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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Must a casualty insurer make the section 1503(b)(11) one-third add-back to Article 33 entire net income for the IRC section 847 deduction, when it already eliminated that deduction from its 1988-1992 New York entire net income?
No. The section 1503(b)(11) one-third add-back exists to uncouple Article 33 from the IRC section 847 special deduction that an insurer claimed federally in tax years 1988 through 1992. These…
Could a plumbing contractor buy boilers and compressors for resale when it furnished and installed them at federal facilities?
No, when they became building accessories. They were fixtures, and a United States construction contractor consumed them rather than selling them tax-exempt to the government.
Was a dual determination properly mailed to an officer's old residence when only the corporation's business mailing address had been changed?
Yes. Staff said the residence remained the officer's address in Board records because changing the business address did not automatically change the officer's personal address.
If a ready-mix concrete company buys a mixer drum and a truck chassis, does it owe motor vehicle tax or sales tax, and does invoicing them separately make the drum exempt?
It depends on the transaction, not the invoice. If the customer buys a complete concrete truck with the mixer drum already attached, the whole thing is treated as the sale of a motor vehicle, even…
Does the Texas manufacturing exemption cover communication headgear/headsets that machinery operators wear because the plant equipment is too loud to hear over?
No. The Comptroller's office told this taxpayer that communication headgear worn by machinery operators, even though it's necessary because the machinery is too loud to allow normal communication…
When a combined report is filed, is the 'principally engaged in the business of lending funds' test (for whether a corporate debt instrument is investment capital) applied to the individual lending member or to the combined group?
Per individual member. The exclusion that keeps a debt instrument out of investment capital (when the holder is principally engaged in lending funds and the obligor received those funds) turns on…
Are culverts or drain pipes used on a farm or ranch exempt from Texas sales tax, and does it matter whether they're part of an irrigation system, a drainage system, or a road?
It depends on what the culverts or drain pipes become part of. Culverts or drain pipes (metal, clay, or other material) are exempt when they're installed as components of an underground irrigation…
Which out-of-state gross receipts, business and occupation, and city/county business taxes have to be added back to income when computing Utah corporate franchise tax?
Of seven different out-of-state and local taxes a multistate company asked about, only one had to be added back to income for Utah corporate franchise tax purposes. Utah Code § 59-7-105(2)(b)…
Was a chef hired by wineries an employee, or a caterer whose meal-service charges were taxable?
He was an independent-contractor caterer, so meal-service charges were taxable. Separately stated train maintenance was not, and interstate catering required allocation.
Could California garnish a nondebtor spouse's earnings despite a premarital agreement making each spouse's property separate?
No. Staff said the agreement preceded the tax debt, transferred no property the taxpayer owned, and left the spouse's earnings outside the taxpayer's ownership.
Which data-entry, personalized-notice, mailing, and media-conversion charges were taxable?
Remote-only data delivery was not taxable, but data entry on tangible media or a customer's computer, personalized notices, and physical media conversion were taxable.
An insurance company sold a shopping mall it held in a separate investment account for 190 pension plan clients -- some private (covered by ERISA) and some government pension plans (not covered by ERISA). Is New York's Real Property Transfer Gains Tax on the sale preempted by federal ERISA law for any of these clients' shares of the gain?
Split by investor type. Prudential Insurance Company of America sold the Smith Haven Mall through PRISA, a separate investment account holding real estate on behalf of 190 pension-plan contract…
Could a Florida patent-licensing corporation apportion royalty income outside Florida when it had not shown that another state actually taxed it or had jurisdiction to do so?
No. The corporation filed only in Florida and provided no ruling or other evidence that another state taxed it or had jurisdiction to impose a qualifying tax. It therefore was not shown to be doing…
The rule that my on-reservation federal contract work is taxable came out after I did the work — can it really be applied to those earlier years?
Yes — the court decision applies retroactively, so the earlier work is taxable. Compliance Technology, an asbestos-abatement consultant, was assessed gross receipts tax on $17,290.27 it received as…
Is a video photographer's videotaping of depositions, testimony, and court proceedings exempt from Texas sales tax?
Starting October 1, 1995, yes — when the video (or audio) taping of depositions, testimony, or other court records is sold to a party participating in the lawsuit (such as a plaintiff, defendant, or…
When a New York resident becomes a nonresident partway through the year and later receives a year-end bonus based on her whole year's performance, is any part of that bonus taxed as resident-period income, and how much of it counts as New York-source income?
None of the bonus accrues to the resident period (January 1 through February 28, 1990), because its existence and amount weren't fixed with reasonable accuracy until the company determined it at…
How did RP 95-4 require a multistate taxpayer to request a fairer South Carolina income allocation or apportionment method?
The taxpayer filed a separate written application explaining why the statutory method did not fairly represent South Carolina activity, proposed a reasonable alternative, supplied supporting…
Are direct-to-home (DTH) satellite television subscription services subject to Utah sales tax as a taxable 'telephone service'?
No -- direct-to-home satellite television service is NOT subject to Utah sales tax. Utah taxes intrastate 'telephone service' under § 59-12-103(1)(b)(ii), and the administrative rule defining that…
Could California extend a pre-bankruptcy tax lien after the underlying tax was discharged?
Only as to qualifying pre-petition property the taxpayer still owned. Staff said the lien survived there but could not reach after-acquired property after discharge.
Is VasoSeal, a medical device used to stop bleeding from arterial punctures after procedures like coronary angiography and angioplasty, exempt from Texas sales tax?
No. The Texas Comptroller's office ruled that VasoSeal does not qualify for a sales tax exemption because it doesn't meet the definition of an exempt item such as a drug/medicine or a prosthetic…
Is all electricity used in an apartment or housing complex exempt from Texas sales tax as 'residential use,' or does it depend on how each part of the complex is actually used?
No, not all of it. The Comptroller's office reaffirmed that the predominant use test applies area-by-area within an apartment or housing complex: electricity used for genuinely residential purposes…
Did South Carolina follow federal nonrecognition treatment for the bank holding-company reorganization described in PLR 95-10?
Yes. For the addressed merger, South Carolina followed federal tax treatment for the bank, interim corporation, holding company, and shareholders under the specifically listed reorganization…
What South Carolina tax interest rate applied for the period beginning October 1, 1995?
The rate was 9%. The notice says interest was compounded daily, except that simple interest applied to an underpayment of a declaration of estimated tax.
Is a city's purchase of generator sets, transmission lines, and natural gas pipeline equipment for a new municipal power plant exempt from Utah sales tax as government-purchased personal property, or taxable as construction materials?
Mostly exempt, but with an important catch on installation. The generator sets (mounted on removable skids), overhead transmission lines and poles, and the underground natural gas pipeline all…
Did Navy reimbursement, usage restrictions, and a right of first refusal make special tooling and test equipment a resale to the government before contractor use?
No. The contract expressly left title with the contractor, and neither reimbursement nor a later purchase option transferred ownership before use.
Does a Texas healthcare provider owe sales tax on polysomnographic sleep units (equipment used to diagnose and treat sleep disorders and sleep apnea)?
Yes. The Comptroller confirmed the company correctly paid sales tax on its polysomnographic sleep units. Healthcare providers owe sales tax on equipment they buy to provide their services unless a…
When a contractor buys materials, supplies, or equipment for a construction or design contract where title passes to an exempt customer, when does the contractor owe Texas sales or use tax instead of claiming a resale exemption?
It depends on timing. Under Day & Zimmerman v. Calvert, a contractor's purchases can be exempt as sales for resale only if title to the property passes to the customer before the contractor makes…
Did Florida tax receivables sold before January 1 to a non-Florida affiliate, or the promissory note received by Florida sellers filing a consolidated return?
No. The Florida sellers did not own, manage, or control the receivables after the sale, and the non-Florida buyer did no Florida business. If the consolidated-return stock-ownership test was…
How could a multistate taxpayer apply South Carolina's June 12, 1995 switch to a double-weighted sales factor?
For a tax year beginning before June 12, 1995 and ending after it, the taxpayer could apply the double-weighted sales factor to the entire year or use the old single-weighted formula through June 11…
Did a vehicle lessee owe California tax on rents after moving to the state when the vehicle had been leased and used in Illinois for more than 90 days?
Yes. California periods made lease continuing purchase; lessee owed rent tax and could not credit Illinois tax assumed paid for lessor's acquisition.
How did Florida tax two conditional-sales-contract procedures when customers signed outside Florida but one procedure routed the original contracts through Florida before final acceptance?
Scenario One was exempt because customers and the company executed, accepted, and delivered the contracts outside Florida before they later entered the state. Scenario Two was taxable because…
Were four out-of-state note-closing, custody, and motor-vehicle financing arrangements exempt from Florida documentary stamp tax?
Yes. Notes executed and delivered outside Florida to the lender or an authorized agent, later held by an out-of-state custodian or returned for Florida safekeeping, were exempt when supported by the…
Are charges for installing, servicing, and monitoring a burglar alarm/security system taxable in Texas, including when the system is installed during new construction of a building or house?
Yes. The Comptroller's office confirmed that charges for installing, servicing, and monitoring burglar alarm/security systems are taxable as 'security services' under Tax Code Section 151.0075, even…
Does a rental company owe sales tax on the amount it charges a customer for a rented piece of equipment that was stolen during the rental period?
No. The Comptroller ruled that sales tax is not due on a charge by a rental company for a rented item that was lost, misplaced, or stolen, because sales tax applies to the transfer of a taxable item…
Is the labor to develop a multimedia presentation, desktop-published literature, or graphic art (booth graphics, ads, slides) taxable in Texas when it's delivered to the client on a diskette or as film/output, and can the developer buy reproduction materials tax-free?
Yes, taxable. The Comptroller told this developer that charges (labor and materials) to create a multimedia presentation delivered on diskette are taxable as the sale of a computer program, and that…
Is a business that prints and mails advertising coupons directly to consumers on behalf of retailers providing a taxable sale, or a nontaxable advertising service, under Texas sales and use tax law?
It's a nontaxable advertising service, not a taxable sale of coupons. The Comptroller told this business that printing coupons out of state and mailing them directly to consumers in specific zip…
If a nonprofit hospital system creates a new tax-exempt subsidiary to own its medical office buildings, does that new subsidiary qualify for the same Texas sales and use tax exemption, and can supplies, services, and construction purchases for the buildings be bought tax-free?
Yes, largely. The Comptroller ruled the new nonprofit subsidiary (COMPANY), as a Section 501(c)(3) organization, is eligible for the same exemption under Texas Tax Code Section 151.310(a)(1) and (2)…
Three home building companies pooled land into a joint holding corporation, then each builder sold its allotted lots (with houses already built by that builder) to individual home buyers -- sometimes using a redundant second deed from the builder since the builder never actually held title. Do all these individual home sales get added together for New York's $1 million Real Property Transfer Gains Tax threshold, since they all trace back to one big parcel?
No aggregation required -- each home sale was tested on its own. Four individuals, through three separate home-building companies (A, B, and C), pooled their resources into a jointly-owned holding…
My mortgage lender foreclosed on 10 unsold condo units and bought them back at a foreclosure sale. Is New York's Real Property Transfer Gains Tax consideration the actual foreclosure bid price, or the much larger unpaid mortgage debt -- and does construction money my lender agreed to cover on my behalf also count as consideration?
The higher of the two figures -- the total mortgage debt, not the (lower) bid price -- plus the lender's covered construction costs. Port Jefferson Development Corp. built 133 condominium units…
My new accountant didn't realize we had to pay a few days early, so we were late — can we avoid the penalty since it was an honest oversight and we always pay on time?
No. A tax penalty for missing New Mexico's early-payment deadline for large taxpayers stands when the miss was due to the accountant's failure to check the rules — that negligence is attributed to…
Were a ministry's snack and drink sales at its services exempt from California sales tax?
Qualifying food sold at ministry gatherings was exempt on the stated assumptions, including noncarbonated Snapple, but carbonated drinks and waters remained taxable.
New York Advisory Opinion TSB-A-95(36)S: In Donaldson, Lufkin & Jenrette's 22-year NYC IDA headquarters-relocation deal -- where a single affiliate, Leasing Corp., handles all outright equipment purchases -- are the purchases, improvement materials, rent, maintenance contracts, debt service, reimbursements, and buyout all exempt from sales and use tax?
Yes, exempt across all nine questions raised, subject to the usual strict agency documentation. Donaldson, Lufkin & Jenrette, Inc. ("DLJ") and its affiliates (the "DLJ Group") proposed a roughly…
New York Advisory Opinion TSB-A-95(35)S: In a 15-year NYC IDA deal to keep Travelers Group and Smith Barney headquartered in New York City, are the group's equipment purchases, maintenance contracts, debt-service payments, intercompany cost-sharing, option buyout, and lease-removal penalties all exempt from sales and use tax?
Yes, exempt across all six questions raised, subject to strict documentation conditions. Travelers Group Inc. ("TGI"), Smith Barney Inc. ("SBI"), and their New York City-based affiliates (together…
When did a specialty-bed provider have to collect Florida sales tax on prescribed hospital-bed sales and rentals to hospitals or patients?
The provider generally had to tax a hospital's purchase or lease unless the hospital supplied a consumer exemption certificate. A qualifying resale certificate could apply when the hospital…
Did a California HMO owe use tax on free, preaddressed handbooks an out-of-state printer sent by common carrier through California postal centers directly to members?
No for the direct-member shipment. The gift was completed when the out-of-state printer handed the preaddressed books to the common carrier, but books shipped to the HMO's California locations were…
Could fast-food chains sell school-lunch items to schools or PTAs without charging sales tax?
Yes, with proper documentation. Purchases for resale to students were resale sales, free-lunch ingredients could be exempt, but direct chain-to-student sales were taxable.
How was tax measured when a company bought $2.50 coupons and gave customers free video rentals normally priced at $3?
The coupon sale and gift were nontaxable intangible rights, but each California redemption created a taxable video rental measured by the $2.50 third-party payment.
Did sales or use tax apply when prepaid phone cards were distributed to members or political contributors in return for dues or contributions?
No. The cards were tokens of prepaid telephone-service value rather than tangible property sold for their physical form, though the first seller of the physical card was generally its taxable consumer.
Is a service, estimate, or trip charge taxable if a customer gets an estimate to repair an appliance but decides not to have the repair done?
No. A service, estimate, or trip charge made in connection with the repair of tangible personal property is generally taxable, but there is no taxable charge if an estimate is rendered for a fee and…
Is painting, patching, and seal coating work on a neglected strip shopping center's walls and parking lot considered nontaxable maintenance, or is it taxable repair/remodeling/restoration?
It's taxable repair, remodeling, and restoration, not nontaxable maintenance. The Comptroller explains that maintenance under Rule 3.357(a)(4) means scheduled, periodic work done to sustain or…
If a customer paid tax on parking space rent before getting a Texas sales tax permit, and later gets a permit, can the tax already paid be refunded?
Generally no. A customer cannot issue a resale certificate for purchases made before the effective date of its sales tax permit, so tax collected before that date should not be refunded. The only…
Is an interior decorator's design fee, purchasing fee, administrative charge, freight/move-in charge, or consultation fee taxable under Texas sales and use tax?
It depends on how the charge is billed. A separately stated interior design fee or a stand-alone consultation fee is not taxable. But a design fee folded into a lump-sum charge for taxable property…
Could a catalog retailer average shipping costs across all California sales and tax only the reporting-period excess over carrier costs?
No. The transportation exclusion was capped transaction by transaction at the separately charged amount or the retailer's actual carrier cost, whichever was lower.
Did aircraft sold between sister corporations carry over the seller's common-carrier exemption, or did the buyer need a new test period?
The buyer needed its own test. Related ownership did not merge the corporations' uses, and the two-aircraft sale was taxable unless the purchaser separately qualified for the common-carrier exemption.
Are vibrating shaker screens used at a sand, gravel, and aggregate processing plant exempt from Texas sales tax as manufacturing equipment?
It depends on where in the process the shaker screens are used. Shaker screens used before the aggregate material undergoes any physical or chemical change (such as crushing) are not part of…
Is cleaning out debris from an existing farm irrigation canal a taxable service in Texas, and does the agricultural exemption cover it?
Yes, it's taxable. Cleaning debris out of an existing irrigation canal to restore it to near its original working order is nonresidential repair and restoration of real property, which is taxable…
When a repair company fixes real-property equipment (like a restaurant refrigeration system) under a manufacturer's warranty, or provides a free 'goodwill' repair afterward, who owes Texas sales/use tax on the labor and parts?
It depends on who is footing the bill and why. When an out-of-state manufacturer's warranty covers the repair and the repair company bills the manufacturer (not the property owner) for labor and…
What did the original Florida ruling say about Georgia notes stored in Florida, and why must the revised TAA 95M-007R be reviewed?
The original ruling said Florida safekeeping did not create documentary stamp tax if the Georgia notes were executed and delivered outside the state and supported by an accepted bank-officer…
What major legal changes did South Carolina's 64-page 1995 legislative update summarize?
The update covers alcohol regulation, motor vehicles, and taxation. Its major tax subjects include the new Revenue Procedures Act and protest system, federal income-tax conformity through 1994,…
Are labor charges to install exempt manufacturing equipment also exempt from Utah sales tax, whether bundled into the equipment price or billed separately?
Yes, generally. A tax research consultant asked the Utah State Tax Commission to confirm that labor charges to install manufacturing machinery or equipment that already qualifies for the…
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