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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Was lowering a concrete product into an excavation prepared by another contractor a taxable sale or an improvement to realty by the manufacturer?
It was a taxable sale when another company completed the installation. Lowering the product to street level or into the prepared hole was merely job-site delivery, so tax applied to the total selling …
When a stock savings bank reorganizes into a holding company structure through a transaction the IRS treats as a tax-free IRC section 351 exchange, does that reorganization also stay tax-free for New York bank franchise tax and personal income tax purposes?
Yes, tax-free for both. Cayuga Savings Bank, a New York stock savings bank, formed Iroquois Bancorp, Inc. as a holding company and executed a reorganization where a newly formed 'New Bank' merged into…
Cayuga Savings Bank asked whether reorganizing into a bank holding-company structure - becoming a wholly-owned subsidiary of a new holding company in a transaction the IRS ruled is a tax-free section 351 exchange - is likewise not a taxable transaction for New York purposes under Article 22 (personal income tax on shareholders) and Article 32 (bank franchise tax).
Yes. The Department ruled that because neither Article 22 nor Article 32 of the Tax Law contains any modification addressing a federal section 351 tax-free exchange, New York follows the same tax-free…
Were textbooks sold to students by two accredited South Carolina vocational business colleges exempt from sales tax?
Yes. The two accredited vocational business colleges were institutions of higher learning under the historical exemption, so their sales of textbooks to students were exempt from South Carolina sales …
Were concrete, reinforcing steel, and a metal pool liner used to construct a gamma irradiator exempt as manufacturing-machine materials?
Yes. The integrated irradiator—including its nearly six-foot concrete radiation shield and storage pool—was a manufacturing machine rather than a building, so the contractor's concrete, reinforcing ba…
Which software installation, customization, training, maintenance, programming, data-processing, and consulting charges were taxable?
Tax depended largely on whether the provider sold the software or another taxable item. Separately stated training and true contract programming were not taxable, while data processing and seller-conn…
Could a seller use tax refunded by Texas to reduce the purchaser's unrelated past-due account balance?
Not without the purchaser's consent. Tax collected from the customer had to be returned to that customer, and a state refund to the seller could not be applied against the customer's other debt unless…
Did 38 days of bank safekeeping defeat the export exemption for gold when the buyer did not take possession until removing it from the United States?
No. The rule's 30-day storage provision applied only when the buyer possessed the property in Texas. Because the seller or bank held the gold until export, the buyer did not possess it for 30 days and…
Were rentals of automotive golf carts and pull-carts taxable at private, public, and municipal facilities?
Yes. The historical statute defined a sale to include leasing or renting tangible personal property of any kind. DRS therefore ruled that rentals of automotive golf carts and pull-carts were subject t…
Did the historical exemption for repairing nonbusiness motor vehicles cover labor on boats or snowmobiles?
No under this historical ruling. DRS said the exemption for repairs to motor vehicles not used in a trade or business did not apply to boats or snowmobiles. Labor charges for repairing either were the…
Were real estate appraisal services subject to Connecticut sales and use tax?
No under this ruling. Connecticut DRS stated that real estate appraisal services were not subject to sales and use tax.
Were bridge engineering services by licensed professional engineers taxable as building engineering services?
No under this historical ruling. DRS said bridge engineering by licensed professional engineers was not building engineering and therefore was not subject to sales and use tax. DRS marks the ruling no…
Could an equipment lessor exclude a separately stated insurance charge from tax, and were damage-waiver fees taxable?
A separately stated premium paid to an insurance company could be excluded from tax. A damage-waiver fee remained taxable because it was not an insurance premium.
Were handling, insurance-premium, and damage-waiver charges taxable when connected with a taxable sale?
Handling charges were taxable even if separately stated. A combined handling-and-insurance charge was fully taxable; a separately stated premium underwritten by an insurer was not taxable, but a damag…
Which towing-company charges were taxable: motor-vehicle storage, impound, towing, or owner-notification fees?
Storage and impound fees were taxable. Separately stated towing and notification fees were not taxable under the letter's historical guidance.
When a long-distance carrier offers a 900-number billing-and-collection service to business customers, are its billing/collection fees taxed the same as its communications charges under New York's transmission-company and utility-services taxes?
Yes. Because MCI's billing-and-collection revenue is directly tied to its regulated telephone service, the full amount MCI charges 900-number "Sponsors" for both the communications and the billing/col…
Are non-destructive testing services and reports a taxable information service?
They are not taxable. PCA Engineering, Inc. tests and evaluates the physical characteristics of materials (mostly metal) in structures, machines, and equipment using non-destructive methods — magnetic…
New York Advisory Opinion TSB-A-90 (4)I: Dabelstein, is whether her domicile will change as a result of marrying a nondomiciliary Army officer stationed in New York.
No, not automatically. The Department ruled that Edith Dabelstein's New York domicile does not change on her marriage date merely because she now intends to eventually follow her Army-officer husband …
Were environmental-facility siting and remediation-design services taxable as building engineering or building design?
Generally no under this historical ruling. DRS excluded siting and design of landfills, impoundments, hazardous-waste facilities and incinerators, plus groundwater cleanup and remedial-program design.…
How did Texas tax portable-building sales versus permanently affixed residences or broiler houses, and did an agricultural exemption apply?
Portable-building labor and materials were taxable. Permanent real-property improvements followed contractor rules: lump-sum residential work was not taxed to the customer, separated materials were ta…
What forms had to accompany a Kansas utility sales-tax refund request beginning in 1990?
A Kansas retailer of electricity, gas, or water requesting a sales-tax refund had to submit completed supplemental schedule Form BT/st-33 together with exemption certificate Form STD-28B. The Departme…
Could an FAA Part 135 air taxi buy machinery, tools, and equipment tax-free for aircraft repair, remodeling, or maintenance?
Only items used directly and exclusively to service carrier aircraft or their component parts qualified under the described exemption. General equipment supporting the shop or overall carrier operatio…
Could a nursing-home lessee claim the residential-utility exemption and a refund when the utility account still named a former owner?
Not without establishing that it was the purchaser and operator. The utility could accept a future certificate after written confirmation, and earlier refunds required proof that the lessee operated t…
Were an architect's project inspections for a construction lender taxable as architectural work or business consulting?
They were taxable business consulting under this historical ruling, not exempt new-construction or architectural services. The architect verified a borrower's payment requests for the lending bank and…
Did nonprofit craft centers have to collect tax on craft and artwork sales and on consignment fees charged to artists?
Yes under this historical ruling. The exemption covered sales to qualifying nonprofits, not their sales to customers, apart from two permitted one-day events. Craft centers had to tax craft and artwor…
Was a March 1987 custom-software maintenance agreement taxable, and what happened after Texas began taxing custom programs in October 1987?
The custom program and its maintenance were not taxable under the rule in force when the agreement began. A qualifying prior-contract exemption could cover the term through March 29, 1988, but a March…
When were a Texas firm's investigation services taxable based on where the work occurred and where the client was located?
Texas taxed investigations performed in Texas for any client and out-of-state investigations for Texas clients. Work performed outside Texas for an out-of-state client was not taxable; related expense…
Which landscaping, surveying, stakeout, feasibility, engineering, roadway, drainage, and septic-design services were taxable?
Under this historical ruling, residential and commercial landscaping, subdivision surveying, and stakeout for real-estate development were taxable. Site feasibility studies, site-development engineeri…
Could the insurer buy equipment and telecommunications for resale when hospitals used its automated claims-submission and inquiry system?
Not on the submitted documents. They did not show that the insurer rented equipment, resold telecommunications, or sold a taxable service. A taxable information service or exclusive circuit-line lease…
How did Texas tax an automobile extended warranty and repairs performed under it?
The extended warranty and motor vehicle repair labor were not taxable, but parts, supplies, and materials were. Under a separated contract the repairer collected parts tax from the customer, usually t…
Could a taxpayer claim detrimental reliance based on a prior audit despite the disclaimer in Texas Audit Results letters?
Not merely because an auditor failed to detect an error. The disclaimer barred that theory, but it did not bar a claim based on specific erroneous written or oral advice given during the audit if the …
Does an out-of-state bank owe New York banking franchise tax just because it buys installment contracts secured by New York property and, if a borrower defaults, forecloses or sues through a New York attorney?
No. A Connecticut bank that buys the contracts entirely outside New York, has no New York office or employees, and only occasionally enforces a security interest or takes foreclosure title here is not…
Is a charge to drive a go-kart on a track taxable, and are packaged ice cream bars sold there taxable?
The go-kart charge is exempt; the ice cream bars are taxable. Little Ozzie's Inc. runs a go-kart raceway with no admission charge — only a charge to use a go-kart on the circular track — and sells pac…
Is replacing a built-in electric wall oven a nontaxable capital improvement?
Yes — it is a nontaxable capital improvement. Robert E. Harrison asked whether replacing the built-in electric wall oven in his home's kitchen is a capital improvement exempt from sales tax. The old 1…
If a parent holding company spins off its New York lending business into a new New York subsidiary, keeps a bank account and books here, but is otherwise run entirely from Japan, does the parent still owe New York corporate franchise tax?
No. Once the parent withdraws its authorization to do business in New York, becomes a purely passive investment holding company managed entirely from Japan, and confines its remaining New York contact…
Can an S corporation carry forward research and development tax credits it earned during a year when it wasn't subject to Article 9-A tax, to a later year after it becomes a regular C corporation again?
No. A research and development tax credit computed for a year when the corporation was an S corporation — and therefore not subject to Article 9-A tax at all — cannot be carried forward to a later yea…
Could a railroad buy a modified track loader tax-free under the rolling-stock exemption when it would remain aboard connected gondola cars?
Yes. Based on the assurance that the modified loader would remain on the train and move among connected gondola cars to unload material, the railroad could issue an exemption certificate for its purch…
Which investigation, surveillance, expert-testimony, consultation, and process-serving charges were taxable under Texas's security-services rule?
Licensed investigation and surveillance services were taxable, with directly related expenses included. Separately stated expert testimony and pure consultation could be nontaxable, and process servin…
Can a federal contractor buy tax-free as the government's agent, and is the state estopped by an old letter that wrongly said it could?
No on both counts — the contractor owes tax and cannot rely on the old letter. West Valley Nuclear Services Co., Inc., a Westinghouse subsidiary serving as general contractor to the U.S. Department of…
Our original borrower wants off the hook for a loan; the corporate owner who guaranteed it (and later took title to the collateral) will assume the note directly instead. The lender wants a supplemental mortgage recorded to add the new owner as obligor and clean up a drafting gap so the mortgage clearly secures the note. No new money is being lent. Does that trigger additional mortgage recording tax?
No additional tax due. Carol Management Corporation borrowed $6 million from a bank in 1987, evidenced by a note; Howard Kaskel personally guaranteed the note up to $6,114,000 (principal plus two year…
Which farm-equipment repair and farm-structure charges were exempt or taxable under Connecticut's agricultural exemption?
Separately itemized repair parts for machinery used exclusively in agricultural production were exempt, but repair labor was taxable. Labor to renovate farm structures was taxable, while lumber, hardw…
How were franchise-tax auditors to adjust pre-1988 surplus for unbooked employee post-retirement-benefit liabilities supported by actuarial studies?
A taxpayer needed at least one actuarial study. Auditors used or discounted the study liability, allocated group amounts among corporations by employees, applied the report-year employee ratio, and ma…
How were local taxes sourced when mobile-phone equipment was rented with telecommunications service, versus equipment sold or rented by itself?
Bundled equipment and telecom service was sourced as telecommunications at the call's origin, or the billing address if origin was unknown. Equipment sold or rented without service was tangible proper…
Was a charge for the right to fish from banks, piers, a boathouse, stalls, and a fishing barge subject to Texas sales tax?
No. The Comptroller compared the payment to leasing land for hunting rights and treated it as a nontaxable non-amusement service.
Were admissions to a for-profit amusement held at a historic location exempt from Texas sales tax?
Yes, if the place was a Recorded Texas Historic Landmark or was included in the National Register of Historic Places. The exemption turned on the location's designation, not whether the provider was n…
When were construction-management services taxable for new construction, owner-occupied homes, and existing business property?
Under this historical ruling, construction management for new construction and existing one-, two-, or three-family exclusively residential owner-occupied property was not taxable. The same service fo…
Were auction sales of bank-repossessed tangible personal property and the auctioneer's fee to the bank taxable?
Yes under this historical ruling. The auctioneer had to collect tax on total gross receipts from selling the repossessed property. The auctioneer's fee charged to the bank was also taxable as a sales-…
What did a supplier have to do when drop-shipping merchandise to a Connecticut customer for an out-of-state retailer?
ABC Corporation complied by charging Connecticut tax to the out-of-state retailer when ABC delivered the merchandise to that retailer's Connecticut customer. Instead, ABC could accept through the reta…
Were gross receipts from providing expert-witness testimony subject to Connecticut sales and use tax?
No under this ruling. Gross receipts for rendering expert-witness testimony remained exempt from Connecticut sales and use tax under Conn. Gen. Stat. § 12-412(11).
Were guest greens fees, tennis-court fees, club-professional services, and the professional's property sales or leases taxable?
Under this historical ruling, a country club's greens fees and court-time fees charged to members' guests were not taxable, and club-professional services were exempt. But tangible personal property s…
Did a private janitorial contractor avoid Texas tax on equipment and supplies because it served federal facilities and its contract funded those purchases?
No for equipment and consumed supplies. The janitorial service sold to the federal government was exempt, and transferred items could be bought for resale, but the contractor owed tax on equipment and…
Was a pager loss or damage protection fee taxable when it covered lost, stolen, destroyed, or damaged equipment?
Coverage strictly for loss, theft, destruction, or damage beyond repair was not taxable. A fee covering maintenance, repair, or repairable-damage waiver was taxable; a single premium containing damage…
When could a seller reduce the taxable sales price by the value of property accepted as a trade-in?
When the trade-in was of the same nature as the item sold, or was another type of item the seller sold in its regular course of business. A computer seller could offset a computer trade-in, but not a …
When were installation, renovation, repair, and maintenance services taxable in owner-occupied and rented condominium units?
Under this historical ruling, painting, carpentry, electrical, and plumbing labor billed directly to residents was nontaxable in owner-occupied units but taxable in rented units. Association-wide work…
Was a physician-prescribed book containing an at-home cardiac rehabilitation program exempt from Texas sales tax as a therapeutic device?
No. The book remained taxable even when sold under a licensed practitioner's written or oral prescription because it did not meet Rule 3.284(a)(11)'s definition of a therapeutic appliance or device.
Was electricity used to repair, renovate, or convert qualifying commercial barges exempt because the vessel materials and labor were exempt?
No. The vessel materials-and-labor exemption did not extend to natural gas or electricity. Utilities used to manufacture property for sale could be exempt, but utilities used later to sell or affix th…
Could a customer claim a residential gas or electricity exemption or refund after the utility account had been closed?
Only after Comptroller review of available evidence because no on-site use study could be performed. The claimant had to explain the account, closure, and utility uses; mixed exempt and nonexempt use …
Were teleconferencing charges and the related long-distance charges taxable, and could the provider buy long-distance service for resale?
Yes. Teleconferencing was a taxable telecommunications service, and the total charge—including qualifying long-distance charges—was taxable. The provider could issue a resale certificate if it made no…
How could an elevator contractor calculate the taxable portion of contracts combining real-property repair and maintenance?
It could apply one taxable percentage based on prior-year aggregate repairs divided by total repair-and-maintenance receipts, supported by time sheets or similar records, and use that percentage on in…
Was a service that collected customer mail, packaged it, and delivered it for shipment to foreign countries taxable?
No under this ruling. X Company's couriers collected mail from customer offices, brought it to X's office for packaging, and delivered it for shipment overseas. DRS said the described international ma…
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