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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My client (a tenant under a nearly-49-year lease) is negotiating a lease amendment with two parts: one clause simply clarifies the tenant's existing right of first refusal if the landlord decides to sell, and a second clause forces the landlord to offer the tenant the property once a large enough third-party cash offer comes in, even if the landlord doesn't want to sell. Does either part of this amendment turn the lease into a taxable 'transfer of real property' under New York's Real Property Transfer Gains Tax?
The two clauses get opposite answers -- the ordinary right-of-first-refusal clause isn't a taxable transfer, but the clause forcing the landlord to offer the tenant the property once a qualifying thir…
Was a bookseller's separately labeled postage-and-handling charge subject to Texas sales tax?
Yes. Texas said the seller properly taxed the full bill, including the P&H charge, because the narrow third-party U.S. postage exclusion did not apply.
Which vehicle services were taxable: inspections, insurance-purpose appraisals, other appraisals, breakdown coverage, or roadside repairs?
Separately stated inspections and noninsurance appraisals were not taxable; insurance-purpose appraisals were taxable. Repair parts were taxable, but repair labor was not.
Could airlines buying Texas debt-collection services claim multistate-purchaser treatment with exemption certificates?
Yes, but the airlines had to issue exemption certificates and accrue the proper Texas tax; the provider's requested refunds required verification first.
Was the 1991 federal automobile luxury tax included in Texas's motor vehicle sales tax base?
No, if the retailer separately stated and identified the federal tax to the customer. The letter also said long-term lease payments were not subject to motor vehicle sales tax, the lessor's vehicle pu…
How did Texas tax laundromat vending sales, coin-operated washers and dryers, drop-off laundry, and vending commissions?
Accessible vending sales and drop-off laundry were taxable; coin-operated washer/dryer receipts and commissions from inaccessible machines were not.
What conditions did SC Revenue Ruling 91-5 require for a civic or fraternal organization's event to qualify for the admissions-tax exemption?
The exemption required seven event-specific conditions: exclusive sponsorship and operation by a qualifying nonprofit civic or fraternal organization; donation of net proceeds to an exclusively charit…
For an oil field tool rental company, which of its many charges to customers — tool rental, sub-rentals, sales, repairs, freight, supervisor time, mileage, and inspections — are subject to Utah sales tax?
Almost everything is taxable, with two narrow exceptions. Tool rentals (including sub-rentals) are always taxable, and sales are taxable unless they qualify as an exempt interstate sale or a sale to a…
How did Texas source state and local sales tax for conference-calling services and long-distance calling-card calls?
Texas taxed conference bridging performed in Texas regardless of billing address. Calling-card tax depended on actual call origin, destination, and Texas billing or service facts.
Could a utility credit an electricity sales-tax refund to the customer's account instead of paying the refund directly?
Yes, but only with the customer's written consent to apply the sales-tax refund as an account credit rather than issue a refund.
When does a required or suggested donation become a taxable sale or admission charge in Texas?
A mandatory payment normally became taxable when the value received was commensurate with it, although an exemption could still apply to the transaction.
Did assigning a computer purchase to a leasing company remove the customer's Texas sales-tax liability if the customer had already used the computer?
No. If the customer used the computer before assigning the purchase order to the leasing company, the customer owed tax on the computer purchase.
Was the sale of a blood autotransfuser to a Texas hospital taxable when the hospital used it in patient care?
Yes. The hospital was the consumer of taxable patient-care items, so the equipment sale was taxable unless the hospital supplied a valid exemption certificate.
Could a registered engineer's signature and seal replace the purchaser's signature on a predominant-use utility exemption certificate?
No. The engineer certified the study, but the purchaser still had to sign. An agent could sign with specific power of attorney, subject to the utility's acceptance.
Is a New York corporation that was dissolved by proclamation in 1926 -- before the law that would have taxed it for holding property -- still liable for franchise tax or subject to a tax lien on real estate it still holds title to?
No, and yes to the lien release. 20th Century Realty Company was dissolved by Proclamation of the Secretary of State on March 13, 1926 -- 47 days before an April 29, 1926 amendment to former Tax Law s…
Metro-North Commuter Railroad operates commuter trains in both New York and Connecticut and employs workers - on trains, in offices, and along its right-of-way - who perform duties in both states. How does section 7 of the Amtrak Reauthorization and Improvement Act of 1990, which bars a state other than an employee's residence state from taxing a rail employee's compensation if the employee performs 'regularly assigned duties... on a railroad in more than one State,' apply to Metro-North's four categories of employees, and what does 'regularly assigned' mean?
It depends on whether the employee's multi-state work is systematic or random. A New York nonresident employee whose job description requires performing duties in New York and Connecticut on a systema…
Is a toll-free 800 'call before you dig' message-relay answering service subject to New York sales tax?
Not taxable, on these facts. One Call Systems runs a toll-free 800 line that lets contractors, utilities, and the public report their intent to disturb the earth; the message is relayed to member util…
Are membership fees for a dating referral service, where members browse a library of other members' profiles, taxable as an information service?
Yes. People Resources runs a singles service where each member writes a biography and provides photos and a video, and all of that is placed in a library — separated by men, women and sexual preferenc…
Was upholstery labor included in the taxable sales price when a company bought chair frames, hired another company to upholster them, and sold completed chairs?
Yes. Texas said tax applied to the completed chair's full sales price, including upholstery labor whether or not separately stated; resale certificates could cover inputs.
Did Texas treat apartment and nursing-home common areas as residential real property, and was new-construction labor taxable?
Yes, the listed properties and their common-area improvements were residential. Separately stated materials were taxable, but new-construction labor was not.
Did the occasional-sale exemption cover a Texas manufacturer selling an aircraft used for employee transportation and charter activity?
No. Texas said the aircraft was a general-business-purpose asset, and the manufacturer was not selling the business's entire operating assets.
When could restaurants sell meals tax-free to government employees or religious, charitable, and educational organizations?
Only when the exempt entity or its authorized agent made and directly paid for a qualifying purchase with valid documentation. Official travel alone did not exempt an employee's meal.
What documentation did a natural-gas seller need for predominant-use exemptions or gas delivered through a Texas pipeline interconnect for out-of-state use?
The seller needed valid exemption documents or collected tax. For out-of-state transport, pipeline contracts or invoices naming the foreign delivery point could prove export.
Could corporations transfer business assets into a new partnership, or sell an undivided interest for cash, without Texas sales tax?
Potentially. No-consideration contributions were not sales, and joint-ownership transfers could be exempt if prior tax and bona fide-contract conditions were met.
Did transferring land to a contractor count as payment, and did the customer owe sales tax on a lump-sum geodesic-dome construction contract?
The land was consideration equal to the credit received, but the customer owed no tax on the lump-sum new-construction contract; the contractor owed tax on materials.
Did a Texas outdoor-play company have to collect sales tax when it sold vouchers that could later be exchanged for assigned-seat tickets?
No. The vouchers were not admission documents, so tax was collected only when customers exchanged them for actual play tickets.
Was a monthly apartment-locator package taxable when it included updated pricing information, a computer, laser disc, and software?
Yes. Texas taxed the full monthly charge as an information service and allowed the provider to buy customer-controlled equipment and software for resale.
Which charges in a Texas modeling package were taxable when it included photo preparation, a session, a portfolio, and directory placement?
The preparation, photo session, and portfolio package were taxable in full. A separately stated charge for directory placement was not taxable.
Did a January 1990 contract avoid later Texas state and Amarillo sales-tax increases when it passed present and future taxes to the customer?
No. The contract's tax pass-through clause made the customer responsible for present and future taxes, so the prior-contract exemption did not apply.
When a Texas vendor rebuilds a customer's motor-vehicle part and returns that same part, is the full charge taxable?
No. Returning the same rebuilt part to the same customer was a repair: labor was not taxable, while materials followed separated- or lump-sum-contract rules.
We entered a purchase-and-assumption agreement with the Resolution Trust Corporation, acting as receiver for a failed savings bank, giving us options to acquire the failed bank's leased and owned New York real estate. Since the RTC is a federal agency handling a bank failure, are its transfers of that real estate to us exempt from New York's Real Property Transfer Gains Tax?
Yes, exempt -- because the Resolution Trust Corporation is a federal agency and instrumentality of the United States, any transfer of real property interests it makes as receiver is exempt from New Yo…
Were connection, PBX-capacity, repair, and building-wiring jobs performed for a Texas telecommunications provider taxable?
Yes. All listed functions were taxable, but resold connection service could be covered by a resale certificate; PBX and building work could not.
How did Texas apply sales tax to lump-sum and separated contracts for drilling and equipping a new water or irrigation well?
For lump-sum work, the contractor paid tax on inputs and charged no tax to the customer; separated contracts taxed materials but not labor, subject to exemption.
Which computer peripheral components qualify for Nebraska's LB 775 personal property tax exemption under the amended, post-1989 rule?
Only six specifically listed components, and only if climate-controlled. Under Revenue Ruling 29-91-2 — which applies the amended definition in Neb. Rev. Stat. § 77-4105(2)(b), R.S.Supp. 1988 — only t…
Which computer peripheral components qualify for Nebraska's LB 775 personal property tax exemption under the older, pre-1989 rule?
They must directly communicate with the mainframe business computer. Under Revenue Ruling 29-91-1 — which applies the older statutory definition (Neb. Rev. Stat. § 77-4105(2)(b), R.S.Supp. 1987, exemp…
Is a proposed New York investment subsidiary of Chase Manhattan Corporation -- organized under the federal Bank Holding Company Act's section 4(c)(7) to invest in equity and debt securities for its own account -- taxed as a banking corporation under Article 32, or under the general Article 9-A franchise tax?
It depends on facts determined at year end, not on how the subsidiary is organized. Chase Manhattan Corporation ('CMC') proposed to form a New York investment company (the 'Company'), organized under …
Does a tax-exempt nonprofit have to collect sales tax on items sold at its annual charity auction held at a commercial auction house?
No. A New York not-for-profit corporation with an Exempt Organization Certificate wanted to run a charity auction of donated property to raise funds, held either at a public school or a commercial auc…
When a company buys taxable information reports delivered to offices both inside and outside New York, how much sales tax applies?
Only the New York-delivered portion is taxed, allocated by where delivery occurs. Revlon, Inc. buys taxable information-service reports (research and marketing) delivered to its offices across the U.S…
Are tickets to a dinner-theater performance taxable as cabaret charges, or exempt because the food was merely incidental to the show?
Taxable. Tamara NY, NY Limited Partnership staged the live play 'Tamara' at the New York Armory, where audience members were treated as guests and served a lavish banquet — a Le Cirque buffet designed…
Are cranes and equipment a contractor buys to install a gas pipeline and electric distribution grid for a utility exempt from New York sales tax as production machinery?
No. Bancker Construction Corp. bought heavy cranes to help install a gas pipeline and an electrical distribution grid for Long Island Lighting Company (LILCO). It asked whether that equipment qualifie…
Were the seller's various post-surgical support garments exempt from Texas sales tax as braces?
Yes. After examining the submitted product information, Texas said every listed support garment met Rule 3.284's definition of a brace and qualified for exemption.
Could a lessor title vehicles tax-free when leasing them to a qualifying rural electric cooperative?
Yes. The 1991 letter treated qualifying rural electric cooperatives as exempt organizations and allowed vehicles leased to them to be titled in the lessor's name tax-free. Unless the vehicle was sold,…
Did a separately stated federal luxury tax on taxable jewelry or fur become part of the amount subject to Texas sales tax?
No. Texas said the federal luxury tax was excluded from the taxable sales price when separately stated and identified on the customer invoice.
Are industrial gasses like oxygen, acetylene, argon, nitrogen, and carbon dioxide exempt from Utah sales and use tax when used in a manufacturing process?
It depends on which gas. Oxygen and acetylene qualify as exempt "fuel" gasses under Utah's manufacturing fuel exemption (then Rule R865-19-35S) and are not taxed when used in a manufacturing process —…
Could an exempt university buy telephone lines for fire-safety hookups in university-owned fraternity houses without paying sales tax?
Yes. Texas said the exempt university could give the telephone company an exemption certificate instead of paying tax on the fire-safety telephone lines.
Were recurring Texas rental charges for returnable gas cylinders taxable when the cylinders were supplied with gas?
No. The later cylinder-rental charges were not taxable, but the gas charge was taxable unless the customer bought the contents for resale.
Were private telecommunications circuits used to control petroleum pipeline pumping stations exempt from Texas sales tax?
No. Texas said pipeline-control telecommunications were taxable, except that long-distance communications originating outside Texas were exempt.
Could a commercial tenant claim a Texas electricity exemption or refund when its landlord bought the utility and billed reimbursement under the lease?
No. Texas treated the landlord as using the utility commercially in leasing property, not reselling electricity to the tenant.
Was physician-prescribed or physician-dispensed methadone exempt, and how were dispensing bottles and prior tax payments treated?
Methadone was exempt when prescribed or dispensed by a physician. Prescription containers sold with it were exempt, while bottles used for drugs not sold were taxable.
Were mini Dopplers exempt therapeutic appliances, or taxable diagnostic devices?
They were taxable diagnostic devices. Texas expressly corrected its December 1990 letter, which had wrongly treated mini Dopplers as exempt therapeutic appliances.
Was a checkout surcharge used to recover junk-automobile waste-handling costs subject to Texas sales tax?
The surcharge followed the item sold: it was taxable on a taxable sale, but not taxable when the underlying sale was exempt as a resale.
Does the sales tax exemption for manufacturing equipment used in new or expanding operations cover high-speed duplicating/photocopy machines at a printing company's satellite locations that have no printing press?
No — not automatically. The Commission applies the manufacturing equipment exemption on a per-location ('establishment') basis. A printing company's central plant, which houses actual offset printing …
Did a high-volume diskette duplicating machine used to copy computer programs qualify for Texas's 1991 manufacturing-equipment refund?
Yes. Because the machine manufactured computer programs sold as tangible personal property, it qualified for the 25% refund available for tax paid on the 1990 purchase.
Were remote-terminal services taxable data processing when the provider's main computer processed client data but output printed at the client's site?
Yes. Both arrangements were taxable data processing, and the Comptroller said their total charges were taxable even though reports printed at the client's site.
Did using 45 titled trailers as collateral for a loan trigger Texas motor vehicle tax?
No. The company borrowed about $125,000 on a three-year payment plan and pledged 45 trailers, but title remained in the company's name. Because the vehicles merely secured a loan and title did not cha…
Did paint and coatings used against corrosion qualify for Texas's manufacturing refund or phase-in exemption?
They qualified on processing machinery or as legally required pollution control, but not on nonqualifying piping or equipment; application labor did not qualify.
Were historical books exempt when a nonprofit society distributed books published by others, and how did Texas tax work on registered historic buildings?
The books were taxable because the society had not both published and distributed them; specified historic-building labor was exempt, but materials were taxable.
How did Texas tax lump-sum vehicle repairs, separated repairs, vehicle remodeling, and work on movable specialized equipment?
Lump-sum vehicle repairs were not taxed to the customer, separated repairs taxed incorporated parts, and all vehicle-remodeling or specialized-equipment charges were taxable.
Are materials and rented tools a tenant's contractors use to build out leased space at 7 World Trade Center exempt from New York sales and use tax?
Partly. Insurance Services Office, Inc. leased space at 7 World Trade Center and asked whether its contractors' purchases were exempt. Because legal title to the building's construction, improvements …
When performers set and collect their own cover charges at a tavern's door, must the tavern collect sales tax on those cover charges?
The cover charges are taxable, but on these facts the performers — not the tavern — must collect the tax. 89 Cragg Road Inc. (DBA Island Cottage) runs a Rochester tavern and lets performers entertain …
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