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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Did rent paid by a related corporation to a grantor trust qualify for Florida's related-entity debt-payment exemption?
No. The rule's exception applied only to payments between related corporations that were co-makers of the debt securing the real property. It did not extend to a grantor trust, partnerships, or guaran…
If a company buys or builds equipment mainly to control air and water pollution — vapor recovery systems, leak detectors, cathodic protection, double-wall tanks, cleanup gear — is that equipment exempt from Alabama sales, use, and property tax, and deductible for franchise and income tax?
Mostly yes. Company A, an Alabama petroleum business, planned to buy or self-construct five kinds of environmental equipment (vapor recovery systems, in-line leak detectors, cathodic protection, doubl…
Is electronic mail (e-mail) service taxable under Texas sales tax?
**Yes — electronic mail is a taxable telecommunications service in Texas.** The Comptroller's letter states that electronic mail has been subject to sales tax as a telecommunications service since 198…
Does a company owe Texas sales tax on fees charged to songwriters for demo placement and to music publishers for catalog/system access?
**Yes.** The Comptroller ruled that sales of the company's song catalog and system access are subject to Texas sales tax when sold to Texas residents — the company must collect 7.25 percent state sale…
Is an independent contractor who fills in as a temporary secretary/word processor for law firms exempt from sales tax as a 'temporary help service'?
It depends on the facts, not the label. The Comptroller explains that, absent a written contract defining the relationship, Texas has historically applied common-law employer/employee tests — now codi…
Is unprocessed dirt, sand, or gravel taxable, and is digging/backfilling flow line ditches a taxable service in Texas?
**Digging and backfilling flow line ditches is not a taxable service, and the sale or delivery of unprocessed dirt, sand, gravel, or similar materials (merely sorted, sized, screened, washed, and/or d…
Is tangible personal property incorporated into an underground drainage system on a farm exempt from Texas sales tax the same way underground irrigation system components are?
**No.** The Comptroller's letter states that Senate Bill 82 exempts components installed as part of an underground irrigation system on a farm or ranch used to produce agricultural products sold in th…
Does a mailing service or a broker who collects payment for a 900-number telecommunications service have to collect Texas sales tax on those transactions?
**No — in both situations described, the letter holds the taxpayer is not responsible for collecting tax on the underlying sale.** For the mail-order referral business, a mailing service (stuffing/add…
Is customizing a customer's car with performance and body enhancements taxable in Connecticut as a repair, or as fabrication of the customer's property?
It's taxable, but as fabrication — not as a repair. A company added engine and body 'enhancements' (customization) to customers' vehicles, boosting their performance and value. DRS held this is NOT ta…
Were post-confirmation advances under a revolving loan created by a confirmed Chapter 11 plan subject to Florida's nonrecurring intangible tax?
No. Each advance ordinarily would have been taxable because the revolving loan was secured by Florida real property, but the Department found the advances exempt for as long as the loan remained outst…
How did Florida's annual intangible tax apply to fund shares holding municipal leases or repurchase agreements backed by federal securities?
The investment-company funds themselves were exempt, and shareholder net asset value was fully exempt when the valuation-date portfolio held only exempt assets. Municipal lease obligations and repurch…
Are vitamin and mineral supplements for horses exempt from Texas sales tax?
**Yes — vitamin and mineral supplements for horses are exempt from Texas sales tax**, according to this Comptroller letter, unless the item is not clearly for horses only, in which case the seller sho…
Is a toxic-waste cleanup company's service taxable, and are the equipment and supplies it uses during a cleanup subject to sales tax?
Yes -- the cleanup service itself is taxable as processing and real-property-maintenance work, and the company's own cleanup equipment (booms, vacuums, earth-moving machinery) and protective gear/disp…
Does a condominium's common-area electricity qualify for New York's reduced residential energy sales tax rate, including electricity used for the pool, laundry room, and a rooftop antenna lease?
Partly. Hall lights, stairway lights, heaters, and outside lighting tied to the residential building are common-area uses that DO qualify for the reduced residential energy rate. But electricity for t…
How did Texas calculate use tax on a vehicle leased outside the state and later brought into Texas?
Texas used the vehicle's original purchase price without a deduction for depreciation or prior out-of-state use. The applicable rate was the rate in effect when the vehicle entered Texas, and similar …
Is the license and service fee a company pays to access training materials (books, videotapes, videodiscs, software) subject to Texas sales tax?
**Yes — the license and service fee for accessing the training materials is taxable, but a separately stated charge for the training itself is not.** When the company (ABC CO.) uses the training mater…
When a building owner hires an independent managing agent to hire, pay, and supervise building maintenance staff, are those workers' wages exempt from New York sales tax as employee wages, or taxable as the managing agent's service charge?
It depends on who really controls the workers. Where the building owner -- not the managing agent -- sets staffing levels, work hours, shifts, and pay rates, funds the payroll (even though the agent p…
Are receipts from selling custom industrial-control software, and from ongoing modification/updating services on that software, subject to New York sales and use tax?
No -- software designed and developed to a specific purchaser's own specifications ('custom' software) stays exempt from sales and use tax after the September 1, 1991 law change, and so do charges to …
Is a research firm's government-funded pilot plant, built to test a new pollution-control process at a power station, exempt from sales and use tax as research equipment, government property, production machinery, or a capital improvement?
Partly. Tangible personal property bought for use directly and predominantly in the experimental/laboratory research is exempt. Property that becomes part of a permanent capital improvement (the shelt…
Is electricity used to manufacture signs exempt from Texas sales tax when the company also installs most of the signs it makes?
**It depends on whether the finished sign is sold as tangible personal property or as an improvement to realty.** Electricity used directly in manufacturing a sign qualifies for the sales tax exemptio…
Did modifying a travel trailer qualify it for Texas's historical disability-related motor vehicle tax exemption?
No. The historical exemption covered vehicles modified for operation by or transportation of a person with an orthopedic disability. Because a travel trailer was not designed to transport people, modi…
Is the charge for tattooing a person, including applying a temporary tattoo, subject to Texas sales tax?
**No — the charge for tattooing people, including applying a temporary tattoo, is not taxable**, because it is a service rather than a sale of tangible personal property. The person who applies the ta…
Is a cartoonist or caricature artist's charge for drawings at a catered party taxable under Texas sales tax law?
**Yes — a charge for a cartoonist (caricature artist) is taxable as the sale of graphic art, not as a nontaxable entertainment charge**, and the cartoonist must collect and remit sales tax on charges …
Were receivables taxable on January 1 after a Florida parent sold them to an out-of-state subsidiary with no Florida business situs?
No. The subsidiary owned the receivables on January 1 and had no Florida business situs, while the parent retained only ministerial servicing duties without discretion. The subsidiary's purchase note …
When a leased vehicle is sold (for example, the lessee buys it at the end of the lease), who collects the Kansas sales or use tax?
It depends on whether the seller is a licensed Kansas vehicle dealer. A lessor that holds a valid Kansas Vehicle Dealers License (under K.S.A. 8-2403) collects the Kansas sales tax on the purchase pri…
Is equipment rented or leased for making a motion picture, video, or audio recording exempt from Texas sales tax?
**Yes, effective October 1, 1993, a producer may claim an exemption from tax on qualifying machinery or equipment rented or leased for the production of a motion picture or a video or audio recording,…
Which parts of a sulfuric-acid and cogeneration complex did the cancelled TAA treat as exempt energy-production equipment?
Cancelled. Before the taxpayer cancelled the TAA on September 29, 1993 to provide more information, its text treated specified boiler-feedwater and condensate equipment as exempt but denied the reques…
Were electricity sales under a utility's filed residential tariff exempt from Florida sales tax?
Yes. The Department treated a unit classified as residential under the utility's Public Service Commission tariff as a residential household, making the owner's or tenant's electricity purchases exemp…
Which hotel rooms rented continuously to an employer for rotating crews qualified for Florida's six-month transient-rental exemption?
Only the minimum number of guaranteed rooms continuously rented for longer than six months qualified; additional or interrupted rooms remained taxable. Using the hotel's spreadsheets, the Department i…
Did the $2 residential or $4 commercial surcharge apply to a forced-placed dwelling fire master policy and its certificates?
The residential-only master policy carried the $2 surcharge when issued to a Florida mortgagee. Each certificate for Florida residential property also carried $2, while a certificate covering Florida …
When a state, county, city, and industrial development authorities give a company a free plant site, cash reimbursements, grants, and other incentives to locate a factory in Alabama, is the value of those inducements taxable as corporate income — or excludible as a gift?
Excludible as gifts. To induce Company A to build a production facility in Alabama, the State, a county, a city, and two industrial development authorities signed agreements giving Company A a free pl…
When must architects, engineers, or contractors in Texas charge sales tax on copies of blueprints or plans, and when do they instead owe tax as the purchaser?
**It depends on whether the copies are provided to the original client under the professional service agreement, or sold separately to someone else.** When an architect or engineer gives copies of ori…
How did Texas require a seller-financing dealer to report a vehicle sale when the dealer paid all tax at title transfer?
The dealer could pay all tax to the county with timely title and registration documents, but still needed a financing-seller permit. Receipts from that sale went into gross receipts, not taxable recei…
Are hospital gowns sold to a hospital or medical center subject to Texas sales tax?
**Yes — hospital gowns are taxable when sold to a hospital or medical center.** Unless the hospital, nursing home, or other institution itself qualifies for an exemption under Tax Code Section 151.310…
Is a business's fee for picking up and collecting used oil, used oil filters, used antifreeze, and used brake fluid for recycling subject to Texas sales tax?
**No — the Comptroller determined that collection services for used oil, used oil filters, used antifreeze, and used brake fluid to be recycled or re-refined are not subject to Texas sales tax.** The …
Under South Carolina Revenue Ruling 93-11, was a lessor or lessee responsible for property tax on leased real and personal property?
The lessor was generally liable as owner. Liability shifted to the lessee for financing arrangements and specified exceptions, including unit valuation and qualifying 99-year real-property leases; fee…
Which in-state activities did South Carolina Revenue Ruling 93-10 treat as protected solicitation under Public Law 86-272, and which activities destroyed immunity?
Protection covered interstate sales of tangible goods when South Carolina activity was limited to solicitation, ancillary acts, de minimis activity, or specified independent-contractor work. Regular r…
Does a Connecticut manufacturer owe use tax on product displays it buys, stocks with its goods, and gives free to retailers?
It depends on where the retailer is. A hardware maker bought empty product displays from an out-of-state supplier, stocked them with its hardware in Connecticut, and gave the stocked displays free to …
Can a city exempt residential gas and electricity from local sales tax differently — for example, repealing the tax on one energy source but not the other, or only part of the local tax?
**No.** The Comptroller's letter states the answer to both questions is "no": a municipality cannot repeal only a portion of the local tax as it applies to residential gas and electricity, and it cann…
Did a Wisconsin corporation have Florida tax nexus when its president controlled the business from a company-equipped Florida home office?
Yes. The executive set policy, handled financing, made daily and capital decisions, visited Florida customers, and used company-owned office equipment in a Florida home. Those activities created corpo…
How did Florida's annual intangible tax apply to a municipal-bond fund and its shares when the portfolio sometimes held taxable assets?
The investment-company fund itself was exempt. Its shares were fully exempt only when the valuation-date portfolio was 100% exempt. If any taxable asset remained on that date, only the portion attribu…
Were initiation fees and annual dues taxable when a yacht-owners club provided information and purchasing help but no recreational facilities?
No. The nonprofit club operated only an administrative office and owned no clubhouse, marina, dock, restaurant, vessel, or other recreational or physical-fitness facility. Its initiation fees and annu…
Can 'Direct' distributors in a direct-sales organization get their own sales tax permits, and how do they handle tax on non-company items like tapes, books, and business tools?
**Yes — the Comptroller's office decided that any 'Direct' distributor may obtain a sales tax permit and report tax on their own sales**, reversing prior denials, effective for procedures implemented …
Does a computer software marketing aid built by an out-of-state vendor for a Texas manufacturer qualify for the 'developed from scratch' exemption, and is it taxable even though the master copy stays out of state?
**No exemption applies here, and the software is taxable.** The Comptroller held the Rule 3.308(b)(4) exemption for software "created from scratch" only applies when the software is built for the cust…
Are standalone elevator inspection services subject to New York sales tax?
Yes, when the customer is the property owner or lessee. Inspecting elevators to check code compliance is a diagnostic service that counts as maintaining real property under Tax Law section 1105(c)(5) …
Were litigation costs advanced by a contingency-fee law firm taxable accounts receivable before a client recovered money?
No. Under the reviewed contracts, clients owed nothing until a case ended with a recovery, and the firm could not bill advanced costs before then. Costs recorded for unresolved cases therefore were no…
Does a for-profit medical lodging facility have to collect Connecticut room occupancy tax once it is licensed as a health care institution?
No -- once it is licensed. A for-profit 'Medical Hotel' provided short-term rooms, 24-hour nursing care and meals to patients recovering from procedures or treatments. It had a Certificate of Need (Co…
Can a company get a sales tax refund on insurance/actuarial services by prorating the tax based on the ratio of its Texas to out-of-state insurance premiums?
No — the Comptroller denied the refund request. **Prorating insurance service tax based on the ratio of Texas to out-of-state premiums is not a valid method** under Rule 3.355. The letter found the ta…
If a construction contract says the contractor will 'pay all sales taxes,' does that satisfy Texas's tax-included-price rule, and who is liable for the tax?
**No — that contract clause is not enough on its own.** The Comptroller explains that under Rule 3.286(d)(3), a bill, contract, or invoice must either separately state the sales tax amount or contain …
Is a land survey to locate a farm/ranch fence line taxable, even though the fence materials themselves are exempt?
Yes, the survey is taxable. **A land survey to determine or confirm property boundaries is a taxable real property service under Rule 3.356 (Real Property Services), even when the survey is done to lo…
Does a property manager have to collect sales tax on services like security, janitorial, pool, and lawn care that are purchased from independent contractors?
**Yes.** The letter states that taxable services purchased by a property manager from independent contractors are taxable — for example, a pool service, a lawn service, or a janitorial service hired b…
Is a hotel's separate convention center subject to sales tax on room rental, and what happens when meals are served in it?
**Renting the convention center space by itself is not taxable — a rental of real property is not subject to sales tax.** But when meals are served, the analysis splits: charges for meeting rooms wher…
How did the original TAA treat a municipal-bond fund's valuation-date taxable assets before the Department issued a revision?
The original ruling exempted the fund itself and fully exempted shares only for a 100% exempt valuation-date portfolio. It said taxable valuation-date assets made all non-federal net asset value taxab…
Is a retinal angiographer's x-ray service for ophthalmologists taxable under Texas sales and use tax?
**No — the Comptroller ruled the retinal angiographer is providing a non-taxable health or medical diagnostic service.** Because the service itself is non-taxable, none of the fee (whether for taking …
Is a reading lamp prescribed by an optometrist for vision rehabilitation exempt from Texas sales tax as medical equipment?
**No — the reading lamp does not qualify for the medical equipment exemption.** The Comptroller's response states that the reading lamp described (prescribed by an optometrist, used along with prescri…
If a for-profit company produces a charity booklet and donates all proceeds to an exempt organization, is the sale of the booklet exempt from Texas sales tax?
**No — donating all the proceeds to a nonprofit does not make the sale exempt.** The Comptroller explains that the Section 151.312 exemption for periodicals/writings turns on who publishes or distribu…
Is sales tax due on charges for calls to 900 telephone numbers, and who is responsible for collecting it if the 900 number is sub-leased to another company?
**Sales tax is due on 900-number calls that originate from points within Texas**, and the telecommunications firm that transmits the calls collects the charge — including the tax — from the customer o…
Is finish-out labor on a vacant, never-finished building taxable as remodeling, or exempt as new construction?
**Tenant finish-out labor is taxable as nonresidential remodeling** even on a building that was never finished out before, as long as the building was previously occupied or used in its unfinished (sh…
Is a child identification/registration service (videotape and photo registration in case a child goes missing) taxable under Texas sales/use tax?
**No — the Videotape Registration Service and Photo Registration Service themselves are not taxable**, according to this 1993 Comptroller letter ruling. The company charges $20 for a kit to produce a …
When a developer has a contractor improve realty that will later be sold to a water district, can the contractor buy materials tax-free under Tax Code Section 151.311?
**It depends on who has the contract with the governmental entity.** Effective October 1, 1993, if the water control and improvement district (WCID) itself contracts with the developer for the improve…
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