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When did superseded RR 96-7 exempt a federal employee's South Carolina hotel stay from accommodations sales tax?
The stay was exempt only when the federal government directly purchased it—through direct billing, a government check, or a qualifying centrally billed government card. An employee-paid stay was taxab…
Is a syringe that injects solution into a catheter attached to a patient (rather than directly into the patient) exempt from Texas sales tax as a hypodermic syringe?
No. Because the needle goes into a catheter attached to the patient rather than directly into the patient, the syringe is not considered a hypodermic syringe, so it does not qualify for the Tex. Tax C…
A supplier sells car wash soap, upholstery shampoo, deodorizers, and other supplies to auto dealers, car washes, body shops, and detailers. Which of these items are taxable, can customers just write 'BLANKET' on a resale certificate, and is the supplier covered if a customer just refuses to pay tax?
No blanket exemption from listing items, and no, a refusal-to-pay form doesn't protect the seller. A resale certificate must describe the general nature of the taxable items — the single word 'Blanket…
If a company keeps a resale inventory of replacement parts and later writes some of them down or scraps them because they're obsolete, is sales tax due on those parts?
It depends on what happens to the parts. Parts purchased for resale can be bought tax-free with a resale certificate. If the parts are later marked down and sold, sales tax is due on that (lower) sell…
Is the sale, fabrication/manufacture, and installation of custom blinds, draperies, and plantation shutters taxable in Texas, and does it matter whether the work is done in new-home construction versus an existing home?
It depends on the item and on new construction vs. existing home. Materials that become part of blinds and draperies are always taxable (tax collected per the contract type — lump-sum vs. separated). …
Does a ready-mix concrete reclaimer — equipment that washes and separates sand and gravel out of waste ready-mix concrete so it can be reused — qualify for Texas's manufacturing equipment sales tax exemption?
Yes, if the equipment is an integrated piece of equipment whose primary purpose is a direct manufacturing process. The Comptroller ruled that washing and separating manufactured aggregate so it can be…
A manufacturer hired a company to manage its parts/supplies warehouse, and that same company also sells parts/supplies to the manufacturer. What determines whether the warehouse management fee is taxable?
It depends on whether the manager is performing taxable services (like janitorial or data processing) as part of the warehouse management work. If so, tax is due on those taxable services, including o…
When is custom software considered 'developed from scratch' and when has a developer transferred 'exclusive rights' to it, for purposes of the Texas custom-programming tax treatment discussed in an earlier ruling (fiche 9309L1273C08)?
It depends on the facts, but the letter lays out the tests: 'exclusive rights' means the developer gives up ALL rights to copy, change, or market the software and won't sell it to anyone else — if the…
If a state agency leases office space in a privately owned building and puts the utilities in its own name, is it exempt from tax on the utilities even if the building owner later reimburses the agency for the utility cost?
Yes. Utilities are taxable items, but a state agency occupying a privately owned building can buy them tax exempt under Sec. 151.309, Tax Code, as long as the utilities are in the agency's own name an…
Is revenue from a repeater service that is not connected to the public switched telephone network subject to Texas sales tax, and is it also subject to the Telecommunications Infrastructure Fund assessment?
Yes to sales tax, no to the TIF assessment. Revenue from a repeater service that is not interconnected to the public switched network is subject to Texas sales tax, but is not subject to the Telecommu…
New York Advisory Opinion TSB-A-96(35)S: When a group of securities-clearing companies finances new equipment through the New York City Industrial Development Agency's bond program, are the equipment purchases/leases, the companies' lease payments to the IDA, the $1 buyout price, and the early-removal penalty all exempt from New York sales and use tax?
Yes to all four -- as long as the IDA stays the on-paper purchaser, lessor, or lessee. Because title to the equipment runs through the New York City Industrial Development Agency (IDA) under General M…
Is a technical writing service — such as preparing a material safety data sheet on compressed gases — subject to Texas sales tax?
No, not the writing/editing itself. Separately-stated charges for developing a technical document (research, writing, and editing) are not taxable, but the writer owes tax on the materials and supplie…
A privately owned building is leased to a tax-exempt entity, and the owner plans a 12,000 square foot expansion. Is the construction work exempt from Texas sales tax as an improvement for an exempt organization?
No. Because the building is privately owned, the construction work can only qualify for the exemption if the remaining lease term exceeds the anticipated life of the improvement. Here the lease has 9 …
Is a towable hydro-mulcher taxed as a motor vehicle or under the limited sales tax, and what happens when one is mounted on a cab chassis before the chassis is sold?
Towable hydro-mulcher units are considered equipment or moveable specialized equipment and are taxed under the limited sales tax provision (not as motor vehicles). But if one of those units is install…
If a company buys an aircraft, will it owe Texas sales or use tax depending on where the aircraft is hangared and how much it's flown in Texas?
The Comptroller agreed with the taxpayer on all three points: (1) an aircraft hangared outside Texas and used more than 50% outside Texas is not subject to Texas use tax; (2) if the aircraft is used o…
Is a medical transcriptionist's service of transcribing oral or taped medical dictation into a patient's records and letters subject to Texas sales tax as a data processing service?
No. A district court ruled that a medical transcriptionist's transcription of medical dictation is not a taxable data processing service, the Comptroller decided not to appeal, and medical transcripti…
A for-profit company contracts with a Texas public school district to operate and manage one of its elementary schools, buying computers, software, books, and supplies for the school. Are those purchases exempt from Texas sales/use tax?
Generally no, not automatically. Because the for-profit company (not the school district) is buying the goods to perform its taxable-benefit services contract, the company owes tax on the taxable good…
Can a utility company refund state and city sales tax on an inactive residential electricity account where the electricity was used 100% for residential purposes?
The utility can accept an exemption certificate and refund the state sales tax, but only for billing periods within the 4-year statute of limitations (billing periods starting on or after August 1, 19…
Were consumer loans taxable after an out-of-state bank sold them to an out-of-state subsidiary before January 1?
No. The loans had no Florida taxable situs on January 1 because the non-Florida subsidiary owned them. The bank's described servicing was ministerial, and the subsidiary's note could be eliminated as …
Did a year-end sale of receivables leave the Florida seller or the out-of-state buyer owing Florida intangible tax on the receivables?
No. The Florida corporation did not own, manage, or control the receivables on January 1 after selling them to the out-of-state limited entity, and the buyer had no Florida taxable situs on the submit…
Were employer-sponsored 403(b) retirement plans subject to Florida intangible personal property tax?
No. Florida treated the 403(b) plans as annuity contracts whose cash equivalents qualified as exempt money, so the married plan holders did not owe annual or nonrecurring intangible personal property …
Did a Florida resident owe intangible tax after contributing an investment portfolio to a non-SEC-registered out-of-state limited partnership?
No. After contribution, the partnership rather than the Florida resident owned the portfolio, so the resident had no tax on those assets. The resident's limited-partnership interest was exempt because…
Are restocking fees charged when a customer returns merchandise subject to Texas sales tax?
No. Restocking fees are not taxable. The retailer should credit the customer the original purchase price plus the tax paid on that price, and then may deduct the separately stated restocking fee from …
Is a water softener used to condition water for a newspaper printing press exempt from Texas sales/use tax as manufacturing equipment?
No. The water softener itself is taxable equipment because it is one step removed from directly manufacturing the newspaper. However, the chemicals previously used to treat the water are exempt as nec…
Does a raw water sand filter system that treats water used to cool machinery and equipment in a manufacturing process qualify for Texas's manufacturing exemption?
No. The raw water sand filter project does not qualify for the manufacturing exemption because the water it treats is not used in processing tangible personal property for sale — it's used to keep the…
Is the charge for a membership coupon book — which contains order forms customers use to order manufacturer coupons redeemable for discounts — subject to Texas sales tax?
No. The charge for the coupon book itself is not taxable because the sale is treated as the sale of an intangible. However, the company must pay Texas sales or use tax on the charge to print the coupo…
For Texas sales tax purposes, is work on golf course features (lakes, cart paths, retaining walls, bunkers, tee signs, bridges, gabions) taxable remodeling/repair labor, or nontaxable new construction labor?
It depends on the specific feature and circumstances. A golf course is a collection of improvements to realty (cart path, clubhouse, fairway, green, lake, parking lot, tee box); repairing, remodeling,…
A photographer offers glamour photography sessions that include a free makeover. Can the makeup and supplies used in the makeover be purchased tax free, and is the photographer responsible for collecting tax on the session itself?
Partly. The photographer may issue a resale certificate to buy tax free only the makeup and supplies actually transferred to the customer (like makeup, lipstick, and hair spray). Tax is owed on suppli…
Does re-processing a customer's plastic pellets — melting them down in a twin screw extruder, blending in a hardener, flame retardant, or other material, and re-pelletizing — qualify for Texas's manufacturing exemption?
Yes. The Comptroller ruled that melting the customer-owned plastic pellets, adding a hardener, flame retardant, or other material, and forming new pellets is "processing" tangible personal property th…
Is a health/athletic club's membership revenue subject to Texas sales tax, and does that change if the membership was purchased under a physician's written prescription?
It depends on what's being sold. Clinical services performed pursuant to a physician referral and written prescription (like cardiac, pulmonary, or diabetes rehab and testing, or physician-supervised …
New York Advisory Opinion TSB-A-96(33)S: Are the fees a farmer charges to board and care for horses kept on his farm for breeding purposes subject to New York sales tax?
Yes, exempt -- but only if the boarded horses are used predominantly to breed horses for sale, and the owner provides a Farmer's Exemption Certificate. A farmer boards horses belonging to other owners…
New York Advisory Opinion TSB-A-96(32)S: Is installing custom-cut, permanently anchored closet shelving a tax-exempt capital improvement, and does it matter whether it's going into a brand-new building or an existing one?
It depends on whether the building is new or existing. Home Insulation & Supply Inc. installs closet shelving cut to the exact size of each closet, permanently anchored with screws, nails, or similar …
Are duty-free 'in bond' sales and 'tax paid' sales at the Salt Lake City airport's duty-free store exempt from Utah sales tax as interstate commerce?
It depends on delivery, not on the duty-free label. "In bond" duty-free sales -- where federal customs law requires the merchandise to be delivered directly to the departing passenger or aircraft at t…
My elderly mother's house is held in an irrevocable trust, with her as trustee's grantor keeping a life estate. She wants a HUD-approved reverse mortgage. Is recording that mortgage exempt from New York's mortgage recording tax, even though the borrower is technically the trust rather than my mother individually?
Exempt, as long as the reverse mortgage genuinely conforms to the HUD/HECM federal program. A 77-year-old grantor had conveyed her Greenburgh home to an irrevocable trust in 1988, reserving a life est…
New York Advisory Opinion TSB-A-96(34)S: When a nonprofit cooperative housing corporation generates its own electricity and submeters it to residential and commercial tenants at cost, are those electric charges taxable utility sales, do residential tenants get a reduced rate, and can the co-op get a refund on the sales tax it paid for the fuel oil used to generate that electricity?
Yes, all three questions get detailed yes answers. Mutual Redevelopment Houses, Inc., a nonprofit cooperative, generates its own electricity and bills residential and commercial tenants separately fro…
New York Advisory Opinion TSB-A-96(31)S: When an interior design firm buys furnishings for a client at its own discretion and bills the client a marked-up price (cost plus a design fee percentage), is the entire charge taxed as a sale of goods, or can the design fee be taxed at a lower rate as a separate service?
The entire marked-up charge is taxable as a sale of goods, at New York City's full combined rate, unless the design fee is separately contracted for and separately billed. J.P. Molyneux Studio Ltd., a…
Could Florida investment funds net short sales against identical long stock positions when calculating intangible personal property tax?
No. Although an initiated short sale was not taxed because the fund did not own the shorted stock, each long stock or securities position the Florida funds owned on January 1 remained taxable at value…
Was an interest-bearing cash account held with a broker subject to Florida intangible personal property tax?
No. Florida treated the described interest-bearing brokerage cash account like cash deposited with a bank because it was not organized as a mutual fund or money-market fund. The ruling warned that fun…
Did trusts with Florida settlors owe intangible tax when an out-of-state trustee controlled revocation and the settlors lacked broad access powers?
No. The trusts had an out-of-state trustee, the Florida settlors could revoke or amend only with that trustee's written approval, they could not invade principal, and their limited appointment power c…
Which of my internet service company's fees -- monthly service, set-up, domain registration, custom web design, extra disk space, audio/video, and secure server -- are subject to Texas sales tax?
Most of the fees an internet service provider charges are taxable, but not all. The Monthly Service Fee, Set-Up Fee, Additional Disk Space Fee, Audio/Video Fee, and Secure Server Fee are all taxed as …
As an advertising agency, which of our 'nonbillable' expenses (items and services we buy but can't fully bill back to clients) owe Texas sales/use tax, and which don't?
It depends on whether the item was resold to the client or just consumed by the agency. If an agency buys a taxable item or service for a client but ends up not billing (reselling) it -- for example, …
Did Utah charge sales tax on internet access in 1996, and what about the phone-line equipment an internet provider installed for customers?
In this 1996 ruling, the Utah State Tax Commission said charges for internet access itself were not subject to sales tax, but the provider's charges for DS1/DS3 equipment and Access Transport Lines (t…
If I trade gift baskets to a radio station in exchange for a free radio ad (a tradeout), do I owe Texas sales tax on the baskets?
It depends on what's mostly in the basket, not on the fact that it's a barter. This corrected 1996 Comptroller letter says that if the taxable items (the basket itself and any miscellaneous, non-food …
If I generate a federal net operating loss while I'm a New York nonresident, can I carry that loss back to reduce my New York tax from an earlier year when I was a New York resident?
Yes, potentially. New York has no independent NOL carryback rule of its own - the deduction rides entirely on Tax Law § 612, which starts New York taxable income from federal adjusted gross income. Un…
Is nitrogen used to nitrify drilling mud, and the cementing of a well's casing seat, subject to Texas sales/use tax and the oil and gas well servicing occupation tax?
Yes to both. The Comptroller held that sales of nitrogen and drilling mud are subject to Texas sales or use tax, and that a product made by combining the two (nitrified drilling mud) is also taxable. …
If I start a computer-aided design (CAD) drafting business, do I have to charge sales tax on the blueprints I produce, and does it matter whether I'm a licensed architect or engineer?
Yes -- a draftsman (whether drawing by hand or using CAD software) owes sales tax on the delineations and blueprints produced from a customer's specifications, and on additional copies, because produc…
Is a real estate inspection service -- checking a building's structural components like plumbing, wiring, and roof and issuing a condition report -- subject to Texas sales tax?
No. The Comptroller ruled that real estate inspection services -- checking structural components of a building such as plumbing, electrical wiring, HVAC units, and roofs, and issuing a written conditi…
Is equipment sold to hearing-impaired customers, like FM systems, amplified phones, and alarm devices, exempt from Texas sales tax the same way hearing aids are?
Only two specific products in this ruling -- the Williams Sound Pocket Talker and the SoundMate TW6AA Belt Pack Transmitter and receivers -- are exempt outright as hearing aids. A longer list of other…
Does an interstate truck driver who lives in Wyoming but is dispatched from a Utah terminal owe Utah state income tax on wages earned driving through Utah?
No. Under federal law (then 49 U.S.C. § 14053, now recodified as § 14503), an over-the-road truck driver's wages from operating in interstate commerce are taxable only in the driver's state of domicil…
Can married Utah taxpayers who filed a joint state income tax return switch to separate returns by filing an amended return?
No, not usually. Utah follows the federal rule: once married taxpayers file a joint state income tax return, they cannot later amend it to file separately. The only exception is a couple who qualified…
If my restaurant sells 'bulk food' that needs more cooking or heating before it can be eaten, how do I document that it's not taxable, and what records does the Comptroller expect?
Uncooked, refrigerated, or frozen food that still needs cooking or heating is not 'food ready for immediate consumption' under Rule 3.293(a)(9)(A) and is not taxable, regardless of quantity -- 50 froz…
When a business sells equipment it already owns to a bank or lender and then leases it back, does Utah sales tax apply to the sale, and do the lease payments count as taxable rent?
Lease payments in a genuine sale-leaseback financing arrangement are exempt from Utah sales tax only if all three conditions are met: (1) the lessee already paid sales tax when it originally purchased…
Does a private vending-machine company owe sales tax on proceeds it donates to a school PTA fundraiser?
The school fundraising exemption does NOT cover a private vendor's gumball-machine sales just because proceeds are donated to a school PTA — that exemption is reserved for sales made by the school or …
How does Utah sales and use tax apply to a video production business's equipment rentals and purchases, and to the charges it bills clients for finished commercials, corporate videos, and film/video productions?
Equipment rentals and purchases used to produce films and videos are taxable purchases for the producer, though items that become part of the final product sold to a customer (or resold) can be bought…
If I buy natural gas in Texas and ship it out of state by pipeline to generate electricity at my out-of-state plant, do I owe Texas sales tax on the gas?
No. The Comptroller ruled that buying natural gas in Texas and shipping it via interstate pipeline to Pennsylvania, where it is consumed to manufacture electricity, is a noncommercial use of natural g…
Can a non-profit water supply corporation use a sales tax exemption certificate on purchases for a project funded by the Texas Water Development Board's Economically Distressed Areas Program (EDAP)?
Yes, but only for purchases tied to Economically Distressed Areas Program (EDAP) projects. Water Code Sec. 17.921(a) specially defines non-profit water supply corporations as "political subdivisions" …
Does a metal roller-leveling process that flattens coiled metal and changes its hardness count as manufacturing or processing, so the wrapping/packaging and equipment used with it are tax-exempt?
The Comptroller's Tax Policy Director did not agree, on the facts presented, that a metal coil leveler qualifies as exempt manufacturing/processing equipment. He explained that if the leveling-induced…
What intangible-tax consequences followed when Florida subsidiaries sold receivables to an out-of-state affiliate before January 1?
The Florida subsidiaries owed no tax on receivables they did not own, manage, or control on January 1. Their notes from the buyer were taxable assets, but qualifying intercompany notes could be exclud…
What Florida deed, documentary stamp, and intangible taxes applied when divorcing spouses divided real property and one gave the other a secured note?
Florida imposed deed tax on 50% of the value of the conveyed Florida real property because the wife received interests beyond her undivided share. Documentary stamp and nonrecurring intangible tax wer…
Did a Florida resident or an out-of-state partnership owe intangible tax after the resident contributed stock for partnership interests?
No. After the contribution, the Florida resident no longer owned, managed, or controlled the stock, and the out-of-state partnership's stock had no Florida taxable situs. The resident's general- and l…
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