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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Could a corporation extend the deadline to amend its former Texas franchise-tax report after an IRS audit?
No. If a finalized IRS Revenue Agent's Report changed amounts used for Texas franchise tax, Rule 3.544(d)(2) required an amended Texas report within 120 days. The RAR became final when IRS…
I bought subsurface pumps for my gas/oil wells to remove water so gas can flow to the surface -- do they qualify for the sales tax manufacturing exemption?
No -- the pumps are taxable. The Comptroller ruled that bringing oil or gas to the surface is "production," not "manufacturing, processing, or fabrication" under Tax Code 151.318. Even though the…
Could a lessee's own vehicle reduce the taxable value of the lessor's purchase of a new vehicle?
Yes, but only if the lessee's old vehicle was delivered to the new-car dealer as part of the lessor's purchase. If the vehicle went to the leasing company and was then sold to a neighbor, the lessor…
Was a qualified settlement fund subject to the former Texas franchise tax?
No, on the Comptroller's stated understanding. The letter said a qualified settlement fund could not be a corporation, LLC, bank, or savings and loan association under state or foreign law. Because…
Does a New Jersey document-storage company owe New York tax on its various service charges (storage, retrieval, filing, faxing, photocopying) to New York customers?
A New Jersey document-storage company's storage, retrieval, filing, disposal, and similar labor services -- all physically performed in New Jersey -- are not subject to New York sales or use tax…
Could a corporate group stop filing consolidated Florida income-tax returns after acquisition restrictions separated a subsidiary's operations and reporting?
Yes. Florida found good cause to discontinue consolidated returns because indefinite acquisition-related restrictions sharply limited communications and operational knowledge, while the acquired…
How did Florida tax a condominium resort's room charges, amenity and promotional fees, housekeeping, repairs, reserves, and telephone services?
The resort manager had to register and collect tax as the owners' rental agent. Total guest rent—including mandatory amenity and housekeeping amounts—and promotional occupancy payments were taxable.…
Were a lithographer's retouching, assembly, proof, and color-separation charges taxable when the finished separations went directly to the customer's printer?
Yes. The customer sought tangible color separations, so all production charges A–H were taxable; only the actual-cost portion of a separately stated qualifying shipment charge could be excluded.
Did a testamentary trust or its Florida income beneficiary owe intangible tax when two of three co-trustees lived outside Florida and majority approval was required?
No. The trust lacked Florida situs because two of its three equal co-trustees were New York residents and every action required majority approval. The Florida income beneficiary could not alone…
Could a sublessee recover sales tax paid on potentially exempt concession lease payments from 1983 through 1988 when the refund claim came years later?
No. The lease payments may not have been taxable under the food-and-drink concession exclusion, but the refund claim was filed after the applicable three-year deadline. Section 215.26 barred the…
Could a Florida wholesale motor-vehicle dealer register and plate a vehicle held for resale without triggering sales or use tax?
No. Florida found no exemption allowing a wholesale dealer to title, register, or obtain a regular license plate for an inventory vehicle tax-free. Those acts triggered use tax even when the vehicle…
Was a contract to install, maintain, resurface, and remove temporary ice rinks a service or a lease?
It was an ice-rink lease, not a service or ice sale; staff was told to apply Regulation 1660, but no final tax method was decided.
Was a helicopter operator a common carrier when it transported only one hospital's patients under the hospital's direction and payment?
No. The exclusive hospital arrangement was a charter service to one client, not transportation offered indiscriminately to the public, even though the FAA authorized common-carrier operations.
How did corporate expenses affect the two former Texas franchise-tax components?
Corporate expenses were generally deductible in computing taxable capital. They also reduced earned surplus to the extent the expenses were allowed as deductions when computing the corporation's…
Can I buy a recumbent bicycle tax-free in Texas if my doctor prescribed it for rehabilitation, and what does the prescription need to say?
Yes, but only if the prescription is written correctly. A recumbent bicycle can be purchased tax free with a prescription from a licensed practitioner of the healing arts, but the prescription must…
Is renovating a specialty hospital taxed as work on nonresidential (commercial) real property, or as work on residential real property?
Taxable. The Comptroller ruled that hospitals are considered nonresidential (commercial) property, so the total charge to renovate an existing building into a specialty hospital is taxable, even…
Did leasing airplanes and train cars that lessees used in Texas create franchise-tax nexus for the lessor?
Yes. The lessor was subject because it held a Texas certificate of authority. It also had nexus independently because it leased airplanes and train cars that lessees used in Texas, even though the…
Did changing fiscal year-end require an extra former Texas franchise-tax filing, and which earned-surplus periods applied?
No additional report was required solely because the fiscal year-end changed. The 1997 annual report used August 1, 1995 through April 11, 1996 for earned surplus. The 1998 report used April 12,…
Could related companies allocate shared overhead-material costs to federal contracts using square footage or headcount rather than tracing each purchase directly?
Yes. The approved, federally audited method could continue because it was reasonable and consistently allocated overhead to the government contracts.
I'm leasing land, a car wash building, and the car wash equipment together to my own S corporation -- is that lease subject to Texas sales tax?
No. The Comptroller ruled that leasing the land, building, and equipment together to the S corporation is treated as a lease of real property, so no sales tax applies to the lease payments -- the…
Did an out-of-state alarm-monitoring company have Texas franchise-tax nexus without Texas plant, equipment, or employees?
Yes. The alarm-monitoring company was subject because it held a Texas certificate of authority. Texas also found independent service nexus because it processed monitoring signals for Texas…
Did an Indiana parent or its consumer-finance subsidiaries owe 1996 Florida intangible tax on receivables sold to the parent before January 1 and returned January 2?
No. The Indiana parent actually owned, bore the risk of loss, and managed the receivables outside Florida on January 1, while the subsidiaries performed only ministerial processing and accounting.…
Which counties did South Carolina identify for the displaced-worker credit and economic-impact-zone incentives in IL 96-23?
The notice lists 17 economic-impact-region counties for the displaced-worker credit, generally using a 25-mile boundary rule, and 27 economic-impact-zone counties for investment-credit and…
How did California tax a design firm's preliminary and finished print art, radio master, single final television commercial, release copies, and media-placement charges?
Separately billed preliminary art, most radio production value, one final TV commercial, and placement were nontaxable; finished print art and release copies were taxable.
How did California tax a design company's charges for producing print, radio, and television advertisements and arranging media placement?
Print finished art was taxable; radio tax was limited to raw recording media; one final TV commercial and media-placement services were nontaxable.
We had to completely rebuild an ice skating rink that never worked because of construction defects, before it ever opened to the public -- does the rebuild count as new construction or taxable repair?
New construction. The Comptroller ruled that rebuilding the ice rink qualifies as new construction (rather than a taxable repair to existing real property) because the original rink was never used…
Did an irrevocable trust or its income beneficiary owe Florida intangible tax when trustees had to remain outside Florida and the beneficiary held only a limited appointment power?
No. An individual trustee could not reside in Florida, a corporate trustee could not qualify or do business there, and any trustee becoming taxable in Florida had to stop serving. The beneficiary's…
Did an irrevocable trust or its income beneficiary owe Florida intangible tax when trustees had to remain outside Florida and the beneficiary held only a limited appointment power?
No. An individual trustee could not reside in Florida, a corporate trustee could not qualify or do business there, and any trustee becoming taxable in Florida had to stop serving. The beneficiary's…
Did an irrevocable trust or its income beneficiary owe Florida intangible tax when trustees had to remain outside Florida and the beneficiary held only a limited appointment power?
No. An individual trustee could not reside in Florida, a corporate trustee could not qualify or do business there, and any trustee becoming taxable in Florida had to stop serving. The beneficiary's…
Were duty-free goods tax-exempt exports when ticketed international passengers took possession inside a secured Florida departure area before boarding?
Yes. Although passengers took possession in Florida and none of the statute's three listed shipment methods applied, the shop rebutted the domestic-sale presumption. Ticket verification, sealed…
Which deeds were subject to South Carolina's new deed recording fee when it took effect on December 1, 1996?
The deed's execution date controlled. A deed executed before December 1, 1996 remained subject to the former documentary-tax law even if recorded later; a deed executed on or after December 1, 1996…
Were charges for customized research and a strategic marketing plan taxable when the client received one research compilation and one plan divided among three binders?
No. The client bought customized research and advice, so one compilation and one plan were incidental to a nontaxable service; separately transferred additional copies would be taxable.
Were retail sales of Juice Plus+ Thins tablets exempt as food when the product was labeled a dietary supplement and lacked complete-dietary-food evidence?
No. Tablet form and dietary-supplement labeling excluded the product from food, and the seller supplied no nutrition evidence showing it qualified as a complete dietary food.
How is local sales tax (like the Regional Transportation Authority tax) sourced on cellular telephone and cellular roaming charges?
Local sales tax (such as the Regional Transportation Authority tax) on cellular telephone service is sourced to the location of the cell site that receives and re-transmits the call. If the cellular…
Are charges for telemarketing sales calls, list-based calling, and related services (compiling lists, mail fulfillment, final reports) subject to Texas sales tax?
Charges for making sales calls (soliciting sales and taking orders) are not subject to Texas sales tax. But charges tied to gathering or selling customer/prospect information -- such as calls made…
Are natural gas and electricity used at a personal care home taxed as residential or commercial utility service?
Residential -- provided the predominant use of the natural gas and electricity is by persons who initially contracted to live at the personal care home for periods exceeding 29 days. The Comptroller…
Does a bank subsidiary's section 1452(d) election to be taxed under Article 9-A survive the merger of another bank subsidiary into it, with the electing company as the survivor?
Yes. Barclays Business Credit made the one-time section 1452(d) election to keep being taxed under Article 9-A rather than the Article 32 bank tax. Merging another bank subsidiary (BZWSI) into it,…
How did Florida apply sales and documentary stamp taxes to SEC-registered interests giving buyers recurring use and rental rights in hotel suites?
Florida reached mixed results. The security sale and common-expense reimbursements were not subject to sales tax, and interests accepted, signed, and issued outside Florida escaped original-issue…
Could California record nominee liens after delinquent taxpayers quitclaimed two properties to their son for no consideration around the audit?
Yes. Staff concluded the transfers were made with actual intent to hinder, delay, or defraud the Board and recommended nominee liens against both properties.
I'm a cotton ginner and I use gas and electricity to keep my warehouse or storage area cool and dry so cotton seed doesn't sprout, including during the off-season -- is that electricity exempt from Texas sales/use tax?
Mixed answer, split by predominant use. The electricity used to actively lower the temperature or humidity of stored cotton seed to a target level counts as exempt processing. But electricity used…
Did Canadian sales representatives soliciting Texas dealers create former franchise-tax liability, and did P.L. 86-272 protect the company?
Texas representatives soliciting dealer purchases of office furniture subjected the Canadian corporation to the former taxable-capital component. If their Texas activity was limited to soliciting…
For Tennessee franchise and excise tax, how was a factoring subsidiary classified, did it combine with its manufacturing parent, and how did it apportion receivable interest?
The proposed factoring subsidiary was a financial institution because acquiring and servicing receivables produced more than half its gross income. It filed separately from its nonfinancial…
Could a voluntarily registered out-of-state printer use one invoice for a multistate customer and leave California use tax to the customer?
One invoice was allowed, but voluntary registration required the printer to collect California use tax and identify California products and calculations on its records.
How were intercompany receivable sales, collection gains, and servicing fees sourced under the former Texas franchise tax?
The parent's sale of receivables to its subsidiary created no gross receipts for either corporation. Any subsidiary gain collected above its purchase price was sourced to the customer-debtor's legal…
Is a fee for gathering medical records from doctors and hospitals on behalf of an insurance company's underwriting department subject to Texas sales tax?
Yes, it's taxable. The Comptroller ruled that a firm's fee for contacting doctors, hospitals, and other medical service providers to obtain medical information for an insurance company's…
Could an S corporation deduct IRS payroll-tax penalties when computing former Texas earned surplus?
No. Texas treated shareholder-allocated S-corporation items as if the corporation were taxed as a C corporation. Because the Comptroller understood Section 162 to disallow deductions for U.S.…
Did the Florida grantor, out-of-state corporate trustee, or nonresident trust advisor owe intangible tax on the described irrevocable trust?
No. The sole non-Florida trustee exclusively held and managed the assets outside Florida, the grantor had no current income right or power to revoke, invade principal, or appoint beneficiaries, and…
Did an out-of-state trustee keep trust assets outside Florida intangible tax when the Florida grantor could veto investment changes and replace the trustee?
No. The Florida grantor retained control by requiring consent before investment-strategy changes and by being able to remove and replace a trustee who departed from the grantor's prior investment…
Did a Florida grantor or trustee owe 1997 intangible tax on securities placed in the described irrevocable trust, or when the assets returned after January 1?
No. Florida concluded that neither the grantor nor trustee owed intangible tax on the trust assets and that distributing the assets back to the grantor after January 1, 1997 did not create 1997 tax.…
Which LoanLiner open-end credit forms created a taxable written obligation or renewal under Florida documentary stamp tax?
The signed BFL224 credit agreement and VFL065 advance request had to be read together and were taxable because they supplied a promise to pay, an approved sum certain, and the borrower's signature.…
Was a motor-vehicle lease subject to Florida documentary stamp tax when it lacked an unconditional payment obligation and title stayed with the lessor?
No. The lease contained no unconditional obligation to pay money, and the lessee did not automatically become owner when total rentals equaled the vehicle's value. A purchase option and…
Under the original, now-superseded ruling, did an out-of-state lender's unsigned, unrecorded unilateral loan-extension notice create Florida documentary stamp tax?
This ruling is superseded. It originally said no tax arose when the lender executed the notice outside Florida, the borrower neither signed nor returned it, nothing was recorded, and no connected…
Could owners change their land-trust beneficial interests by transferring stock in the corporate trustee without Florida documentary stamp tax?
No. When stock ownership in the corporate trustee determined each person's land-trust ownership and distributions, a later stock transfer effectively assigned a beneficial interest. Any…
I wrongly accepted exemption certificates but I'd asked the state about it several times — can the penalty be abated even though I owe the tax?
The protest was granted in part and denied in part. Roadrunner Industrial Works, a small family equipment-rental and services company, accepted non-taxable transaction certificates (NTTCs) on…
Is the wastewater treatment system my manufacturing company must install to meet TNRCC environmental requirements exempt from Texas sales and use tax?
Partially exempt. The pollution control equipment itself qualifies for the Texas manufacturing exemption because it's necessary and essential to the manufacturer's production process, and the…
Are closed-caption decoders and wireless phone jack extenders used by deaf people exempt from Texas sales tax?
Yes. The Comptroller ruled that a closed-caption decoder for televisions and a wireless phone jack extender used with a phone flasher are both exempt from Texas sales tax when used by a deaf person,…
Can a buyer reduce the sales or use tax it already paid on equipment purchases when the vendor later gives back a cash or credit rebate or discount tied to those specific purchases?
Yes, in most of the scenarios described. The Comptroller ruled that volume discounts and cash rebates paid directly by a vendor to a purchaser -- including cooperative marketing funding,…
Who owed 1996 Florida intangible tax after a retailer transferred receivables to a new subsidiary for stock before January 1 and liquidated it January 2?
Neither company owed 1996 tax on the receivables because the subsidiary owned them on January 1, the assets lacked Florida situs, and the retailer performed only ministerial servicing. But the…
Does Texas sales tax apply to charges for mechanical warranty inspections that determine what caused equipment or a motor vehicle to break down, without appraising the dollar amount of damage?
No. The Comptroller ruled that charges for inspecting tangible personal property are not taxable unless the inspections are performed under a policy or policies of insurance. Because mechanical…
Does Texas use tax apply to repair or replacement parts (such as retreaded tires) bought out of state and installed in Texas on a common carrier's self-propelled vehicle?
No, use tax is not due on repair or replacement parts acquired outside Texas and actually affixed in Texas to a self-propelled vehicle used as a licensed and certificated common carrier -- but the…
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