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 a third-party service that uses Interactive Voice Recognition (IVR) technology to independently verify a consumer's phone-service-switch instructions -- billed to the telemarketing company, not the consumer -- a taxable data processing service?
Yes. A company's independent, IVR-based verification service -- confirming a consumer's instruction to switch long-distance telephone carriers after a telemarketing call, matching the phone number…
Did recording a corrective leasehold mortgage and future amended renewal mortgages trigger additional Florida documentary stamp tax?
No. The corrective and future amended renewal mortgages qualified as exempt renewals because the original documentary stamp tax had been paid, the same obligor executed them, and they only continued…
Did recording a corrective leasehold mortgage and future amended renewal mortgages trigger additional Florida documentary stamp tax?
No. The corrective and future amended renewal mortgages qualified as exempt renewals because the original documentary stamp tax had been paid, the same obligor executed them, and they only continued…
Did an out-of-state catalog retailer create California use-tax collection nexus by conducting photo shoots in the state?
Taking catalog photos was not a selling activity, but using an exclusive California work or photo site could create nexus as a place of business.
If a company performs auto damage appraisal (insurance) services for a self-insured client, are those services taxable, and does the client need to provide anything to document the exemption?
The client (referred to as CORPORATION X) was correct: auto damage appraisal services performed on behalf of a self-insured entity are NOT taxable. Rule 3.355(b) taxes insurance services performed…
Was Sallie Mae exempt from Texas motor vehicle sales and use tax on a vehicle purchase in 1997?
Yes. The Comptroller said the federal exemption in 20 U.S.C.A. § 1087-2 exempted the Student Loan Marketing Association from Texas motor vehicle sales and use tax, so its Texas vehicle purchase was…
Under the superseded RR 97-3, how were hotel room charges, mandatory fees, optional guest services, and tourist packages taxed?
Room charges and mandatory customary services generally used the ruling's 7% accommodations rate. Optional services often used a 5% guest-charge rate or another tax rule. RR 98-21 expressly…
Did using independent contractors for computer programming in Texas create franchise-tax nexus for an out-of-state corporation?
Yes. The corporation employed its own programmers outside Texas but used independent contractors to perform programming services in Texas. Those in-state services subjected it to both former…
How did the former Texas franchise tax define taxable capital and surplus?
Taxable capital was the corporation's stated capital plus surplus. Section 171.109(a)(1) defined surplus as net assets minus stated capital and said it included unrealized, estimated, or contingent…
If a family moves their domicile out of New York mid-year and empties out their only New York home, are they still taxed as full-year statutory residents just because they spent more than 183 days in New York that year?
No. Even though they spent more than 183 days in New York during 1996, the Kukulkas moved all their household furnishings, clothing, and personal effects out of their New York home by August 17,…
I had (or later got) nontaxable transaction certificates for my construction jobs, but didn't show them until after the audit — can I still keep the deductions?
No. To keep a New Mexico gross receipts tax deduction that needs a nontaxable transaction certificate (NTTC), you must both hold a valid NTTC at the required time and prove you held it within 60…
Is a $30 donation to a school booster club, given in exchange for having a name stamped on a commemorative brick placed at the school, subject to Texas sales tax?
No. A $30 donation to a high school fine arts booster club, given in exchange for having a brick stamped with the name of a student, alumnus, or other requested name and placed at the school, is not…
When a strip-mining company is legally required to reclaim mined land by planting it with grass for future livestock grazing, does the grass seed -- and the fertilizer and heavy equipment used in reclamation -- qualify for the Texas agricultural exemption?
Partly. Grass seed used to revegetate strip-mined land as part of the legally required reclamation process DOES qualify for the agricultural exemption under Tax Code § 151.316, which exempts seeds…
Which parts of a print-and-mail company's letter-printing and mailing service are taxable printing versus exempt mailing, and does the tax rate depend on where the letters are mailed to?
A company that prints and mails specialized notices and letters must charge sales tax on its printing of letters, envelopes and address labels (taxable under the printing/imprinting rules), but not…
How does New York sales tax apply to the many different services and equipment rentals an executive office suite provider bills to its tenants -- phone answering, copying, word processing, mail handling, catering, and pass-through charges?
An executive office suite operator's tenant services are taxed item-by-item depending on their end result: telephone answering and equipment-based copying/faxing are taxable, word processing is not,…
What South Carolina interest rate applied to tax underpayments and overpayments for the quarter beginning April 1, 1997?
The rate was 9% for the three-month period beginning April 1, 1997. Interest was compounded daily, except that simple interest applied to an underpayment of a declaration of estimated tax.
If my company performs services (like research) entirely in another state but delivers the finished product — a report — to a customer in New Mexico, does New Mexico get to tax those receipts?
The protest was sustained in part and denied in part. Lockheed Missiles & Space Company performed research and development on four missile-defense contracts largely at its California facilities,…
When is a multimedia presentation on CD-ROM or diskette taxable as a computer program in Texas, versus a non-taxable production service?
It depends on whether the production contains "source code." This follow-up letter clarifies an earlier ruling: "source code" means any series of instructions -- whether originally written by the…
Could a chain of purchases, leases, and subleases of semiconductor equipment qualify as tax-exempt resale transactions before the equipment reached the operating joint venture?
Yes, for the intermediate transactions. Each registered dealer acquired or leased the equipment solely to resell, lease, or sublease it and supplied a resale certificate, so those steps were exempt.…
Is a pager company's self-insured product replacement program (monthly charge plus deductible) exempt from Utah sales tax the same way ordinary insurance is?
It depends on whether the customer bought or leased the pager. For a purchased pager, the separately stated PRIP (pager replacement insurance program) charge is nontaxable, since Utah's tangible…
Did California's food-container regulation amendment end the exemption for nonreturnable containers sold to commercial packers?
No. Assistant Chief Counsel said the Board did not intend its Regulation 1589 food-container amendment to reverse the long-standing section 6364 treatment for empty nonreturnable containers sold to…
Could commercial packers buy nonreturnable containers tax-free when filling them with customers' products for resale?
Yes. California's section 6364 interpretation exempted those container sales, and the Regulation 1589 amendment was not intended to narrow that treatment.
Could a used-car dealer buy a customer's vehicle tax-free and finance its resale to that same customer?
Yes, the licensed dealer could buy the vehicle tax-free if it was held strictly for resale. But reselling it to the same customer for $700 was taxable. The dealer needed a seller-financing permit…
Was an FDOT contract for a statewide electronic toll-collection system a public-works construction contract or a tax-exempt sale of equipment to the state?
It was a public-works construction contract. The contractor, not FDOT, was the ultimate consumer and owed sales or use tax on tangible personal property that went into or became part of the…
Did an LLC seller's-permit application need detailed identification for a nonmanaging foreign-corporate member or California registration for that corporation?
No, under the 1997 memorandum. The LLC had to give detailed information for managing members, not this nonmanaging corporate member, and a valid foreign corporation did not need California…
Is a flood zone determination service -- checking FEMA flood hazard maps and certifying whether property is in a flood zone for mortgage lenders -- taxable in Texas as an information or insurance service?
No, it's not taxable. A service company that consults flood hazard boundary maps (FHBMs) and certifies on a FEMA form whether property is in a flood zone -- helping mortgage lenders meet a federal…
Could a county's direct purchases of materials for a design-build governmental-center renovation qualify for Florida's government-sales exemption?
Yes. Materials bought under the county-furnished procedure were exempt because the county chose the purchases, issued purchase orders, paid vendors, retained title, assumed risk of loss, maintained…
Could a county buy stadium construction materials tax-free when its development consultant and contractor identified what the project needed?
Yes. The proposed owner-furnished-material procedure produced exempt direct county purchases because the county issued the purchase orders, paid vendors, took title and possession before…
Was a city-owned pier's lease to a concessionaire exempt from rental tax, and were separately charged electricity and gas also exempt?
The lease was exempt because the publicly owned pier qualified as a recreational facility and the lessee provided both food and drink concession services. The city still had to collect tax on…
If Utah's sales tax rate changes between when a fixed-price construction contract is signed and when the work is delivered, which rate applies?
The rate in effect when the sale is actually completed — when title to the goods passes, ordinarily at delivery — controls, not the rate in effect when the fixed-price contract was signed. A rate…
Were sales of the PROTONICS hinged knee brace exempt as prescription medicine?
Only under specified conditions. California treated the fully worn hinged knee brace as an orthotic device, but patient sales required a written order from a licensed physician or podiatrist.
Did installing an emergency-vehicle alerting device for a deaf or hard-of-hearing driver qualify the vehicle for Texas's disability exemption?
No. The motor vehicle tax statute described in the letter exempted vehicles modified for people with orthopedic disabilities, defined by limited movement of body extremities. A hearing deficiency…
Are manufactured buildings and their construction materials exempt from Utah sales tax when sold to agricultural producers for farming use, even though the building becomes part of real estate?
Yes, exempt -- if the building is used primarily and directly in commercial farming operations. Utah Code § 59-12-104(21) exempts tangible personal property used or consumed primarily and directly…
As a contractor installing commercial kitchen fixtures and equipment, who pays Utah sales tax — me or my customer — and does it matter whether the item becomes part of the building?
It depends on whether the item becomes part of the real property. When a contractor installs construction materials or real property fixtures (built-in ovens, built-in appliances, sinks) that get…
Were custom-furniture freight charges exempt when one common carrier handed the shipment to a local carrier for final delivery?
It depended on the consignee. Shipment to the buyer care of the local carrier remained direct and exempt; shipment to the retailer made the first leg taxable incoming freight.
How did Florida treat a retail parent company's investment interest and intercompany dividends in its corporate sales-factor apportionment?
The investment interest was business income but stayed out of the sales factor because the taxpayer was not a financial organization and the amount was under 1% of gross receipts, so exclusion…
Was a slide-in camper exempt because its Canadian purchasers took it home after the California retailer installed it on their truck?
No. The retailer did not ship the camper outside California, and a slide-in camper was not a new motor vehicle eligible for the foreign-resident exemption.
Did California need a nominee lien after a deceased taxpayer's property was transferred following the recording of two existing state tax liens?
No. Staff said the two existing tax liens had already attached before the property transfer, so recording an additional nominee lien was unnecessary.
Were commissions earned in Texas and shoe sales delivered in California Texas receipts under the former franchise tax?
The commissions were Texas receipts for both former franchise-tax components because the taxpayer performed the customer service in Texas. The shoe-sale receipts were not Texas receipts because…
Did Public Law 86-272 protect a Texas-authorized corporation from both former franchise-tax components?
No. The certificate of authority made the corporation subject to the former taxable-capital component even if its only Texas activity was protected solicitation. If the stated activities qualified…
What initial and later former Texas franchise-tax reports followed a merger into a newly formed surviving corporation?
The surviving corporation's initial report was due May 7, 1997 and covered the privilege period from February 8, 1996 through December 31, 1997. Its December 31, 1996 year-end supplied both initial…
Do a TV broadcaster's transmitters, related repair labor/parts, and the electricity used to run them qualify for Texas's manufacturing sales tax exemption?
No. Transmitters, their associated repair labor and parts, and the electricity used to broadcast are NOT exempt from Texas sales tax, even though broadcasters can qualify as manufacturers for their…
Was selling internet advertising space subject to California sales or use tax?
No when the advertiser received no tangible personal property. If the advertising-space seller also provided tangible property, the charges for that property were taxable.
Were charges for collecting, electronically transmitting, and reconciling patient payments taxable when the processor also supplied periodic reports?
No. The true object was account-collection and reconciliation services, so customer charges were not taxable; the processor was the consumer of report materials and owed tax when buying or using…
Were CAD design charges for PCB photoplot tooling taxable, and did an older published annotation protect the manufacturer for the audited periods?
Current regulation made the full tooling contract, including design, taxable even if separately stated. Appeals recommended deleting audited NRSU charges because older published advice said…
Were noncarbonated sports drinks such as Gatorade, Powerburst, and Exceed exempt from California sales tax as food products?
Yes. Tax counsel said the named noncarbonated sports drinks qualified as food products whose sales were exempt under Regulation 1602(a)(1).
Could a corporation use federal net operating losses from before 1991 to reduce later former Texas earned surplus?
No. Former Texas earned surplus began with federal taxable income before federal net operating loss deductions. Texas instead allowed its own apportioned business-loss carryforward for up to five…
When an unredeemed towed vehicle is sold at a New York City Marshal's auction, are the towing charges paid to the towing company out of the auction proceeds subject to sales tax?
No -- towing charges that a New York City Marshal pays to a towing company out of the proceeds of an unredeemed vehicle sold at a Marshal's auction are not subject to sales tax, because the Marshal…
Did a section 501(c)(3) nonprofit have to collect Florida admissions tax on live theater performances it actively sponsored?
No. The nonprofit qualified as a sponsoring organization because it actively planned and conducted the performances, was responsible for safety and success, received the gross and net proceeds, and…
Were sales of permanently implanted Biogran bone-graft material taxable?
No. California concluded that Biogran stimulated the body's natural bone-growth function and was permanently implanted, so its sales were not subject to tax.
Did forming a Texas corporation create former franchise-tax liability even before considering its business activity?
Yes. Section 171.001 subjected a Texas-chartered corporation to the former franchise tax. The corporation calculated taxable capital and earned surplus, apportioned each, and paid the greater amount…
Does equipment like routers, servers, and hubs used by an Internet service provider to deliver service qualify for Texas's manufacturing sales tax exemption?
No. Equipment such as routers, servers, and hubs used by an Internet service provider (ISP) to provide its service is taxable at the time of purchase. The Comptroller explained the equipment can't…
Is a check-guarantee service's per-check fee, which merchants pay to have a customer's check backed against non-payment, subject to New York sales tax?
No -- a check guarantee service's fees, including its per-check charge and its minimum monthly account fee for low-volume merchants, are not subject to New York State or New York City sales tax,…
Who has to collect New York sales tax on towing charges and vehicle auction sales when a New York City Marshal tows away cars for unpaid parking tickets -- the Marshal or the independent towing company?
The New York City Marshal, not the independent towing company, must collect and remit sales tax on towing charges paid by a vehicle owner reclaiming a car towed under the Parking Violations Bureau…
How did RP 97-3 require a taxpayer to request a refund of an overpaid South Carolina deed recording fee?
The taxpayer first presented the original deed and any required original affidavit to the county recording official for verification, then sent those originals, the verification, and a…
Were over-the-counter sales of Zbar exempt as sales of food?
No. California treated Zbar as a medicine designed to regulate blood sugar rather than an exempt food product, and its over-the-counter sales did not meet the medicine-exemption conditions.
Our client, a publicly traded corporation that owns New York real estate, is being acquired by another publicly traded company through a reverse triangular merger structured as a tax-free reorganization -- our client's shareholders will exchange their stock for less than 50% of the acquirer's voting power and value. Since our client itself is a real-estate-owning entity being acquired via its shareholders exchanging stock, is our client (the acquired company) primarily and jointly liable, along with its own shareholders, for New York's Real Estate Transfer Tax on this controlling-interest transfer -- or is that liability solely the acquiring company's?
Yes -- the acquired company and its shareholders are jointly liable as grantor, with the acquirer secondarily liable as grantee. Company X, a widely held, publicly traded C corporation owning New…
Which items in an autobody shop's miscellaneous-materials charge were taxable sales to customers rather than supplies consumed by the shop?
Installed lubricants, adhesives, nuts, and bolts were sold to customers; rags, abrasives, cleaners, masking materials, and similar shop supplies were consumed.
Did a reseller make a taxable use of a software disk by remotely transmitting its contents instead of reselling the disk?
Yes. Because the disk itself was not resold, transmitting its contents was a taxable use, measured by the reseller's cost of the program.
Is the Ceprate Stem Cell Concentration System, used to prepare a patient's stem cells before high-dose chemotherapy, exempt from Texas sales tax as a health care supply?
No. The Ceprate Stem Cell Concentration System does not qualify for Texas's health care supplies exemption under Tax Code Section 151.313. The product is used in a process called immunoadsorption to…
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