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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When a Texas equipment lease is renewed or extended, does the seller charge sales tax at the old rate from the original lease or the new rate in effect at renewal?
A renewal or extension of an equipment lease is treated as a brand-new lease, not a continuation of the old one. So the lessor must charge, report, and remit Texas sales tax at whatever rate is in eff…
Must a national fraternity's parent organization collect sales tax when it sells pins, cards, and supplies to its chapters and members?
Yes. When the parent organization sells items like ID cards, pins, and supplies to chapters or members, those are retail sales — it buys them tax-free for resale but must collect sales tax on the sale…
Is replacing an underground fuel oil storage tank a nontaxable capital improvement, even though it can eventually be taken out of service?
Yes. Installing a replacement underground fuel oil tank — poured on a concrete slab, buried, and asphalted — is a capital improvement, so the work isn't taxable. No local law forces its removal when o…
Does a company have to charge sales tax on the full pre-rebate price when it later pays its customers a cash rebate based on their volume of purchases?
No. The Comptroller ruled that volume-based cash rebates a company pays its customers after the sale are excludable from the sales tax base, as long as they are properly documented, the tax refunded i…
Does a Texas contractor owe sales tax on labor to install wall-to-wall carpet, and does it matter if the job is new construction, repair, or a gutted building?
It depends on the type of property and the type of job. Labor to install wall-to-wall carpet in residential property is never taxed. For nonresidential property, labor is exempt only if the job counts…
Does a Texas company that reclaims land after strip mining (dirt work, fertilizing, planting, and hay production) owe sales or use tax on its equipment, and can the agricultural exemption or resale certificates apply?
The reclamation company owes tax on the machinery and equipment it uses; the agricultural exemption does not apply because the land is being restored after strip mining, not farmed. Reclamation itself…
If a contractor tears out a parking lot down to the soil and rebuilds it, is that taxable remodeling or tax-free new construction under Texas sales tax rules?
It is nontaxable new construction. Because the asphalt and base material are entirely removed down to the soil before the parking lot is rebuilt, the project counts as new construction rather than tax…
Is labor to power-wash and acid-clean hotel air conditioning units taxable in Texas, or is it exempt real property maintenance?
It depends on how the unit is installed. Units installed into a window opening are tangible personal property, so the full charge to power-wash or acid-clean them is taxable. Units installed into the …
Does a research and development joint venture's purchase of software with a useful life over six months qualify for the Texas Section 151.348(b) sales tax exemption?
Yes. The Comptroller confirmed that a company qualifying as a joint research and development venture under 15 U.S.C. Section 4301 is exempt from sales tax on taxable items with a useful life over six …
Is wrapping and packaging material used to ship shucked and unshucked oysters exempt from Texas sales tax?
Through September 30, 1991, wrapping and packaging used to ship both shucked and unshucked oysters to customers was exempt from Texas sales tax. After that date, the general wrapping-and-packaging-to-…
Does a Texas auto shop owe sales tax on window tinting, alarm installation/repair, and cellular phone sale/installation/repair for vehicles?
It depends on the activity. Tinting a vehicle's windows and repairing a customer-owned alarm are treated as nontaxable motor-vehicle maintenance/accessory-repair labor. But selling and installing a ce…
A New York S-corporation shareholder who moved to Virginia asks three questions: (1) are dividends paid out of his corporation's accumulated earnings from the years it was a New York C corporation taxable to him as a nonresident for New York personal income tax purposes; (2) if he later buys another business in New York, does that purchase - by itself, whether he moves back right away, moves back later, or never moves back and runs it from Virginia - change his New York residency status; and (3) if he doesn't buy the New York business and simply stays in Virginia, will he be treated as a New York nonresident?
Dividends a nonresident shareholder receives that represent a distribution of the corporation's accumulated earnings from years it was a New York C corporation are not New York-source income under Tax…
Is the natural gas used by a tortilla factory (tortilleria) exempt from Texas sales tax as gas used in manufacturing, or is it taxable commercial/residential use?
Taxable. The Comptroller ruled that gas used by a tortilleria to make tortillas (and other items like barbacoa) that are packaged warm and sold for immediate consumption through a drive-up window, wit…
Is boarding up or tarping a damaged home or business to protect it from vandalism or weather a taxable sale of materials, or a nontaxable improvement to real property?
Taxable. The Comptroller ruled that temporarily boarding up or tarping a damaged residence or business is a sale and installation of tangible personal property (plywood, boards, tarps), not an improve…
Does Texas charge sales tax on telemanagement services that get refunds for clients who were overbilled by telecom companies?
No. The Texas Comptroller ruled that telemanagement services consisting of obtaining refunds for clients who were overbilled for telecommunications services and equipment are not subject to Texas sale…
Does a Texas laboratory that tests soil, water, wastewater, and materials samples and sells the results as a report have to charge sales tax on that service?
No. The Comptroller ruled that a laboratory's testing and analysis of soil, water, wastewater, concrete, and metal samples is not a taxable service under the information services rule. But the lab sti…
How are hazardous-waste cleanup, remediation, and related site services taxed under Connecticut's services-to-real-property tax?
It splits several ways. A company cleaned up hazardous waste at industrial and commercial sites -- decontaminating facilities and running groundwater/soil remediation. Connecticut taxes services to in…
Are environmental and safety training and consulting services for a manufacturer taxable business management services in Connecticut?
It depends on whether it's training or consulting. A manufacturer that generates hazardous waste hired a provider for a mix of environmental and safety services. DRS split them under the business-mana…
If a health club member gets a written prescription from a doctor for an exercise program, is the membership fee exempt from Texas sales tax?
Only partly, and only for some members. The Comptroller ruled that a health and fitness facility's membership and initiation fees are exempt from sales tax as an amusement service only to the extent t…
Is an electric cart bought as a substitute for a wheelchair exempt from Texas sales tax?
Yes. The Texas Comptroller confirmed that an electric powered cart bought to use in place of a wheelchair is exempt from Texas sales tax, and no doctor's prescription is required for that exemption.
When did South Carolina Revenue Ruling 92-10 apply casual excise tax, use tax, or no tax to transfers of vehicles, motorcycles, boats, motors, and airplanes?
The historical ruling used a transaction matrix. An in-state purchase triggered casual excise tax at titling if sales tax had not been paid. An out-of-state retailer purchase generally triggered use t…
Does a shop that adds armor and modifies brakes/suspension on motor vehicles have to charge sales tax on the whole job, and can it buy the armor materials tax-free?
Yes. Texas treats this armor and brake/suspension work as taxable 'remodeling,' so the shop must collect tax on its total charge — materials, skill, and labor combined. The shop can buy incorporated m…
When can a Texas retailer accept an export certificate in good faith, and when does a sale to a Mexican buyer become taxable?
A Texas retailer cannot accept an export certificate in good faith if it already knows the goods have not yet left the country. But the retailer also does not have to collect sales tax until the sale …
Which surveying services are taxable and which are exempt under Texas sales tax?
It depends on the type of survey. Surveys that establish or determine a property boundary (boundary surveys, lot staking for conveyance, platting) are taxable. Surveys that only locate structures with…
Can a paging company give its local telephone company a resale certificate for the incoming phone lines and numbers it leases and then provides to its paging customers?
Yes. Because the paging company passes the leased telephone numbers and incoming lines through to its paging customers as part of a taxable paging service, it may issue a resale certificate to the loc…
Can a Texas business file sales tax returns based on a 4-4-5 (or 5-4-4) retail fiscal accounting calendar instead of standard calendar months?
Yes. Texas lets a business file sales tax returns on its 5-4-4 (or similar 4-4-5-style) fiscal accounting calendar instead of strict calendar months, as long as returns are still due the 20th and the …
Is a one-time sale of the right to reproduce a photograph subject to sales tax, and what about buying the photograph outright?
Selling the one-time right to reproduce a photograph is not taxable — it's treated as a royalty, and the customer only takes temporary custody. But buying the photograph outright from the photographer…
Does a veterinary clinic collect sales tax on pet food and pet supplies, and what about grooming — given the special veterinarian tax rules?
A veterinarian pays sales tax when it buys pet food, supplies, and medicine, and does not collect tax when it resells those animal-care items to customers. But grooming is a taxable service, so the cl…
Does a company that arranges repair and maintenance work through subcontractors and bills customers a marked-up price owe sales tax on its charges?
Yes. A company that contracts to have repair and maintenance done, subcontracts the actual work, and bills the customer a marked-up price is acting as a prime contractor. Under Tax Law § 1105(c)(5) an…
Does a document-plotting, scanning, and reproduction business qualify for Utah's manufacturing sales tax exemption on its equipment as a separate manufacturing establishment?
No. The Tax Commission ruled that laser plotting, color electrostatic plotting, document enlargement/reduction, and document scanning are service activities (comparable to drafting, photocopying, and …
If a Texas trucking company's driver buys a replacement tire in another state and pays that state's sales tax, can the Texas tire dealer credit that tax against the Texas use tax owed when the truck returns to Texas?
Yes. Texas use tax is owed on tires bought outside Texas only if the truck carrying them comes back to Texas within one year of purchase. When it does, the dealer can credit any sales or use tax legal…
Does a Texas broker owe sales tax on the fees earned brokering animal fat and byproducts sold to Mexican buyers, or on the underlying sales themselves?
No. The Comptroller ruled that a broker's fees for arranging sales of animal fat and byproducts between a seller and Mexican buyers are not subject to Texas sales tax. The underlying sales themselves …
Does a city Bureau of Vital Statistics have to charge sales tax when it sells summary lists of births in response to verbal open-records requests?
No. The Comptroller ruled that summary lists of births sold by a city Bureau of Vital Statistics are exempt from Texas sales tax under Rule 3.341(a), because the office is required under the Texas Ope…
Does a tenant owe sales tax on removing and replacing fuel tanks when the property is leased from a state agency and title to the improvements vests in that agency?
No tax is due. Because the tenant leased the site from the New York State Department of Transportation — an exempt agency under Tax Law § 1116(a)(1) — and title to the tanks vested in the Department u…
Is a discounted group-sales amusement-park ticket taxable when admission is called 'free,' and is installing a fiberglass tubeslide a nontaxable capital improvement?
The whole group ticket is taxable unless it separately states admission and rides. An amusement park's ride charges escape tax only when its pay-one-price ticket separately states the taxable admissio…
Is an anesthesia ventilator exempt from Texas sales tax as a prosthetic device, even though the anesthesia machine it plugs into is taxable?
Yes. The Comptroller ruled that anesthesia ventilators, which mechanically breathe for a patient who cannot breathe on their own under anesthesia, qualify as exempt prosthetic devices under Rule 3.284…
Under South Carolina Revenue Ruling 92-9, could banks request return extensions, use a noncalendar tax year, and seek refunds of pre-1991 bank-tax overpayments?
Yes, subject to the historical procedures. A bank could request an extension for good cause by the original due date, filing a tentative return showing 100% of anticipated tax and remitting that amoun…
Did South Carolina Revenue Ruling 92-8 permit bonus-number, bonus-card, progressive, wheel-or-balloon, or odd/even cover-all bingo games?
No. The historical ruling rejected all five formats. Bonus-number and bonus-card prizes improperly increased the announced prize; progressive play offered multiple prizes and reused covered spaces as …
Are a town's 'pay-as-you-throw' trash-bag fees a taxable sale of bags or a nontaxable intangible right to dispose of trash?
Not taxable to residents. A Connecticut town ran a 'pay-as-you-throw' program: residents' trash is collected only if placed in special town bags, distributed (at town hall or through retail-store agen…
Are wigs and hairpieces for disease-related hair loss exempt from Connecticut sales tax as prostheses?
No -- and note this ruling is OBSOLETE: DRS marks it 'not current … reference purposes only' and states it was 'obsoleted by AN 94(5),' so do not rely on it. As issued, DRS held that wigs and hairpiec…
Is a post-production video animation studio that adds computer-generated special effects and animation to video programs (like TV ads, courtroom presentations, and product demonstrations) at the direction of the producer performing a taxable service?
No. The Comptroller ruled that a video animation studio that adds special effects and animation to video programs under a producer's direction, with no creative control of its own over the finished vi…
Is computer consulting — system design, analysis, and estimating — taxable in Texas, and when does it become taxable because it's tied to a hardware or software sale?
Computer consulting charges (system design, analysis, estimating) are not taxable in Texas unless the consultant also sells the hardware or software recommended in the engagement. If all equipment or …
An oil and gas services company asked the Comptroller about the sales/use tax treatment of several things: well pressure testing services, flare stack sales and rentals, other rentals/leases of tangible personal property, an environmental/energy-conservation repair exemption, whether Texas has a state income tax, and direct payment permit procedures for contractors.
Well pressure testing services are not subject to Texas sales or use tax, though they may instead be subject to the 2.42% oil well service (occupation) tax under Chapter 191 of the Tax Code. Flare sta…
A nursing home operator hires Texas and out-of-state contractors to do electrical repair work at its nursing homes, sometimes billed as a lump sum and sometimes with materials and labor separately stated. Should the contractor charge Texas sales tax, and if the tax is owed but not collected, does the state pursue the nursing home or the contractor?
It depends on how the contractor bills the job, not on whether the contractor is based in Texas or out of state. On a lump-sum bill (materials and labor combined into one price), the contractor should…
Can a farmer or rancher file a single agricultural/farm-purposes exemption certificate with a retailer and then just sign later invoices marked 'Exempt agricultural purposes,' instead of filing a new certificate for every purchase?
Yes. A farmer or rancher can file one properly completed exemption certificate with the retailer, who keeps it on file, and afterward the purchaser can simply sign subsequent invoices stamped 'Exempt …
Does a Texas hauler of dirt, sand, caliche, or rock have to charge sales tax on the material or on delivery charges?
It depends on whether the material is processed. Since June 1988, the Comptroller has exempted sales of unprocessed sand, dirt, and gravel from sales tax. But processing — including crushing, mixing, …
Is natural gas used to fuel a boiler that makes steam, which then powers chemical-processing equipment, exempt from Texas sales tax, or is it too 'one step removed' from manufacturing to qualify?
No, the natural gas is not too far removed from manufacturing to qualify. The Comptroller ruled that natural gas used to fuel a boiler that heats water into steam, where the steam powers equipment use…
Are sales to mixed-blood descendants of the Ute Tribe who are not themselves enrolled tribal members exempt from Utah sales tax the way sales to enrolled tribal members are?
No. Utah's sales tax exemption for reservation sales applies only to enrolled members of a tribe who live within the reservation's exterior boundaries, evidenced by a Federal Bureau of Indian Affairs …
Is a service that verifies the bond ratings in a customer's portfolio a taxable information service, even if the customer considers their portfolio contents confidential?
Yes. The Comptroller ruled that verifying bond ratings against a customer's portfolio is a taxable information service, because the bond rating information itself is general information available to a…
A company tests underground storage tanks for leaks using a van equipped with a computer, to help customers comply with Texas Water Commission leak-detection regulations. Should the company be collecting sales tax on these testing charges?
No. Charges to test whether an underground storage tank leaks more than allowed by Texas Water Commission or other regulatory standards are not taxable. However, the testing company still owes sales o…
A company duplicates (dubs) master audio or video tapes into copies. Does dubbing count as manufacturing or processing, and can the company get a refund or reduction of sales/use tax on its dubbing equipment?
Yes — the Comptroller confirmed that making duplicates of master tapes is processing or manufacturing, so dubbing machinery and equipment can qualify for a phased-in sales/use tax refund or reduction:…
A commercial vehicle monitoring service places decals with an 800 number on trucking/shipping company vehicles so other drivers can call in complaints about how the vehicle is being driven; the service forwards the complaint reports back to the vehicle-owning company. Is this service taxable as an information service?
No. The Comptroller withdrew its two earlier opinion letters and ruled that this vehicle-monitoring service is not taxable because it qualifies as a proprietary information service under Rule 3.342(d)…
As a bank, I made a construction loan to a cooperative sponsor, secured by a pledge of the sponsor's unsold co-op shares, proprietary leases, and purchase-money notes. The sponsor defaulted, and I'm about to foreclose under the UCC by bidding in my share of the debt. Will I become personally liable, as 'transferee,' for any unpaid Real Property Transfer Gains Tax the sponsor owes, once I take ownership of the pledged shares and leases through the foreclosure?
No transferee liability -- a 1992 statutory amendment specifically releases a secured party from personal liability for the transferor's unpaid gains tax when it enforces its lien on pledged cooperati…
Are a meat packer's feed, hay, and packaging materials exempt from Connecticut tax as materials used in fabrication?
Mostly no. A Connecticut meat-packing plant bought live horses, slaughtered and butchered them, and packaged the meat (mostly for export to Europe). DRS held that the butchering and cutting of carcass…
How is sales tax charged on the installation of a new lawn sprinkler system — what part of the cost, if any, is taxed on the invoice, and at what rate?
Installing a new sprinkler system is an improvement to realty, so how tax applies depends on billing: if the installer bills a lump sum, the customer owes no tax and the installer instead pays tax on …
An out-of-state company leases equipment to customers in Texas, buying the equipment from outside Texas and delivering it to various Texas locations. After the Quill v. North Dakota decision, does this lessor still have to collect and report Texas sales and use tax?
Yes. Because the lessor retains title to the equipment while it is leased and located in Texas, it is considered to have property in the state, which by itself is enough to make it "engaged in busines…
A general contractor has a separated contract (materials and labor billed separately) to build a new commercial building, and subcontracts landscaping (grass, bushes, trees) and a hardwired burglar alarm system to other companies who install those materials into the realty. How does sales tax apply between the subcontractors, the general contractor, and the customer — and does it matter if the job is residential instead of commercial?
The subcontractors' full charges (materials and labor) to the general contractor are taxable. The general contractor can either pay tax to the subcontractors and pass that cost through as part of its …
A hotel resells telecommunications services to guests (marking up local and long-distance calls) but also uses the same trunk lines and phone equipment for its own business calls. Can the hotel buy the phone lines and equipment tax-free with a resale certificate, or get a refund of the sales tax it already paid?
No, not in full. A hotel cannot in good faith issue a resale certificate for trunk line service that it also uses for its own business calls — resale certificates may only be issued for lines dedicate…
Are charges for a children's summer camp and instructional classes (like karate, tennis, basketball, volleyball, and cheerleading) for kids ages 3-17 subject to Texas sales tax?
No. Rule 3.298(a)(2) specifically identifies children's day camps or boarding camps and instructional classes in any sport or musical discipline as non-amusement services, so charges for these camps a…
Are bacterial/microbial products used by feedlots, poultry farms, swine farms and dairies to digest livestock waste in catch ponds exempt from Texas sales tax as a farm/ranch exemption item?
No. The Comptroller ruled that microbial products used to biodegrade manure and other waste in livestock catch ponds do not qualify for the farm/ranch sales tax exemption, because that exemption is li…
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