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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The rules for exemption certificates changed in 1992 — do the old timing rules still apply to my earlier sales?
McDonnell Douglas lost this round. It had claimed gross receipts tax deductions for services it performed for Martin Marietta (which Martin Marietta resold to a U.S. agency), but it couldn't produce…
Does a film and video production company owe sales tax on special-effects paint, blank tape stock, and duplicate tapes (dubs) it has made for clients?
It depends on the item. The blue paint used exclusively for blue-screen special effects can be bought tax-free with an exemption certificate (though separately billed painting labor is still…
Does the manufacturing exemption cover a microwave oven used to cook or heat food for sale?
It depends on who operates the oven. A microwave or convection oven used by a restaurant (or similar business) to cook food that it then sells qualifies for the manufacturing exemption, but a…
Is a 'Maps on Demand' service that delivers maps and proximity information over the internet subject to Texas sales tax?
Yes. The Comptroller ruled that a 'Maps on Demand' service delivering maps and proximity data over a web page is taxable in Texas, and the entire charge -- including the monthly minimum and any…
Does a university have to charge sales tax on the fee it bills dorm students each semester for network port access to the campus computer system?
Yes. The semester fee a university charges dorm students for network port access to the campus computer system is taxable as a sale of information services, and the university must collect sales tax…
Is a mandrel used to wind fiberglass filament and resin into pipe and tanks exempt from Texas sales and use tax, and what about the disposable rollers used to apply resin?
Mandrels purchased after January 1, 1995, and used to wind fiberglass filament and resin into pipe and tanks are totally exempt from Texas state and local sales and use tax, and the buyer may give…
Why could a Texas vehicle owner face local property tax after already paying motor vehicle sales tax?
The taxes were separate. Motor vehicle sales tax applied to the purchase price. Cities and counties could also impose local property tax, generally on business-use vehicles and sometimes on…
Did out-of-state salesmen who could bind the company on order terms remove Public Law 86-272 protection and Texas throwback?
Yes. Because the salesmen could bind the company on order quantities, some prices, payment terms, delivery dates, and refusals, the company had nexus in every state where it sent them. It was not…
Does a wholesaler that only makes exempt resale of natural gas during pipeline transportation need a Texas sales tax permit, and can it use a resale certificate without a permit number?
No. A wholesaler that only makes exempt sales of natural gas resold during pipeline transportation does not need a Texas sales tax permit solely to report those exempt sales, but must still issue a…
Where were information-service receipts sourced for the former Texas taxable-capital and earned-surplus components?
They were sourced where the services were performed. The Comptroller classified the client's activity as information services and applied that performance-location rule to both taxable capital and…
Were payments under a bona fide one-year resident-hotel lease exempt from Florida transient rentals tax, including when unforeseen events ended the lease within six months?
Yes, if the written one-year lease was entered in good faith with intent to honor it. Florida found the resident payments exempt under the over-six-month lease rule. An early termination caused by…
Is a separately stated environmental drum-cleaning fee charged with petroleum products subject to California sales tax?
Yes. The $6.50 fee reimbursing drum reconditioning and environmental costs was taxable as a service charge connected with the petroleum sale, unlike the separate refundable drum deposit.
Is electricity used at a food-processing facility exempt from Texas sales tax as manufacturing use when the facility's own vending machines are what ultimately sell the packaged food?
No, the electricity is taxable. Because the facility is owned by the same entity that owns the vending machines the food is ultimately sold through, the Comptroller treated the electricity as being…
Does a multi-level marketing or direct sales company have to collect and remit Texas sales and use tax on sales made by its independent distributors?
Yes. Under Rule 3.286(a)(3) a direct sales/multi-level marketing company is treated as the retailer, its independent distributors are its agents for nexus purposes, and the company -- not the…
What rules of play govern selling and conducting seal card games in Nebraska?
Seal card games are legal, and this ruling is the operator's rulebook for running them. Under Revenue Ruling 35-96-5, LB 1277 (effective July 19, 1996) made seal card games a legal form of lottery…
Was an airport baggage-handling system a real-property improvement, and who owed Florida tax under the lump-sum construction contract?
The system was an improvement to real property. Under the lump-sum contract, the contractor was the consumer and had to pay sales or use tax on materials, supplies, and the fabricated cost of…
Did California use tax apply to a jet delivered in Oregon, used there for pilot certification, and based in Nevada for more than 90 days?
No, if the assumed certification maneuvers occurred outside California and the jet did not enter California within 90 days; the unidentified, already-completed deal received no reliance relief.
Did receivables transferred by a Florida parent to an out-of-state subsidiary retain Florida intangible-tax situs when the parent performed only collection support?
No, if the Florida parent's work stayed within the listed ministerial and processing functions. The out-of-state subsidiary's receivables then lacked Florida taxable situs, regardless of whether the…
How did Florida tax signs manufactured in Florida and furnished with subcontracted installation under lump-sum or fully itemized contracts?
Under lump-sum and similar fixture-installation contracts, the sign maker was the ultimate consumer and owed Florida use tax on each sign's full manufactured cost when made, even for an out-of-state…
How much of a marina's $20,000 monthly master-lease payment was taxable when parts of the property were subleased or used for separately taxed boat storage?
Florida rejected the marina's proposed $27.12 monthly tax and calculated $165.11. Tax applied to the lease amount allocated to undeveloped mangrove land and to the marina's own office, restroom, and…
Did an out-of-state seller have to collect Florida tax when it sold goods to an unregistered out-of-state buyer and drop-shipped them to the buyer's Florida customer?
No. The seller did not have to collect Florida sales or use tax because both seller and buyer were outside Florida, the goods were outside Florida when sold, and a common carrier delivered them from…
Which shopping-mall tenant charges were taxable as rent, and when could a separately billed electricity reimbursement be excluded?
Nearly every listed charge was taxable rent: fixed and percentage rent, common-area maintenance, real-estate tax, sprinkler, insurance, marketing, refuse, landlord-work, water, gas, and telephone…
Was a civic center's sale of controlled advertising space on scoreboards, press tables, and concourse signs subject to Florida sales or use tax?
No. The advertisers received no right to occupy, control, or exclude others from the scoreboards, press tables, or concourse signs, so the arrangement was not a taxable lease or license of real or…
Was a motorhome delivered to a California resident outside the state exempt after more than 90 days of out-of-state use?
Sales tax did not apply to a proven out-of-state sale, and use tax did not apply after qualifying functional use outside California for more than 90 days before entry.
Could a California dealer avoid collecting use tax on a motorhome delivered to a resident outside the state for more than 90 days of use?
Yes, with genuine out-of-state use and a good-faith section 6247 statement. California registration did not tax the buyer automatically but could undermine the dealer's good faith.
Is an optional escrow fee charged so customers can claim a software's source code if the seller goes out of business subject to Texas sales tax?
Yes. The Comptroller ruled that the escrow fee is part of the total sales price of the taxable software, so it is subject to Texas sales/use tax both when first charged and each year it is renewed.
Were photocopies sold through coin- or card-operated machines at a municipal library subject to sales tax?
The library was treated as consumer, not retailer, for machine-made copies at its facility, so those customer charges were not taxable. Tax instead applied to the library's equipment and supplies.…
How were separately contracted software modifications, upgrades, and maintenance receipts sourced under former Texas franchise tax?
Separate modifications and maintenance were services sourced where performed, while separately stated upgrades were sourced to the payor. If one upgrade-and-maintenance contract did not reasonably…
How were separately contracted software modifications, upgrades, and maintenance receipts sourced under former Texas franchise tax?
Separate modifications and maintenance were services sourced where performed, while separately stated upgrades were sourced to the payor. If one upgrade-and-maintenance contract did not reasonably…
Was a regional water supply authority formed by counties and cities exempt from Florida intangible personal property tax?
Yes, to the extent the authority met the ownership and membership requirements in section 163.01(9)(c). A qualifying interlocal governmental entity is treated like a Florida municipality or county…
Could an acquired Florida affiliated group stop filing consolidated corporate income tax returns after it became part of a new federal group?
Yes. Florida granted the request beginning with 1995 tax years because the former affiliated group ceased to exist when a new parent acquired it. That former group would no longer file a federal…
How should California measure noncash consideration when a mobilehome park operator acquires a used mobilehome through a court sale, lienholder transfer, or probate claim?
Use the value of everything given: generally the court judgment, the unpaid rental obligations satisfied by transfer, or the allowed probate claim, adjusted for payments made.
Were German-language brochures exempt from California sales tax when the printer delivered them here and the customer later exported them?
No. Delivery to the purchaser in California completed a taxable sale before export. Retailer shipment by carrier directly to Germany would have qualified.
Is the labor to install new equipment in a refinery or chemical plant taxable, and does an October 1995 capacity-expansion exclusion change the answer?
It depends on the facts: installation labor on qualifying manufacturing equipment that is not an improvement to realty was exempt in 1995 under Sec. 151.3111, but the same labor was taxable in 1994…
Is a consultant's fee for auditing EDP controls, helping a client pick new computer hardware/software, or writing a software vendor's white paper subject to Texas sales tax?
No, none of the three described services is taxable on its own. Reviewing a client's EDP controls and writing a confidential audit report is not taxable, and neither is a…
Does Texas sales tax apply to charges for staking (surveying) an oil or gas well before it is drilled?
Mostly yes. The boundary surveying and acreage/unit-designation work used to stake an oil or gas well are taxable surveying services, but the narrower charge for determining the actual placement of…
I had enough investment credit to cover the tax I owed — do I still owe penalty and interest for paying the compensating tax late?
The protest was denied. Jezlaine, a jewelry manufacturer, bought equipment out of state in 1993–1994 but didn't know it owed compensating (use) tax and never reported it. A new CFO later filed for a…
Which parts of a phone-based information, advertising, and voice-mailbox service are taxable telecommunications services in Texas, and which parts are not?
Charges for playing recorded advertisements or messages to callers who dial in are not subject to Texas sales tax, but charges for computerized telephone polling, call transfer/routing, and…
Were initial and annual software source-code escrow fees taxable when customers received access only if the software company ceased doing business?
It depended on what the fee covered. If the source-code escrow fee only bought an intangible right to claim the code if the software company ceased doing business, Utah said the fee was not taxable.…
Were uninterruptible power systems installed at federal facilities fixtures consumed by the United States construction contractor?
Yes. Staff reaffirmed that the UPS remained building accessories and were essential to the fixed works because they powered critical equipment.
Is telephone or on-site technical support for software and hardware subject to Texas sales tax, and does it matter whether the same company sold the property?
Yes, if the property being supported is located in Texas. Telephone technical support for tangible personal property (hardware or software) is taxable when the property is in Texas, and exempt under…
Is cleaning a petroleum storage tank subject to Texas sales tax, and does it matter whether the tank is above ground, below ground, or over 500 barrels in capacity?
It depends on whether the tank counts as an improvement to real property. Cleaning a below-ground tank, or an above-ground tank holding more than 500 barrels, is treated as nontaxable real property…
Did a Tennessee publisher owe sales or use tax when a Tennessee printer sent publications directly to nonresidents, either itself or through a mailer?
It depended on who hired the Tennessee mailer. No tax applied when the printer shipped or mailed publications directly out of state, or when the printer hired an independent mailer with no legal…
Does a wholly owned aircraft-transportation subsidiary that flies employees and customers of related companies for a cost-based fee qualify for New York's commercial aircraft sales tax exemption?
Yes, conditionally -- a wholly owned subsidiary whose sole activity is flying employees, customers, and potential customers of its related companies for a cost-based fee qualifies for New York's…
Did sales messages distributed to consumers on disks, diskettes, or videotapes qualify for California's printed-sales-message exemption?
No. Section 6379.5 narrowly listed catalogs, letters, circulars, brochures, and pamphlets, so sales of the media and duplication services remained taxable.
Was a partnership's transfer of mixed assets to its wholly owned subsidiary tax-free when the subsidiary assumed liabilities?
No. The subsidiary's assumed liabilities were consideration, so the transfer was a taxable sale rather than a pure capital contribution. Counsel allocated assumed liabilities and any other…
Did a Chapter 7 discharge eliminate California successor liability arising from an asset purchase made 15 months before bankruptcy?
No. Staff concluded that the successor liability was a priority tax claim tied to the pre-bankruptcy asset purchase and therefore was not discharged.
When did California staff conclude the automatic stay ended for a corporate debtor with a confirmed Chapter 11 liquidation plan?
The stay ended on February 20, 1996, when the bankruptcy court entered the order confirming the liquidation plan, because the corporation would receive no discharge.
Is a charge for 'on hold' tapes with marketing messages played to callers waiting to be connected, plus related equipment, subject to Texas sales tax?
Yes. Charges for 'on hold' tapes containing marketing messages played to callers while they wait to be connected, and for the related equipment, are subject to Texas sales tax. A single charge…
Did Nevada family partnerships and their corporate general partners acquire Florida situs because their Florida-resident president made investment decisions from Florida?
No. The Nevada partnerships and corporate general partners lacked Florida situs because their offices, records, staff, board meetings, and implementation of decisions remained outside Florida. The…
When a manufacturer drop ships goods to a distributor's customer in Utah and the distributor won't pay sales tax or provide exemption documentation, who is responsible for the tax -- the manufacturer, the distributor, or the end customer?
The manufacturer's sale to its distributor is exempt as a sale for resale, even when the manufacturer drop ships the goods directly to a third-party customer in Utah -- the manufacturer is not…
Does electricity used in a vacant apartment unit count as residential use that is exempt from Texas sales tax?
Yes, effective October 1, 1995, when Section 151.317 of the Tax Code was amended, the Comptroller began treating electricity used in vacant apartments as residential use exempt from sales tax --…
Is electricity used to power the pumps at a saltwater disposal well exempt from Texas sales tax as electricity used to transport a material extracted from the earth?
Electricity used to power the pumps at a saltwater disposal well is exempt from Texas sales tax only if the saltwater being transported is naturally occurring produced saltwater. Once that saltwater…
Is a separately stated charge for inspecting and testing a commercial building's fire alarm system subject to Texas sales tax?
No. A fire alarm system in a commercial building is considered an improvement to realty, so separately stated charges for inspecting and testing that system are not subject to Texas sales tax, even…
Did a Nevada corporation and partnership acquire Florida intangible-tax situs because Florida residents owned interests and performed some ministerial functions?
No. The Nevada corporation and partnership had no Florida office or employees, conducted their business outside Florida, and did not transact business with Florida customers. Some ministerial…
Did a laminate manufacturer owe Florida use tax on sample chips supplied free with its products for color and texture selection?
No. Florida treated the sample laminate chips like exempt paint color cards because they showed available colors, textures, and patterns and accompanied the manufacturer's products at no separate…
Did an annual tenant-improvement credit reduce taxable commercial rent when the lease did not require the tenant to make improvements?
Yes. The annual credit reduced the base rent subject to Florida sales tax because the lease granted it regardless of whether the tenant spent anything on improvements. The lease did not require…
Which payments under nationwide touring-bus leases were subject to Florida sales tax when the buses moved in and out of the state?
Florida tax applied to every lease payment attributable to a period when the bus was in Florida. Payments contracted to be paid after the lessee removed the bus from Florida were not taxable if the…
If I buy molds from a California company and a California company also modifies those molds, do I owe Utah sales/use tax on the modification (labor) charges, or only California tax?
No Utah sales tax applies. The Commission ruled that because a California company performed the mold-modification labor in California, the transaction was a California sale, not a Utah sale, so…
Could a qualified-production-service contractor buy overhead materials for resale when its federal contract included FAR 52.245-2 but omitted FAR 52.232-16?
No. FAR 52.245-2 accelerated title only for direct-cost items, so no clause passed overhead materials to the United States before contractor use.
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