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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Is each fund of a multi-fund regulated investment company (mutual fund) a separate corporation for Connecticut corporation business tax?
Each fund is treated as a separate corporation. A multi-fund regulated investment company (a RIC -- essentially a mutual fund with several 'series' funds) asked how Connecticut's corporation business …
Is delivering video programming to consumers by microwave or satellite a 'community antenna television service' subject to Connecticut sales tax?
Yes -- it is a 'community antenna television' (CATV) service. A company delivered video programming directly to consumers by microwave or satellite, with customers using descrambling equipment. DRS ru…
Is deeding land from co-tenants to their newly formed partnership a taxable contribution of partnership assets under Connecticut's conveyance tax?
Taxable. Three people held two parcels as tenants-in-common since 1983 and filed partnership tax returns, but didn't sign a formal partnership agreement until 1990 -- and that agreement described thei…
Does incorporating a farm void the individual farmer's tax exemption permit, and can the new corporation use the farmer's sales history to qualify?
Two traps. A farmer with a Connecticut Farmer Tax Exemption Permit planned to transfer his farm to a newly formed corporation in exchange for its stock. DRS ruled: (1) the transfer makes the farmer's …
Were marine mechanical-breakdown policies taxable when sold for pleasure boats, and did the answer change for large vessels used exclusively in commerce?
The policies were taxable when sold for sport-fishing or other pleasure vessels. They were not taxable for vessels of at least eight tons fresh-water displacement used exclusively for commercial purpo…
Did contract language immediately vesting title in the United States make overhead materials used by a federal service contractor tax-free purchases for resale?
No. Texas treated overhead materials used or consumed by the service provider as taxable to the provider despite contract language vesting title in the federal government. Resale required both title a…
Was a map-based flood-zone certification service for mortgage lenders taxable when it involved no on-site survey and was insufficient to rate flood insurance?
No. The service was neither surveying nor insurance on the stated facts, so the provider did not collect tax. It did owe tax on the certificates and other materials used to perform the service, includ…
Was an hourly service that searched for scholarships, grants, student loans, and other financial aid taxable, and which inputs could be bought for resale?
Yes. Texas treated the educational consultant's search as a taxable information service. The consultant paid tax on consumed supplies but could buy transferred property and the search database for res…
Could a hotel manager make tax-free purchases for Resolution Trust Corporation property by showing vendors only the RTC's general tax-exemption form letter?
No. The RTC form letter alone was insufficient. The manager needed proof that title to the hotel transferred to the RTC and a written agreement appointing the manager as RTC's purchasing agent before …
Are medical billing, payment processing, collection, and customer-service functions subject to New York sales tax?
No. Datamedic Corp. provides medical practices with billing, insurance-claim/payment processing, collection, and patient customer-service functions (coding claims, submitting them to carriers, posting…
Is an on-line financial news service an exempt newspaper/periodical, or a taxable information service, and is the delivery equipment taxable?
Taxable information service, not an exempt newspaper or periodical. Market News Service's 24-hour on-line international financial news is delivered as an electronic readout/display on a screen, not in…
Is a banquet gratuity charge subject to sales tax when the operator keeps part of it instead of paying the entire gratuity to the banquet employees?
Yes — the entire gratuity charge is taxable. A separately stated, gratuity-designated charge escapes sales tax only if ALL three conditions in 20 NYCRR § 527.8(l) are met, and the third is that all of…
On an automobile lease with a purchase option, is sales tax due on the down payment, and who is responsible for collecting the tax on the full lease price?
For this pre-June-1, 1990 automobile lease with a purchase option, sales tax was due on the FULL lease price and had to be collected on each payment made under the lease — and the lessor/vendor (the l…
Was a computerized service that called patients or clients to remind them of appointments taxable when it sent customers only a list confirming completed calls?
Yes. Texas taxed the entire appointment-reminder charge as a telecommunications service. Printed call lists transferred to customers could be bought for resale, while other supplies and equipment rema…
Did a natural-gas marketer have to collect Texas tax when pipeline title and possession passed outside Texas, and what changed when both passed in Texas?
No collection was required when both title and possession passed outside Texas; any later Texas use-tax duty belonged to the customer. When title and possession passed in Texas, the marketer had to co…
Did an out-of-state software company create Texas tax obligations by sending employees into Texas for customer training, and which software charges were taxable?
Yes. Employee training visits made the company engaged in business in Texas, requiring a permit and use-tax collection. Software, installation, and support were taxable; separately stated training was…
How did Texas tax software delivery, installation, support, programming, and hardware sales when bank customers were located inside or outside Texas?
Texas taxed software and hardware delivered in Texas, installation of the seller's software, and support for Texas customers. Direct out-of-state delivery was not taxed. Contract programming was nonta…
Could a food-service subsidiary buy disposable meal-service items tax-free when it transferred them with taxable prepared meals to its carrier parent?
Yes. The subsidiary was a separate food-service retailer and could use a resale or exemption certificate for nonreusable items transferred with taxable meals. The vendor could refund tax within the fo…
How should a Texas printer tax one invoice covering signs delivered to stores in both Texas and New Mexico, and what records were required for a refund?
Only signs delivered in Texas were taxable, but a lump-sum mixed-state invoice was presumed fully taxable. The printer had to separately state Texas and out-of-state charges and retain shipping record…
When did live operator answering services become taxable in Texas, and were automated answering and voicemail services already taxable?
Live operator answering services were nontaxable when the letter was issued but became taxable October 1, 1991. Automated answering and voicemail were already taxable telecommunications services and r…
Who owed Texas vehicle tax when a financing seller understated the sale price on the county tax receipt?
The seller remained responsible. Documents showed a $5,950 sale and $458.80 collected for tax, title, and license, but only a $595 price and $35.70 tax were reported. Repossession did not remove the s…
Were customer charges for drug testing and drug screening services subject to Texas sales tax?
No. The Comptroller concluded that performing drug tests and drug screening was not a service subject to Texas sales tax on the facts presented.
How did the 1991 guidance say contractors and subcontractors should document separated material and service charges for exempt-entity work?
Contractors needed permits and resale certificates. A subcontractor qualified for exemption when material costs were separated from service costs; the contractor issued a resale certificate to the sub…
Could a waste hauler buy roll-off boxes for resale, and was its total charge for placing, picking up, dumping, and returning the boxes taxable?
Yes to both. The company could buy the roll-off boxes tax-free with a resale certificate and seek a vendor refund for six previously taxed boxes. Its entire customer charge for collecting and removing…
Is equipment installed at an IDA-financed facility exempt from sales/use tax when purchased as the IDA's agent with title passing to the IDA?
Exempt — but only if two conditions hold. American Linen installed a Memtek wastewater treatment system as replacement equipment at a Buffalo plant financed under a 1978 industrial revenue bond lease …
Could a Texas provider of a nontaxable service add a 'Texas Price Adjustment' to recover sales tax paid on consumed items?
Yes. The Comptroller said the adjustment did not violate Rule 3.324(b)(4) because it recovered the provider's own tax cost without representing the amount as sales tax imposed on the customer.
How did Texas's 1991 motor-vehicle-repair change treat separately stated consumable supplies and lump-sum repairs?
A repair shop separately stating parts and labor could buy qualifying consumable repair materials tax-free for resale and collect sales tax on the itemized customer charge. A lump-sum repairer instead…
Were services performed under insurance policies for unauthorized or surplus-lines insurers taxable Texas insurance services?
Yes, when performed in Texas for an insurer doing insurance business in Texas. The Comptroller treated unauthorized insurers engaged in insurance as insurance carriers and required the provider to pre…
Is a fireworks-display contract taxable, and is selling fireworks outright to an exempt organization that runs its own display taxable?
It depends on which of two arrangements is used. (1) When Auburn Fireworks contracts to PUT ON a fireworks display — providing the pyrotechnics, crew, and insurance — the customer never takes title or…
Was writing 'Paid by cash' on a customs-broker export certificate and obtaining the customer's signature enough to document a Texas sales-tax refund?
No. The receipt also had to state the cash amount, identify it as a tax refund for specifically exported items, show the refund date, and include the purchaser's name, address, and signature.
Were full-time peace officers acting as independent contractors required to collect Texas sales tax on guard services?
No. The Comptroller said their guard-service charges were not taxable because the statutory security-service definition covered services requiring a license, and full-time peace officers did not need …
Were translation services taxable, and did the tax treatment of a hired typist depend on whether the typist used a word processor or a typewriter?
The described translation services were not taxable. A hired typist's charge was taxable data processing when a word processor was used, but ordinary typing performed with a typewriter was not taxable…
Was a separately stated fuel charge taxable when machinery was supplied with a service, with an operator, or as a bare rental?
It depended on the arrangement. Fuel was taxable as part of a taxable service and as part of an equipment rental with an operator, but a separately stated fuel charge was not taxable when the equipmen…
Did vehicles received instead of foreclosure qualify for Texas's sale-for-resale exemption when they would be used before resale?
No. A vehicle titled for resale could not be driven, and the requester planned to use the vehicles while holding them, so the resale exemption did not apply. The letter said no other exemption covered…
Our cooperative housing corporation ended up owning back its own unsold shares (for 8 vacant and 22 occupied units) after a messy chain of foreclosures and a bank settlement, paying the bank $1,215,000 for the first mortgage, second mortgage, and all the unsold shares combined. When we eventually resell those unsold units, is that subject to New York's Real Property Transfer Gains Tax, and what's our original purchase price?
Yes, future sales of the unsold cooperative shares will be subject to the gains tax if their combined consideration reaches $1 million, and the cooperative corporation's original purchase price for th…
Was a separately stated charge for a technical specialist's future installation advice taxable with the sale of an oil-well packer?
Yes. The specialist's advice was requested with the packer and accompanied its sale, so Texas treated the service as part of the taxable sale even though it was separately stated and performed after t…
Which parts of a credit consultant's work were taxable debt collection, and which were nontaxable consulting services?
Work on actual past-due accounts was taxable debt collection, while general credit procedures, staff training, and advice unrelated to specific delinquent accounts were nontaxable unrelated services. …
Was a boat broker's commission subject to Texas sales tax when the principal's boat sale qualified as an occasional sale?
No. If the business acted as a disclosed broker and the principal was not a seller and qualified for occasional-sale treatment, the boat sale was not taxable and the broker's commission was not subjec…
Could an exempt nonprofit homeowners association buy member services tax-free and recover sales tax it had paid in error?
Yes. The association could issue exemption certificates for purchases related to its exempt function when it did not separately charge members, and it could request supplier refunds for tax paid in er…
Which seller-financed mortgage-servicing activities were taxable in Texas when billed through setup and monthly service fees?
Coupon books, delinquency notices, and computer-produced account or IRS reports were taxable; document storage, payment verification and remittance, and recording a lien release were not. A lump-sum f…
Were sales of microbial odor neutralizers for municipal, industrial, and agricultural wastewater uses subject to Texas sales tax?
Generally yes. The seller had to collect tax unless the customer supplied a valid resale or exemption certificate; cities and utility districts could qualify for exempt-function purchases, some manufa…
Were charges for balancing and changing the stroke of an oilfield pumping unit subject to Texas sales tax?
Yes. Texas treated an oilfield pumping unit as tangible personal property and classified balancing and bore-stroke modification as taxable remodeling, making the entire charge taxable.
Are ophthalmic (eye) surgical suture materials exempt from New York sales tax as prosthetic aids or as drugs/medical supplies?
Exempt as medical supplies under Tax Law § 1115(a)(3), not as prosthetic aids under § 1115(a)(4). Alcon's ophthalmic sutures (silk, dacron/nylon, polypropylene, polyester) are used to close surgical e…
Is a company that copies and sells certified hospital medical records selling taxable tangible personal property or an exempt service?
Taxable. A company copied certified hospital medical records and sold the copies to attorneys, insurers, peer-review organizations, government agencies, and individuals. DRS ruled this is a taxable SA…
Was an extended warranty for repairs to a residential heating and air-conditioning system subject to Texas sales tax?
No. Texas said the residential real-property repair warranty and repair labor were not taxable, while the warrantor or third-party repairer owed tax on the applicable parts, supplies, materials, and e…
Was an approximately $50 fee to use a Galveston bungee-jump concession subject to Texas sales tax?
Yes. The Comptroller treated the per-jump charge as a taxable admission to an amusement service, comparable to taxable admission fees for a golf course or tennis court.
Were an investigator's unarmed process-serving and document-delivery charges taxable Texas security services?
No. The Comptroller treated unarmed service of subpoenas and legal notices and unarmed document delivery as nontaxable unrelated services because the work did not require a private-investigator or sec…
Could a Texas rental or leasing company use vehicles retired more than 18 months earlier for the fair-market-value deduction?
No. The agency applied an 18-month policy requiring the retired vehicle to be offered for sale and claimed against a replacement purchase within 18 months. The appended internal memo acknowledged that…
Were the Texas Workers' Compensation Commission's charges for medical fee guidelines, blank forms, rules, and agenda packets subject to sales tax?
No. The Comptroller treated those governmental publications and documents as exempt. STAR now warns that the cited Rule 3.341 was repealed in 2008 and its content moved to Rule 3.322(h)(5) in 2011.
How did Texas tax telecopy, telex, translation, and person-delivered voice-message services between Texas and the Soviet Union?
Translation and person-delivered message charges were not taxable. Long-distance telecopy and telex charges were taxable only when the service originated in Texas and was billed to a Texas telephone n…
If the Tax Department issues a tax levy against 'Mr. X individually and as an officer of ABC, Inc.' for the corporation's unpaid taxes, can the bank apply the levy against the corporation's own bank account, or only against Mr. X's personal account?
Only the individual's account. ABC, Inc. failed to pay sales taxes it owed, so the Commissioner issued a tax warrant and then a tax levy naming 'Mr. X individually and as an officer of ABC, Inc.' and …
Were customer damage repairs, equipment inspections, and freight charges connected with sold or rented equipment taxable in Texas?
Repair services and parts billed to a customer for damaged rental equipment were taxable; inspection-only charges were not. Freight on equipment sold or rented to customers was taxable whether provide…
Was a charge for underground-storage-tank vapor analysis and a confidential leak-detection report subject to Texas sales tax?
No. The report and sample-analysis charge was not taxable, but the provider had to pay sales tax on the tubes, equipment, and other tangible property used to perform the service.
Could an elevator maintenance contract tax only the percentage allocated to repairs and exclude scheduled maintenance and inspection?
Yes. Texas accepted a 72% nontaxable maintenance-and-inspection and 28% taxable repair allocation if credible job-history evidence supported it and both contracting parties agreed, with state and loca…
Was a $25 introductory airplane flight taxable as instruction or as an amusement service?
It depended on the flight. A documented flight conducted as part of an FAA Part 61 or Part 141 instruction course was not taxable; a noninstructional sightseeing or enjoyment flight returning the ride…
Are on-line financial news services delivered to subscribers on computer screens exempt newspapers or periodicals, or a taxable information service?
Taxable information service, not an exempt newspaper or periodical. The petitioner's client published four on-line financial newsletters delivered to subscribers as text on computer screens (via Teler…
Was leasing a permanently affixed above-ground storage tank larger than 500 barrels subject to Texas sales tax?
Generally no, because Texas treated it as real property. But the lease was taxable if its terms made clear that the tank remained tangible personal property, regardless of size.
For a railroad's charter excursions, is the transportation taxable, who pays tax on bundled event tickets, and what local rate applies to souvenirs and food sold on a moving train?
The Department answered three questions for a railroad running charter excursion trains. (1) Charter excursion fares — including tickets bundling rail transportation with admission to events like spor…
How did Texas tax towable dollies, jeeps, stingers, auxiliary axles, and converter gears beginning September 1, 1991?
Texas moved these items into the trailer and semitrailer definitions. In-state purchases and rentals became subject to motor vehicle tax, while units used interstate by interstate motor carriers becam…
Could an exempt religious college buy basic local telephone service for student rooms tax-free when included in room and board?
No. The service did not relate to the college's exempt purpose. The college could pay tax and include it in room rent, or buy for resale, separately charge students, and collect tax.
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