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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Is adding bulk heading to a natural lake, or paving over a worn dirt cart path, new construction or remodeling for Texas tax purposes at an existing golf course?
Both are new construction. The Comptroller ruled that adding concrete bulk heading (gabions) around part of a completely natural lake is new construction, and that paving a naturally worn dirt cart pa…
If I provide answering services (human or automated) to Texas customers from a location in Arkansas, do I owe Texas tax, and do I have to collect it from my customers?
Either human or automated answering service would be subject to Texas tax if the provider were located in Texas. Because the provider is in Arkansas, it must collect Texas Use Tax from its Texas custo…
As trustee of an estate, I'm selling a farmhouse where two disabled beneficiaries lived, plus two adjacent vacant farm parcels, to the same buyer. Is the house sale exempt from New York's Real Property Transfer Gains Tax as a residence, and do I have to add its sale price to the two land parcels' prices to test the $1 million threshold?
Split answer: the house sale was exempt on its own terms, but still had to be combined with the land sales to test the $1 million threshold. Mary and Seely Ward's ~100-acre Orange County farm, with a …
Did the October 1, 1993 tax law change move mobile office trailers and rental bunkhouses from motor vehicle tax to sales tax?
Only office trailers changed. House trailers designed as an office, sales outlet, or other workplace moved from Motor Vehicle Tax Code Chapter 152 to Limited Sales Tax Code Chapter 151 as of October 1…
Does a company that performs pre-employment psychological testing, drug testing, and background-check services still have to collect Texas sales tax on those services?
It depends on the specific service. As of August 30, 1993, pre-employment psychological/attitude/honesty testing no longer requires a Private Investigators and Private Security Agencies Board license …
Is a shopping mall's lease-based charge to tenants for redistributed electricity (plus an administrative fee) a taxable resale of a utility service, or is it untaxed rent?
It's untaxed rent, not a taxable utility resale -- because the electricity and administrative-fee charges are billed under the terms of the mall's leases as 'additional rent,' following the Court of A…
I own a nine-acre beachfront parcel that I've treated as my principal residence, with a main house, a separate beach house, and an old barn, none of which I've ever rented out or depreciated. If I subdivide and sell just the beach house and barn (on six of the nine acres) to a buyer, does New York's Real Property Transfer Gains Tax apply?
No gains tax, because the beach house and barn were part of the owner's tax-exempt residence, not separate business or investment property. Burton Brous bought a nine-acre Long Island beachfront parce…
Are hollow point needles used with a hypodermic syringe exempt from Texas sales tax?
Yes. The Comptroller ruled that hollow point needles adapted for use with a hypodermic syringe — including anesthesiology, thin wall tuohy, arterial, biopsy, and blood collection needles that are holl…
If a business catches up on years of unfiled sales tax reports, does not having had a valid sales tax permit increase its liability, and is there a limit on how far back the state can go?
Not having a valid sales tax permit does not itself increase the tax liability, but filing more than 30 days late triggers a 10% penalty (or a 50% penalty if the state finds intent to evade tax or com…
How does Texas distinguish nontaxable employee/temporary-help labor from taxable 'contract labor'?
There is no separate definition of 'contract labor' in the Tax Code or Rules. Instead, labor is nontaxable if it qualifies either as an employee's service under Tax Code Section 151.057 (or the parall…
We're the fee owner of an office building. To help a prospective tenant (Newsweek) get NYC Industrial Development Agency economic-development benefits and a real estate tax abatement, we're converting our building to a condominium and conveying title to the tenant's units to the IDA for nominal consideration, then leasing those units back from the IDA at nominal net rent under an 'Overlease' lasting about 15 years and 8 months. We'll keep all the economic benefits and burdens (condemnation/insurance proceeds, income-tax ownership treatment, the right to sell/mortgage/transfer), and the IDA's title will end automatically on a set date or earlier if certain events happen (like the Prime Lease terminating), with title reverting to us. Are the conveyance to the IDA, the eventual title reversion, the Overlease, the Prime Lease with our tenant, and the related financing all exempt from New York's Real Estate Transfer Tax, Real Property Transfer Gains Tax, and Mortgage Recording Tax?
Exempt at every step -- Midtown Realty Company kept all the real economic benefits and burdens of ownership throughout. Midtown Realty, the fee owner of the office building at 1775 Broadway in Manhatt…
Can each school-sponsored student organization within a school district hold its own two one-day tax-free sales or auctions each year?
Yes. The Comptroller confirmed that the school district, each school in the district, and each school-sponsored student organization within each school (examples given: FFA, Spanish Club, Drama Club, …
Is a country club's 'Non-Resident' membership class — for members who live more than 100 miles from the club, some of them out of state — subject to Texas sales tax on dues and fees?
Yes. The Comptroller ruled that because the country club itself is located in Texas, sales tax applies to all membership dues, initiation fees, and other assessments charged for the Non-Resident membe…
When a customer returns merchandise, gives a late resale/exemption certificate, or was billed tax in error, how does a seller get back the sales tax it already remitted to Texas?
The seller can get a refund or credit from the Comptroller two ways: file amended sales/use tax returns for the periods the tax was remitted, or take a credit on its next return. Either way, the selle…
Is a company that supplies law-library staff and looseleaf filing to law firms providing taxable personnel services in Connecticut?
It splits. When the company supplies temporary LIBRARY PERSONNEL (librarians, paraprofessionals, clerks) to law firms, that IS a taxable personnel service under Conn. Gen. Stat. § 12-407(2)(i)(C): the…
Does Texas sales tax apply to municipal franchise fees passed through on cable TV and garbage collection bills, and to tickets for an amusement event?
**Yes — all three items described in the letter are subject to Texas sales tax.** The Comptroller's letter explains that under Texas Tax Code Sec. 151.007(a)(2), 'sales price' includes the total amoun…
Can a Medicare-related printing/forms contractor buy printed forms, booklets, and publications tax-free with a resale certificate because they're ultimately used for the federal Medicare program?
**Only if the contract with the federal government specifically provides that title to the items passes to the federal government upon receipt, and the items are not used before title passes.** The Co…
Is labor to repair residential property damaged by a fire, flood, or other casualty taxable in Texas?
**No — labor to repair residential improvements to realty is not taxed in Texas, regardless of the cause of the damage.** The Comptroller's letter clarifies that a 1993 legislative update on the disas…
Can a direct payment permit holder accrue local or MTA use tax based on where an item is first used, instead of where it was first stored?
**No.** Under Rule 3.377(c)(5), a direct payment holder cannot accrue local (city, county, MTA/CTD) tax based on the location of first use — the tax is due based on the location where items are first …
Is a charge for licensing a copyrighted photograph or image for publication subject to Texas sales tax?
**No — a charge for licensing photographic images for publication is not subject to Texas sales tax.** However, charges for developing film are subject to sales tax, unless the photographer gives the …
Is seismic surveying for oil and gas exploration (placing explosive charges and geophone receivers) a taxable surveying service in Texas?
**No — the Comptroller ruled this seismic surveying service is not taxable surveying.** The letter explains that laying out source points (explosive charge locations) and receiver points (geophone loc…
Is a breathing monitor that can be used independently of a ventilator exempt from Texas sales tax as a prosthetic device?
No — **the breathing monitors (Monitor LS-75 and VM-90) are taxable when sold to hospitals, clinics, doctors, etc.** The Comptroller ruled that the monitors do not meet the definition of a prosthetic …
Does a general-purpose farm building, like a hog barn, qualify for the Texas agricultural sales tax exemption?
**No — a general-purpose farm or ranch building does not qualify for the agricultural exemption unless it is specifically designed to function as a piece of farm machinery or equipment.** The letter e…
Are materials and labor exempt when contracting to improve real property for a tax-exempt organization, and is disaster-repair labor still exempt after October 1, 1993?
**Materials used in a contract to improve realty for an organization exempt under Tax Code Sections 151.309 or 151.310 are exempt, but only tangible personal property that is necessary and essential t…
Are tracheal ('endo-trach') tubes purchased by hospitals exempt from Texas sales tax as prosthetic devices?
**Yes — tracheal tubes qualify as an exempt prosthetic device, so a hospital, other health care provider, or individual may purchase them tax free under Rule 3.284(c)(1), and no prescription is requir…
Are diagnostic reagents that veterinarians use on blood samples to test dogs and cats for disease exempt from Texas sales tax as drugs and medicines?
**No — the diagnostic reagents are not exempt as drugs and medicines.** The Comptroller explains that to qualify for the drug/medicine exemption, a substance must possess curative or remedial properti…
Are mobile offices/office trailers taxable as tangible personal property in Texas, and can I buy them tax-free for rental to customers?
**Yes — effective October 1, 1993, mobile offices became subject to limited sales and use tax as items of tangible personal property under Chapter 151.** A business that buys mobile offices in order t…
Did the 1993 change to the sales tax law on disaster-area real property repairs affect labor to repair residential property, and when does tax apply to non-residential repair labor for damage that occurred before the law changed?
**No — residential property repair labor remains untaxed; the 1993 law change only affects non-residential property repairs.** The Comptroller confirms the change in the sales tax law regarding real p…
Are environmental site-assessment and safety-consulting services performed by a professionally certified consultant subject to Texas sales tax?
No — the Comptroller ruled these services are **not subject to sales tax**. The consultant's site assessments, spill prevention control and counter-measure (SPCC) plans, Texas Workers' Compensation Ex…
Does air-control machinery in a manufacturer's clean room qualify for Connecticut's manufacturing-machinery sales and use tax exemption?
Yes. A company that makes hypodermic needles was building a 'clean room' — an enclosed, environmentally controlled space — and installing machinery to regulate the air's temperature, pressure, humidit…
In a bond-financed Industrial Development Authority (IDA) manufacturing project, which Alabama taxes get abated or exempted — deed recording tax, mortgage tax, sales and use tax, ad valorem tax, income tax on rent and bond interest, and the IDA's lease tax?
It depends on the tax and the document. In this IDA (Industrial Development Authority) bond-financed manufacturing project under the Tax Incentive Reform Act of 1992 (§ 40-9B-1 et seq.), the Departmen…
If a cellular phone company gives away a free phone as part of a promotion tied to a customer's donation to a charity, does the company owe use tax on the phone?
**Yes.** The Comptroller ruled that if a cellular phone seller gives a person a cellular phone because that person made a donation to a charity, the seller must pay tax on the acquisition cost of the …
Is a CPA's 'write-up' work of entering, maintaining, and retrieving payroll-check data taxable as data processing in Texas?
**Yes — entering, maintaining, and retrieving information from payroll checks is taxable data processing service in Texas**, even though the client (not the CPA) actually computes and writes the payro…
Does Texas sales tax apply to fees a government agency charges for copies of public records?
**No sales tax is due on the fee for the first copy of a public record that a governmental body is required to furnish under the Open Records Act — but sales tax is due on any additional copies of the…
Does a dental clinic owe sales tax on the electricity it uses for X-rays, making crowns/bridges/appliances, dental lights, and air conditioning for patients?
**Yes — the dental clinic must pay sales tax on its electricity and natural gas.** The Comptroller ruled that a dentist using electricity to take and develop X-rays, manufacture crowns, bridges, and d…
If a cellular phone company gives away a free phone to a customer who donates to charity, does the company owe sales or use tax on that phone?
It depends on who is giving the phone away. **If a cellular phone service provider gives a subscriber a free phone as part of the cellular service because the subscriber donated to a charity, the comp…
Did receivables of a non-Florida corporation acquire Florida taxable situs when its representatives regularly called on Florida customers?
Yes. The receivables arose from business regularly conducted in Florida through company representatives and received the benefit and protection of Florida law and courts. The Department therefore trea…
Is a non-stock cooperative housing corporation that has taxable income exempt from Connecticut's corporation business tax?
No — not if it has taxable income. A non-stock cooperative housing corporation CAN qualify as a 'cooperative housing corporation' under Conn. Gen. Stat. § 12-214(a)(5) and Conn. Agencies Regs. § 12-21…
Does a company that processes Medicare claims under a federal government contract owe sales tax on the claim forms, checks, and supplies it uses to do that work?
Yes — **the claim forms, checks, and other supplies the company uses to process Medicare claims are taxable to the company**, because those items are not sold or transferred to the federal government.…
Is the exchange of 'trade dollars' between a taxpayer and its vendors subject to Texas sales tax?
**Yes — both sides of the exchange are taxable sales.** The Comptroller ruled that issuing and redeeming 'trade dollars' (five-dollar face-value credits given to vendors in exchange for goods/services…
Metro-North Commuter Railroad Company asked whether two categories of employees who work in both New York and Connecticut - (1) employees paid collectively-bargained travel time to reach a temporary out-of-state work assignment, and (2) employees who work a set schedule of days in New York and are 'on call' at home in Connecticut - qualify for the federal Amtrak Reauthorization and Improvement Act's exemption from New York income tax on compensation paid to interstate rail employees who perform 'regularly assigned duties' in more than one state.
It depends on the category. Employees paid travel time to reach a single, temporary out-of-state assignment (like a conductor sent to flag a specific New York construction site) are NOT exempt - they …
Were component parts used to repair a lithotriptor exempt from Florida sales tax?
Yes. Because lithotriptors were specifically exempt medical appliances under the rule then in effect, component parts necessary for their operation and performance were also exempt. Although the reque…
Is a heart/lung machine used during surgery exempt from Texas sales tax as a prosthetic device?
**Yes — the heart/lung machine qualifies as an exempt prosthetic device under Texas Tax Code Section 151.313(a)(4)** because it performs the function of a vital organ (both heart and lung), whether us…
When separate vendors each do part of an oil and gas well workover, is each vendor's job taxed on its own, or based on the overall well-servicing job?
**Taxability is determined within the context of the overall service, not vendor-by-vendor.** The Comptroller confirmed it will not follow Comptroller's Hearing No. 28,608 (which had looked at each ve…
Are a golf course's membership initiation fees, annual dues, and driving-range fees subject to New York's tax on social or athletic club dues, even though it markets memberships and calls itself a 'country club'?
No -- because members have no proprietary interest, no control over activities or management, membership is open to the general public on a first-come, first-served basis limited only by the facility'…
Must a customer that resells purchased business forms only to tax-exempt New York municipalities still register as a sales tax vendor and give its supplier a resale certificate?
Yes -- a manufacturer selling business forms to a customer must collect sales tax on those sales unless the customer furnishes a properly completed Form ST-120, Resale Certificate. The fact that the c…
How is income from servicing extended warranty contracts allocated to New York for the Article 9-A receipts factor?
Receipts from servicing extended warranty contracts are 'other business receipts' under 20 NYCRR 4-4.1(b)(5), and they are allocated to New York when they are earned in New York -- that is, where the …
Are sales to a New York customer, drop-shipped to the customer's out-of-state buyers, New York receipts for the business allocation percentage?
It depends on where the goods are shipped, not who the customer is. For the receipts factor of the Article 9-A business allocation percentage, receipts from sales of tangible personal property are all…
If a manufacturer is located outside a taxing city's limits but inside a taxing county, does it owe city use tax based on the vendor's location?
It depends on what the certificate covered and how the item was actually used. **The letter gives two possible answers, not one rule:** if the manufacturer's resale or exemption certificate validly co…
Is a video production company a 'manufacturer' for Texas sales tax purposes, and can it rent or lease production equipment tax-free?
**Yes — effective October 1, 1993, producing a motion picture, video, or audio recording (a copy of which is sold, offered for sale, licensed, distributed, broadcast, or otherwise exhibited) counts as…
Are materials used to build new railroad track — rails, ballast, bridges, cross ties, culverts — exempt from Texas sales tax, and how do contractors and material suppliers document that exemption?
**Yes — materials to build railroad road bed, railroad track, and cross ties are exempt from Texas sales tax under Tax Code Section 151.331**, and this exemption applies regardless of whether the cont…
When a corporation transfers its assets to a new company in exchange for less than 100% of that new company's stock, is the transfer taxable in Texas?
**Yes — when multiple companies each contribute assets to a newly formed corporation and no single contributing company receives 100% of the new corporation's stock, the transfers of tangible personal…
Is a fee for acting as an umpire between two arbitrators subject to Texas sales tax?
It depends on the context: **the Comptroller's October 8, 1993 letter says a general charge to act as an umpire between two arbitrators, plus an associated mileage charge, is not subject to tax** — bu…
Did a seller-financing dealer owe tax on unpaid installments when title filing was delayed only by the buyer's missing insurance proof?
No. If missing buyer liability-insurance proof was the only reason the county would not accept the title application, the permitted dealer could keep remitting tax as payments were received rather tha…
If a taxpayer already received a refund for one issue in an audited tax period, can they later claim a refund for a different issue in that same period?
**Yes.** The Comptroller's internal policy memo states that a final refund determination on one issue (one set of transactions) does not bar — under res judicata or otherwise — a later refund claim fo…
Are barricade services and plastic pavement marker tabs used by highway contractors subject to Texas sales tax?
**Yes for barricade service (taxed as equipment rental), but plastic marker tabs can be bought tax-free as consumable supplies.** The letter states that charges for barricade service are treated as a …
Is a microbe air scrubber system (and the microbes used in it) exempt from Texas sales tax, and is monitoring/maintenance of the system taxable?
**The microbe air scrubber system qualifies for the manufacturers' phased-in exemption under Tax Code Section 151.318, and microbes sold together with the system as part of that sale are also covered …
Can a janitorial services company buy its cleaning equipment and supplies tax-free under a resale certificate?
**Generally no for equipment and supplies used up on the job, but yes for items left behind with the customer.** The Comptroller ruled that separately pricing janitorial equipment on a price-per-squar…
Is a New York corporation owned by tribal members and operating entirely on an Indian reservation exempt from Article 9-A franchise tax?
No. A New York domestic corporation that runs a bingo operation entirely on the St. Regis Mohawk Reservation and is owned entirely by tribal members is still subject to the Article 9-A franchise tax. …
Were Calli Beverage, Fortune Delight, NuPlus Bulk, Electrosport, and Evergreen subject to Florida sales tax?
No. The Department relied on the state agriculture agency's Food Laboratory classification of all five products as dietary food supplements and found them exempt from Florida sales and use tax under t…
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