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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Do casualty insurance agencies owe Texas sales tax on fees they charge clients for services like claims administration, risk inspections, and rate-setting when those fees are paid instead of a sales commission?
Yes. When a casualty insurance agency charges a client a fee -- instead of earning a sales commission -- for services such as claims administration, risk inspections, rate-setting, or claims/loss adju…
Can a caterer, hotel, or restaurant use a resale certificate to buy or rent tables, chairs, decorations, or audio-visual equipment used in providing food service, instead of paying tax on those items?
No. A caterer, hotel, or restaurant that buys or rents equipment (such as tables, chairs, utensils, decorations, or audio-visual equipment) to use while providing food service must pay tax on that equ…
Can a corporation and its affiliates file one combined Texas sales tax return instead of separate returns for each entity?
No. The Comptroller's office will not accept a combined sales tax return or report from a corporation and its affiliates -- Texas requires each entity to file its own separate report, and the agency d…
Are low-vision aids and devices sold to blind or visually impaired individuals exempt from Utah sales tax?
No, there is no special sales tax exemption for sales to blind or visually impaired individuals. Utah taxes tangible personal property regardless of the purchaser's physical limitations, and items tha…
Is providing equipment with an operator for oilfield lease-site work -- like restoring a wellsite, cutting a pipeline right-of-way, building or maintaining a road, or setting frac tanks -- taxable under Texas sales tax?
It depends on the specific service. Reclaiming an oil and gas lease site back to its pre-drilling condition is not taxable, but restoring other nonresidential real property improvements is taxed. Sett…
Is non-executable source code that a seller licenses to manufacturers, who must substantially re-engineer it before use, a 'completed computer program' subject to Texas sales tax?
Yes. The Comptroller ruled that the seller's non-executable source code -- even though customers must substantially re-engineer it before using it -- meets the dictionary definition of 'source code' a…
Is a biotechnology company's purchase of cell, organ, or tissue taken from a cadaver exempt from Texas sales and use tax?
Yes. The Comptroller reversed an earlier determination and ruled that cell, organ, and tissue purchased or sold by a biotechnology company are exempt from Texas sales tax to the extent they are taken …
Were Florida residents' interests in a non-SEC-registered limited partnership exempt, and did the partnership itself have Florida intangible-tax situs?
The Florida residents' limited-partnership interests were exempt because the partnership was not registered with the SEC. The partnership itself also was not subject to Florida intangible tax because …
How does New Mexico set the market value of my land for property tax, and can I challenge the state's number?
The cooperative won a substantial reduction, though not everything it asked for. Central Valley Electric Cooperative protested the Property Tax Division's $396,400 valuation ($11,325 per acre) of its …
Does a process server who files court documents and pulls certified copies of court records owe sales tax on those services?
Filing or serving legal documents like citations, subpoenas, and writs is not a taxable service, and researching court records or requesting certified copies is not taxable by itself. But sales tax is…
Does a company that locates and negotiates preferred provider network contracts for health plans owe Texas administrative services tax or sales tax on the contingent commissions it earns?
No. A company that locates and negotiates contracts with preferred provider networks on behalf of health care and occupational injury plans, earning a contingent commission based on savings, owes neit…
When a tax-exempt nonprofit organization hires a for-profit carnival operator to run an event, who owes sales tax on the amusement -- the carnival operator or the exempt entity?
It depends on two things: whether the contract between the exempt entity and the carnival operator is a joint venture (sharing both profits and losses, which makes ticket sales taxable), and if not, w…
Does a front-end loader used to blend materials and support cooling during processing qualify for Texas's manufacturing equipment sales tax exemption?
No. The Comptroller ruled that a front-end loader used to blend seed and product and to support the deaeration and cooling process is treated as intraplant transportation equipment or equipment used i…
Are replacement or repair parts for exempt ski resort equipment (snowmaking equipment, grooming equipment, tramways) also exempt from Utah sales tax?
Yes, ultimately. After first advising the taxpayer to treat replacement parts as taxable pending a related manufacturing-exemption decision, the Utah State Tax Commission concluded on December 6, 1996…
How did the former Texas throwback rule source receipts from medical products shipped from Texas, including exports?
Delivery to a Texas buyer produced Texas receipts. Delivery to another state produced non-Texas receipts unless the seller was not subject to tax there, in which case the receipts threw back to Texas.…
Did a year-end sale of receivables between out-of-state affiliates avoid Florida intangible tax, and was the resulting note eliminated on their consolidated return?
Yes to all three requested conclusions. The selling affiliate did not own, manage, or control the receivables on January 1. The purchasing affiliate lacked Florida nexus and the receivables did not ha…
Does an engineer hired by an insurance company to investigate a homeowner's damage claim have to charge the insurance company sales tax on the investigation?
Yes. The Comptroller ruled that an engineer's investigation of an insured's claim -- inspecting a dwelling and reporting on damage and its cause -- is a taxable 'insurance service,' so the engineer mu…
Is a machinery moving company's charge to relocate equipment within or between facilities subject to Texas sales and use tax?
No, not by itself. A machinery moving company's charge for simply relocating a machine or piece of equipment within a plant or between facilities is not taxable, but the entire charge becomes taxable …
Is selling stock in a corporation that operates a country club subject to Texas sales tax when stock ownership is required for membership?
Yes, generally -- if owning stock is required to get a special privilege, status, or membership classification in a private club that provides amusement services, the sale of that stock is taxable. Th…
When a direct-sales or multi-level-marketing company gives away free prizes or awards at a home party, who owes the tax -- the company or the person who receives the prize?
The company giving away the prize owes the tax, not the recipient. Pulling an item out of tax-free resale inventory to give away as a prize is a taxable divergent use, so the company (or the distribut…
Does metal-leveling equipment qualify for the Texas manufacturing sales tax exemption when the leveling process changes the metal's tensile and yield strength?
Yes. Because leveling increases the metal's tensile and yield strength to meet the customer's specifications, the Comptroller found the process causes a physical change and qualifies as 'processing,' …
Does an out-of-state captive equipment-finance company that leases/finances equipment used in Utah, with no Utah office or employees, have Utah income/franchise, property, and sales/use tax nexus?
It depends on the facts of each lease/finance arrangement — this ruling explains the tests rather than giving one flat answer, because whether a transaction is a true lease or a secured loan changes t…
When ranchers upgrade a privately owned power line and then transfer it to a city, is sales tax owed on the upgrade materials -- either because the operation is agricultural or because the line ends up city-owned?
Yes, sales tax applies. A group of ranchers/farmers owned a power line serving their farms and agreed to upgrade it "to code" so a city could take over ownership and maintenance. Even though the line …
Does a tobacco distributor owe Utah cigarette and tobacco tax when it sells cigarettes and cigars to the duty-free store at the Salt Lake City airport, even though the duty-free store resells them to travelers leaving the country?
Yes -- the distributor still owes the tax, unlike the sales tax treatment of the same duty-free sales. Utah's cigarette and tobacco taxes are levied on the FIRST sale, purchase, use, or storage of the…
Does a private insurance carrier owe Texas sales and use tax on crop loss adjusting services it buys, even though the underlying crop insurance is federally reinsured?
Yes. Texas sales and use tax applies to crop loss adjusting (claims appraisal) services that a private crop insurance carrier buys from an outside adjusting company, even though the underlying crop in…
If an industrial supply company runs a customer's on-site tool crib and charges a management fee plus product costs, is that management fee taxable?
Yes, in most cases. The Comptroller ruled that if the industrial supply company is a retailer of all the sales made through the tool crib (not acting as the customer's purchasing agent), then its mont…
Who owned the interest earned while a Texas county held collected motor vehicle sales tax?
The state. Based on an enclosed Attorney General opinion and related case law, Tax Policy said interest earned while the county held motor vehicle sales tax belonged to Texas and had to be remitted to…
Who owed Texas use tax on a vehicle bought outside Texas and leased for use in Texas, and what happened at buyout?
The operator owed Texas use tax when the out-of-state-purchased vehicle was brought into Texas for use. Tax was based on the owner's purchase price, with credit for similar tax legally paid to another…
Is sales tax due on assets transferred into a new corporation or partnership as part of a statutory merger or a tax-free IRC 351 reorganization?
No. Assets transferred as part of a statutory merger, or transferred to a newly formed corporation or partnership for its initial capitalization, are not subject to Texas sales tax, as long as either …
Does a company owe Texas sales or use tax on loose product samples and sample binders or books that it produces or buys to help its sales representatives solicit customers?
Yes. The Comptroller ruled that loose samples and sample binders or books distributed in Texas are taxable, because their only use is to demonstrate the products they represent, not to be sold themsel…
Is a temporary staffing agency's key-entry data-entry work, performed at a client's own facility using the client's own computer system, subject to New York sales tax?
No -- charges from a temporary staffing agency for its temps' key-entry of manual records (time cards, C.O.D. stubs, package pick-up records) into a client's own computer system, at the client's own l…
The rules for exemption certificates changed in 1992 — do the old timing rules still apply to my earlier sales?
McDonnell Douglas lost this round. It had claimed gross receipts tax deductions for services it performed for Martin Marietta (which Martin Marietta resold to a U.S. agency), but it couldn't produce t…
Does a film and video production company owe sales tax on special-effects paint, blank tape stock, and duplicate tapes (dubs) it has made for clients?
It depends on the item. The blue paint used exclusively for blue-screen special effects can be bought tax-free with an exemption certificate (though separately billed painting labor is still taxable),…
Does the manufacturing exemption cover a microwave oven used to cook or heat food for sale?
It depends on who operates the oven. A microwave or convection oven used by a restaurant (or similar business) to cook food that it then sells qualifies for the manufacturing exemption, but a microwav…
Is a 'Maps on Demand' service that delivers maps and proximity information over the internet subject to Texas sales tax?
Yes. The Comptroller ruled that a 'Maps on Demand' service delivering maps and proximity data over a web page is taxable in Texas, and the entire charge -- including the monthly minimum and any per-ac…
Does a university have to charge sales tax on the fee it bills dorm students each semester for network port access to the campus computer system?
Yes. The semester fee a university charges dorm students for network port access to the campus computer system is taxable as a sale of information services, and the university must collect sales tax o…
Is a mandrel used to wind fiberglass filament and resin into pipe and tanks exempt from Texas sales and use tax, and what about the disposable rollers used to apply resin?
Mandrels purchased after January 1, 1995, and used to wind fiberglass filament and resin into pipe and tanks are totally exempt from Texas state and local sales and use tax, and the buyer may give sup…
Why could a Texas vehicle owner face local property tax after already paying motor vehicle sales tax?
The taxes were separate. Motor vehicle sales tax applied to the purchase price. Cities and counties could also impose local property tax, generally on business-use vehicles and sometimes on personal-u…
Did out-of-state salesmen who could bind the company on order terms remove Public Law 86-272 protection and Texas throwback?
Yes. Because the salesmen could bind the company on order quantities, some prices, payment terms, delivery dates, and refusals, the company had nexus in every state where it sent them. It was not prot…
Does a wholesaler that only makes exempt resale of natural gas during pipeline transportation need a Texas sales tax permit, and can it use a resale certificate without a permit number?
No. A wholesaler that only makes exempt sales of natural gas resold during pipeline transportation does not need a Texas sales tax permit solely to report those exempt sales, but must still issue a re…
Where were information-service receipts sourced for the former Texas taxable-capital and earned-surplus components?
They were sourced where the services were performed. The Comptroller classified the client's activity as information services and applied that performance-location rule to both taxable capital and ear…
Were payments under a bona fide one-year resident-hotel lease exempt from Florida transient rentals tax, including when unforeseen events ended the lease within six months?
Yes, if the written one-year lease was entered in good faith with intent to honor it. Florida found the resident payments exempt under the over-six-month lease rule. An early termination caused by an …
Is electricity used at a food-processing facility exempt from Texas sales tax as manufacturing use when the facility's own vending machines are what ultimately sell the packaged food?
No, the electricity is taxable. Because the facility is owned by the same entity that owns the vending machines the food is ultimately sold through, the Comptroller treated the electricity as being us…
Does a multi-level marketing or direct sales company have to collect and remit Texas sales and use tax on sales made by its independent distributors?
Yes. Under Rule 3.286(a)(3) a direct sales/multi-level marketing company is treated as the retailer, its independent distributors are its agents for nexus purposes, and the company -- not the distribu…
What rules of play govern selling and conducting seal card games in Nebraska?
Seal card games are legal, and this ruling is the operator's rulebook for running them. Under Revenue Ruling 35-96-5, LB 1277 (effective July 19, 1996) made seal card games a legal form of lottery by …
Was an airport baggage-handling system a real-property improvement, and who owed Florida tax under the lump-sum construction contract?
The system was an improvement to real property. Under the lump-sum contract, the contractor was the consumer and had to pay sales or use tax on materials, supplies, and the fabricated cost of componen…
Did receivables transferred by a Florida parent to an out-of-state subsidiary retain Florida intangible-tax situs when the parent performed only collection support?
No, if the Florida parent's work stayed within the listed ministerial and processing functions. The out-of-state subsidiary's receivables then lacked Florida taxable situs, regardless of whether the p…
How did Florida tax signs manufactured in Florida and furnished with subcontracted installation under lump-sum or fully itemized contracts?
Under lump-sum and similar fixture-installation contracts, the sign maker was the ultimate consumer and owed Florida use tax on each sign's full manufactured cost when made, even for an out-of-state j…
How much of a marina's $20,000 monthly master-lease payment was taxable when parts of the property were subleased or used for separately taxed boat storage?
Florida rejected the marina's proposed $27.12 monthly tax and calculated $165.11. Tax applied to the lease amount allocated to undeveloped mangrove land and to the marina's own office, restroom, and r…
Did an out-of-state seller have to collect Florida tax when it sold goods to an unregistered out-of-state buyer and drop-shipped them to the buyer's Florida customer?
No. The seller did not have to collect Florida sales or use tax because both seller and buyer were outside Florida, the goods were outside Florida when sold, and a common carrier delivered them from o…
Which shopping-mall tenant charges were taxable as rent, and when could a separately billed electricity reimbursement be excluded?
Nearly every listed charge was taxable rent: fixed and percentage rent, common-area maintenance, real-estate tax, sprinkler, insurance, marketing, refuse, landlord-work, water, gas, and telephone char…
Was a civic center's sale of controlled advertising space on scoreboards, press tables, and concourse signs subject to Florida sales or use tax?
No. The advertisers received no right to occupy, control, or exclude others from the scoreboards, press tables, or concourse signs, so the arrangement was not a taxable lease or license of real or tan…
Is an optional escrow fee charged so customers can claim a software's source code if the seller goes out of business subject to Texas sales tax?
Yes. The Comptroller ruled that the escrow fee is part of the total sales price of the taxable software, so it is subject to Texas sales/use tax both when first charged and each year it is renewed.
How were separately contracted software modifications, upgrades, and maintenance receipts sourced under former Texas franchise tax?
Separate modifications and maintenance were services sourced where performed, while separately stated upgrades were sourced to the payor. If one upgrade-and-maintenance contract did not reasonably sta…
How were separately contracted software modifications, upgrades, and maintenance receipts sourced under former Texas franchise tax?
Separate modifications and maintenance were services sourced where performed, while separately stated upgrades were sourced to the payor. If one upgrade-and-maintenance contract did not reasonably sta…
Was a regional water supply authority formed by counties and cities exempt from Florida intangible personal property tax?
Yes, to the extent the authority met the ownership and membership requirements in section 163.01(9)(c). A qualifying interlocal governmental entity is treated like a Florida municipality or county for…
Could an acquired Florida affiliated group stop filing consolidated corporate income tax returns after it became part of a new federal group?
Yes. Florida granted the request beginning with 1995 tax years because the former affiliated group ceased to exist when a new parent acquired it. That former group would no longer file a federal conso…
Is the labor to install new equipment in a refinery or chemical plant taxable, and does an October 1995 capacity-expansion exclusion change the answer?
It depends on the facts: installation labor on qualifying manufacturing equipment that is not an improvement to realty was exempt in 1995 under Sec. 151.3111, but the same labor was taxable in 1994 be…
Is a consultant's fee for auditing EDP controls, helping a client pick new computer hardware/software, or writing a software vendor's white paper subject to Texas sales tax?
No, none of the three described services is taxable on its own. Reviewing a client's EDP controls and writing a confidential audit report is not taxable, and neither is a needs-assessment/vendor-selec…
Does Texas sales tax apply to charges for staking (surveying) an oil or gas well before it is drilled?
Mostly yes. The boundary surveying and acreage/unit-designation work used to stake an oil or gas well are taxable surveying services, but the narrower charge for determining the actual placement of th…
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