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 an insurance carrier reimburses a service provider for travel, meals, and hotel expenses incurred while performing a taxable service, is that reimbursement itself part of the taxable sales price, even though it's separately stated and feels like a pass-through cost rather than a fee for the service?
Yes. Expense reimbursements like travel, meals, and hotel costs are taxable as part of the total price of the taxable service, even if separately stated on the bill -- Tax Code Sec. 151.007(a)…
How did Florida tax a synthetic lease and later substitutions of Florida mortgage collateral?
The arrangement was mortgage financing, so its payments were not taxable rent. The recorded trust mortgage and synthetic-lease mortgage were separate taxable debts, but qualifying collateral…
Were payments under a lease-form real-property financing structure taxable as Florida commercial rent?
No. Considering all agreements together, Florida treated the structure as mortgage financing because it secured borrowed money and placed the financing economics and property risks on the lessee.
Is a chemical skin-peeling treatment exempt from New York sales tax as a 'drug or medicine,' even though the FDA and the state Board of Pharmacy both classify it as a drug?
Taxable. Even though the FDA and the New York State Board of Pharmacy both classify this chemical skin-peeling treatment as a drug, it's marketed and used as a cosmetic to improve appearance and…
Does a gas company get the lower 4% residential gross-earnings-tax rate on gas sold to multi-family apartment and condo buildings, even when it bills the landlord or property manager on a single meter?
Yes -- it's residential service. A local gas distribution company's gross earnings from selling and distributing gas to multi-family dwellings (apartments, duplexes, condominiums) are 'allocable to…
Is a charity golf tournament whose proceeds go to a parks and recreation department exempt from Kansas tax?
No — the Kansas Department of Revenue found no provision in either the Kansas retailers' sales tax act or the Kansas income tax act that would exempt an annual golf tournament from tax, even though…
Does the Kansas 'hand tools' sales tax exemption include hand-held power tools, or only manually powered tools?
The Department declined to narrow its definition: 'hand tools' under K.S.A. 79-3606(kk) include any hand-held power-operated or manually operated tool, not just tools powered by hand. It has defined…
A jewelry manufacturer converting a former map-making facility into its plant added a silver-dust pollution control system: new concrete pads, dedicated electrical switchgear, and extra HVAC units to cool the air moving through the dust collector. Which of these items and which labor charges qualify for Texas's manufacturing/pollution-control equipment exemption?
Mixed results. New concrete pad materials are taxable, but the LABOR to build the new pads is exempt new-construction labor under Rule 3.357(a)(5) since there was no prior improvement to remodel.…
Were patient and family accommodations provided by nonprofit healthcare organizations subject to Florida transient-rental tax?
No, for qualifying on-site and off-site care facilities and hotel rooms paid directly by exempt organizations for their charitable care purpose. A stated charge to patients or families could be taxable.
Must an out-of-state manufacturer with no property or employees in Kansas file a Kansas corporate income tax return?
No — based on the facts presented, the Kansas Department of Revenue concluded the company is not required to file Kansas income tax returns. The company manufactures fixtures and sells them FOB…
Were transaction fees for processing nationwide telephone calls at a Texas operator center Texas franchise-tax receipts?
Yes. The corporation processed calls from across the United States at its Texas operator center and charged a transaction fee. Because the processing service was performed in Texas, the fee was a…
How did Florida tax later advances under a multistate revolving credit line partly secured by Florida real estate?
No additional documentary stamp tax applied to advances while the Florida collateral stayed the same, but nonrecurring intangible tax was due on later draws allocated to the proportional Florida amount.
Did Florida deed tax apply when two mergers under another state's law vested Florida real property in the surviving entities without deeds?
No. The transfers were not taxable when foreign law governed the surviving entities and vested the Florida property by operation of law without requiring execution and delivery of a deed.
When could a Florida utility treat electricity sold to a residential household or model home as sales-tax exempt?
The account had to be properly coded residential under filed tariffs, supported by a customer certification of exclusive household use, and accepted in good faith. Any nonexempt use made the entire…
An independent contractor sold his services for resale but got the resale certificates a few months late. Can he still claim the deduction and a refund of the gross receipts tax he paid?
No — the refund was denied. A retired radiation-safety expert worked as an independent contractor for two Department of Energy contractors and later learned he owed New Mexico gross receipts tax.…
Did occasional California engineering-support visits create nexus for an out-of-state component seller even when the representative took no orders?
Yes under the 1999 facts. On-site support maintained the seller's California market, so it had to register, collect use tax, and document any customer-paid credits.
A direct-sales company gives a home-party 'hostess' credits based on the volume of orders she collects (a percentage of merchandise total, plus bonus credits for hitting order-count and dollar thresholds), which she can apply toward her own order including the sales tax due. Do these hostess credits reduce the taxable sales price of the goods she buys, or are they just a form of payment?
The hostess credits do NOT reduce the taxable sales price -- tax is still computed on the full regular retail value of the goods. The credits are treated as consideration the hostess earned in a…
How did 1999 Texas legislation affect dentist professional associations and corporations with less than $150,000 in gross receipts?
Senate Bill 1085 allowed dentists to organize as professional associations effective September 1, 1999, and the letter said professional associations were not subject to franchise tax. Separately,…
Did Florida deed tax apply when Florida partnerships merged into non-Florida limited partnerships without deeds?
No, if the surviving entities' governing law vested the Florida real property by operation of law without requiring execution and delivery of deeds.
What did the original Florida TAA 99B4-009 say about deed tax on property transferred in a partnership conversion?
The original ruling said only minimum deed tax applied if the same partnership validly converted and held fee-simple title before conversion. The document directs readers to revised TAA 99B4009R, so…
Is food a church buys for Vacation Bible School or a church-sponsored religious education event exempt from Kansas sales tax?
Exempt — food a qualifying 501(c)(3) religious organization buys with a church check, prepares for service at a church religious function, and serves as part of that function is exempt from Kansas…
A direct sales organization selling vitamins through independent Texas distributors needs a Texas sales tax permit. What state and local sales tax rates apply, and how should the organization collect and account for local taxes across all of its distributors' sales?
The direct sales organization -- not its distributors -- is responsible for collecting and remitting sales and use tax on all Texas distributor sales, under Rule 3.286. On top of the 6.25% state…
A direct payment permit holder already paid sales tax to its vendor on past purchases. Can it now retroactively issue a direct payment exemption certificate for those same past purchases so it can get a full refund of the tax and instead accrue and pay the tax itself directly to the state?
No. A direct pay permit holder must choose, at the time of each purchase, between giving the supplier a direct payment exemption certificate or having tax paid directly to the supplier -- once tax…
Is a Kansas sale exempt when the seller ships the goods out of state by common carrier or the mail?
No — Kansas sales tax does not apply when the seller of tangible personal property is obligated to deliver the property to a point outside Kansas, or delivers it to an interstate common carrier or…
Are a retailer's freight and shipping charges taxable in Kansas when the item sold is taxable?
Yes — if the item being sold is subject to Kansas sales tax, the retailer's shipping and freight charges are also subject to tax, whether they are included in the total product price or separately…
When utility services are unbundled, how is Kansas sales tax computed and who must collect it?
When electric and natural gas services are unbundled into a commodity charge and a distribution charge, Kansas sales tax should be computed individually on each component. How the charges and tax…
A taxpayer sought a refund of sales tax it charged clients (employers) for case management/risk management consulting services, on the theory that because those clients were 'nonsubscribers' to Texas Worker's Compensation, the services couldn't be taxable insurance services. Is that refund claim valid?
Largely no -- an internal Tax Policy Division memo to the Comptroller's refund-review staff concludes the taxpayer's reliance on the 'nonsubscriber' label is misplaced. Being a Worker's Compensation…
Will a state-prescribed Texas sales tax exemption certificate that a customer completes electronically, signs with an electronic signature pad, and stores only in electronic form pass muster in a Comptroller audit?
Yes. The Comptroller's audit division accepts certificates with electronic signatures, in addition to certificates that have been scanned, faxed, or microfiched -- so a system that creates a…
I bought a $1,175,000 property that includes a vacant, un-modernized one-family house, intending to redevelop it as a residential subdivision or assisted-living facility -- I have no intention of using the existing house as anyone's personal residence, and the seller didn't live there either. I paid the 1% mansion tax at closing but I'm seeking a refund since neither of us actually used or intended to use the house as a residence. Am I entitled to that refund?
No refund -- the mansion tax was correctly assessed. Petitioner purchased property in New Rochelle, New York for $1,175,000 that included an existing, vacant, un-modernized one-family dwelling, and…
Are a billing-services company's separately stated charges for preparing customer bills, supplying extra report copies, reimbursed pass-through expenses, and envelope stuffing/postage all taxable in New York?
It splits by item. The core bill-preparation service (data processing, printing, formatting, plus bill stock/forms/envelopes) is not taxable, since preparing customer bills isn't an enumerated…
Does a standalone casket retailer that sells directly to consumers (not through a funeral home) have to charge New York sales tax, even though funeral homes don't charge tax on the caskets they sell?
Yes, taxable. New York's sales tax exemption for caskets only applies when sold by a mortician, undertaker, or funeral director -- a standalone casket retailer selling directly to consumers, without…
Was net gain from selling trademarks, goodwill, source code, patents, and other intangibles to a California corporation a Texas receipt?
No. The Comptroller treated the trademark, customer base, workforce in place, goodwill, source code, patents, and intellectual property as capital-asset intangibles. Net gain from their sale was a…
Is the labor to install a dome roof on an existing storage tank taxable, or exempt as original construction?
Taxable — installing a dome roof on top of an existing storage tank is not exempt "original construction," so the installation labor is subject to Kansas sales tax. Under K.S.A. 79-3603(p),…
Are a boar stud operation's semen sales, delivery charges, and supplies exempt from Kansas sales tax?
A boar stud operation's sales of semen dosages to Kansas hog producers are exempt when the buyer furnishes an exemption certificate, because semen bought by those breeding and raising hogs for…
Is welding rod a farmer buys to repair machinery exempt from Kansas sales tax?
Taxable — welding rod a farmer buys to repair machinery is a taxable welding supply, not exempt. It is not "farm machinery and equipment" or a "repair and replacement part" under the K.S.A.…
Could an employer buy a car for resale and tax only the monthly fee charged when the car was leased to an employee as a benefit?
No. The benefit was not a market lease with identifiable rent, so the employer consumed the car and tax applied to the dealer purchase price.
Did adding a general partner make renewed partnership notes and mortgages subject to new Florida stamp or intangible tax?
No, if the executed amendment preserved the same partnership and obligor and all statutory renewal requirements were met.
Did an obligation secured by a Florida leasehold mortgage owe annual or nonrecurring intangible tax?
It owed the one-time nonrecurring intangible tax because the leasehold estate was classified as real property; annual intangible tax did not apply.
Must a group that buys weather-alert radios with grant funds and resells them at cost collect Kansas sales tax?
Yes — a community group that bought weather-alert radios with FEMA Project Impact grant funds and resells them to residents and businesses is a retailer and must collect and remit Kansas sales tax,…
Are periodicals and writings sold by a church exempt from Texas sales tax, and does that exemption extend to formats other than print, like video tape, audio tape, or computer disk?
Yes. Tax Code Section 151.312 exempts periodicals and writings published and distributed by a religious, philanthropic, charitable, historical, scientific, or similar nonprofit organization.…
A phone customer noticed their bill includes an FCC line charge, which they understood to be a federal charge tied to the number of incoming lines, within the total that Texas sales tax is calculated on. Since it looks like a federal tax/fee, should Texas sales tax apply to it?
Yes. The FCC line charge isn't a federal tax on the customer -- according to the FCC, it applies to all subscribers regardless of long-distance usage and is simply another way for the phone carrier…
How did Florida's comprehensive arena TAA tax tickets, service charges, concessions, and event-facility rent?
Generally, ticket charges and required facility-lease payments were taxable, including convenience fees and mandatory operating-cost reimbursements. The TAA also recognized specific admission…
Could a Florida school board buy materials tax-free for school additions under its direct-purchase procedures?
Yes, if the board directly ordered and paid vendors, took title and liability at delivery, and bore the risk of loss before the materials were installed.
Was a thoroughbred sold at a Florida auction taxable when the seller delivered it by common carrier to the buyer in another state?
No, if the seller delivered the horse outside Florida through the common carrier and followed the interstate-sale rule. Tax applied if the buyer took possession in Florida.
Did an aircraft owner have Texas franchise-tax nexus when it leased planes to a carrier operating flights involving Texas?
It depended on the carrier's Texas activity. The aircraft owner was subject to franchise tax if its planes were leased to common carriers providing intrastate Texas transportation or maintaining…
A commercial monitoring company separately bills clients for security-system monitoring and fire-alarm-system monitoring, subcontracting the actual monitoring to its parent company. Are separately stated charges for monitoring a fire alarm system taxable the same way as security system monitoring charges, and what about the telecommunications lines used to run both?
No -- separately stated charges for monitoring FIRE alarm systems are NOT subject to Texas state and local sales tax, while separately stated charges for monitoring SECURITY systems ARE taxable. On…
Did Florida's 1999 TAA tax a contribution of unencumbered land to a wholly owned LLC?
Historically, yes—but this TAA is expressly marked obsolete. The Department's 1999 position treated the increased value of the owners' LLC interests as consideration and taxed the deed based on the…
Did endorsing a Loanliner advance check create a Florida documentary-stamp-taxable written obligation to pay money?
Yes. The borrower's endorsement made the check a taxable written obligation because the reverse side stated that the borrower agreed to pay the amount shown on the accompanying voucher.
Which foodservice products sold to restaurants, nursing homes, and schools are exempt from Kansas sales tax?
It depends on the item and the buyer. Disposable foodservice items a restaurant passes to the customer with the meal — napkins, straws, doilies, toothpicks, disposable cups and silverware, carryout…
Is demolition labor taxable in Kansas, or exempt when tied to original construction?
Taxable — on these facts the demolition labor is subject to Kansas sales tax, and the contractor's purchases of materials and supplies to perform the contract are taxable too. K.S.A. 79-3603(p)…
Is a domestic violence shelter's food purchases exempt from Kansas sales tax?
Taxable — a domestic violence group shelter is not exempt from Kansas sales tax on the food it buys to prepare meals for its residents. The Department explained that not every nonprofit organization…
Does a corporation owe Texas franchise tax just because it owns, or is affiliated with, a limited partner in a Texas limited partnership?
Merely owning or being affiliated with a limited partner does not create franchise-tax nexus, but putting people in Texas can. The Comptroller declined to rule that two Florida corporations were…
A commercial photography studio creates images (conventional film transparencies or digital media) for advertising clients and, on request, does pre-press production work (scanning, color-adjusting, image-setting, and proofing) to prepare 4-color film and proofs for the client's printer. Which of the studio's cameras, computers, scanners, and other equipment qualify for Texas's manufacturing exemption?
The studio qualifies as a manufacturer under Sec. 151.318 because it fabricates tangible personal property (transparencies, electronic media, 4-color film, proofs) for sale. Under new Sec.…
How were GNMA mortgage-backed security interest receipts apportioned when the underlying mortgagors could not be identified?
Rule 3.549(e)(13)(D) applied. The Comptroller rejected the taxpayer's argument that the private securities issuer was the payor, maintained that a GNMA security holder owned an undivided beneficial…
If a retailer refunds an extended warranty charge, must it also refund the sales tax collected on it?
Yes — when a retailer refunds an extended warranty charge (here, by sending a check to the finance company to reduce the loan principal), the state and local sales tax that was collected on that…
If a worker files a 'zero income' return claiming a refund of all withholding and then stops filing, can New Mexico add a 50% fraud penalty on top of the back tax?
Yes — and it did. The protest was mostly denied. A U.S. West employee who had paid New Mexico income tax jointly with his wife for 1994 and 1995 suddenly filed a 1996 return reporting zero income…
Was a motor vehicle sale to the Kickapoo Indian Tribe exempt from Texas motor vehicle sales tax, and did the exemption extend to individual members?
A sale directly to the Kickapoo Indian Tribe was exempt. The letter said a federal statute exempted the Alabama-Coushatta, Kickapoo, and Tigua tribes from state sales and excise taxes. But the buyer…
Are video captioning services taxable in Kansas, and can the blank tape be bought exempt?
Video captioning is a taxable service in Kansas, so the company must collect sales tax on the gross receipts it charges customers for captioning. Kansas taxes the service of servicing or altering…
For a private club's construction/renovation contracts billed lump-sum, what kind of written statement or contract language satisfies Rule 3.286(d)(3)'s requirement that a stated price includes sales tax, and which of several possible documents (purchase order, bid, signed contract, invoice) controls for that purpose? Separately, is a CPA firm's computer-prepared payroll tax reports for the club a taxable data processing service?
For 'tax included' lump-sum billing, Rule 3.286(d)(3) requires either the tax be separately stated OR a written statement that the price includes tax; whether a given letter/purchase order/bid…
Could advertising or offering a video-game jackpot above $125 be treated as an unlawful special inducement in South Carolina in 1999?
Yes, potentially. After Gentry v. Yonce, the Department warned that advertising or offering jackpots above the legal limit could be construed as a special inducement under § 12-21-2804(B). If the…
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