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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I leased out my restaurant and liquor license but collected no cash rent — do I still owe gross receipts tax on it?
The protest was denied. A Santa Fe motel operating as a Quality Inn leased its on-site restaurant and state liquor license to a tenant. When the tenant fell behind, they modified the lease to waive…
How much of a pre-need burial contract fee entered taxable receipts when it covered future merchandise and service cost increases?
The merchandise-related portion entered taxable gross receipts with the vault, liner, or urn price; the service-related portion did not.
Were buses leased to California exempt from sales and use tax because they were exempt from vehicle registration fees?
No. The lessor's MTE purchase or use was taxable. The lessor could pay on purchase price or make a timely, irrevocable fair-rental-value election.
Which asset basis controlled gross receipts when federal and former Texas franchise-tax depreciation methods differed?
Taxable-capital basis followed the method used to compute surplus: GAAP depreciation under the GAAP method or federal basis under the federal-income-tax method. Earned surplus used the actual…
Does a graphics design firm have to collect sales tax on the brochures, logos, and marketing materials it designs and delivers to clients on a computer disk?
It depends on what's actually being sold: if the invoice and agreement clearly state the client is buying only reproduction rights (not ownership) and the computer disk is transferred solely so the…
Does a videographer have to charge sales tax on video tape copies sold to a town board, a church, or a wedding couple?
A videographer who tapes town board meetings, church services, and weddings, then sells a copy to the purchaser, doesn't owe sales tax on copies sold to a town or other government entity (with a…
When a commercial landlord charges tenants for 'condenser water' used to run their air conditioning, is that a taxable utility sale or an untaxed part of the rental?
No -- a commercial building owner's charge to tenants for 'condenser water' (the water circulated through a building's central air conditioning system) is not a taxable sale of water or a…
I didn't know about New Mexico's gross receipts tax and my tax preparer never mentioned it — do I still owe the penalty and interest, or just the tax?
The protest was denied. Steven Bone ran a one-person home-remodeling business and didn't know New Mexico's gross receipts tax existed. He used H&R Block for his income taxes every year — they even…
How are an out-of-state natural-gas marketer's sales to New York end-users taxed under the Article 9 utility taxes, Article 9-A, and the sales tax, when title passes outside New York and the marketer arranges transportation as the customer's agent?
A natural-gas marketer deriving more than 50% of its receipts from gas sales is classified under Article 9: it is subject to the section 186 gross-earnings tax (so not Article 9-A, per section…
Which parts of a 'turn-key' trade-show company's design, fabrication, rental, shipping, storage, and project-management charges are subject to New York sales tax?
A New York-based 'turn-key' trade show company's rentals and occasional sales of exhibits and displays (bundled with design, fabrication, and shipping charges) are taxable when delivered in New York…
Does an out-of-state manufacturer have to register and collect New York sales tax if its only New York contact is an occasional trade show demo and orders shipped by mail or common carrier?
No -- a Rhode Island manufacturer with no New York place of business or property, no New York sales staff or agents, only an occasional (once-every-other-year) New York trade show appearance where…
Is a wedge-shaped foam bed pillow marketed to control acid reflux exempt from sales tax as medical equipment?
A specialized wedge-shaped foam 'Bed Pillow' recommended by physicians to control acid reflux, if not generally useful absent illness or injury, qualifies as exempt medical equipment when sold…
Which of a cargo airline's ground support equipment items -- forklifts, tugs, jacks, carts, and dozens more -- qualify for New York's commercial aircraft exemption from sales tax?
Federal Express's ground support equipment is exempt from New York sales tax under Section 1115(a)(21) only when it's installed on the aircraft or genuinely used for aircraft maintenance and repair…
Can a Connecticut resident who works for Citicorp in New York City allocate to Connecticut, and exclude from New York income, the four days per week he works from a home office that Citicorp itself set up as part of a corporate office-space-cutting telecommuting program?
No. Because reviewing environmental reports is ordinary desk work that could be performed at Citicorp's New York City office, and Citicorp's telecommuting program existed to cut office-rental costs…
Did a Nevada investment subsidiary's intangible assets have Florida situs, and could intercompany accounts be excluded on a consolidated return?
The Nevada subsidiary was not subject to Florida intangible tax if all its activities and decisions occurred outside Florida. The group's subsidiary investment remained taxable, but intercompany…
Did a Florida beneficiary or Wisconsin trustee have to file Florida intangible-tax returns for an irrevocable trust?
No. The Florida beneficiary's limited power to name successor beneficiaries was not a taxable beneficial interest, and the Wisconsin trustee and trust lacked Florida situs. Neither had to file an…
Did an income beneficiary have a taxable Florida trust interest when appointment rights were limited and the trustee was outside Florida?
No. The non-Florida trustee had no Florida taxable situs, and the income beneficiary's limited appointment power—without revocation or corpus-invasion rights—was not a taxable beneficial interest.…
Did receiving income from an irrevocable trust create Florida intangible tax when the beneficiary's other powers were limited?
No. The beneficiary's income right was paired only with a limited appointment power, not a right to revoke the trust, invade its corpus, or generally appoint assets. The non-Florida trustee also…
Did a foreign irrevocable trust or its beneficiary owe Florida intangible tax when trustee and beneficiary powers were restricted?
No. The trustees lacked Florida taxable situs, and the beneficiary's limited appointment power did not amount to a taxable beneficial interest because the beneficiary could not revoke the trust or…
Did a 1995 irrevocable trust or its beneficiary owe Florida intangible tax when every trustee was required to remain outside Florida?
No. No trustee had Florida taxable situs, and the beneficiary's limited appointment power—without authority to revoke the trust or invade its corpus—was not a taxable beneficial interest. No trust…
Did a 1980 irrevocable trust or its income beneficiary owe Florida intangible tax when the trustee could not be based in Florida?
No. The non-Florida trustee lacked Florida taxable situs, and the income beneficiary's limited appointment power—without revocation or corpus-invasion rights—was not a taxable beneficial interest.…
Were securities in an irrevocable trust subject to Florida intangible tax when an out-of-state trustee controlled the account?
No, under the stated facts. The trust was not taxed while its out-of-state trustee retained management and control of the securities, and the settlor was not taxed because the settlor had no taxable…
Did an irrevocable trust or its settlor owe Florida intangible tax when an out-of-state trustee managed and controlled the assets?
No, under the stated facts. The trust was not subject to Florida intangible tax while management and control remained with the out-of-state trustee, and the settlor had no taxable beneficial…
Which shopping-center electricity charges were excluded from taxable rent, and which remained taxable?
Separately stated tenant electricity was not taxable rent when the landlord paid the utility tax and charged no markup. HVAC and common-area charges remained taxable because they combined…
Was a tenant's reimbursement of electricity through a common-area maintenance charge subject to Florida sales tax?
No, under the stated conditions. The separately stated reimbursement for actual electricity use was excluded from taxable rent because the landlord had paid sales tax and imposed no markup. Any…
When a New York decedent's estate distributes her mixed retirement benefits - a pension-linked IRA rollover, a Voluntary Employee Contribution Account, and a Flexible Premium Annuity - to nonresident beneficiaries, is that income subject to New York personal income tax under Article 22?
Yes, but only in part. Each nonresident beneficiary has New York-source income, though the taxable amount depends on three separate pieces: the Flexible Premium Annuity is fully taxable because the…
If someone sells stock short and then moves out of New York State while the short sale is still open, must they accrue the potential gain and pay New York personal income tax on it on their final resident-period return?
No. Under Treas. Reg. § 1.1233-1(a), a short sale isn't consummated until the seller delivers stock to close it out, so the amount of gain, if any, cannot be determined with reasonable accuracy…
Are multi-year installment payments from a nonqualified deferred compensation plan, paid to a former New York employee who has become a nonresident or nondomiciliary, exempt from New York personal income tax under the federal source-tax law at 4 U.S.C. § 114?
Yes, if the installments are paid annually over a period of 10 or more years using a 'declining balance of years' formula - each year's payment equals the remaining account balance divided by the…
If a former New York State employee moves to Florida and later takes a lump-sum withdrawal from the NYS Deferred Compensation Plan (a section 457 plan), can New York still tax that payment as a nonresident's income?
No. Because federal law (4 U.S.C. § 114, added by Public Law 104-95) defines income from an IRC § 457 eligible deferred compensation plan as 'retirement income,' and bars any state from taxing the…
Did a lessee owe sales tax on the shortfall between its master-lease rent and the lower rent collected from a subtenant?
Yes. The lessee remained obligated for the full master-lease rent, so it owed tax on the difference not paid by the subtenant. Taxing the two portions once was not prohibited pyramiding, and no…
Were tickets for scheduled train rides between tourist attractions subject to Florida sales tax as admissions or equipment rentals?
No. The tickets paid only for scheduled transportation between points where passengers could board or leave. They were neither taxable admissions nor rentals because passengers did not control the train.
Did Tennessee's structural-metal-fabricator exemption cover aluminum bought and fabricated into weir troughs for an out-of-state water-treatment plant?
No. The exemption required both a qualifying structural metal fabricator and a fabricated product listed in SIC Industry 3441. The facts did not establish the contractor's qualifying primary…
Were perforated picking tickets taxable when they combined shipping labels, a packing slip, and an internal order-gathering section?
No. The perforated ticket was treated as one article whose primary purpose was to provide shipping labels and a packing slip that accompanied the product. Although the internal order-gathering…
Did an irrevocable trust with an out-of-state trustee, Florida grantor, and out-of-state trust advisor owe Florida intangible tax?
No. The trust had no Florida situs because its sole nonresident trustee held and managed the assets outside Florida. The Florida grantor lacked a taxable beneficial interest, and the nonresident…
Did a foreign trust with a Florida grantor-beneficiary and an out-of-state trustee have Florida intangible-tax situs or a filing requirement?
No. The trust assets lacked Florida taxable situs, and the Florida beneficiary had no taxable beneficial interest because he lacked a current income right plus the required control powers. Neither…
Did a Florida grantor-beneficiary owe intangible tax after transferring assets to a foreign-situs trust but retaining consent power over pledges and dispositions?
Yes, in her capacity as grantor. She had no taxable beneficial interest because she lacked a current income right and the specified beneficiary powers, but her required written consent before the…
Is Florida documentary stamp tax due on a signed small-business line-of-credit addendum that requires a $150 nonrefundable origination fee?
Yes. The signed line-of-credit addendum contained a promise to pay and a $150 sum certain, so 70 cents of documentary stamp tax was due if the credit line was established or the bank charged the fee…
Is Florida documentary stamp tax due when the same married owners deed property from themselves as tenants in common to themselves as tenants by the entireties?
No. Where the same two owners held the same 50% interests before and after the deed, changing title from tenancy in common to tenancy by the entireties did not convey an interest from one party to…
Is a deed required when a Florida general partnership converts to a limited partnership taxed on the property's fair market value?
No. Because the resulting limited partnership was legally the same entity as the general partnership before conversion, the required deed was subject only to minimum documentary stamp tax, not tax…
Is a deed required when a Florida general partnership converts to a limited partnership taxed on the property's fair market value?
No. Because the resulting limited partnership was legally the same entity as the general partnership before conversion, the required deed was subject only to minimum documentary stamp tax, not tax…
Are receipts from coin-operated machines that measure and print a person's height and weight subject to Florida sales tax?
No. Receipts from the described coin-operated height and weight machines were exempt because the machines provided a personal service, not amusement or vending. The owner still owed tax on the…
Should a contractor charge a water association sales tax on repair invoices for equipment affixed to real property?
No. Because there was no advance written agreement itemizing every material and price, the repair work was not a class 2(d) retail-material contract. The contractor owed tax when buying materials…
Which parts of a California design firm's retail-store interior project were taxable, including concepts, finished drawings, fixture purchases, installation, and training?
Concept services, valid agency work, installation, and optional training were nontaxable; finished drawings, mock-ups, models, and artwork disks were taxable.
Did an out-of-state mortgage broker create Texas franchise-tax nexus by soliciting loans through mail and telephone?
No, if mail and telephone solicitation of mortgage loans was the corporation's only Texas activity and it lacked a Texas certificate of authority. Texas surveys, inspections, or other activities…
We sell a color Doppler weather radar system (antenna, computer, and enhanced software) to TV stations for live severe-weather coverage -- is it exempt from Texas sales/use tax?
Yes, exempt. The Comptroller ruled that a color weather radar system -- sold as a package consisting of an antenna, a computer, and enhanced software, with the computer used for no other purpose --…
My direct payment permit is being canceled because the Comptroller says I didn't buy $800,000 of taxable items this year, even though I did — I just didn't accrue that much use tax on it. Will my permit be canceled?
No, the permit will not be canceled. The Comptroller had initially notified the company that its direct payment permit would be canceled because it appeared not to meet the $800,000 annual…
Does a tax-free restructuring of a partnership's corporate partners (a section 351 transfer plus section 368(a)(1)(A) mergers) trigger recapture of the investment tax credit?
No. Investment tax credit is recaptured under Tax Law section 210.12(g) only if qualified property is disposed of or ceases to be in qualified use. A tax-free section 351 contribution and tax-free…
Could a Florida manufacturer apportion its corporate income when it used an out-of-state contract plant staffed and supervised by its employees?
Yes. The company's employees, dedicated workspace, inventory control, quality-control work, and shipping activity at the out-of-state contract plant meant it was doing business outside Florida. It…
Could a reorganized corporate group stop filing consolidated Florida corporate income tax returns and begin filing separate returns?
Yes. Florida granted permission for the group to discontinue consolidated returns beginning with tax year 1995 because mergers, acquisitions, and the mismatch between corporate structure and Florida…
When did South Carolina begin following the final federal check-the-box entity-classification rules?
The Department said it would follow the final federal entity-classification regulations for South Carolina purposes as of their January 1, 1997 effective date. The rules generally allowed eligible…
Which resale certificates did a Tennessee seller need when an out-of-state reseller ordered goods drop-shipped to its Tennessee customer?
Both certificates were required for the described transactions. The out-of-state reseller's home-state certificate established that the seller's customer bought for resale, while the Tennessee…
Did a timely tax determination against a partnership also notify a corporation that had actually operated the business?
No. The partnership notice did not establish the corporation's liability, so the three-year period applied and corporate liability might be barred.
Did a portfolio transferred by Florida residents to an out-of-state limited partnership have Florida intangible-tax situs in 1997?
No. After the residents transferred the portfolio, neither they, the out-of-state partnership, nor its out-of-state corporate general partner owed 1997 Florida intangible tax on it. Their…
For Tennessee franchise and excise tax, how was a proposed factoring subsidiary classified, did it combine with its manufacturing parent, and how did it apportion receivable income?
The proposed receivables subsidiary was a financial institution because its factoring activities produced more than half its gross income. It filed separately from its nonfinancial manufacturing…
Do track-mounted or portable moveable partitions qualify as an exempt capital improvement, or are they taxable tangible personal property?
No -- operable, accordion, and portable moveable partitions don't qualify as a capital improvement even though the tracks are bolted into the ceiling structure, because merely mounting panels on…
When is a Metro-North rail employee's pay exempt from New York income tax under the federal rule for employees 'regularly assigned' to duties in more than one state?
It depends on the job description of each specific work assignment, not on how much an employee happens to travel or which roster the employee is eligible for. A Connecticut-based employee sent to…
Did an irrevocable foreign trust owe Florida intangible tax when its trustees could not be based in Florida and its beneficiary held only a limited appointment power?
No. The trust barred an individual Florida trustee and a corporate trustee doing or qualified to do business in Florida, so no trustee had Florida situs. The beneficiary's limited appointment power…
Did an irrevocable foreign trust owe Florida intangible tax when its trustees could not be based in Florida and its beneficiary held only a limited appointment power?
No. The trust barred an individual Florida trustee and a corporate trustee doing or qualified to do business in Florida, so no trustee had Florida situs. The beneficiary's limited appointment power…
Did an irrevocable trust owe Florida intangible tax when no trustee could be a Florida resident and the beneficiary held only a limited appointment power?
No. Because the trust prohibited any Florida-resident trustee, no trustee had Florida taxable situs. The beneficiary's limited appointment power, with no right to revoke the trust or invade…
Did an irrevocable foreign trust owe Florida intangible tax when its trustees could not be based in Florida and its beneficiary held only a limited appointment power?
No. The trust barred an individual Florida trustee and a corporate trustee doing or qualified to do business in Florida, so no trustee had Florida situs. The beneficiary's limited appointment power…
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