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 buyer title a vehicle tax-free before planned disability-related modifications were completed?
Yes. The buyer could claim the historical exemption before completion by providing a written statement identifying the modification, when it would occur, and where it would be performed. The work had …
If a software dealer earns a commission on a software vendor's sale and then separately installs and maintains that software for the buyer, is the dealer's installation and maintenance work taxed as part of the software sale?
No. This internal Comptroller memo concludes that a dealer's separate agreement to install and maintain software is treated as a transaction unrelated to the software vendor's sale, and is not taxable…
Does licensing software to Texas customers to access an out-of-state database service create Texas franchise tax nexus, even with no salespeople in the state?
Yes. The Comptroller ruled that licensing software to Texas customers so they can access an out-of-state gateway/database service creates substantial nexus with Texas for franchise tax purposes, even …
How did Texas's internal memo treat vehicle transfers and refunds involving a living trust with the same owner name?
No tax was due when an individual transferred a vehicle to a living trust bearing that same person's name because the memo found no sale or ownership change. A trust could also claim the historical di…
Does the Texas Workers' Compensation Insurance Facility owe sales tax on the debt collection services it buys to recover unpaid premiums?
Yes. The Comptroller ruled on January 26, 1993 that the Facility's purchases of debt collection services used to collect delinquent premiums are taxable. The Facility's statutory exemption (Texas Insu…
Is sales tax due on cleaning products and supplies used to raise emus on a farm?
It depends on the product. The Comptroller ruled that dishwashing crystals, laundry detergent, and two multi-purpose cleaners used exclusively on the farm to sterilize drinking containers, wash beddin…
Can a customs broker's exportation certificate list extra items on the back of the form or on an attached addendum sheet, and will a cash register receipt work as export documentation?
A cash register receipt is not enough by itself — under Comptroller Rule 3.323(d)(4), export documentation must include a detailed, specific description of the items purchased so an auditor can tie it…
Is the sale and installation of custom interior window shutters a tax-exempt capital improvement to real property, or a taxable sale?
Taxable. The Department ruled that custom interior window shutters are like blinds and draperies, not a capital improvement, so their sale and installation stays subject to sales tax.
Which pieces of a salt mine's equipment — conveyors, elevators, screening, mining machinery, roof bolts, and power-distribution gear — qualify for New York's production-machinery sales tax exemption?
Conveyors, elevators, screening systems, and salt-mining machinery qualify for the § 1115(a)(12) production exemption. Roof bolts and general power-distribution equipment (substations, transformers, c…
How does New York sales tax apply to an outsourced facilities-management provider's mailroom, printing, copying, fax, filing, delivery, and related services, and to its supplies and equipment?
It varies by service. Printing, copying, imprinting, mailing-list maintenance, fax, and sales of copies or supplies are taxable; pure clerical, mailing, shipping, delivery, filing, and messenger servi…
Did Florida's original ruling exempt an out-of-state municipal bond fund and its shares under the former intangible tax?
Yes, it answered all three questions affirmatively, but the official source says revised TAA 93C2-004R superseded this original ruling on February 24, 1993.
A Texas investigation firm did a traffic-accident investigation in Mexico for a California client (and separately does investigations for maquilas in Juarez) — is Texas sales tax due on the investigation service?
No Texas tax is due on an investigation service if both the purchaser and the subject of the investigation are outside Texas, the final report is delivered outside Texas, and the firm obtains an exemp…
Can a contractor building a day-care center on an Indian reservation use the tribe's sales-tax exemption to buy construction materials tax-free?
No. The Comptroller ruled that a contractor building an on-reservation day-care center for a Texas Indian tribe cannot claim the tribe's own tax exemption when buying materials. Instead, if the constr…
Can a general contractor allocate a lump-sum contract between new construction and nonresidential remodeling based on square footage, and what records are needed to back that up?
Yes, but only for labor. A Texas general contractor may use square footage to allocate the labor portion of a contract between taxable nonresidential remodeling and (largely nontaxable) new constructi…
Did a nonresident decedent's estate owe Florida estate tax on a Florida trust holding only intangible property?
No, because the decedent's residence state reciprocally exempted nonresident estates owning only intangible property, and the estate held no Florida real or tangible personal property.
Is a forensic engineer's accident-investigation work for insurance companies and attorneys taxable as an 'insurance service' under Texas sales tax law, even though attorney legal fees themselves are not taxable?
Yes. Under Rule 3.355, a professional engineer's work investigating accidents to help determine whether an insurance claim should be paid is a taxable 'insurance service,' regardless of the engineer's…
Do I have to charge Texas sales tax for boarding or training dogs at my kennel?
No. The Texas Comptroller ruled that boarding dogs and training dogs are both nontaxable services, so a kennel does not charge its customers sales tax on those charges. However, the kennel owner must …
Can a seller accept a faxed or photocopied Mexican pedimento de importacion as proof of export before issuing a Texas sales tax refund?
Yes. The Comptroller confirmed that a seller may accept a legible fax or photocopy of a pedimento de importacion, rather than requiring the original, as proof that goods were exported to Mexico. A ped…
As first mortgagee, I'm set to receive a commercial building free and clear under a Chapter 11 reorganization plan, in full satisfaction of my $90 million loan. The plan also wipes out an unrelated second mortgage on the same building with no payment to that lender. Does the discharged second mortgage debt count as part of MY consideration for New York's Real Property Transfer Gains Tax, even though I'm not paying it and get no benefit from its discharge?
No -- the discharged second mortgage debt is NOT part of the first mortgagee's consideration; consideration is only the amount of the recipient's OWN debt that gets extinguished. Prudential Insurance …
Were shares of a money-market fund holding Student Loan Marketing Association obligations exempt from Florida intangible tax?
Yes, so long as the fund's January 1 portfolio contained only tax-exempt assets. Federal law treated the association's obligations as United States government obligations for state property-tax purpos…
Is a petroleum additives package sold with a vehicle warranty taxable in Texas, and is the warranty repair labor taxed?
Yes — the sale of the petroleum additives package is taxable as tangible personal property. Whether the warranty repair labor is later taxed depends on billing: a lump-sum labor-and-parts charge is no…
Which extra automobile-rental charges did RR 93-1 include in taxable gross proceeds?
All listed add-ons were taxable: fuel charges, collision-damage waivers, personal-accident coverage, extended liability protection, personal-effects coverage, and combined accident/effects coverage. S…
Does a Texas business have to charge sales tax for pumping out grease traps/septic tanks or clearing stoppages in sewer lines?
It depends on what exactly is done and for whom. Removing waste from a septic tank or grease trap that is part of a sewer system is a non-taxable service, but cleaning out a sewer line for a non-resid…
Can a contractor rent equipment tax-free to improve real property on a federal construction project like the Superconducting Super Collider?
No. Since October 2, 1984, when the Texas Legislature repealed the prior exemption, a contractor's rental of equipment used to improve real property on a federal government job is taxable. In this cas…
Does a Texas resume-writing and career counseling service have to charge sales tax on preparing a client's resume?
No, generally not. If you interview a client and write an original resume from that consultation, the charge for consultation and preparing the resume is not taxable, even if produced on a computer or…
Can a creditor or client who hires an automobile repossession company issue a resale certificate instead of paying sales tax on the repossession service?
No. The Comptroller ruled that a client (such as a lender) who hires a company to repossess an automobile cannot issue a resale certificate to avoid sales tax on that repossession service. The service…
Is a health maintenance organization licensed under Article 44 of the Public Health Law an insurance corporation taxable under Article 33?
No. A health maintenance organization licensed under Article 44 of the Public Health Law is not an insurance corporation for franchise tax purposes and is not taxable under Article 33. As long as the …
Our building's fee owner needs to convert floors of a Manhattan office tower into condominium units and convey the units occupied by a major tenant to the NYC Industrial Development Agency, so the tenant can get IDA financing benefits, then lease those units back. Do the conveyance to the IDA, the IDA leaseback, the eventual reversion, and a restated/consolidated lease with the tenant trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt at every step. Resnick Water St. Development Co., fee owner of One Seaport Plaza, needed to convey condominium units occupied by tenant Prudential Securities, Inc. (PSI) to the New York City In…
Is a foreign sales corporation organized in a U.S. possession subject to New York franchise tax, and is its exempt foreign trade income excluded for New York?
A foreign sales corporation (FSC) organized in a U.S. possession (here, the Northern Mariana Islands) is a foreign -- but not an alien -- corporation for Article 9-A, because a U.S. possession is not …
Is a company whose only district activity beyond solicitation is maintaining an office subject to the metropolitan transportation business tax surcharge?
Yes. A company that maintains an office in the metropolitan commuter transportation district (MCTD) is subject to the metropolitan transportation business tax surcharge under Tax Law section 209-B, ev…
Are federal military Survivor Benefit Plan payments to a service member's survivors subject to Kansas income tax?
No -- they are exempt from Kansas income tax. This 1993 internal memo addresses the federal Survivor Benefit Plan, under which a retired armed-services member can elect to take less monthly retirement…
If my advertising agency's invoice lumps taxable and nontaxable charges together, can I still use my direct payment permit to self-accrue the tax?
No. Under Rule 3.288(h), a direct payment permit holder can only issue a valid direct payment exemption certificate to a vendor that separately states its taxable and nontaxable charges. If an adverti…
In the modified opinion, are an asbestos contractor's plastic bags and poly taxable, and what changes when the removal is part of a capital improvement?
Same core result as the original opinion — disposal bags are 'actually transferred' (not taxable) and plastic poly is consumed by the contractor (taxable) — but this modified opinion adds that when th…
Is converting a plugged oil or gas well into a water well taxable as remodeling under Texas sales tax rules, and how does sales tax apply to water well drilling, equipment, and repairs?
Yes — the Comptroller ruled that converting a plugged oil well into a water well is remodeling, as is plugging an existing water well; cleaning out an existing well is a repair, not remodeling. Whethe…
Is a contractor's operation and maintenance of cogeneration plants built with industrial-development-agency financing exempt from sales tax as government activity?
Operating the plant isn't exempt government activity, and because the contractor bills one lump-sum operation-and-maintenance fee without separating taxable from nontaxable charges, it must collect ta…
When a retailer sells discounted cellphones to customers who also sign a carrier service contract, are the phones taxable 'promotional items' the retailer can't buy for resale?
The phones are purchased for resale, not promotional items. Because the retailer sells the phones (bundled with service) at a profit rather than giving them away or selling below cost, it buys them ta…
As fee owner of our Manhattan office tower, we need to convey the condo units occupied by a major tenant to the NYC Industrial Development Agency so the tenant can get IDA financing benefits, then lease those units back from the IDA and sublease to the tenant -- with the IDA's title later reverting to us, possibly repeatedly as the deal is restructured. Does any of this trigger Real Estate Transfer Tax, Real Property Transfer Gains Tax, or Mortgage Recording Tax?
Exempt across the board. The Chase Manhattan Bank, N.A., fee owner of One New York Plaza, needed to convey condominium units occupied by tenant Prudential Securities Incorporated (PSI) to the New York…
How did Florida's revised ruling tax shares of a municipal fund that temporarily held a taxable asset at year-end?
Direct federal and territorial obligations remained exempt, but any taxable asset made the rest of net asset value taxable. The trust itself was exempt, and the last business day was the sole valuatio…
In this January 1993 Texas ruling, an Arkansas printer bought manufacturing equipment in Louisiana tax-free and later brought it into Texas — did Texas use tax apply?
It depends on how long the equipment was used outside Texas first. If the equipment was used in Arkansas for one year or more before being moved to Texas, no Texas use tax is due. If it was used outsi…
Must a private homeowner collect sales tax on the rent when a guest pays to stay in the home during a special event like the 1993 World University Games?
No. A private home not regularly used for lodging guests isn't a 'hotel,' so short-term paid stays during the event aren't subject to New York's hotel occupancy sales tax.
In an outsourced copy-service arrangement, who owes sales tax on the copies, on the toner and paper, on outsourced repairs, and on copier lease payments?
Charging by the copy is a taxable sale of tangible personal property. The provider buys toner and paper for resale (ST-120), and can pass through outsourced repairs tax-free only if separately stated;…
Are a county fire district officers association's purchases of goods and services exempt from New York sales and use tax as a state instrumentality?
Exempt. The Department held the association is an instrumentality of New York State under Tax Law § 1116(a)(1), so its purchases of tangible personal property and services are exempt from state and lo…
Are a fire district officers association's purchases of goods and services exempt from New York sales and use tax as a state instrumentality?
Exempt. The Department held the association is an instrumentality of New York State under Tax Law § 1116(a)(1), so its purchases of tangible personal property and services are exempt from state and lo…
May a New York parent file a combined Article 9-A report with its wholly owned foreign sales corporation subsidiary organized in a U.S. possession?
Possibly -- it is up to the Commissioner. A foreign sales corporation organized in the U.S. Virgin Islands is a foreign but not an alien corporation, because a U.S. possession is not a foreign country…
Could a charitable organization buy building materials tax-free for a medical facility while its contractor handled ordering and delivery?
Yes. The charity executed purchase orders, took title and risk, received invoices, and paid vendors directly. It also had to give vendors a proper exemption certificate or include its information in o…
When did a club have to report sales tax when members could pay annual dues in one payment or two installments?
The club reported tax when each dues payment was received, not when it sent a December statement. January collections went on the January return, and the remaining June payment was taxed then.
Are wheelchair lifts, stairway lifts, pool lifts, and disability-operated power door openers exempt from New York sales tax as artificial devices, and is their installation taxable?
Exempt. Wheelchair lifts, stairway lifts, pool lifts, and power door openers operated only by disability controls are artificial devices exempt under § 1115(a)(4), and their installation and repair ar…
Is a custom-designed communication board (like a FACTS board) for someone who cannot speak exempt from Texas sales tax?
No. The Comptroller found no statutory exemption for a communication board (a FACTS board) designed for someone who cannot communicate verbally. Texas law exempts certain items used by the deaf and le…
Is the labor to dig out and haul away contaminated soil taxable in Texas?
It depends on whether the soil leaves the property. Labor to excavate (dig out) contaminated soil is not taxable if the service provider leaves the soil on the customer's premises. But if that provide…
Does a Texas business have to charge sales tax on data recovery services, like retrieving deleted computer files?
Yes. The Texas Comptroller ruled that charges for labor or services performed to recover or retrieve deleted computer data are taxable as data processing services under Rule 3.330. The provider must c…
Were ABC's Advantage Card and Business Card warehouse-club membership fees subject to South Carolina sales tax under PLR 92-11?
Yes. The paid membership fees were part of the consideration for buying merchandise because Advantage Card and Business Card members paid the posted wholesale price, while 90-day free members paid tha…
Did SC PLR 92-10 impose sales or use tax when exempt manufacturing machines were sold to a lessor and leased back to the manufacturer?
No. The sale to the lessor, the lease back to ABC, and ABC's continued use of the machines were exempt because the equipment was used to manufacture tangible personal property for sale. The ruling sai…
Does Texas charge sales or use tax when a company licenses its programming-language source code and specifications to other developers?
No, not automatically. Texas taxes the sale or license of a 'completed computer program,' but licensing raw source code and specifications so a licensee can build its own derived program is not taxabl…
A partnership is transferring 100% of its partnership interests to a bank, in exchange for the bank cancelling debt and releasing guarantees -- but the partnership's underlying real estate is worth $10 million while the debt being cancelled is $15 million. For New York's Real Property Transfer Gains Tax, is the taxable 'consideration' the $15 million in cancelled debt, or the $10 million fair market value of the real estate?
The taxable consideration is the $10 million fair market value of the underlying real estate -- NOT the $15 million in debt actually cancelled to acquire the ownership interest. A partnership held a l…
Does a licensed customhouse broker corporation with several offices need to file a separate Texas Customs Broker's Export License application for each office?
No. A licensed customhouse broker corporation with multiple offices should file a single Texas Customs Broker's Export License application listing each location, rather than a separate application per…
In a limited partnership, is the corporate general partner subject to franchise tax, is a corporate limited partner subject, and how is an affiliate's administrative fee added back to earned surplus?
The corporate general partner is subject to the franchise tax, because the limited partnership is doing business in Texas. A corporation whose only Texas connection is being a limited partner is not s…
If a customer gives a seller a resale certificate on a rental, but never actually re-rents the item, is the seller liable for the uncollected tax?
Not necessarily. In this December 1992 letter, the Comptroller's Tax Administration Director tells a trade association that on audit, the agency will review a seller's documentation on a case-by-case …
Does an airline owe Texas sales or use tax on peanuts, donuts, and disposable cups, stir sticks, and napkins given to passengers?
No tax is owed on the peanuts and donuts because the airline buys them in bulk, and bulk food purchases aren't taxable. The disposable cups, stir sticks, and napkins used for non-complimentary (paid) …
If a customer's credit card payment turns out to be unauthorized or fraudulent and the credit card company charges the sale back to the business, can the business claim a bad debt deduction for sales/use tax purposes?
Yes. This internal Comptroller memo concludes that a charge-back for an unauthorized or fraudulent credit card payment is treated the same as a bad debt from a bad check, and it qualifies for a bad de…
Is a risk retention group made up of governmental housing authorities exempt from the Article 33 franchise taxes on insurance corporations as a state instrumentality?
Yes. A risk retention group whose members are governmental housing authorities is an 'instrumentality' of government and is exempt from the Article 33 franchise taxes on insurance corporations under T…
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