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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New York Advisory Opinion TSB-A-96(22)S: Are a merchant-services company's charges for its "check guarantee" service -- where it agrees, for a fee, to buy a dishonored check from a subscribing merchant at face value -- subject to New York sales tax?
No, not taxable. TeleCheck Services offers retail merchants a check "guarantee" service: before accepting a customer's check, a subscribing merchant contacts TeleCheck electronically (via a point-of-s…
If a Texas remodeling contractor isn't registered to collect sales tax and doesn't collect it on a lump-sum job, can the customer be assessed the tax instead?
Yes. Once Texas began taxing remodeling services directly, the old rule that only the contractor owed tax on a lump-sum job (based on its material costs) no longer applied. Remodeling services are now…
Is labor to replace a failed electrical ballast in a light fixture taxable in Texas, and does it matter whether the building is a residence or a commercial building?
Labor to replace a failed or failing electrical ballast in a commercial building is taxable as real property repair, because ballast replacement normally requires a licensed electrician. The same labo…
Could a condominium association treat cable television included in a transient room charge as a service bought for resale?
No. Because the guest invoice showed one charge for transient accommodations and did not separately state a cable-service sale, the association was the consumer of the cable service. It had to pay tax…
My company does most of the work for its service out of state — are my receipts from New Mexico customers still subject to gross receipts tax?
Yes — the receipts are taxable, because the service is performed where the customer receives its benefit, not where the company does its back-office work. Entertainment Publications, a Michigan compan…
My form-work company buys plywood that's used up on jobsites for exempt organizations -- can I buy those materials tax free or get a refund of the tax I paid?
No. The Comptroller ruled that a company doing form work (erecting and removing concrete forms and centering materials without incorporating any tangible personal property into the realty) is a nontax…
Under Florida's 1996 intangible tax, did receivables sold to an out-of-state subsidiary retain Florida taxable situs when the seller performed only ministerial servicing?
No. Receivables sold before January 1 to the non-Florida subsidiary lacked Florida taxable situs when the Florida seller retained only ministerial servicing and the subsidiary made discretionary decis…
Under Florida's 1996 intangible tax, who had to report assets in foreign-situs trusts and foreign entities controlled by Florida residents?
The foreign trustee did not have to file, but the Florida grantor-beneficiaries did because their power to remove and replace the trustee gave them control of the trust assets. Their corporation and l…
Under Florida's 1996 intangible tax, did investment assets retain Florida taxable situs after an 11% Florida-company owner transferred them to a Texas partnership?
No. On the stated facts, the Texas partnership, its investment assets, and the resident's non-SEC-registered limited-partnership interest were not subject to Florida intangible tax because management …
Do I owe Texas sales tax on sports cards sold through vending machines, including the chance cards redeemable for an autograph?
Yes -- receipts from sports card vending machines are subject to Texas sales tax because the cards are tangible personal property, not an amusement activity. These machines are not treated as skill-or…
Does Texas sales tax apply to charges for computer consulting, hardware setup, software installation, training, and computer repair/maintenance?
It depends on the specific service. Business/computer consulting, evaluating a client's computer setup, installing software or peripherals you didn't sell, and training employees are NOT taxable. But …
Under Florida's 1996 intangible tax, did receivables sold to an out-of-state subsidiary retain Florida situs when the parent performed routine servicing?
No. Receivables sold before January 1 to an out-of-state subsidiary were not subject to Florida intangible tax when the Florida parent performed only routine, instruction-based servicing. Those activi…
Under Florida's 1996 intangible tax, did receivables transferred to an out-of-state limited partnership escape the January 1 assessment?
Yes. Approximately $11 million of receivables transferred to a Delaware limited partnership before January 1 were not reportable by the Florida transferor because the partnership and its non-Florida g…
Under Florida's 1996 intangible tax, did investment assets retain Florida taxable situs after a Florida resident transferred them to a Texas partnership operated in Texas?
No. On the stated facts, the Texas partnership, its investment assets, and its non-SEC-registered limited-partnership interest were not subject to Florida intangible tax because management and operati…
Can a city that has adopted a Municipal Crime Control District sales tax repeal the Section 323.208 exemption for telecommunications services and tax them under that local tax?
A qualified yes. A city that has adopted a Municipal Crime Control District sales tax may repeal the Section 323.208 Tax Code exemption for telecommunications services and tax those services under the…
Do we have to charge sales tax on commercial wastewater treatment services, and on the hauling charges when we pick up the water ourselves?
No -- treating a customer's wastewater to remove oil and contaminants before it's discharged to a municipal sewer system is not a taxable service, because water itself is exempt from Texas sales tax a…
What did the original, now-obsolete Florida TAA 96A-024 say about a bundled car-dealer promotion?
The original ruling said the full promotional-contract price was taxable because flyers, checks, envelopes, gifts, sale tags, and a licensed mailing list were consequential parts of a retail sale. But…
What crude oil severance tax exemption levels applied in Kansas from May 1996 through April 1997?
For the fiscal period May 1, 1996 through April 30, 1997, the Kansas crude oil severance tax exemption levels were set using a determined average oil price of $15.81 per barrel. Because that price is …
If a Texas seller with Texas nexus sells to an out-of-state buyer who has no Texas nexus, and the buyer resells to a third party, does the Texas seller need to collect Texas tax, and what documentation does it need from the buyer?
A Texas seller does not have to collect Texas tax on a sale to an out-of-state buyer if the buyer gives the seller a valid Texas resale certificate showing the buyer is a bona fide retailer reselling …
If I'm a developer building streets, roads, or sewer/water lines in a subdivision that I plan to donate to the county, can my contractor buy materials tax-free?
Yes, but only if the dedication and government acceptance happen before construction starts. A developer donating subdivision infrastructure (streets, roads, sewer/water lines, etc.) to a governmental…
Was a lump-sum direct-mail marketing campaign taxable in Florida, and could the marketer buy campaign inputs with resale certificates?
Yes for Florida clients. The entire lump-sum direct-mail campaign was taxable because the printed materials were essential, not incidental, and mailing-list sales to Florida purchasers were also taxab…
If our pharmaceutical company gives free prescription and nonprescription drug samples to physicians and hospitals in Texas, do we owe sales or use tax on them?
It depends on who receives the sample and whether it's prescription or nonprescription. Prescription and nonprescription drug samples given free to physicians (to be dispensed to patients) are exempt …
If my appliance repair customer pays only for an estimate and decides not to go ahead with the repair, do I have to charge sales tax on that estimate/service call fee?
No -- if a customer only pays for a service call or estimating fee and decides not to have the appliance repaired, that fee is not taxable because no repair (a taxable service) actually took place. Bu…
Will the Utah State Tax Commission accept a membership-club retailer's proposed member exemption-certificate and non-taxable sales log system as sufficient for its resale/exempt-purchase tax exemption recordkeeping?
The Commission won't sign a formal contractual agreement (it doesn't normally enter into those), but it approved the substance of the proposed system: keeping each member's signed exemption certificat…
If I transfer my manufacturing equipment to a new LLC to reduce personal liability and lease it back to my business, do the lease payments qualify for Utah's manufacturing sales tax exemption?
No, not on these facts. Transferring already-in-service manufacturing equipment to a new LLC purely for liability protection, then leasing it back to run the same operations it always has, does not qu…
Does an out-of-state finance company with two Utah-based sales employees, but no Utah office or property, owe Utah corporate franchise/income tax?
Yes. The Utah State Tax Commission ruled that a California-based company purchasing motor vehicle installment contracts from Utah dealers has Utah corporate income tax nexus solely because it has two …
Do I have to charge sales tax on sodium bentonite clay that I sell for different uses — animal feed, cat litter, well-plugging, pond/landfill sealant — and on delivery charges for it?
Sodium bentonite clay is taxable when sold to an end user no matter how it's used -- as animal feed additive, cat litter, well-plugging material, or a pond/tank/landfill sealant. The seller only needs…
Is an air compressor that powers pneumatic tools exempt from Texas sales tax under the manufacturing exemption?
Yes, conditionally: the Comptroller ruled that an air compressor used to power pneumatic tools qualifies for Texas's manufacturing exemption, but only if the pneumatic tools themselves are used for as…
Is my company's charge for online continuing-education courses and certification testing subject to Texas sales tax?
No -- charges for providing continuing education courses and testing over the Internet are not subject to Texas sales tax. However, if the company pays its Internet Service Provider separately for mai…
Does automating an existing manual production line count as tax-exempt 'new or expanding operations' equipment, or is it a taxable 'normal operating replacement'?
Not automatically exempt — it depends on facts the Commission hadn't yet been given. Utah's manufacturing exemption applies to equipment for 'new or expanding operations' but not to 'normal operating …
Is a service that compiles and reports weekly underground natural gas storage capacity data from multiple subscribers a taxable information service, or does it qualify as a nontaxable proprietary compilation or geophysical survey?
No exemption applies -- the Comptroller ruled that a company's weekly reports on underground natural gas storage capacity, compiled from data submitted by storage operators and sold to industry subscr…
Is an LLC taxed as a partnership a 'portfolio investment partnership,' and is a foreign corporate member subject to Article 9-A by reason of its membership?
New York follows the LLC's federal classification, so an LLC taxed as a partnership is a partnership for New York tax. An LLC that meets the IRC section 851(b)(2) gross-income requirement and is not a…
Under Florida's 1996 intangible tax, which foreign-trust assets, restricted shares, employee options, and merger shares were taxable?
The foreign-trust assets were not taxable to the beneficiary, and a discretionary distribution after January 1 did not change that result absent evidence of a sham. Nonvested restricted shares and non…
Under Florida's 1996 intangible tax, which foreign-trust assets, restricted shares, employee options, and merger shares were taxable?
The foreign-trust assets were not taxable to the beneficiary, and a discretionary distribution after January 1 did not change that result absent evidence of a sham. Nonvested restricted shares and non…
Under Florida's 1996 intangible tax, which foreign-trust assets, restricted shares, employee options, and merger shares were taxable?
The foreign-trust assets were not taxable to the beneficiary, and a discretionary distribution after January 1 did not change that result absent evidence of a sham. Nonvested restricted shares and non…
Under Florida's 1996 intangible tax, which foreign-trust assets, restricted shares, employee options, and merger shares were taxable?
The foreign-trust assets were not taxable to the beneficiary, and a discretionary distribution after January 1 did not change that result absent evidence of a sham. Nonvested restricted shares and non…
Under Florida's 1996 intangible tax, which foreign-trust assets, restricted shares, employee options, and merger shares were taxable?
The foreign-trust assets were not taxable to the beneficiary, and a discretionary distribution after January 1 did not change that result absent evidence of a sham. Nonvested restricted shares and non…
Under Florida's 1996 intangible tax, which foreign-trust assets, restricted shares, employee options, and merger shares were taxable?
The foreign-trust assets were not taxable to the beneficiary, and a discretionary distribution after January 1 did not change that result absent evidence of a sham. Nonvested restricted shares and non…
Under Florida's 1996 intangible tax, were the grantor or sole out-of-state trustee liable for an irrevocable trust?
No. On the stated trust terms, neither the grantor nor the sole out-of-state trustee was liable for Florida intangible tax. The trust was irrevocable, the grantor retained only a limited power of appo…
Under Florida's 1996 intangible tax, were receivables sold to an out-of-state subsidiary before January 1 taxable when sold back after January 1?
No. Receivables sold at fair market value to an out-of-state subsidiary before January 1 lacked Florida taxable situs on the assessment date. A sale back on January 2 or later did not change that resu…
Under Florida's 1996 intangible tax, were assets contributed to an out-of-state limited partnership or the partners' interests taxable?
No. After Florida residents transferred part of their investment portfolio to an out-of-state limited partnership, they no longer owned, managed, or controlled those assets. The partnership's assets h…
Under Florida's 1996 intangible tax, were a non-Florida trustee or a grantor with only an income interest liable for an irrevocable trust?
No. The non-Florida trustee gave the trust no Florida taxable situs, and the grantor did not have a taxable beneficial interest. The grantor had an income interest but could not invade principal, revo…
Under Florida's 1996 intangible tax, did an irrevocable trust create liability for its out-of-state trustees, grantor, or Florida custodians?
No. The out-of-state trustees were not liable because they managed and controlled the trust outside Florida. The grantor did not hold the combination of rights required for a taxable beneficial intere…
Under Florida's 1996 intangible tax, did an irrevocable trust create liability for its out-of-state trustee, grantor, or Florida custodians?
No. The out-of-state trustee was not liable because management and control rested outside Florida. The grantor did not hold the combination of rights required for a taxable beneficial interest, and Fl…
Under Florida's 1996 intangible tax, were an out-of-state trustee, the grantor, or Florida custodians liable for an irrevocable trust's assets?
No. The out-of-state trustee was not liable because management and control rested outside Florida. The grantor lacked the combination of rights required for a taxable beneficial interest, and Florida …
Was Florida documentary stamp tax due more than once when one joint venturer borrowed against property legally titled in another venturer's name?
No. Documentary stamp tax was due only once on the mortgage where the borrowing joint venturer held equitable title, the other joint venturer held legal and equitable title and also signed the mortgag…
Was a recorded cross-collateralization agreement subject to Florida documentary stamp tax even though it did not increase the original note balances?
Yes. Recording the cross-collateralization agreement created mortgage treatment because each property secured both its original debt and a contingent obligation tied to the other loans. The agreement …
Were a lender's floor-plan, credit-line, and small-business loan forms subject to Florida documentary stamp tax?
No. The submitted floor-plan, credit-line, and small-business loan forms did not contain or incorporate all three elements required for a taxable written obligation: a written promise to pay, a sum ce…
Under Florida's 1996 intangible tax, were a non-Florida trust, its grantor-beneficiary, or a Florida custodian liable for the trust assets?
No. The non-Florida trustee and trust property had no Florida taxable situs. The grantor-beneficiary could not revoke the trust, invade principal, or exercise an unlimited appointment power, so there …
Under Florida's 1996 intangible tax, did an out-of-state corporation or partnership acquire Florida situs because their Florida owners made investment decisions?
No. The out-of-state corporation and limited partnership had no Florida taxable situs because their day-to-day activities and operations occurred at offices outside Florida, even though the two Florid…
Does a cotton mote fiber processing operation qualify for the same sales tax exemption on electricity (without needing a predominant use study) that Texas already grants to cotton ginning operations?
Yes. The Comptroller found that the process and equipment used to condition, clean, and package cotton mote fiber (a waste byproduct of cotton ginning) are substantially the same as those used in cott…
Is a testamentary trust a New York resident trust under Tax Law section 605(b)(3)(C), and subject to New York personal income tax under Article 22, when all of its trustees live in New York but the person who created it in her will died domiciled in Florida?
No. A trust created by will is a New York resident trust only if the decedent was domiciled in New York at death. Because Genevieve G. Harper died domiciled in Florida, the Harper Family Trust is a no…
If I don't file a return or hand over my records, how does New Mexico figure out what income tax I owe?
The estimated tax bills stood. Robert and Carol Welsh, New Mexico residents who ran a coin-operated laundry, reported and paid gross receipts tax but never filed personal income tax returns for 1989–1…
I forgot to report a retirement payout and only found out years later — can I avoid the interest and penalty?
No — both the interest and the penalty stood. Frank Ruybalid received a lump-sum retirement disbursement in March 1991 with federal tax withheld but no state tax. He moved, never got the follow-up tax…
Is an elevator or wheelchair lift installed in my home exempt from Texas sales tax if my doctor prescribes it?
Yes -- an elevator or wheelchair lift installed in a home can be exempt from Texas sales tax as a therapeutic device, but only if the doctor provides a written prescription and a signed statement of m…
Can a contractor rent equipment tax-free using a resale certificate if the equipment is used to improve real property or perform a taxable service?
No. Contractors who improve new real property, repair or remodel residential real property, or provide taxable services like nonresidential repair/remodeling must pay sales tax when they purchase, ren…
Is a signed tax settlement with the state binding if it was never approved by the Attorney General?
No — a settlement that compromises assessed taxes is not binding on New Mexico unless the Attorney General approved it in writing. Johnson & Johnson settled a small ($40,000) nexus dispute over six su…
May a transportation corporation include its independent operators' revenue miles in the section 184 mileage allocation fraction?
No. Section 184.4(a) allocates a transportation corporation's gross earnings by a fraction of 'the taxpayer's mileage' within New York over the taxpayer's mileage everywhere, using actual revenue mile…
Is a natural-gas broker LLC that never takes title to the gas subject to the section 186 or 186-a gas/utility taxes?
No. A natural-gas broker that never takes title, possession, control, or risk of loss of the gas -- it only matches producers with end-users, states in its agreements that it is a broker, reports only…
Does a bank subsidiary's section 1452(d) election to stay under Article 9-A survive (1) the acquisition of its parent bank by another bank, and (2) an expansion of the subsidiary's line of business?
No. ESB (later renamed Associates) timely made the one-time section 1452(d) election to keep being taxed under Article 9-A instead of the Article 32 bank franchise tax. The 1986 acquisition of its par…
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