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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Does a country club housed in a building bearing a Texas Historical Commission marker qualify for the sales tax exemption on amusement services (dues/initiation fees) available to a Recorded Texas Historic Landmark?
No -- the club's building does not qualify. Rule 3.298(g)(1)(F) exempts amusement services (like a country club's dues and initiation fees) only when provided exclusively in a place designated as a…
When one lump-sum contract adds new square footage onto two existing, partially-demolished buildings while also redoing their remaining structures, how should the new-addition work be split from the remodeling work for sales tax purposes?
The contract must clearly separate the two categories, because they're taxed differently. Work on the existing building slabs -- including new siding, new fronts, and the plumbing/electrical/HVAC…
Did a nonprofit missionary organization have to collect Florida sales tax on its sales of tangible personal property?
No. Because the organization held a valid religious-institution exemption and regularly conducted public worship services at an established location, Florida treated it as a church and exempted its…
Are traffic-control electronics (cameras, radios, controllers, message signs) for a highway reconstruction project taxable 'construction materials,' and can a contractor buy them tax-free as the government's purchasing agent?
The traffic-control electronics themselves (CCTV cameras, radios, controllers, message signs, and cabinet components) remain tangible personal property even when mounted on poles or structures --…
If you didn't pay New Mexico income tax because you genuinely believed you were exempt, can the interest on the unpaid tax be waived?
The protest was denied. A taxpayer who paid no New Mexico income tax for several years — because, as a tribal member living and working on the Navajo Reservation, he genuinely believed his income…
If a paid tax preparer's mistake caused you to underpay New Mexico income tax, can the interest on the unpaid tax be waived?
The protest was denied. A couple whose paid tax preparer accidentally left $18,491 of wages off their 1992 return had to pay interest on the resulting underpaid New Mexico income tax — even though…
How did Texas tax a vehicle brought into the state by a new resident in 1997?
Historically, Texas generally charged a new resident a flat $15 instead of the 6.25% sales or use tax if the vehicle had first been registered to that resident elsewhere. New and used vehicles…
Was a single shipping-and-handling fee taxable when f.o.b.-origin freight would have been exempt but the seller could not identify the shipping and handling portions?
Yes. F.o.b.-origin common-carrier freight alone would have been nontaxable because title passed at shipment, but Tennessee provided no exclusion for handling. Because the seller combined shipping…
Which therapy beds, hospital beds, mattresses, and incontinence supplies qualified for Tennessee's medical-device exemption, and did Medicare or TennCare payment make otherwise taxable items exempt?
Prescribed acute-care therapy units and alternating-pressure mattresses were exempt orthotic support devices. Hospital beds were exempt only when the seller could prove a patient's specific medical…
Was California's 80/80 food rule applied across an entire bakery chain or separately to each store location?
Separately by location. One store could meet the 80/80 rule while another did not; a qualifying store generally taxed suitable food even when sold to go.
Could a Tennessee affiliate financial institution apportion franchise and excise tax, and how did the ruling source its factoring, unsecured-loan, credit-approval, and receivable-servicing receipts?
Yes. The financial institution could apportion because it was taxable or conducted nexus-creating financial activity in other states. It used a single receipts factor: factored-receivable income…
Are the temporary signs, barrels, and cones a highway-materials supplier sells to road contractors an 'ingredient or component part' of the road, so the sale can be deducted from gross receipts on an NTTC?
The protest was denied. Highway Supply sold traffic-control devices — signs, barrels, cones, barricades — to road contractors and to government agencies, and claimed gross-receipts-tax deductions on…
When an appeal found some originally taxed transactions exempt and another omitted transaction taxable, did California have to reduce the determination without considering the added tax?
No. The audit period was evaluated as a whole; increases and decreases were netted, but the final amount could not exceed the original determination after the increase period expired.
Are crew uniforms and their monthly cleaning exempt from Texas sales tax when purchased for the crew of a ship operating in interstate coastal commerce?
No. Crew uniforms and the monthly cleaning of those uniforms do not qualify for the Tax Code § 151.329 exemption for machinery, equipment, and consumable items used to operate certain ships and…
When a Texas printer/fulfillment house mails direct-mail advertising for an out-of-state customer to addresses both inside and outside Texas, how much of the charge is subject to Texas sales tax?
Only the pieces mailed to Texas addresses are subject to Texas tax; pieces mailed by the third-party mailer to addresses outside Texas are not taxed, even though the seller (a Texas business) billed…
Is transferring a company's delivery vehicles into a newly created, wholly-owned subsidiary (to limit liability) exempt from Utah sales tax as an isolated or occasional sale?
Yes. Transfers of titled/registered motor vehicles are normally NOT exempt as isolated or occasional sales under Rule R865-19S-38C, but that rule carves out an exception for vehicle transfers made…
Did a foreign corporation create Texas franchise-tax nexus by serving as general partner of Texas limited partnerships?
Yes. Assuming the three limited partnerships did business in Texas, the California corporation's role as their general partner created Texas nexus under the former franchise tax. It had to file an…
Was documentary stamp tax due when a sole beneficiary moved Florida real property from a trust into that same person's IRA?
No. Because the same person was the trustee and sole beneficiary of the trust and the sole beneficiary of the IRA, moving title to the IRA custodian did not transfer beneficial ownership of the…
Which parts of a shipping company's Florida port lease qualified for the port-property sales-tax exemption?
The exemption depended on actual use. Transit Shed #2 and throughput fees for docking, mooring, and cargo loading were fully exempt; mixed container and office facilities were partly exempt; support…
Could a shutter manufacturer sell fixtures to its 95%-owned sales company on the same tax basis as sales to independent home-improvement stores?
Yes conditionally. If S--- and its 95%-owned company were separate persons and used the same or equivalent price as unrelated stores, staff would treat the sales alike. The unidentified client…
Could a shutter manufacturer use its price to a 95-percent-owned sales subsidiary as the taxable fixture price?
Yes, if both corporations were separate persons and their dealings used the same or equivalent arm's-length price charged to unrelated stores.
Which charges were taxable when a California graphic designer delivered computer-created finished art on paper or disk?
The finished art was taxable whether delivered on paper or disk. Separately stated preliminary-art work could be excluded if supported by retained hard-copy records.
Were a missionary organization's tangible-property sales exempt when it held a Florida exemption and conducted weekly public worship?
Yes. The organization held a valid Consumer's Certificate of Exemption as a religious institution and conducted weekly public worship and Bible instruction at an established physical location, so…
How did Florida tax lump-sum fuel-station installations and repairs to the electronic control console?
For a predominantly real-property lump-sum project, the contractor was the taxable consumer of tanks, pumps, canopies, and the installed electronic console. A stand-alone repair to the console was a…
Did an out-of-state manufacturer lose Public Law 86-272 protection and become subject to Tennessee franchise and excise taxes when its employees collected customer accounts and picked up defective goods and scrap for credit?
Yes. Employee visits to collect unpaid Tennessee accounts and company-truck pickups of defective products, trim, and scrap for recycling and customer credit were independent post-sale business…
Could a contractor avoid Tennessee use tax on materials bought tax-free by a municipality merely by calling itself the construction manager and having municipal employees perform the installation?
Generally no. If the company remained responsible for the construction contract, it used the municipality's tax-free materials and owed use tax even when municipal employees installed them. Tax…
Did an out-of-state equipment seller create Tennessee franchise and excise tax nexus through occasional sales calls and one to three annual post-sale visits to observe equipment startup and suggest efficiency improvements?
No, on the stated facts. Protected solicitation did not create nexus, and the unprotected post-sale startup visits—one in 1996 and no more than three in each prior year—were de minimis under…
Would a yacht avoid California sales and use tax if title and possession passed offshore before same-day California entry and later use was mostly outside the state?
Yes under the stated plan and assumption: offshore title and possession avoided sales tax, and at least half of the first six months after California entry outside the state defeated the use-tax…
How did Texas tax a concrete pump bought with a truck, bought separately, or leased with the truck?
A one-vendor purchase of a truck with the pump attached was fully subject to motor vehicle tax. If the chassis and pump came from separate vendors, the chassis was subject to motor vehicle tax and…
Was a vacuum erection device an exempt prosthetic medicine when only its constriction seal remained on the body?
No. The vacuum pump was not worn on the body, so the complete device failed the then-applied fully-worn test and was a taxable appliance.
Were wheelchair backpacks, baskets, and pouches exempt replacement parts?
Yes under the stated conditions. California treated baskets and pouches as replacement parts when sold for an individual's personal use as directed by a licensed physician.
Are charges for duplicating a customer's master video tape onto distribution copies taxable in California?
Yes. Making multiple distribution tapes from a master is taxable production or fabrication of tangible personal property, even though producing a qualifying original master can receive different treatment.
Are charges for copying a customer's prewritten computer programs onto CD-ROMs for distribution taxable in California?
Yes. Copying customer-provided prewritten programs onto one or more physical CD-ROMs for distribution was a taxable sale of tangible personal property, not an exempt custom-programming service.
Did California stop charging interest on unpaid sales and use tax while a bankruptcy automatic stay prevented collection?
No. The automatic stay stopped the Board from collecting the liability, but interest continued to accrue on the unpaid tax until the tax was paid.
How were software manuals delivered electronically, on paper, or on a CD-ROM containing a search engine taxed?
Electronic-only documentation was nontaxable; paper was consumed by the seller unless separately charged, while the CD search engine was taxable prewritten software requiring allocation.
Did a new optional software-maintenance agreement avoid tax when it required all updates to be delivered electronically with no tangible media?
Yes. A new agreement requiring exclusively remote updates was nontaxable, while an agreement contemplating tangible update media remained taxable for its full 12-month charge.
Can a waste-transfer-station operator buy a competitor's trash-hauling service tax-free for resale when that competitor also uses the same transfer station for its own customers' trash?
No -- the charge Paper Fibres pays Browning Ferris Industries (B.F.I.) to haul all the consolidated waste from Paper Fibres' own transfer station to a Pennsylvania landfill is a separate taxable…
Can a foreign diplomatic mission use its U.S. State Department tax exemption card to book a hotel room tax-free in New York if payment is made by the mission's check, the mission's credit card, or a credit card in the name of the mission's home government?
Yes -- a foreign mission holding a valid U.S. Department of State Mission Tax Exemption Card covering hotel room taxes can rent hotel rooms exempt from New York sales tax when payment is made by the…
Are the flat monthly fees an internet service provider charges customers for internet access subject to New York state and local sales tax?
Starting February 1, 1997, flat monthly fees an internet service provider charges for internet access are not subject to New York state and local sales tax, including bundled amenities like…
Did California tax leased trucks moved into the state after more than 90 days of out-of-state use?
No under the stated conditions. The trucks were bought and first used outside California, used there over 90 days, and did not enter California within 90 days of purchase.
After buying back a previously sold backdrop for rental inventory, could the company avoid tax on later rents by paying tax on the buyback price?
Yes, if it timely paid purchase-price tax and leased the repurchased backdrop in the same form. Otherwise, California rent was taxable.
If Texas adopted the 1996 Internal Revenue Code definition, would 1997 federal changes count when determining S-corporation status?
Conditionally, yes. The Comptroller said that if pending legislation changed Texas's statutory IRC definition to the Code in effect for 1996, provisions specified in that Code but effective in 1997…
What South Carolina interest rate applied to tax underpayments and overpayments for the quarter beginning July 1, 1997?
The rate was 9% for the three-month period beginning July 1, 1997. Interest was compounded daily, except that simple interest applied to an underpayment of a declaration of estimated tax.
Did a Tennessee contractor owe Tennessee sales or use tax on pipe components bought or brought into Tennessee for prefabrication before the finished units were installed in buildings outside Tennessee?
Yes. A contractor owed Tennessee sales tax on components bought in Tennessee and use tax on untaxed components brought into Tennessee for prefabrication, even though the finished piping units were…
Can a New York City Industrial Development Agency sale-leaseback structure let PaineWebber buy and lease office build-out improvements and equipment sales-tax-free by having its agents purchase everything on the IDA's behalf?
Yes, with conditions -- the New York City Industrial Development Agency's proposed sale-leaseback structure for PaineWebber's office build-out ("Tenant Improvements") and equipment/software…
Who owed California tax when a prime service company took customer payments but subcontractors furnished and installed or repaired real-property items?
The subcontractors, not the prime company. Their role as the parties furnishing and installing or repairing the property made them the construction contractors.
We're a not-for-profit educational organization leasing 23% of a Manhattan office building. To help us qualify for a real property tax exemption on our space -- which requires the space's OWNER (not just its user) to be tax-exempt -- our landlord has agreed to convey us bare legal title to just the air envelope enclosing our leased space, as a fee simple determinable that automatically reverts to the landlord when our lease ends. The landlord keeps every economic benefit: all our rent, all mortgage financing rights and proceeds, condemnation proceeds, and tax ownership treatment; we get no rights to encumber the space, no condemnation claim, and no relief from our lease obligations. No money changes hands. Does this 'raw title' transfer trigger New York's Real Estate Transfer Tax?
Exempt -- the landlord keeps every economic incident of ownership, so there's no real change in beneficial ownership. American Management Association ('Petitioner'), a not-for-profit educational…
Does sales tax apply to a convention center's charges for additional electrical, telephone, and plumbing hookups ordered by trade show exhibitors and managers on top of its basic license fee?
No -- the Javits Convention Center's charges for additional electrical, telephone, and plumbing services ordered by show managers and exhibitors on top of its basic utilities aren't subject to sales…
What crude oil severance tax exemption levels applied in Kansas from May 1997 through April 1998?
For the fiscal period May 1, 1997 through April 30, 1998, the Kansas crude oil severance tax exemption levels were set using a determined average oil price of $21.98 per barrel. Because that price…
If a lessor leases a building along with tangible personal property inside it (like computer equipment) for one combined rent with no separate charge for the equipment, is any part of the rent subject to Texas sales tax?
No. Under Comptroller's Rule 3.294(k)(1), when a lease of real property (a building) also includes the lease of tangible personal property located in that space -- here, computer hardware and…
Did out-of-state contractor licensing or ownership of Texas partnerships create nexus for a holding company and its subsidiaries?
The holding company and two subsidiaries were not doing business in Texas so long as partnership employees did not act as their agents in Texas and no other Texas connections existed. Two different…
How did Texas treat a Nevada loan-participation subsidiary and dividends paid to its Texas bank parent?
Texas found the Nevada subsidiary had nexus because the Texas bank and other Texas servicers performed services for it. Dividends formally declared from earnings were respected. The Texas-domiciled…
When did Florida tax drop-shipped equipment sales and separately billed installation or repair charges?
The manufacturer needed a valid Florida resale certificate from the distributor or had to collect tax on the drop shipment. Installation and repair labor, trip, expense, and parts charges were all…
Were free-distribution newsletters exempt periodicals, and were mailing lists used for several issues eligible for one-time-use treatment?
Qualifying newsletters issued four to 60 times yearly could be exempt, but lists used over a multissue contract were not shown to be restricted to one-time use.
Did structural-steel fabrication by a wholly owned subsidiary become part of the parent's taxable material cost for a California construction contract?
Yes. The subsidiary was a separate corporate person, so its fabrication charge was part of the steel's taxable sales price to the parent contractor.
How did the former Texas franchise tax apply to an S corporation?
Texas generally taxed an S corporation like any other corporation doing or authorized to do business in the state. Under the 1997 system it computed taxable-capital and earned-surplus components,…
How were receipts from a software support, maintenance, and enhancement plan apportioned under the former Texas franchise tax?
Texas treated the plan as licensing a computer program because nearly all costs related to upgrades, extensions, and enhancements rather than telephone support. Renewal charges were therefore…
Is a court-ordered liquidation fund taxed like a qualified settlement fund subject to New York franchise tax, State income tax, or New York City income tax?
No. A court-ordered liquidation fund that only holds proceeds, pays creditors, distributes to beneficiaries, and makes short-term investments is not conducting a business, so it is not a corporation…
Does a non-bank Article 9-A taxpayer keep its Article 9-A status when it contributes its assets to a partnership, and how do tiered-partnership items flow to it?
It keeps its Article 9-A status. Because the SBIC was never a banking corporation under section 1452(a)(9), it is simply an Article 9-A taxpayer and the section 1452(d) grandfather election does not…
If the state's own employees repeatedly told me I didn't owe gross receipts tax, can it later come back and make me pay it plus interest?
The protest was denied. Arthur Pino, a rural contract mail carrier near Magdalena, tried to register and pay New Mexico gross receipts tax, but Department employees repeatedly told him — wrongly —…
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