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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How do Kansas county appraisers identify and value non-productive 'waste' land within agriculturally classified property?
Within agriculturally classified land, non-productive 'waste' areas are valued at $10.00 per acre. This 1998 Division of Property Valuation memo helps county appraisers identify waste land — the…
How did Kansas tell county appraisers to value land using non-center-pivot sprinkler systems?
Kansas recommended treating the listed non-center-pivot sprinkler systems like flood irrigation for the water-ratio adjustment because their application efficiency more closely resembled flood…
How do Kansas county appraisers adjust the agricultural use value of farmland whose productivity is reduced by salinity or alkalinity?
Farmland whose productivity is reduced by salinity or alkalinity can have its agricultural use value adjusted, but only for specifically identified areas where the condition is hindering normal…
Is a manufacturer's own aluminum casting mold taxable, and does it matter whether the mold is separately billed or the customer owns it on paper?
As of October 1, 1997, the mold used to make these particular castings no longer qualifies for the manufacturing exemption -- but the answer depends heavily on the time period and on whether there's…
Did a condominium master association owe Florida sales tax when it passed guard payroll costs to separate member associations?
Yes. The master association was the guards' sole legal employer, while each condominium association was a separate entity receiving taxable security services. Passing through actual payroll and…
Did a Florida church owe tax on conference hotel rooms and meals or on the lump-sum fees charged to attendees?
No, on the stated structure. The church directly reserved and paid for lodging, assumed responsibility for attendees, and used the rooms and meals in church business. Its attendee charge also…
What South Carolina tax interest rate applied from July through September 1998?
The rate was 8% for the three-month period beginning July 1, 1998. Interest was compounded daily, except that simple interest applied to an underpayment of a declaration of estimated tax. The…
Can a company that buys bulk gas tanks to lease to customers purchase the tanks exempt from Kansas sales tax?
Yes. Because Kansas sales tax applies only to retail sales — sales to the final user or consumer — a company that buys bulk liquefied gas tanks in order to lease them to its customers is not the…
When a company installs home theater, security, and automation equipment into a house, does each item stay taxable personal property, or does it become part of the real estate?
It depends on the item, not the whole project. Equipment that can be removed without significant damage to the house (like a bolted-on projector or cabinet-mounted components) stays personal…
Is installing a new swimming pool at a residence exempt from Kansas sales tax as residential remodeling?
Yes. Installing a new swimming pool (or tool shed or similar structure) near an existing residence qualifies as exempt residential remodeling when the structure is intended to serve the residence,…
Under RR 98-14, could a South Carolina taxpayer deduct commissions paid to a foreign sales corporation instead of treating them as dividend-related expenses?
Yes, if the foreign sales corporation had economic substance and was properly formed and operated under IRC Sections 921-927. RR 98-14 treated the commissions as deductible business expenses, not…
Can a Texas farmer or rancher buy an advertising sign tax-free using a farm exemption certificate?
Yes -- a farmer or rancher can purchase a sign used to market their products (for example, a 'hay for sale' sign) tax-free by giving the seller an agricultural exemption certificate instead of…
Could a cement maker buy T.D.A. grinding aid for resale because it remained in and may have improved the finished cement?
The published treatment remained yes for this product, but a 1998 note called the 1955 reasoning shaky and reaffirmed that the manufacturer bears the proof burden.
Did filing a final federal return and liquidating operations dissolve a Texas corporation for franchise-tax purposes?
No. Although the corporation had liquidated two years earlier and filed a final 1996 federal return, Comptroller records still showed an active Texas charter. It remained responsible for franchise…
Was a for-profit corporation exempt from Texas franchise tax because it performed services formerly provided by government agencies?
No. Section 171.001 applied to corporations doing business or authorized in Texas, and the former law contained no exemption for a for-profit company performing services for federal, state, county,…
Was a deed from a Canadian corporation acting only as bare trustee back to the beneficial owners subject to Florida documentary stamp tax?
No. The owners bought the Florida property with their own funds, and a declaration of trust established before acquisition showed that the corporation held only legal title for their benefit.…
The state seized money from my bank account and later admitted the levy it named was invalid. Do I get the money back?
No — the bank was served two levies at the same time, and even though the one the Department pointed to was invalid, a second levy for genuinely delinquent taxes was valid and supported the seizure,…
Can a direct payment permit holder switch to a new inventory accounting system by depleting old tax-paid parts first (FIFO) before reporting tax on new usage?
No -- the Comptroller rejected the proposed First-In-First-Out (FIFO) transition method for depleting old tax-paid inventory before reporting new tax under a direct payment permit. A brewery with a…
Were chilled-water charges and construction of a customer-owned distribution system subject to Florida sales tax?
No, under the described agreement. Chilled water delivered through pipes was exempt water, and customer-owned water chilled by the utility was an exempt service with only incidental chemicals. The…
Did maintaining a company office in Texas create nexus for both former franchise-tax components?
Yes. Rule 3.546(c)(15) treated maintaining a Texas place of business as taxable-capital nexus. Rule 3.554(d)(18) treated an office paid for directly or indirectly by the company and formally…
Did converting a Texas corporation to an LLC by filing articles of conversion require final franchise- and sales-tax returns?
No, if the corporation filed articles of conversion. Texas treated the converted LLC as the same legal entity, so no final franchise-tax or sales-tax return was required; the state would update its…
What proof and records did a South Carolina vendor need for a foreign-diplomat sales-tax exemption in 1998?
Apply the exemption shown on the Office of Foreign Missions card only to the person pictured on it. A vendor could request additional identification and had to record the card's Tax Exemption Number…
How is a 501(c)(7) not-for-profit country club's real property classified and assessed for Kansas property tax?
It depends on how each part of the property is used. Following a Board of Tax Appeals decision (Manhattan Country Club, Docket No. 97-1460-PR), this memo tells county appraisers that portions of a…
Is a customized medical literature-search service taxable as an information service, even though each report is tailored to one client and can't literally be resold as-is?
Taxable -- customizing the search and binding results into a client-specific report doesn't make the underlying information 'proprietary' to that client, so the service is a taxable information…
How are a natural-gas limited partnership and its corporate general and limited partners taxed under sections 186, 186-a, and Article 9-A?
The partnership itself is not subject to Article 9-A or section 186, but as a 'person' selling gas consumed in New York and not PSC-supervised, it is a second-class utility taxable under section…
Could a first-year New Mexico resident avoid penalty and interest after reporting only New Mexico income instead of all federal adjusted gross income?
No — Jim Dodson had to report all federal adjusted gross income on Form PIT-1 and use Form PIT-B to allocate his California income, so the penalty-and-interest protest was DENIED. Dodson called the…
Can a 501(c)(3) nonprofit buy remodeling work tax-free for a building it leases out to for-profit tenants?
Yes -- because the rental income from the leased space qualifies as related (tax-exempt) income under IRS guidelines for this organization's exempt purpose, the entire remodeling project can be…
Did a Texas retailer collect limited sales tax on a utility trailer kit, or did the buyer pay motor vehicle tax when registering it?
The retailer did not collect Chapter 151 limited sales tax. The trailer kit was subject to Chapter 152 motor vehicle tax, which the purchaser paid to the county tax assessor-collector when…
Did independent agents soliciting Texas orders for publications create nexus for both former franchise-tax components?
They created taxable-capital nexus. Independent agents soliciting Texas orders for tangible publications made the corporation responsible for franchise-tax reports under Rule 3.546(c)(4). The…
Is a television station's doppler weather radar system exempt from Texas sales tax?
Exempt only if used to generate images for broadcast -- if the same system is instead used for weather forecasting or other non-broadcast purposes, that use is taxable. A television station asked…
Were a city's pier leases to food-and-drink concessionaires exempt from Florida sales tax, and did the same rule cover a license?
The leases were exempt as long as each tenant actually sold both food and drink within the pier, which qualified as a recreational facility. A separate license agreement was taxable because the…
How is business machinery that is still being built taxed in Kansas on January 1?
As machinery, not as 'other' property -- which is the taxpayer-favorable answer. The directive holds that such property 'shall be listed at its retail cost when new and depreciation shall begin the…
My Kansas house was only half-built on January 1 -- is the lot still taxed as vacant land?
No -- once the construction adds value, the lot stops being vacant for tax purposes. The directive states that property with construction in progress on January 1 'shall be valued at fair market…
In a pick-and-pack fulfillment arrangement, are the printing costs, picking fees, and packing fees subject to Kansas sales tax?
In this pick-and-pack and printing arrangement, the Department ruled that the printing costs are taxable — Kansas sales tax if the material is printed in Kansas, otherwise Kansas compensating (use)…
Could authorized Rule 68 taxpayers claim current-return credits for tax paid on qualifying pollution-control items and buy new items without paying tax upfront?
Yes, with proof. The taxpayers could credit current returns for Tennessee sales or use tax actually paid on qualifying pollution-control items, or apply for a refund instead. They had to show that…
Could a Tennessee multi-level marketing company collect tax from unregistered distributors using suggested retail price for resale goods, while taxing personal-use goods at member price?
Yes, under the proposed arrangement. The company could collect tax based on suggested retail price for goods an unregistered distributor said were for resale, but it had to remit every dollar…
Did an investor-owned electric utility include transformers in taxable capital when GAAP required capitalization as plant assets?
Yes, if GAAP required capitalization. Section 171.109(b) required the corporation to compute surplus, assets, and debts under generally accepted accounting principles. Transformers classified by…
Did a federal Section 368(a)(1)(F) reincorporation eliminate Texas final and initial reports when state records showed one entity terminated and another was authorized?
No. Although the taxpayer viewed the state-of-incorporation and name change as a federal F reorganization with uninterrupted tax attributes and no short year, Texas records showed the old…
Could one corporation receive another corporation's Texas business-loss carryover through a merger when state records still showed separate certificates of authority?
No. Comptroller records showed one corporation still had an active Texas certificate of authority, the other had received a separate certificate on December 23, 1996, and the agency had no record of…
Does Utah tax phone calls and prepaid calling cards, at what rate, on which calls, and when is the tax actually due on a prepaid card?
Yes, Utah taxes intrastate telephone service (calls that both originate and terminate in Utah) at a combined state/local rate generally between 6.00% and 6.35%, which can be passed through as a line…
Can a motor vehicle be titled and registered in the name of a business trust, and can beneficial interests in that trust be sold or transferred to investors without triggering a re-titling requirement?
Yes to both, with a key condition. A motor vehicle can be titled and registered in the name of a business trust, because Utah treats the LESSOR of a leased vehicle as its owner for…
When a city owns an airport but a private airline finances/contracts the construction, is that construction exempt from Texas sales tax -- and does it matter whether the space is public or restricted?
Yes for public-access areas -- construction of a people mover, bus stations, terminal relocation, and baggage system is exempt under Sec. 151.311 because it's owned by the City, benefits the public,…
For the Article 9-A receipts factor, is part of a company's commission income allocable outside New York when the income-generating telemarketing is performed by an out-of-state subcontractor?
Yes. The taxpayer earns commissions when an out-of-state independent telemarketing company it hires gets a telephone company's customers to subscribe to a new service. For the receipts factor,…
Is a flat monthly fee for an assigned parking space behind my office building a taxable parking service or a nontaxable real property rental in Texas?
Taxable -- a flat monthly fee for an assigned parking lot space is a taxable motor vehicle parking service, not a nontaxable real property rental. A business paid a flat monthly fee for an assigned…
An immigrant couple's accountant wrongly told them cleaning income wasn't subject to gross receipts tax, and paying the back interest would be a hardship. Can the interest be waived?
No — interest on late-paid gross receipts tax is mandatory and cannot be abated for bad advice or financial hardship, so the protest was DENIED. Luis Tamayo and Amanda Llerena came from Ecuador and…
What sales tax exemptions and changes took effect in Kansas on July 1, 1998?
This notice summarizes the sales tax legislation that took effect in Kansas on July 1, 1998. Key changes: the aircraft exemption for licensed air carriers was extended to sales made through the…
Did delivering products to Texas in vehicles borrowed or assigned from a parent corporation create earned-surplus nexus for both companies?
Yes. Solicitation already created taxable-capital nexus for both foreign corporations. For earned surplus, Corporation A controlled the borrowed, assigned, or leased vehicles and used them to…
Could a county buy arena construction materials tax-free through a direct-purchase program managed by its contractor?
Yes, but only after the program was amended as represented. The county had to issue exempt purchase orders, pay vendors directly, take title and liability at delivery, buy full replacement-value…
Is leasing hard-drive space on a computer system to store voice and fax messages subject to Kansas sales tax?
No. A business that leases space on its computer system's hard drive — used by customers to store voice or fax messages that callers can access — is providing a non-taxable service. The Department…
Can doctors, dentists, and veterinarians buy prescription pads and other printing tax-free using a resale certificate?
No -- doctors, dentists, and veterinarians perform nontaxable medical services and are not considered to be reselling tangible personal property, so they cannot issue a resale or exemption…
Can a 50/50 joint venture between a 501(c)(3) nonprofit and a for-profit company use a direct payment permit to claim a partial (50%) sales tax exemption?
Yes -- the joint venture may issue direct payment blanket exemption certificates to its vendors, and may then claim a 50% (pro rata) exemption on taxable purchases in keeping with the exempt…
Are pallet rental fees and related delivery/transfer charges taxable for a food manufacturer, given the packaging-supplies exemption for pallets?
Taxable -- the packaging-supplies exemption for pallets doesn't apply here because the pallets are leased on a short-term (daily) basis, not for a period of one year or more. A food manufacturer…
How did Texas tax a total-loss vehicle sale, its later resale after repair, and an insurer's receipt of the vehicle after paying a claim?
A vehicle declared a total loss lost its motor-vehicle identity for sales tax purposes, so its sale was taxed under Chapter 151. After repair, later sales returned to Chapter 152 motor vehicle tax.…
Is sushi sold from a supermarket's in-store sushi bar subject to New York sales tax?
Yes. Sushi packs and platters sold from a sushi counter inside a grocery store are taxable, because they're prepared, ready-to-eat meals arranged for individual or multiple servings -- not the kind…
How could affiliated Florida banks allocate one consolidated intangible-tax liability when claiming credits on separate franchise-tax returns?
The holding company and five wholly owned banks qualified as an affiliated group for a consolidated 1998 intangible-tax return. For their separate bank-franchise-tax returns, they had to allocate…
What Florida sales, documentary stamp, intangible, and property taxes applied to a county facility lease-and-leaseback financing?
No sales tax applied to the described lease payments if the two intermediate trusts registered as Florida dealers before closing and issued resale certificates. Prepaid rent avoided documentary…
Could a licensed South Carolina bingo operation sell a bingo card for more or less than its printed face value under RR 98-13?
No. RR 98-13 said a licensed bingo operation could neither mark a card up nor discount it: every bingo card had to be sold to the player at its printed face value.
Can an out-of-state contractor use a resale exemption certificate to buy materials tax-free in Kansas?
No, in general. An out-of-state contractor cannot use a resale exemption certificate to buy materials (such as carpet) tax-free in Kansas — under K.S.A. 79-3603(l), contractors are the final users…
For a Texas aircraft engine repair company, which charges are taxable, and does it matter whether the customer is a commercial airline, a repair shop, or a privately/corporately owned aircraft?
It depends heavily on WHO the customer is and HOW the charge is billed (lump-sum vs. separately stated) -- commercial-airline and licensed-carrier work is largely nontaxable, private/corporate…
Could a Texas state agency grant a license to a corporation that was not in good standing for franchise-tax purposes?
No. The Comptroller confirmed that a state agency could not grant a license to a corporation that was not in good standing with respect to franchise tax. The letter attributed that requirement to…
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