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 501(c)(3) organization building homes for low-income people buy construction materials without Texas sales tax?
Yes. Because building low-income housing was the organization's exempt purpose, it could buy building materials tax free even for a home transferred to a client under a lump-sum contract.
Was a $5,000 license for software developed for one Texas customer exempt as custom programming?
No. The developer retained legal rights and granted a nonexclusive license, so the contract was taxable. Custom programming was exempt only when the client retained all legal rights to the program.
If a mutual savings bank restructures into a mutual holding company and then acquires another savings institution in a multi-step transaction the IRS already ruled tax-free federally, is the whole transaction also tax-free for New York's Article 32 banking franchise tax?
Yes. Independence Savings Bank, a New York mutual savings bank, restructured by forming a new mutual holding company, merging itself into a new stock-form subsidiary bank (a transaction the IRS had al…
Which direct-mail-firm charges are taxable in Connecticut -- the mailing service, the advertising, the printing, or the postage?
It depends on what the firm actually does. DRS addressed a direct mail firm in two situations. (a) PURE MAILING -- just sorting, folding, inserting, and mailing materials the client had printed elsewh…
Are membership deposits and dues for a developer-run recreational community club taxable as social or athletic club dues?
No. Membership deposits and dues paid to a developer-operated recreational club (ski, golf, tennis, equestrian, fitness, swimming, and social facilities) are not taxable social or athletic club dues u…
Does the rental of a 'yardhorse' yard tractor qualify for the sales-tax exemption for heavy tractor-trailer combinations?
No. The rental of a 'yardhorse' yard tractor used with a trailer weighing over 26,000 pounds does not qualify for the Tax Law § 1115(a)(26) exemption for tractors and trailers. Although the vehicle cr…
Is selling advertising space in a periodically distributed trade directory taxable, or is it exempt 'media advertising'?
Exempt. A company published an annual directory of trade vendors (supplies and services for architects and contractors) and sold advertising space in it to those vendors, distributing the directory to…
Must a real-estate facilities-management firm collect sales tax on the rental-plan books and custom software it delivers to building owners?
Yes, largely. A firm that produces computer-generated rent information and floor-plan graphics for building owners must collect sales tax on its rental-plan books, which are tangible personal property…
Which of a mall cinnamon-roll shop's items are taxable, and does having tables or a food court change the answer?
It depends on the item and how it's sold. At a mall 'Cinnabon' shop: fresh-baked (heated) cinnamon rolls, cups of coffee, soft drinks, and bottled water are taxable whether eaten in or taken out. Pre-…
What documentation supported a Texas sales-tax refund for work claimed as new construction rather than nonresidential remodeling?
A city structural inspector verified that the permit covered a new structure, so the Comptroller's credits section would process the refund. Rule 3.357(b)(7) addressed documentation.
When did renovating golf-course lakes, fairways, greens, tees, paths, and systems count as new construction instead of taxable remodeling?
Complete demolition followed by reconstruction was new construction; leaving any part intact made the work repair or remodeling. Expanding an existing lake and spreading seedbed were taxable.
Are a members-only Fire Island beach club's dues taxable as club dues, and are its furnished unit rentals taxable hotel occupancy?
No to both. A members-only Fire Island beach club is not a taxable 'social or athletic club' under Tax Law § 1105(f)(2): its memberships are sold to the public first-come, first-served, members have n…
Can a retailer buy labeling and hanging services for its resale merchandise tax-free, and is use tax due if the work is done out of state?
No — the labeling and hanging services are taxable. When a clothing retailer hires a company to print and affix labels and put merchandise on hangers, those services are taxable under Tax Law § 1105(c…
Is a nonprofit venture-capital networking group a tax-exempt organization, and are its member dues and the meeting rooms it rents subject to New York sales tax?
Three answers, and the group comes out untaxed on the parts that matter. (1) No — the Western New York Venture Association does not qualify as an exempt organization under Tax Law § 1116(a)(4), even t…
Were resume consultation, original writing, and computer reproduction services subject to Texas sales tax?
Consultation and original resume writing were not taxable, even when performed on a computer or memory typewriter. Reproducing a resume supplied by the client was taxable.
Could a Texas aluminum-can manufacturer buy printing plates and artwork negatives without sales tax?
Yes. The Comptroller allowed exempt purchases of the printing plates used to apply designs to cans and the artwork negatives used to produce those plates.
Did federally mandated accessibility work on a nonresidential Texas business qualify for a sales-tax exemption?
No. The total charge to repair, remodel, or restore nonresidential real property was taxable even when the work was legally mandated rather than voluntary.
Did a third-party installer have to charge Texas sales tax for mounting neon channel-letter signs on a building?
For an existing nonresidential building, the installer could accept a valid resale certificate from the manufacturer. New-construction installation labor was not taxable.
Must a housing co-op charge sales tax on the parking and garage fees it bills tenant-shareholders who own their spaces through allocated shares?
No. A cooperative housing corporation does not have to collect sales tax on the rental fees it charges tenant-shareholders for garage and parking spaces, when those spaces are represented by shares of…
Under South Carolina Revenue Ruling 92-1, when were for-profit health-club and fitness-center membership fees exempt from admissions tax?
Fees were exempt when the business was a qualifying for-profit physical fitness center covered by the Physical Fitness Services Act and offered only listed or approved fitness activities plus support …
Was labor to repair a lightning-damaged security system exempt under Texas's natural-disaster real-property repair rule?
No. Licensed alarm-system work was a security service, not real-property repair, so the natural-disaster labor exemption in Rule 3.357 did not apply.
Could a nonresident servicemember use Texas's historical new-resident vehicle tax instead of ordinary use tax?
Possibly. Ordinary use tax applied to the out-of-state vehicle's original purchase price with credit for similar state tax paid elsewhere. But a servicemember whose military home of record was outside…
Could a Texas lessee later obtain a refund as Michigan tax continued to be paid on the same out-of-state vehicle lease?
Yes. Texas initially credited only the $97.24 paid to Michigan before the vehicle entered Texas. If Michigan tax continued to be legally due on the lease, Texas would refund its use tax dollar for dol…
Are dairy farmers and dairy processing plants exempt from sales tax on their fuel and electricity bills, and what happens if a single utility meter covers both an exempt operation and a residence?
Yes, both qualify, but they check different boxes. A dairy farmer is an agricultural producer entitled to buy fuel and electricity tax-free, doesn't need a sales tax number, and should check the "agri…
Is a singles newsletter that is mostly directory listings exempt from New York sales tax as a periodical?
No — it's taxable. 'The Matchmaker,' a newsletter for Jewish singles, is not exempt as a periodical under Tax Law § 1115(a)(5), even though it meets all five general requirements for a periodical in R…
Is a manufacturer's sale of ultrasound diagnostic imaging equipment exempt from New York sales tax as production machinery or as medical equipment?
It's not exempt as production equipment, but it is exempt as medical equipment — with a catch. Advanced Technology Laboratories' ultrasound diagnostic imaging systems do not qualify for the § 1115(a)(…
When does someone become a Kansas resident who may be required to register a vehicle in a county?
When they establish a domicile there -- and living in a county for 90 days creates a rebuttable presumption of it. This 1992 Division of Vehicles memo interprets the Kansas residency requirements in K…
Was labor to install a separately purchased, nonpermanent air compressor taxable in Texas?
No, on the stated facts. The installer did not sell the compressor, the compressor was not permanently affixed to realty, and the work was not part of repairing or remodeling other tangible personal p…
When were Texas oil-spill cleanup charges taxable, and how did the Comptroller treat related oilfield construction work?
Well-site cleanup tied to oil and gas activity was not taxable, nor was qualifying waterway cleanup. Cleanup at a plant or elsewhere on land away from the well site was taxable.
Were year-end expense allocations from related stores to a shared accounting and data-processing corporation taxable in Texas?
Yes, for Texas stores. Calling the charges reimbursements or the service company an agent, nonprofit seller, or employee did not exempt the taxable data-processing services.
Could a Texas business buy packaging tax free for computer hardware and duplicated software disks sold to customers?
Yes. Packaging for manufactured computer hardware sold for resale was tax free, and so was packaging for resale disks containing software whose rights the business owned.
Were a country club's $10,000 refundable certificates of ownership subject to Texas sales tax?
No. The certificates qualified as nontaxable refundable initiation fees when the membership agreement or bylaws identified them that way and protected the member's right to a full refund or tax accoun…
Could a shipping business avoid Texas tax on packaging supplies delivered to Texas customers for use in interstate shipments?
No. The Comptroller said the packaging supplies were taxable because they were put to their intended business use when delivered to customers in Texas, rather than merely stored for later shipment out…
When was directional drilling a nontaxable service rather than a taxable equipment rental in Texas?
It was a nontaxable service when the drilling company planned the well, supplied equipment and personnel, and controlled and monitored the work. Supplying tools with only an advisory supervisor was a …
Was a portable building for raising emu chicks exempt from Texas sales tax as agricultural equipment?
The letter did not give a final yes-or-no answer for the building. It said exemption required exclusive qualifying agricultural use and a specialized mechanical design that made the structure equipmen…
Were a directional driller's day-rate tools, operators, standby charges, and separately billed equipment taxable rentals?
No, when the driller planned the well and controlled the equipment as part of its service. Equipment used by someone else was a taxable rental, and tax collected in error had to be refunded to custome…
Are the materials a contractor pours into a farm bunker silo's floor and walls exempt from New York sales and use tax as farm-silo property?
Mostly exempt, with one taxable slice. Materials a contractor incorporates into a farm bunker silo used to make and store silage are exempt from New York sales and use tax under Tax Law § 1115(a)(6) b…
Were meals sold to retirement-community residents exempt while the residents were evacuated to a hotel?
No. The exemption required meals to be served to permanent residents at the retirement facility itself, and the hotel used during the evacuation was not a retirement facility.
Is a condominium association that only collects common charges and reserve-fund interest -- with no rental or business income -- subject to New York's Article 9-A corporate franchise tax?
It depends on the year. For 1986 through 1988, no -- the Larkfield Professional Center Condo Association, an unincorporated Real Property Law Article 9-B condominium association whose only income was …
Did a federal service contractor owe Texas tax on equipment and supplies charged to a contract or titled to the U.S. government?
Yes. The contractor owed tax on equipment and consumable supplies used to provide services, even when costs were charged directly to the government or the government took title at acquisition.
Could a well-service company buy consumed supplies and permanently installed guyline anchors tax free for resale?
Not the consumed supplies; the service provider owed tax on them. Permanent guyline anchors were real-property improvements, with materials and customer charges treated differently under separated and…
Did an insulation contractor need a Texas sales tax permit to remodel an exempt organization's nonresidential building?
Yes. Installing insulation in existing nonresidential realty was a taxable repair and remodeling service, so the contractor needed a permit even though the exempt customer could provide an exemption c…
Was the full price charged by contractors to refit a business's owned or leased space taxable in Texas?
Yes, under the letter's assumptions. Refitting was treated as repair or remodeling, and charges for machinery, equipment, or nonresidential real-property work were taxable in full, including labor and…
How did Texas distinguish ordinary use tax from new-resident tax for an incoming vehicle and motor-capable folding boat?
An out-of-state vehicle brought into Texas for highway use faced ordinary use tax with credit for similar tax paid elsewhere, unless the new resident qualified under Rule 3.71 based on prior registrat…
Were structural changes to commercial buildings exempt from Texas sales tax when required by the Americans with Disabilities Act?
No. The Comptroller said Texas law contained no exemption for costs incurred to comply with federal law, so charges for the required commercial-building modifications were taxable.
Were corporate sponsorship fees for a free recycling hotline taxable when sponsors also received callers' messages?
Partly. Institutional advertising was nontaxable, but receiving and relaying callers' electronic messages was a taxable telecommunications service. Without separately stated charges, the entire fee wa…
If a bank subsidiary revokes its election to be taxed under Article 9-A (switching to Article 32) in the same year it has a big capital loss, can it still carry that loss back to earlier years when it was an Article 9-A taxpayer?
Yes, but conditions apply. FSB-Properties, a wholly owned subsidiary of Flushing Savings Bank, qualifies as a banking corporation but had elected to be taxed under Article 9-A instead of Article 32. F…
When a bank resells repossessed cars and mobile homes and buys credit reports on borrowers, which of those are subject to New York sales tax?
It depends on the item. (1) Yes — a bank that sells repossessed automobiles is a 'vendor' of motor vehicles and must collect sales tax at the time of each sale unless it receives a proper exemption do…
How could a Texas contractor structure a separated contract for work on an exempt organization's real property?
The binding contract—not the bid or draw format—had to separately state labor and materials under Rule 3.291. Incorporated materials could be bought for resale, then covered by the exempt customer's d…
Were golf-cart shed rental charges taxable at for-profit and nonprofit Texas country clubs?
Yes. The letter said for-profit club charges had been taxable since October 2, 1984, and nonprofit club charges became taxable October 1, 1991, whether or not separately stated.
Was demolition inside an existing commercial building excluded from tax when a contractor rebuilt the space for a new tenant?
No. Because the project stayed within the existing structure, it was taxable remodeling and the entire charge, including demolition, was taxable. Demolition could be excluded only if the old structure…
Did a September 1991 purchase order preserve an exemption for packaging supplies delivered after the Texas law changed?
No. Because the 1991 legislation included no prior-contract protection, packaging supplies sold on or after October 1, 1991, to nonmanufacturers and nonprocessors were taxable despite the earlier purc…
Are single-use artificial kidneys used in dialysis exempt from New York sales tax?
Yes — with the usual carve-out. Sales of artificial kidneys (the single-use dialyzers used in hemodialysis) are exempt from New York sales and use tax as medical equipment and supplies under Tax Law §…
When a service provider bills a customer for travel, hotel, meals, and other expenses, are those reimbursements part of the taxable charge?
Yes — the reimbursed expenses are taxable. When Helmel Engineering bills a customer for installing or servicing machinery and adds its employees' mileage, hotel, auto rental, and meal expenses (plus a…
Must an out-of-state supplier collect New York tax on goods it drop-ships to a New York fabricator for a customer in a third state?
Yes — collect the tax, but a refund route exists. When Teddy & Arthur Edelman (a Connecticut leather supplier) sells leather to an out-of-state customer (e.g., in California) but ships it to a New Yor…
If a payroll-tax-filing service pools client funds meant for the IRS and state/local tax authorities and invests them before the taxes are due, is the investment income taxable New York investment income or ordinary business income?
Mostly yes, it can be investment capital -- with one carve-out. Corporation A ran a payroll and tax-filing service, collecting client funds ahead of payroll-tax due dates and investing the pooled bala…
Were separately stated travel time and trip expenses for piano repair and maintenance taxable in Texas?
Yes. The Comptroller said transportation and other expenses connected with taxable repair or maintenance services were taxable, so tax had to be collected on the travel-time and expense charges.
Were charges to install and remove rented telephone wire and radio equipment at drilling rigs taxable in Texas?
Yes. Wire setup and removal were taxable labor connected with a rental, and radio installation and removal were taxable as part of the telecommunications service provided with the equipment and freque…
Was a police officer's reimbursement to a Texas city for a third badge and carrier subject to sales tax?
Yes. The city could buy all three badges and carriers tax free, but the officer's reimbursement for the third set was a taxable sale by the city to an individual.
Could a Texas seller accept a California permit number on an out-of-state distributor's resale certificate for Texas drop shipments?
Yes, in good faith, if the buyer was a bona fide out-of-state retailer buying for resale and had no Texas permit. If it was engaged in business in Texas, it instead needed a Texas permit and had to co…
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