete…
Is a bioresorbable surgical implant like Seprafilm IM -- an internal adhesion barrier that dissolves in the body over time -- exempt from Texas sales tax as a prosthetic device?
Yes. Texas exempts prosthetic devices from sales tax, and its rule specifically includes devices implanted in the body -- so a bioresorbable membrane like Seprafilm IM, which is surgically implanted t…
Could a surviving corporation inherit former Texas business-loss carryforwards from corporations merged into it?
No. Rule 3.555(g)(3) prohibited conveying, assigning, or transferring a former Texas business loss to another entity, including through a merger. The surviving corporation therefore could not use loss…
Is hiring a trucking company to haul asphalt to a paving job a nontaxable transportation service, or a taxable equipment rental?
Hiring a trucking company to pick up and deliver asphalt to a paving job site -- where the trucking company supplies its own truck and driver, chooses its own routes, pays all operating expenses, and …
Were reagents, calibrators, and controls sold for testing patient specimens exempt from Florida sales tax as medical chemical compounds?
Yes. Reagents were chemical compounds, and calibrators and controls contained or functioned as reagents. Because laboratories had to use them to validate patient test results, their sales for patient-…
Were sales of an emergency-information service, annual renewals, and the Florida dealer's commissions subject to Florida sales tax?
No. The service was not taxable, and its wallet card had no value apart from evidencing access to the service, so initial fees, renewals, and dealer commissions were not taxed. The dealer still owed t…
My satellite TV provider let me prepay a year of service for $154.95 instead of $354.95 using an 'instant credit certificate,' but then charged me sales tax on the full $354.95, calling the credit a gift certificate -- is that right?
No. Texas sales tax is measured on the actual selling price you actually pay, and an 'instant credit certificate' that immediately reduces your bill at the time of purchase is a discount, not a gift c…
My Texas-based internet business builds websites, broadcasts information online, and resells domain name registrations to customers both in and out of state -- which of these are subject to Texas sales tax, and how do I handle out-of-state customers?
Building and maintaining a website is a taxable data processing service, sourced to wherever the customer actually receives the benefit (not where your server sits) if the customer gives you an exempt…
I sell to a Mexican retailer who wants to buy tax-free for resale in Mexico -- what documentation do I need beyond a standard Texas resale certificate, and does a blanket certificate expire over time?
Beyond a properly completed Texas (or Border States Uniform) resale certificate, Rule 3.285(d)(2) requires you to also keep a copy of the buyer's Mexican Registration Form showing their RFC (Mexican f…
Is a court-created qualified settlement fund that only invests and distributes funds subject to the New York franchise tax or personal income tax?
No. A qualified settlement fund under IRC section 468B that only holds, invests, and distributes funds is not conducting a business, so it is not a corporation subject to the Article 9-A franchise tax…
Did a wooden farm wagon count as a motor vehicle for Texas tax purposes?
No. The wooden farm wagons were not designed to carry people or property over the highway, so Texas treated them as tangible personal property rather than motor vehicles. Changing the business's SIC c…
Did four annual paid Texas product-training seminars defeat P.L. 86-272 protection for a medical-products manufacturer?
Yes. Four recurring one-day seminars teaching customers how to fit the company's medical devices were training services, not protected solicitation. Their regular annual schedule meant they were not t…
When could a manufacturer sell prescription medical trays to Florida hospitals and physicians without collecting sales tax?
Only when the trays were dispensed by prescription and the seller obtained the required documentation: an exempt hospital's certificate number, or a resale or physician-order-use certificate from othe…
Who collects Texas tax when a storage facility auctions vehicles for the U.S. Marshals Service, and how are salvage vehicles treated?
A nondealer auctioneer acting for the U.S. Marshals Service did not collect motor vehicle tax; the buyer paid it at county registration. Salvage vehicles were tangible personal property subject to lim…
Does an out-of-state manufacturer with no Utah offices or employees have Utah sales tax nexus just because it hires an independent contractor to install and service its products in Utah, and how are warranty repairs and installation taxed?
Yes, nexus exists here through the service contractor. Even though the manufacturer had no Utah offices, warehouse, inventory, or sales force, and shipped everything by common carrier, the Commission …
Is Utah sales tax owed on a computer software licensing agreement that also bundles in maintenance, training, and other services?
It depends on whether the software is "canned" (prewritten, sold to a general market) or "custom" (built to a particular customer's specifications). Canned/prewritten software is taxable in Utah wheth…
I design store signage and trim on a computer using 3D drafting software, then fabricate and install it in new stores -- am I taxed as a contractor or as a manufacturer, and does my design equipment qualify for the manufacturing exemption?
You're taxed as a contractor, not a manufacturer, because you affix the signage and trim you fabricate to realty under a new construction contract. Tax is due on your cost of materials (lump-sum contr…
I run a lockbox/remittance service that automates payment posting for doctors' offices -- is that a taxable data processing service in Texas?
Yes -- taxable. The Comptroller ruled that the ABC charges for this automated accounts-receivable payment-posting service fall within the definition of a taxable data processing service under Rule 3.3…
Our nonprofit 501(c)(3) garden club association prints instructional brochures and sells them at no profit to local garden clubs in Texas -- do we owe sales tax on those sales?
No -- the sale is exempt from Texas sales tax. The Comptroller ruled that brochures published or distributed by a nonprofit 501(c)(3) organization are exempt from sales tax under Texas Tax Code Sec. 1…
My school teaches in New Mexico but develops its curriculum and runs job placement out of state — can I apportion my tuition so New Mexico only taxes the in-state part?
The protest was denied. ITT Educational Services runs a vocational school (ITT Tech) in Albuquerque and paid gross receipts tax on its bookstore sales but never on tuition. After an audit, the Departm…
Does sales tax apply to a commercial greenhouse and laboratory used to grow, propagate, and sell orchids from seed?
No sales tax is due. The Comptroller confirmed that machinery and equipment -- including a qualifying building or structure -- used exclusively to process, pack, or market agricultural products by the…
How did a Texas or foreign corporation receive its Comptroller taxpayer identification number?
Secretary of State filings automatically registered a Texas corporation with the Comptroller and generated a temporary taxpayer number. Texas assigned a permanent number after receiving the corporatio…
Did an agreement to purchase existing accounts receivable at a discount create Florida documentary stamp tax liability?
No. The submitted agreement to buy existing accounts receivable did not create documentary stamp tax liability. The ruling was limited to that agreement and excluded any additional documents later inc…
Is replacing a temporary fire sprinkler system with a new one during finish-out of a never-occupied strip-center lease space taxed as new construction or as nonresidential remodeling?
It's new construction, not remodeling -- because the lease space had only been roughed-in and was never finished out or occupied, installing the new fire sprinkler system counts as new construction ev…
My local sales tax rate changed partway through a multi-year equipment lease -- do I owe the old rate or the new rate for the rest of the lease, and what happens when the lease is renewed?
For a fixed-term operating lease (like a 5-year lease), the sales tax rate is locked in at the rate in effect when the lease was signed (consummated) -- it does not change even if the local tax rate g…
Did corporations with more than 35 shareholders add back officer and director compensation under the former earned-surplus tax?
Yes. Section 171.110(a)(1) required the officer-and-director compensation add-back, while subsection (a)(2) excused corporations with no more than 35 shareholders. Presuming each claimant had more tha…
Was a nonprofit private club's annual fee for inactive equity members taxable when it covered overhead but provided no access to club facilities?
No. The fee covered an inactive member's share of taxes, insurance, security, and other overhead while the equity bond awaited sale. Because it preserved status but granted no facility use, it was not…
Was a private club's annual inactive-member fee subject to Florida sales tax when it preserved good standing but allowed no facility use?
No. The annual fee merely kept the inactive equity member in good standing. Because the member could not use club facilities without converting membership status and accepting other charges, the fee w…
Did a voting trust holding shares for 19 people count as one shareholder for the former officer-compensation add-back exception?
Yes, if the shares were registered in the trust's name and the trust was not organized to avoid the add-back. Rule 3.558(b)(7) counted a trust, association, or other registered legal entity as one sha…
I'm a Texas private investigation/security firm with clients and jobs both inside and outside Texas -- which of my investigation and security services are subject to Texas sales tax?
It depends on where the investigation is performed and where its object/benefit is located, not on where the client is based: investigations of people, places, or facilities located outside Texas are …
We're restructuring ownership of a Manhattan office building through five coordinated steps happening the same day, maybe within minutes of each other: a bank's new entities will buy out a 74% interest in two upper-tier partnerships; simultaneously, the remaining lower-tier partnership entity will buy out the other partner's 74% stake in the property-owning partnership, which then dissolves and distributes its real estate to the surviving entity; the bank's new entities will then redeem their upper-tier partnership interests for a direct 74% stake in the entity that now holds the real estate; and finally, the original upper-tier partners will form a new joint entity holding the remaining 26%. Which of these steps trigger New York's Real Estate Transfer Tax, and which are exempt restructuring steps?
Split outcome -- the core 74% acquisition is taxable (viewed as one integrated transaction), while the remaining restructuring steps are exempt. The property at 40 West 53rd Street was owned by 40 Wes…
Was a synthetic lease of improved Florida real property taxable as rent when its substance was a financing arrangement?
No. Under the submitted documents, the synthetic lease more closely resembled a mortgage or financing arrangement than a true lease, so the payments were not subject to sales tax under section 212.031…
Is installing an awning or canopy taxable as new construction, or as a sale of tangible personal property, under Texas sales tax rules?
It depends on whether the canopy becomes an improvement to the realty. If it does, the installation labor counts as new construction and is not taxable, but the materials are taxable (per the lump-sum…
Did a stock sale and inclusion in a new federal consolidated return end a corporation's former Texas franchise-tax obligation?
No. The stock sale and shortened federal consolidated-return period did not end the corporation's Texas status while its certificate of authority remained active. Its filed 1996 report produced no tax…
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