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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I had enough investment credit to cover the tax I owed — do I still owe penalty and interest for paying the compensating tax late?
The protest was denied. Jezlaine, a jewelry manufacturer, bought equipment out of state in 1993–1994 but didn't know it owed compensating (use) tax and never reported it. A new CFO later filed for a m…
Which parts of a phone-based information, advertising, and voice-mailbox service are taxable telecommunications services in Texas, and which parts are not?
Charges for playing recorded advertisements or messages to callers who dial in are not subject to Texas sales tax, but charges for computerized telephone polling, call transfer/routing, and electronic…
Is telephone or on-site technical support for software and hardware subject to Texas sales tax, and does it matter whether the same company sold the property?
Yes, if the property being supported is located in Texas. Telephone technical support for tangible personal property (hardware or software) is taxable when the property is in Texas, and exempt under T…
Is cleaning a petroleum storage tank subject to Texas sales tax, and does it matter whether the tank is above ground, below ground, or over 500 barrels in capacity?
It depends on whether the tank counts as an improvement to real property. Cleaning a below-ground tank, or an above-ground tank holding more than 500 barrels, is treated as nontaxable real property re…
Does a wholly owned aircraft-transportation subsidiary that flies employees and customers of related companies for a cost-based fee qualify for New York's commercial aircraft sales tax exemption?
Yes, conditionally -- a wholly owned subsidiary whose sole activity is flying employees, customers, and potential customers of its related companies for a cost-based fee qualifies for New York's comme…
Is a charge for 'on hold' tapes with marketing messages played to callers waiting to be connected, plus related equipment, subject to Texas sales tax?
Yes. Charges for 'on hold' tapes containing marketing messages played to callers while they wait to be connected, and for the related equipment, are subject to Texas sales tax. A single charge coverin…
Did Nevada family partnerships and their corporate general partners acquire Florida situs because their Florida-resident president made investment decisions from Florida?
No. The Nevada partnerships and corporate general partners lacked Florida situs because their offices, records, staff, board meetings, and implementation of decisions remained outside Florida. The Flo…
When a manufacturer drop ships goods to a distributor's customer in Utah and the distributor won't pay sales tax or provide exemption documentation, who is responsible for the tax -- the manufacturer, the distributor, or the end customer?
The manufacturer's sale to its distributor is exempt as a sale for resale, even when the manufacturer drop ships the goods directly to a third-party customer in Utah -- the manufacturer is not liable …
Does electricity used in a vacant apartment unit count as residential use that is exempt from Texas sales tax?
Yes, effective October 1, 1995, when Section 151.317 of the Tax Code was amended, the Comptroller began treating electricity used in vacant apartments as residential use exempt from sales tax -- excep…
Is electricity used to power the pumps at a saltwater disposal well exempt from Texas sales tax as electricity used to transport a material extracted from the earth?
Electricity used to power the pumps at a saltwater disposal well is exempt from Texas sales tax only if the saltwater being transported is naturally occurring produced saltwater. Once that saltwater i…
Is a separately stated charge for inspecting and testing a commercial building's fire alarm system subject to Texas sales tax?
No. A fire alarm system in a commercial building is considered an improvement to realty, so separately stated charges for inspecting and testing that system are not subject to Texas sales tax, even th…
Did a Nevada corporation and partnership acquire Florida intangible-tax situs because Florida residents owned interests and performed some ministerial functions?
No. The Nevada corporation and partnership had no Florida office or employees, conducted their business outside Florida, and did not transact business with Florida customers. Some ministerial function…
Did a laminate manufacturer owe Florida use tax on sample chips supplied free with its products for color and texture selection?
No. Florida treated the sample laminate chips like exempt paint color cards because they showed available colors, textures, and patterns and accompanied the manufacturer's products at no separate char…
Did an annual tenant-improvement credit reduce taxable commercial rent when the lease did not require the tenant to make improvements?
Yes. The annual credit reduced the base rent subject to Florida sales tax because the lease granted it regardless of whether the tenant spent anything on improvements. The lease did not require improv…
Which payments under nationwide touring-bus leases were subject to Florida sales tax when the buses moved in and out of the state?
Florida tax applied to every lease payment attributable to a period when the bus was in Florida. Payments contracted to be paid after the lessee removed the bus from Florida were not taxable if the re…
If I buy molds from a California company and a California company also modifies those molds, do I owe Utah sales/use tax on the modification (labor) charges, or only California tax?
No Utah sales tax applies. The Commission ruled that because a California company performed the mold-modification labor in California, the transaction was a California sale, not a Utah sale, so Utah's…
Was an intercompany development and management fee taxable as commercial rent because it was calculated from the cost of real property facilities?
No. The fee paid for acquisition, design, construction, financing, leasing administration, and facility management services. The agreement gave the parent no right to use, occupy, or control the facil…
On a combined bank franchise tax return, how are a banking group's allocation factors and loan receipts sourced, and does an intercorporate transfer of a loan change its location?
On a combined Article 32 return the banking group is treated as one corporation. The combined activities of all members are used to compute the entire-net-income, alternative-entire-net-income, and as…
Did a Florida investment adviser create Florida intangible-tax situs for a Texas partnership when the adviser could recommend but not implement investments?
No. The Florida adviser could keep asset records and recommend investments, but had no authority to decide or implement transactions for the Texas corporation or partnership. Actual investment decisio…
When a vehicle leasing company restructures using a titling trust to hold legal title to leased vehicles, are the vehicle transfers into and within that structure subject to Utah sales tax?
No, not the vehicle/lease transfers themselves. A leasing company can acquire a vehicle tax-free under Utah's resale exemption (§ 59-12-104(26)), and transferring that vehicle and lease into a titling…
Does a contractor owe Texas sales tax on the profit and overhead portion of a cost-plus construction contract, with or without a guaranteed maximum price?
Cost-plus contracts (with or without a guaranteed maximum price) are treated as separated contracts under Tax Code § 151.056, so the contractor collects sales tax on materials charged to the job owner…
Is a single-member New York LLC subject to New York tax, and does owning it make a foreign corporate sole member taxable in New York?
New York follows the LLC's federal classification. A single-member LLC that is disregarded for federal income tax (the default under the check-the-box rules) is treated as a branch or division of its …
Are industrial development agency bonds investment capital, is their interest investment income, and are they governmental securities for the investment allocation percentage?
Yes. Bonds issued by the New York City Industrial Development Agency -- a governmental instrumentality (public benefit corporation) under Article 18-A of the General Municipal Law -- are investment ca…
Does a foreign corporation that enters New York only to meet with a prospective accountant, banker, lawyer, or underwriter become subject to the Article 9-A franchise tax?
No. A foreign corporation (XYZ) that enters New York for the limited purpose of meeting with an accountant, banker, lawyer, or securities underwriter it might engage -- and does nothing else in the St…
Is a cane-like device designed to help Parkinson's disease patients overcome motion block exempt from Texas sales tax?
Yes. The STEPP-ALERT, a cane-like device with a multi-colored flap that helps Parkinson's disease patients experiencing motion block phenomenon, qualifies as a therapeutic device and may be purchased …
When an exempt organization owns part of a joint venture that buys taxable items for a joint venture facility, how much of the purchase price can be bought tax-free with an exemption certificate?
An exemption certificate can only cover the percentage of a taxable item's purchase price equal to the exempt organization's percentage ownership interest in the joint venture that owns the facility w…
Does a multi-level marketing/direct sales company have to collect and remit Texas sales and use tax on sales made through its independent distributors?
Yes. Because a company's independent distributors act as its agents under Texas Tax Code § 151.024 and Rule 3.286(a)(3), the company (not the individual distributors) must collect and remit Texas sale…
Is a matchmaking service that arranges social lunch meetings between clients subject to New York sales tax?
No -- a service that interviews clients, matches them with other clients by phone, and arranges a luncheon meeting between them is not subject to New York sales tax, because the primary function of en…
Does an aircraft leased to a commuter air-charter operator qualify as an exempt "commercial aircraft" under New York sales tax law, even though the lessor also uses it for its own company business?
Yes -- an aircraft the owner leases to a commuter air-charter operator qualifies as an exempt "commercial aircraft" under Tax Law § 1115(a)(21), exempting the lease payments and related maintenance/re…
Were securities owned by a Nevada partnership taxable in Florida when all three general partners were Florida residents but decisions and implementation occurred elsewhere?
No. The securities were owned by the Nevada partnership, whose meetings, investment decisions, records, business location, and transaction implementation were outside Florida. They were not owned, man…
Does a Texas mobile home dealer owe sales tax on the tools, equipment, and materials it uses to repair or refurbish manufactured homes held for resale?
Yes, in most cases. A Texas mobile home/manufactured housing dealer that repairs or refurbishes homes held for resale owes sales tax on the vehicles, jacks, nail guns, hand tools, and most other equip…
Does a tax-exempt religious organization owe Texas sales tax on books it publishes and sells, mostly at religious services and meetings?
No. The Comptroller ruled that a nonprofit religious organization exempt under IRC 501(c)(3) does not owe Texas sales tax on the sale or distribution of books it publishes, where the books were writte…
Was a London-branch market-linked deposit exempt from Florida intangible tax even though its interest depended on financial-index performance?
Yes. Florida treated the product as an exempt bank deposit, and therefore exempt money, even though interest depended on market measures and could be zero. The Department relied on authorities stating…
Did RR 97-8 require a taxpayer to qualify as an 'economic impact zone business' before claiming the zone investment tax credit?
No. RR 97-8 said the separate 'economic impact zone business' definition did not limit the investment credit. Eligibility turned on qualifying property being placed in service in an economic impact zo…
Does a grower who hybridizes and sells lily bulbs grown from seed on their own land qualify for Utah's agricultural sales tax exemptions?
Yes, with conditions. A grower who produces lily bulbs from seed on their own land as a seasonal crop qualifies as an agricultural producer, and can sell the bulbs tax-free during harvest season under…
My tax return and check probably got lost in the mail years ago — do I still owe the penalty and interest on the missing payment?
The protest was granted in part and denied in part. Zia Printing, a one-person Albuquerque print shop, had a good filing record but the Department had no record of its November 1989 return or payment.…
Does a county owe sales tax on debt-collection legal services performed by a law firm, and is the law firm's reimbursed expenses treated as taxable debt collection or sales tax?
No. Legal services performed by an attorney to recover debts for a client are not taxable as debt collection services, and a county, as an exempt governmental entity, does not owe sales tax on those l…
Did collateral assignments of already-taxed purchase-money loan documents and mortgage modifications adding land trigger more Florida documentary stamp tax?
No additional documentary stamp tax was due. Tax had already been paid on the original notes, and the purchase-money loan documents were assigned only as added collateral for existing loans, not to se…
Can the Utah Tax Commission give a product-by-product ruling on whether a manufacturer's line of electrotherapy medical devices (TENS-type pain units, muscle stimulators, biofeedback systems, and similar equipment) qualifies for the home medical equipment sales tax exemption?
The Commission declined to give a yes/no answer for each product. It explained that eligibility for Utah's home medical equipment exemption isn't determined by what kind of item it is, but by three ca…
Are batteries for a blood pressure monitoring device exempt from Texas sales tax?
Batteries for a blood pressure monitoring device can be purchased tax exempt in Texas, but only if the device itself was purchased exempt under a doctor's prescription, and the batteries are bought fr…
Was a contract covering towing and limited emergency roadside labor taxable as a Florida service warranty?
No. Florida's insurance staff determined that the contract fell under section 624.124, which allows specified towing and emergency motor-vehicle services without treating the provider as an insurer. T…
Does electricity used in a vacant apartment unit count as residential use that is exempt from Texas sales tax?
Yes. The Comptroller determined that Section 151.317 of the Tax Code, as amended, defines residential use of electricity to include electricity used in vacant apartments -- except electricity used by …
When a manufacturer outsources its entire computer division, are the outsourced services and the equipment the provider buys exempt -- and what about equipment the provider buys as the manufacturer's agent?
Mostly exempt, with one taxable piece. When a manufacturer outsources its whole computer division to an unrelated provider, the outsourced computer and data processing services are exempt under Conn. …
Does Utah sales tax apply to charges for leasing space on remote Internet servers to customers?
Not taxable under 1996 Utah law. Charges for access to online services like the Internet, including reselling leased space on remote Internet servers, were not subject to Utah sales tax at the time of…
Was a guaranteed vehicle buyback-price agreement subject to Texas motor vehicle sales tax?
It depended on the seller. A guaranteed buyback agreement purchased directly from the vehicle dealer was included in taxable value and subject to motor vehicle sales tax. An agreement purchased from a…
Is steam exempt from Texas sales tax the same way ice is exempt?
No. The Comptroller ruled that steam does not qualify for a sales tax exemption. Although steam, like ice, is water in an altered state, the Tax Code only grants specific exemptions to ice (Tax Code 1…
If a fuel distributor blends cheap marine diesel or off-spec No. 2 heating oil with enhanced diesel motor fuel to make standard No. 2 heating oil, is the result taxable 'enhanced' diesel motor fuel?
No — the resulting product is unenhanced diesel motor fuel, so previously-untaxed inter-distributor sales of it stay free of the Article 12-A excise tax, the Article 13-A petroleum business tax, and t…
How did Texas tax a trust's acquisition of long-term operating leases, related vehicles, and beneficial interests?
The dealer owed tax when it first leased the vehicles. Assigning the lease contracts to the trust was an untaxed intangible transfer. The trust could take vehicle title for resale without tax only if …
What did a Texas seller need on an auto-auction document to support a vehicle's acquisition for resale?
The submitted auction document was acceptable if it included the purchasing dealer's general distinguishing number and signature. The seller had to retain its copy for four years from the sale date.
Were arena construction materials exempt when a governmental owner bought them directly through a developer acting as purchasing agent?
Yes, for materials purchased under the submitted direct-purchase procedure. The governmental entity executed purchase orders, was invoiced, paid vendors directly, took title, bore risk of loss, and su…
Are a company's computer-link services -- routing credit-card authorizations between merchants and card issuers, and connecting PC users to Internet service providers -- taxable Connecticut computer and data processing services?
Yes, both are taxable. A company that uses computers to link merchants' card-authorization devices to card-issuing banks, and to link PC users to an Internet/computer service provider, is providing ta…
I moved from a no-income-tax state and didn't know I owed New Mexico tax — can I avoid the interest?
No — the interest stands, even though the couple acted in good faith. Robert and Marilyn Davidson moved to New Mexico in 1990 after 30 years in Texas, which has no income tax. Mr. Davidson taught part…
Can a business renting out mobile office trailers use a resale certificate instead of paying sales tax on repair parts and repair labor for that rental inventory?
Yes. A business may issue a resale certificate instead of paying sales tax on repair or replacement parts bought for mobile office trailers held for rental, and may also issue a resale certificate to …
Does a nightclub or bar owe mixed beverage gross receipts tax or limited sales tax on the cover charges it collects from customers?
It depends on why and when the cover charge is collected. Cover charges collected from customers under 21, and all cover charges collected after 11:00 p.m., are subject to limited sales tax. Cover cha…
New York Advisory Opinion TSB-A-96(45)S: If a three-year car lease is extended by three months (because the lessee's replacement vehicle isn't ready), are the extension's rental payments hit with the extra 5% passenger car rental tax on top of ordinary sales tax -- and does it matter whether the extension is agreed to before or after the original lease expires?
It depends entirely on WHEN the extension is agreed to. If the lessor and lessee agree to extend a long-term (one-year-plus) passenger vehicle lease BEFORE the original lease expires, the extension is…
New York Advisory Opinion TSB-A-96(44)S: Is a database data-cleaning/matching service taxable, and are the related software license fees a company charges its clients subject to New York sales tax?
Split ruling: the data service is exempt, but the software license fees are taxable. Company ABC organizes and updates client marketing databases (standardizing names/addresses, matching households, v…
New York Advisory Opinion TSB-A-96(43)S: Are a manufacturer's sales of corrugated cardboard and box-forming machinery to companies that turn the material into shipping boxes for their own products exempt from New York sales and use tax?
Yes, both are exempt -- but only if the customer gives a timely exemption certificate. Petitioner's client sells corrugated material (which customers form into their own non-returnable shipping boxes)…
Are Kudos whole grain bars exempt from Texas sales tax as a food product, or taxable as a snack item?
The Kudos whole grain bar is exempt from Texas sales tax as a cereal product and food product, reversing the Comptroller's earlier position that it was a taxable snack bar.
How did Florida determine the intangible-tax exemption for fund shares backed by federal and Florida tax-exempt securities?
Fund shares were exempt when the underlying portfolio held only exempt assets at the statutory valuation time. Value attributable to direct U.S. obligations remained exempt. If the rest of the portfol…
What did the 1996 Kansas cigarette and tobacco legislation change for dealers, minors, and vending machines?
Effective July 1, 1996, the 1996 Kansas cigarette and tobacco legislation increased regulation of the sale of cigarettes and tobacco products. The biennial Kansas Cigarette License fee rose from $12 t…
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