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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How did Texas tax heating and air-conditioning repairs to residential and nonresidential mobile homes, RVs, and office trailers?
Residential mobile-home repair labor was exempt but materials were taxable; nonresidential mobile-home repairs were fully taxable. RV and office-trailer repair labor was exempt, while the contract for…
When did a Texas structural-steel business act as a contractor rather than a supplier, and how did that affect sales tax?
It was a contractor when it was responsible for erecting the steel itself or through a hired company; under a lump-sum contract it owed tax on the material cost. When it had no erection responsibility…
Could a Texas dairy farmer buy paper towels tax-free under the agricultural exemption?
Only when the towels were used directly to produce milk for sale, such as cleansing udders. Towels used for the farmer's hands or general washing or drying of a cow were taxable. STAR warns that a 201…
Were charges taxable for moving finished steel within a manufacturer's yard and for separately stated collection and disposal of its industrial waste?
No. Moving finished steel within the manufacturer's yard before sale was not taxable, and separately stated industrial-waste collection and disposal was also exempt. Office rubbish or garbage remained…
How did Texas tax a provider's cross-border telecommunications services between Texas and Mexico?
Charges for calls originating in Texas and routed or retransmitted to Mexico were taxable, while calls originating in Mexico and telecommunications wholly between Mexican points were not. Texas-purcha…
When may a Texas motor vehicle dealer or leasing business deduct the fair market value of a replaced vehicle?
The fair-market-value deduction required a motor vehicle sales, rental, or leasing business to hold Texas title to both vehicles, obtain them for personal or business use, and offer the replaced vehic…
Was MLO Milk and Egg Protein taxable in Texas as a powdered drink mix or therapeutic product?
No. The Comptroller's April 19 letter reversed its February 16 answer and concluded that MLO Milk and Egg Protein qualified as a nontaxable food product.
How did Texas tax a nationwide voice-messaging service's local and long-distance call charges?
The voice-messaging service was taxable telecommunications. Local calls and long-distance calls originating in Texas and billed to a Texas service address were taxable; qualifying out-of-state long-di…
Were payments taxable under an equipment transaction in which the user retained legal title and possession but transferred ownership rights to a financier and leased those rights back?
No. The Comptroller treated the arrangement as financing with the financier acting as a secured creditor, so the payments were not taxable. The equipment user had already paid sales tax or accrued use…
Did exempt aircraft parts lose their Texas sales-and-use-tax exemption while held in inventory before installation on qualifying carrier aircraft?
No. Parts bought to be permanently attached to qualifying common- or contract-carrier aircraft remained exempt while stored for installation as needed, as long as they were not diverted to another pur…
Did excluding an employment and noncompetition agreement from a one-buyer sale of a business's operating assets defeat Texas's occasional-sale exemption?
No. The sale still qualified as an occasional sale of the entire operating assets because the excluded employment and noncompetition agreement was intangible property, and Rule 3.316 excluded intangib…
When was labor taxable for maintenance, modification, or new construction work on Texas petroleum or chemical storage tanks?
Documented scheduled maintenance labor was exempt. Most upgrades to existing tanks were taxable, while qualifying new construction—such as a new dockline, concrete spill pad, or initial finish-out bef…
Does an out-of-state manufacturer owe New York use tax on free promotional products it ships to New York customers, and on what value?
Yes — after September 1, 1989 the free promotional hose are subject to New York use tax, valued at the manufacturer's normal selling price. Sara Lee - Hanes Hosiery makes hosiery outside New York and,…
Is installing raised access flooring a nontaxable capital improvement or 'floor covering,' or a taxable sale and installation of tangible personal property?
It is taxable — raised access flooring is neither a capital improvement nor 'floor covering.' Raised Computer Floors, Inc. installs access flooring on bolted or epoxied pedestals above a building's sl…
Is hauling waste water and sludge from a customer's site to a disposal plant a taxable real-property service, or a nontaxable transportation service?
It is taxable. Ecologics Management, Inc. contracts (usually annually) with generators of liquid waste — municipalities, food processors, landfills — to haul their waste water and sludge (96%–98% wate…
Is a solvent recycler's charge for removing recyclable materials from a New York site taxable, even though the materials are recycled and processed out of state?
It is taxable. Marisol, Inc., a solvent recycler, picks up recyclable material from sites in New York (in its own or subcontracted trucks), transports it to processing facilities in New Jersey, and us…
May a car distributor pay use tax on resale-inventory vehicles that officers and employees also drive using the 2%-per-month depreciation method, and are showroom demonstrators a taxable use?
Yes to the depreciation method, and showroom demonstrators are not taxed. BMW of North America, Inc. — the sole U.S. importer-wholesaler of BMWs — keeps cars in inventory for resale to dealers but let…
Which of a dog club's charges — show admissions, dog-entry fees, cage rentals, and baked-goods sales — are subject to sales tax, and does 501(c)(7) status exempt them?
Most are taxable, and 501(c)(7) status does not exempt them. A dog club organized under IRC § 501(c)(7) holds dog shows to raise money, giving any excess to animal-welfare charities. The Department he…
Is renting out a crane with an operator a taxable rental of tangible personal property, and are the operator's wages excludable?
It is taxable, but separately stated operator wages come out. Northeast Timber Erectors, Inc. planned to rent out a crane with an operator to place modular homes, set beams and trusses, and hoist stru…
Is a charge for monitoring air for asbestos content during removal, and issuing reports, a taxable information service?
It is not taxable — the charge falls within the personal/individual exclusion for information services. George Industries, Inc. hired a consultant (A & A) to take air samples monitoring asbestos conte…
Does a California company that sells computerized movie-theater management systems nationwide, with a New York sales footprint limited to about 4% of revenue and just 13 installation trips over five years, owe New York Article 9-A franchise tax for sending an employee to install and train customers on each system sold there?
Yes, subject to tax for all years at issue. Theatron Data Systems, Inc., a California corporation marketing automated movie-theater management systems nationwide, had no New York office, assets, or ba…
Arthur R. Rosen of Morrison & Foerster asked, on behalf of a hypothetical client ('Mr. Y'), what categories of income are included in the New York taxable income of a New York resident individual who is a nonresident alien for federal income tax purposes.
The Department ruled that Mr. Y remained a New York domiciliary - and therefore a New York resident - because he had not yet actually moved and established a new permanent home elsewhere, even though …
Was a bank's mortgage servicing taxable when it continued collecting and processing payments after selling the mortgage?
Yes under this historical ruling when the service was rendered to or received by a Connecticut bank holding the mortgage loans. DRS classified mortgage servicing as a business analysis and management …
Were bus trip packages with extensive travel and overnight accommodations taxable Texas amusement services?
No. The Comptroller treated the packages as general travel arrangements rather than taxable scenic bus tours because they included extensive travel and overnight lodging, and agreed to refund the sale…
Were pinstriping, decal application, and mileage or service charges taxable when performed on diesel motor vehicles in Texas?
Yes. The Comptroller ruled that the total charge for pinstriping, applying decals, and mileage or service to the job location was subject to sales tax when the work was performed on diesel rigs.
Was electricity exempt when it powered pumps, crushers, and conveyors at a Texas crushed-stone plant?
Yes. Electricity for the pumps, crushers, and conveyors was exempt. Conveyor power qualified because it transported material extracted from the earth, even though the conveyors themselves were intrapl…
Could the Texas Comptroller pay city and county sales-tax refunds promised through a local enterprise-zone program?
No. The Comptroller lacked authority to pay those local refunds. The person who paid the tax had to file separate claims directly with the city and county that created the refund program, and those lo…
Were foam chemicals and foam-dispensing equipment exempt when customers used them to protect taxable products during shipment?
The foam chemicals could qualify as exempt wrapping or packaging supplies when used to further the sale of taxable items, but the dispensing equipment and foam-in-place system were taxable. A qualifyi…
Did selling partnership interests totaling 50% of profits trigger controlling-interest transfer tax when the buyers were unrelated and not acting in concert?
No on the ruling's assumed facts. Although the transaction met five elements of the historical tax, the controlling interest was not transferred to one buyer or a group acting in concert. DRS stressed…
When was specialized cleaning or waterblasting of Texas storage tanks, cooling towers, buildings, pools, and parking garages taxable?
Ordinary cleaning of residences, commercial buildings, pools, and parking garages was taxable. Specialized cleaning of large storage tanks and refinery or chemical-plant cooling towers was treated as …
Did a family support magistrate owe Connecticut's attorney occupational tax when the magistrate did not otherwise practice law?
No under this historical ruling. DRS concluded that family support magistrates performed judicial duties, which the 1982 amendment had removed from the occupational tax's practice-of-law base. A magis…
Could a bingo operator charge less per card for a game when the card was included in a multigame package?
No. A card for a particular game had to carry the same per-card price whether sold individually or inside a package with cards for other games. Effective July 1, 1990, licensees also had to keep an on…
Were dental prosthetic appliances and dentist-dispensed or prescribed medicines exempt from Texas sales and use tax?
Yes. Dental devices that remained in a patient's mouth to replace a missing or deficient part were exempt prosthetic appliances, and drugs or medicines dispensed by a dentist or on a dentist's oral or…
Were lump-sum bulldozer charges taxable for digging a new pond, preparing a home site, or clearing land and building roads for a new subdivision?
No. Those activities were treated as new construction or site preparation, so lump-sum charges were not taxable. Landscaping was different: it was a taxable service, and tax applied to the total charg…
Was completely gutting and refinishing previously occupied space in a Texas shopping mall new construction or remodeling?
It was remodeling. The Comptroller applied Rule 3.357(a)(6) to the work in the existing mall space rather than treating the gut-and-refinish project as new construction.
How did Texas tax new pipeline construction, tie-in labor, gas-plant demolition, and debris removal?
New pipeline construction labor was not taxable, but labor tying the new and existing lines together was taxable remodeling unless it stayed below the letter's 5% threshold within the new-construction…
Did South Carolina's former military automobile exemption cover a nonresident service member who stopped in the state to pick up a car while traveling to an out-of-state assignment?
No. The ruling said a service member merely passing through South Carolina under orders was not settled or established in the state and therefore was not “located” there as the former exemption requir…
Was a separately stated coin-wrapping charge taxable when a company transported bulk coin to its facility and wrapped it there?
No. Coin wrapping performed by the company's personnel at its facility was not subject to sales tax when the charge was separately stated from charges for taxable services.
Which Texas hydrographic, vessel-positioning, marine-staking, and subseabed surveying services were taxable?
Underwater topographic surveys and vessel positioning based on direct scientific observation were not taxable. Boundary, as-built, and post-construction location surveys were taxable, while centerline…
Did a qualifying Texas group need to submit each future calendar for Comptroller review before treating its sales as exempt writings?
No. The Comptroller concluded that all calendars of this nature sold by groups like the requester were exempt writings under Tax Code § 151.312 and would not distinguish calendars based on content. Th…
Was the total charge taxable when a Texas CAD provider converted customer sketches into enhanced computer drawings and delivered printed hardcopies?
Yes. Sales tax applied to the total charge for the computerized drawings. Materials actually transferred to the customer as part of the service, such as the paper used for the final drawings, could be…
Were waiting-time fees, small-load charges, and separately stated delivery charges taxable on sales of ready-mix concrete?
Yes under this ruling. Waiting-time fees and minimum-load charges were part of the seller's gross receipts for ready-mix concrete. Delivery charges were also taxable when delivery occurred before titl…
Was a new-car package combining VIN window etching with theft insurance subject to Connecticut sales and use tax?
Yes. DRS treated the entire charge for the window-etching and theft-insurance package as part of the gross receipts from selling the new motor vehicle. The package remained taxable even when the deale…
Was a one-time cleaning of a newly constructed store taxable when performed before the certificate of occupancy?
Yes under this historical ruling. After the July 1, 1989 change, DRS treated janitorial services as taxable in all instances, including one-time cleaning before a new store received its certificate of…
Was labor taxable when a company ran customer-provided computer cables through the ceilings of an existing nonresidential building to workstations?
Yes. The Comptroller treated the cable-running labor as taxable remodeling of nonresidential real property, even though the installer supplied only labor and did not provide the cable.
Were consultations and property-loss bids taxable when a Texas business helped homeowners settle insurance claims, even though it lacked an insurance license?
Yes. Consultations were taxable insurance loss-prevention services, and bids were taxable insurance loss or damage appraisals. The business's lack of a State Board of Insurance license did not change …
Were cooked marinated beef portions and whole chickens taxable when packaged, refrigerated, sold unheated, and provided without utensils?
No. The Comptroller treated the refrigerated beef and chicken as not ready for immediate consumption because they were sold unheated and without utensils.
Did qualifying as a small-power producer or cogenerator automatically exempt the firm's natural-gas or electricity purchases from Texas sales tax?
No. Such firms were excluded from the rule's electric-utility definition, so they did not receive the utility provision automatically and needed a predominant-use study to establish any exemption.
Did a Texas tattoo shop have to collect sales tax on tattooing charges and on related books, magazines, or photographs?
Tattooing people was not taxable. Sales of tangible items were taxable, including books or magazines showing tattoos and photographs of tattooed people.
Could a seller accept a client's direct-payment certificate when taxable items were billed to the client's advertising agency?
No. The advertising agency had to pay tax on taxable items billed to it, even when acting for a direct-pay client. The seller could accept the client's certificate only if it billed the client directl…
Was an auction buyer's fee taxable when the auctioned item itself was subject to Texas sales tax?
Yes. The buyer's fee was part of the taxable sales price. A taxable item sold for a $200 bid plus a 10% buyer's fee had a total taxable sales price of $220.
Were amusement-park locomotives and coaches, track materials, operating supplies, and repair or maintenance charges exempt from Texas sales and use tax?
Yes. The trains qualified as exempt rolling stock; essential fuel, track, ties, trestles, and operating supplies were exempt; and repair or maintenance charges were exempt because the serviced propert…
Did a service vendor avoid Texas sales tax merely because its customer was a joint venture holding a government contract?
No. The vendor had to charge tax on taxable services sold to the joint venture unless it received a valid resale certificate. The joint venture could issue one only if it directly resold the service t…
Were separately stated freight charges on coaxial cable included in South Carolina use tax when the seller arranged delivery and retained title to destination?
Yes. Because XYZ arranged the common-carrier delivery, remained responsible for the cable until receipt, and passed title at the customer's location, the billed freight was part of sales price even th…
How did South Carolina tax meals a nursing facility prepared for affiliated facilities and for its own patients?
Meals supplied to the affiliated hospital and nursing facility were taxable retail sales measured by the full reimbursement. Meals for the preparer's own patients were taxed when food was withdrawn, u…
Was remote mainframe emulation and software-testing time taxable data processing, and could the software developer claim resale or manufacturing treatment?
The time-sharing and testing service was taxable data processing. But the developer could issue a resale certificate if the service was essential to software sold as tangible property, or a manufactur…
Could an exempt organization buy an athletic-club membership tax-free for its members?
Yes, but only if the exempt organization paid the entire initiation fee and monthly dues and gave the club an exemption certificate. If the individual member paid, the membership remained taxable even…
Could the sale of an identifiable production division qualify for Texas's operating-asset exemption even though the plant had been idle since 1986?
Yes. The idle plant remained an identifiable business segment because the corporation could trace income and expenses directly to each production facility through its subsidiary accounting records.
Were typing and secretarial charges taxable when performed with a computer or memory typewriter rather than a manual typewriter?
Yes for computer-based word processing: the provider had to collect tax on typing, copies, and report covers. Manual, non-memory typewriter services were not taxable, and the provider instead paid tax…
Which restaurant equipment qualified for Texas's 1990 processing-equipment refund?
Restaurants were processors eligible to request a refund of 25% of state sales tax paid on qualifying equipment bought on or after January 1, 1990. Fryers, ovens, mixers, broilers, and stoves qualifie…
How these rulings are useful
- See how the rule applies: A letter ruling shows how a state revenue department actually applied the tax law to a specific business and set of facts.
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