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 manufacturer-funded credit taxable when the dealer passed the exact amount to a particular customer after the sale?
Yes. The manufacturer credit was part of the taxable sales price because it was tied to the particular customer's purchase and reimbursed the dealer for the exact credit passed to that customer.
Could a California S corporation claim a section 6902.2 refund for the two-thirds of Manufacturer's Investment Credit it could not use?
No. Its refund was limited to the 33% credit it could use, and choosing that refund eliminated the MIC that otherwise passed to shareholders.
Are charges for audio-conference bridging services -- conference management without providing the transmission -- subject to New York sales tax or to the section 186-e and 186-a gross receipts taxes?
No. When a provider supplies only audio-conference bridging services -- reserving and programming a bridge, issuing passcodes, verifying participants and assisting them, while the participants buy…
How did Texas treat lease acquisition fees, roadside assistance, credit-card rebates, and resale-inventory vehicles used as trade-ins?
A lease-document fee paid to the lessor or lienholder was outside the vehicle's taxable sales price, and roadside assistance was not taxed. A non-captive credit-card contribution was taxable…
Could a restructuring banking group stop filing Florida consolidated corporate income tax returns?
Yes. Florida found good cause in the banking group's major restructuring and approved separate filing for 1998 and later years, subject to four conditions concerning timing, deferred items, tax…
Were golf tournament fees taxable to members, and which county's local surtax applied to a course spanning two counties?
Member tournament fees were not taxable when existing membership already allowed course use at no extra charge; nonmember fees were taxable. On these multicounty facts, no surtax was due because…
When were Internet sales of tangible personal property Texas franchise-tax receipts under the former delivery and throwback rules?
The sales method did not matter. Tangible personal property sold online or otherwise was a Texas receipt when shipped or delivered to a Texas buyer. Property delivered from Texas to an out-of-state…
When a direct sales organization's independent distributor has overpaid sales tax (e.g., on products kept for personal use, sold out of state, or discounted below suggested retail price), how should the distributor get that overpaid tax refunded or credited -- directly from the Comptroller, or from the direct sales organization itself?
From the direct sales organization itself, not the Comptroller. Because the Comptroller treats the direct sales organization as the seller (requiring tax to be initially collected on the suggested…
When a retailer sells on credit, is sales tax due on the full accounts receivable balance right away, or only as payments are actually collected over time?
It depends on the retailer's own accounting method. If the retailer uses ACCRUAL basis accounting, the ENTIRE tax on the credit sale is due and must be reported at the time of the sale. If the…
A sawmill sells railroad ties to railroad companies and also manufactures lumber generally. Are the railroad ties exempt from sales tax, and separately, do lubricants used in the sawmill's manufacturing machinery qualify for the manufacturing exemption?
Yes to both, with certificates required either way. A railroad company can give the sawmill an exemption certificate to buy railroad ties tax-free under Sec. 151.331 (rolling stock/locomotive fuel…
Two companies provide liability-investigation services to attorneys representing plaintiffs and defendants in injury cases -- not directly to insurance companies -- and argue that because they don't work on 'first-party' claims (an insured's own claim under their policy) and any insurance involved is only incidental to determining liability between litigants, their services shouldn't count as taxable insurance services. Is that right?
No. The companies are providing taxable insurance services whenever they're paid to investigate a loss pertaining to a policy of insurance, regardless of who hires them or whether the claim is a…
Which wheelchairs, walkers, chairs, beds, mattresses, and massage products were exempt from Florida sales tax?
Wheelchairs, mobility scooters serving as powered wheelchairs, and three- or four-wheel push walkers were exempt without a prescription. The reviewed chairs, beds, mattresses, loungers, and massage…
Are a nonprofit club's Christmas-tree fundraising sales exempt from Kansas sales tax?
Taxable — a nonprofit 501(c)(4) club that sells Christmas trees to raise funds for other nonprofits gets no Kansas sales tax exemption for those sales. The Department found that Kansas law does not…
Does a separately incorporated group that includes churches, businesses, and lay persons qualify for the Kansas religious-organization exemption?
No — a separately incorporated organization whose membership includes not only churches but also businesses and lay persons does not qualify as a "religious organization" for the Kansas sales tax…
Did receiving financial assistance from a development corporation qualify a business for the former Texas enterprise-zone deductions?
No. Section 171.1015 required both designation as an enterprise project by the Texas Department of Economic Development and qualifying investment in an approved enterprise zone. Receiving financial…
Someone selling mail order products from home (supplied by a California company) asked whether they need a Texas sales tax permit, and how local tax is determined when the business operates out of a home or apartment.
Yes, a sales tax permit is required, and the seller is responsible for collecting and remitting state and local sales tax on Texas sales (sales shipped outside Texas are exempt). The home itself is…
Why can't an independent distributor of a direct sales/multi-level marketing company simply give the company a resale certificate and buy products tax-free, the way an ordinary reseller would?
Because Tax Code Section 151.024 authorizes the Comptroller to treat the direct sales organization itself -- not the individual salesperson/distributor -- as the retailer responsible for the tax,…
Is a youth baseball nonprofit exempt from Kansas sales tax on its purchases?
Taxable — a youth baseball nonprofit is not exempt from Kansas sales tax and must pay tax on its purchases of tangible personal property and taxable services. The Department explained that not every…
A manufacturing facility that handles powder ingredients asked about the taxability of an equipment enhancement: silos, scale hoppers, filters/receivers, piping/fittings/valves, instrumentation, a motor control center, and a bag dump station with a convey air compressor. Which of these qualify for the manufacturing exemption?
Mostly taxable, with narrow exceptions tied to quality control. Silos (storage of raw powder) are taxable. Scale hoppers are exempt ONLY if they actually measure the recipe amounts used in the…
A retailer demolished most of an existing 49,887-square-foot store -- removing the floor slab, all electrical, all plumbing, the fire protection system, the roof, and the entire parking lot -- but kept one side wall, the rear wall, and the steel columns/joists, then expanded the footprint to 59,666 square feet. Is this project taxed as new construction or as taxable remodeling?
Mostly remodeling, with one new-construction carve-out. Total demolition means removing the ENTIRE structure except the slab -- since this project kept a side wall, rear wall, and the steel…
Can caterers, party planners, florists, and bridal consultants who rent tables, linens, china, vases, and candelabras to re-rent to their own customers use a resale certificate instead of paying tax on the rental?
It depends on whether the renter serves prepared food. Food service operators -- restaurants, caterers, party planners, bridal consultants, and others who serve prepared food -- may NOT purchase,…
Did contributing Texas real estate to a partnership and liquidating two single-member LLCs change their taxable earned surplus when federal law recognized no gain or loss?
No, if the stated federal nonrecognition held. Two single-member LLCs would contribute Texas commercial property to a Virginia limited partnership for a combined 99% interest, then liquidate and…
Can a Texas movie theater buy admission tickets tax-free for resale, and does the same rule apply to the gift certificates, envelopes, and passbooks it buys?
Movie tickets may be purchased for resale under Rule 3.298(f)(1), so a theater that already paid tax on tickets can get a refund by issuing its supplier a resale certificate (limited to a four-year…
Does a 501(c)(3) counseling agency qualify for the Kansas religious-organization sales tax exemption?
No — a 501(c)(3) nonprofit counseling agency does not qualify as a "religious organization" for the Kansas sales tax exemption under K.S.A. 79-3606(aaa), and a sales tax exemption it holds in…
Could a single-member LLC deduct the owner's one-half self-employment-tax adjustment when computing taxable earned surplus?
No. Rule 3.562(f) allowed income and deductions relating to the LLC but barred compensation deductions for the owner, who was not an LLC employee for federal purposes. The one-half…
If a Texas defense contractor's gas and electricity use is exempt because it makes defense/national-security electronics for the U.S. Government, does the exemption also cover indirect uses like offices, cafeterias, and restrooms?
No. The Section 151.317(c)(2)(A)(vi) exemption applies only to gas and electricity actually used in performing the listed defense-related activities (manufacturing precision-guided weapons, radar,…
If I move my home and domicile out of New York but keep working for my New York-based employer from my new state, is my pay still taxed as New York-source income?
No, not once you have actually relocated. New York's Department of Taxation and Finance concluded that a stockbroker who changed his domicile from Westchester County to Wyoming, stopped reporting to…
Does an interfaith council of congregations and individual delegates qualify as a Kansas religious organization?
No — an interfaith council whose membership includes congregations, several religious organizations, and individual delegates does not qualify as a "religious organization" for the Kansas sales tax…
When did Kansas's 1999 truth-in-taxation law require a local budget resolution or ordinance?
A taxing subdivision needed a resolution or ordinance when its budget required property-tax revenue above the prior year's amount plus revenue allowed from taxable new improvements, increased…
Does a Texas company that performs artificial insemination of cattle on ranches owe sales tax on its semen, insemination labor, and the AI supplies/equipment it uses to perform the service?
No. Charges for semen and insemination labor are not subject to sales tax at all, and Tax Code Section 151.316's farm/ranch exemption covers AI supplies, AI equipment, animal care products, liquid…
Did moving a vehicle's turn-signal control to the right side of the steering column qualify for Texas's disability vehicle exemption?
Yes. Moving the turn-signal control to the right side of the steering column was a qualifying modification for the driver with left-side paralysis. The modification had to be required at the time…
If a Texas retailer gift-wraps an exempt item like a Bible for an extra charge, is the gift-wrapping charge taxable?
No. Gift wrapping is not itself a taxable service, and a charge for gift-wrapping an item follows the tax treatment of the item being wrapped. Because Bibles and other books are exempt from Texas…
Can a Texas Internet service provider buy telecommunications services (like leased lines) tax-free for resale, even though part of its Internet access revenue becomes exempt from sales tax starting October 1, 1999?
Yes. Telecommunications services purchased to provide Internet access, data processing, or information services still qualify as a sale for resale under Tax Code Section 151.006(1), because each of…
How does Texas apply state, city, and MTA (Metropolitan Transit Authority) sales tax to cellular roaming charges, including calls that originate or terminate outside Texas?
A call is subject to Texas tax only if it both originates in Texas AND is billed to a telephone number/billing or service address within Texas. Intrastate calls (originating and terminating in…
Could a commercial landlord separate electricity at year-end, refund rent tax, and buy required cleaning services for resale?
The year-end reconciliation adequately separated utility charges from rent, and the landlord could claim a credit after refunding the tenant's erroneously collected rent tax. Required cleaning…
Are a nonprofit's recurring fundraising sales exempt as isolated or occasional sales in Kansas?
Taxable — a 501(c)(3) nonprofit's recurring fundraising sales are not exempt in Kansas. The organization is not a "religious organization" under K.S.A. 79-3606(aaa) (it is not composed exclusively…
Can a New Mexico resident avoid state income tax with tax-protester theories — that wages paid in federal reserve notes are exempt, that the Sixteenth Amendment was never ratified, or that wages are not income?
No. The protest was denied. The Padillas skipped their own hearing, so they never overcame the legal presumption that the Department's income-tax assessments are correct, and the tax lien stood. The…
Did a Texas floor-plan lender owe motor vehicle sales tax when it repossessed a defaulting dealer's vehicle inventory and took title?
No. Repossession was not a taxable transaction, so the floor-plan lender owed no tax when it took title to the defaulting dealer's vehicles. Motor vehicle sales tax was due on the lender's later…
Is building a brand-new structure on a lot where the old one was demolished exempt as original construction?
Exempt labor — erecting a totally new building on a lot where the original building was torn down is "original construction," so the installation labor is not subject to Kansas sales tax; the…
On a project that adds a new addition to an existing grocery store and remodels the old space, which labor is exempt and which is taxable?
Split result — the labor to build a brand-new addition (a new front entry, deli, bakery, and seating area) onto an existing grocery store is exempt original construction under K.S.A. 79-3603(p),…
Does an out-of-state publisher have Kansas use tax nexus because of a joint venture with a Kansas law firm?
Yes. The Department concluded that the Tennessee publisher has nexus with Kansas for compensating (use) tax purposes. Under K.S.A. 79-3702, a 'retailer doing business in this state' includes one…
What special fireworks sales period did Kansas allow for the year 2000, and what did retailers need to do?
The 1999 Kansas Legislature authorized the sale of fireworks during December 28, 1999 to January 1, 2000 to celebrate the year 2000, in addition to the standard Independence Day selling period.…
How did House Bill 2071 raise Kansas fuel tax rates starting July 1, 1999, and what inventory tax applied?
House Bill 2071 (1999) increased all Kansas fuel tax rates by $.02 per gallon effective July 1, 1999, with further increases of $.01 per gallon on July 1, 2001 and $.01 per gallon on July 1, 2003,…
How did a Texas bank treat mortgage-security principal payments and interest on federal funds for the former franchise tax?
Principal repayments on available-for-sale debt securities were excluded from both Texas and everywhere receipts. Interest on federal funds was excluded under the federal-obligation rule only if the…
Did Texas motor vehicle tax apply when trucks and trailers were transferred to newly formed corporations for stock and then to new partnerships for interests?
No. A vehicle transfer to a newly formed corporation for no consideration other than its stock was not taxed, and neither was a transfer to a newly formed partnership for no consideration other than…
How is a dividend that a New York S corporation receives from its foreign (alien) subsidiary sourced for a nonresident shareholder's New York personal income tax?
The dividend is New York source income only to the extent of the alien subsidiary's issuer's allocation percentage under Article 9-A of the Tax Law (Tax Law § 210.7 and § 210.3(b)(1)). Because that…
If a professional service corporation shareholder had to add back excess pension contributions to New York income before 1988, can later withdrawals from a rollover IRA be excluded from New York income until that add-back amount is recovered?
Yes. Because the taxpayer's entire aggregate section 612(b)(7) add-back could be recovered within three years, the Department applied the three-year rule from TSB-M-82(3)-I(Rev.): the amounts the…
Do monthly payments a retiree receives for life under a former employer's non-qualified deferred compensation plan qualify as an 'annuity' eligible for New York's $20,000 pension and annuity income subtraction?
Yes. Because the retiree's monthly payments are paid in money, at a fixed percentage of his final average compensation, for life (or 10 years certain if longer) under a written employer plan, they…
Can a janitorial-services company buy its plastic trash can liners tax-free as a 'resale,' since some of them stay in the customer's trash cans?
No. Plastic trash can liners purchased by a janitorial contractor -- whether used to carry trash off the premises or left in office and restroom trash cans on the customer's site -- are treated as…
When an asbestos-removal contractor buys disposable plastic bags, poly sheeting, and protective clothing for a job at a tax-exempt organization's property, does the contractor owe sales tax on those supplies, and can it get that tax back?
The contractor's purchases of the plastic bags, plastic poly, and protective clothing are taxable retail sales when bought. But because the exempt organization's site is where the service is…
When a building owner lets another company occupy a whole floor for a monthly fee to store its own equipment, is that a taxable 'storage service' or an exempt real-property lease?
Not taxable, on these facts. New York taxes the service of storing goods in space the storage company controls, but it does not tax a genuine real-property lease -- and giving a tenant a specific…
Is the Article 9-A exclusion for dividends received from subsidiary capital limited to the amount of those dividends excluded for federal income tax purposes?
No. In computing entire net income under Article 9-A, the exclusion for dividends received from subsidiary capital under section 208.9(a)(1) is not limited to the amount the corporation excluded (or…
How is Kansas sales tax handled when a dealer buys aircraft for resale and the buyer is an out-of-state resident?
A corporation that buys aircraft in Kansas for the purpose of resale takes delivery here tax-free by giving the aircraft vendor a completed Kansas resale exemption certificate, which means it must…
Did converting a Florida general partnership into a limited partnership trigger deed, renewal-note, or nonrecurring intangible tax?
No. The converted limited partnership was the same entity as the general partnership, so the conversion deed was not taxable. A qualifying renewal of the existing note and mortgage also avoided…
Does a multi-level marketing company owe Kansas sales tax on sales of stressless, pain-relief, and stop-smoking capsules?
Taxable — Kansas sales and use tax law provides no exemption for stressless capsules, pain-relief capsules, or stop-smoking (smokers help) capsules, so the multi-level marketing company selling them…
Is a civic organization sponsoring community youth activities exempt from Kansas sales tax on its purchases and its fundraising sales?
Not exempt — a civic organization that sponsors community youth activities does not qualify for a Kansas sales-tax exemption just because it is nonprofit, so it must pay sales tax on its purchases…
What did House Bill 2549 do to the Kansas estate tax lien effective July 1, 1999?
The Kansas Estate Tax Act applies to estates of decedents who died on or after July 1, 1998, and originally imposed a lien on the gross value of the estate (attaching to proceeds if property was…
If a 501(c)(3) nonprofit is the general partner (not the sole owner) of a limited partnership that hires a contractor to build affordable housing, how much of the construction materials can be bought tax-free?
Only a proportional share. The Comptroller treats the limited partnership the same as it would treat the individual partners -- so the exempt general partner's percentage ownership interest in the…
If an electric cooperative buys items tax-free under a valid exemption certificate but then uses them in a way that isn't actually exempt (divergent use by a for-profit entity), how is the tax calculated -- on the fair market rental value or the original purchase price?
The default is fair market rental value (FMRV): under Rule 3.287(e), tax is due on the ongoing fair market rental value of items purchased under a valid exemption certificate but used in a divergent…
Did California stores create nexus for a related online retailer by accepting its customer returns, even though server location and hyperlinks alone did not?
Yes under the 1999 proposal. Local returns materially supported online sales; third-party server location and a hyperlink alone were not the stated basis.
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