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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Can a Nebraska company cancel its Employment and Investment Growth Act (LB 775) agreement and instead claim credits under the Employment Expansion and Investment Incentive Act?
Yes, if it cancels the first agreement and meets three conditions. Under Revenue Ruling 29-88-2, a taxpayer that signed an Employment and Investment Growth Act (LB 775) agreement -- and later expects …
Were custom-software work, computer repair, and recovery of deleted data taxable under Texas's 1988 rules?
Deleted-data recovery was taxable data processing. Programs made from existing modules and related services were taxable; programs written entirely from scratch were not, and separately stated trainin…
Which sales-tax rate applied when telecommunications equipment was rented with service, rented alone, or sold outright?
Equipment rented with telecommunications service used the service's applicable tax rate. Equipment rented without service or sold outright used the full tax rate in that area; state tax applied to eve…
Could a Texas taxable-service provider buy maintenance agreements, transferred items, natural gas, or electricity tax-free for resale?
Transferred goods and an integral taxable service could be bought for resale, but the provider's maintenance agreements, natural gas, and electricity were not exempt for use in providing taxable servi…
When did taxable debt-collection and insurance services make a bundled accounts-receivable management charge taxable in Texas?
The overall management service was not data processing, but collection follow-ups and insurance-claim preparation were taxable. If bundled taxable services exceeded 5% of the total, the entire charge …
When were a service provider's consultation fees taxable, and was its sale of postage stamps taxable?
General consultations about a customer's ongoing business needs were not taxable, but consultations defining a specific word-processing assignment were taxable. Postage-stamp sales were not taxable.
Were school pictures sold to students exempt from Texas sales tax when the photographer sold them directly or through the school?
No. School-picture sales to students were taxable whether made by the photographer or through the school, because the students—not the school—were making the purchases.
Could Southwestern Bell charge Texas, Dallas, and DART sales tax on a separately stated special municipal charge?
Yes. The Comptroller treated the charge as part of taxable basic local exchange service, and both Dallas and DART imposed sales tax on telecommunications services.
When a Nebraska individual income tax return covers a short period (less than a full year), does the tax have to be annualized and do the exemptions and deductions get prorated?
No annualization or proration of the basic tax. Under Revenue Ruling 22-88-2, a short-period Nebraska individual income tax return is treated as a return for a separate taxable year, and the individua…
New York Advisory Opinion TSB-A-88 (5)I: Issue raised is whether for personal income tax purposes the general partners and the corporate limited partner of Petitioner may claim an investment tax credit, pursuant to section 606(a)(1) of the Tax Law, with respect to Petitioner's investment in equipment to be used in a hydroelectric facility that will manufacture electric energy.
No. The Department ruled that neither the general partners (under Tax Law § 606(a), Article 22) nor the corporate limited partner (under Tax Law § 210.12(a), Article 9-A) of Newport Hydro Associates m…
How did Texas tax reroofing an apartment building that also contained an insurance office or other commercial space?
Materials were taxable. If commercial space was 5% or less, the whole building was residential and labor was not taxed; otherwise, residential labor had to be separately stated to remain nontaxable.
Did the Comptroller finally approve or deny reducing both stated capital and surplus by a subsidiary's pre-acquisition earnings?
No final decision is shown. The internal memo recommended denying a parent's attempt to reduce both stated capital and surplus by a subsidiary's pre-acquisition earnings, but STAR's copy leaves the AP…
How did Texas's April 1988 cable-television bulletin tax new plant, extensions, residential drops, nonresidential repairs, and periodic maintenance?
New plant, extensions, residential work, and qualifying new-building drops had nontaxable labor. Nonresidential repair or upgrades were taxable; scheduled preventive maintenance was not.
How did Texas tax title-company purchases of property-tax searches, customer reimbursements, and tax-search services between affiliated corporations?
The title company paid tax when buying a search, but its closing-party reimbursement was not taxable. Qualifying consolidated-return affiliates could provide the service tax-free after paying tax on i…
Can a sportsmen's club buy the clay targets it uses for members' trap and skeet shooting tax-free for resale, since it charges members taxable fees to shoot?
No — the clay targets are taxable to the club as consumed supplies, not resold to members. Camillus Sportsmen's Club, Inc. is a social or athletic club (Tax Law § 1101(d)(13)) that collects sales tax …
Which programming, laser printing, stationery, mail-shop, postage, and plastic-card services were taxable in Texas?
Programming and tape-data manipulation, laser printing, stationery, and card embossing or encoding were taxable. Separately stated mail-shop work and postage bought with the client's check without mar…
Were sightseeing tours taxable amusement services, and was a tour consisting primarily of transportation to a rodeo taxable?
The sightseeing tours were taxable amusement services. The rodeo trip was primarily transportation and not taxable, but the operator still had to account for tax on the rodeo admission.
How did Texas tax pool and spa repair, remodeling, equipment work, and cleaning on residential versus commercial property?
Commercial pool work and pool cleaning were taxable on the total charge. Residential pool labor was not taxable, including apartment and HOA pools, but separately charged parts were taxable.
Does a foreign corporation that isn't otherwise subject to New York franchise tax become taxable merely because it privately purchased a limited partnership interest in a partnership that does business in New York?
No -- the Department abandoned a 1954 Attorney General opinion that had treated limited partners as automatically doing business wherever their partnership does, and held that a genuinely passive fore…
Does a New Jersey corporation holding a small (6-8%), non-controlling limited partnership interest in a New York investment fund become subject to New York franchise tax just because the fund does business here?
No -- following the same reasoning as its companion opinion issued the same day (TSB-A-88(11)C), the Department held that a foreign corporation's passive, non-controlling limited partnership interest …
How did Texas classify and tax cleaning, repairing, and repainting storage tanks under its 1988 rules?
Tanks over 500 barrels were real property; tanks of 500 barrels or less were personal property. Cleaning was maintenance, and repainting was remodeling, with the letter treating the described services…
When were pumping containers and cleaning lines in a nonresidential grease-trap, grit-trap, or septic system taxable repair rather than nontaxable maintenance?
Work on a system with flow reduced by waste buildup was taxable repair. Regularly scheduled pumping and line cleaning while the system flowed properly were nontaxable maintenance.
Were a record-storage facility's charges for document pickup, storage, and certified shredding taxable, and what about its garbage-company charge?
The facility's pickup, storage, and shredding charges were not taxable. The facility had to pay sales tax on the garbage collection company's charge for hauling away the shredded material.
Were charges for storing and destroying documents and microfiche taxable after the Comptroller revised an earlier 1988 answer?
No. The Comptroller's April 19 revision said the client's document-storage and destruction charge was not taxable, replacing the February 2 answer that had treated destruction and disposal as taxable.
Was a lump-sum charge combining electronic tax-return transmission and a bank loan fee taxable in Texas?
Yes. Although return preparation itself was not taxable, the unseparated transmission and bank-fee charge was fully taxable. The franchise taking the transmission order had to report the tax.
Were rent-to-own agreements true leases or contingent sales for Texas's historical prior-contract exemption?
Texas treated the agreements as true leases, not contingent sales. Only renewal periods already in effect before July 21, 1987 qualified for the historical prior-contract exemption.
If I moved into South Carolina partway through the year, can I deduct my full moving expenses on my South Carolina return, or must I prorate them?
You may allocate the full deduction to South Carolina. In Revenue Ruling 88-4 the South Carolina Tax Commission held that a part-year resident who moves INTO the state may allocate — not apportion — t…
In a pre-need funeral (burial) contract where money is held in trust, who owes income tax on the interest the account earns — the customer or the trust?
The customer. In Revenue Ruling 88-3 the South Carolina Tax Commission held that where a pre-need burial (funeral) contract holds the customer's money in a revocable trust, the customer — as the grant…
Did Texas's $25 sales-tax permit fee or state and local sales and use taxes apply to the National Railroad Passenger Corporation?
No. The letter said the permit fee did not apply and that the National Railroad Passenger Corporation was exempt from state and local sales and use tax under the cited federal provision.
Richard C. Spaulding, a retired 61-year-old New York State employee receiving annual distributions from the New York State Deferred Compensation Plan (funded through IRC § 457 salary deferrals), asked whether those distributions qualify for the Tax Law § 612(c)(3-a) $20,000 pension-and-annuity exclusion available to individuals age 59 1/2 or older - even though the plan administrator labeled his first payment an 'annuity payment.'
No. The Department ruled that distributions from the New York State Deferred Compensation Plan are characterized as wages, not pensions or annuities, for both federal and New York income tax purposes,…
How did Texas distinguish nontaxable insurance premiums and commissions from taxable insurance-service fees and mixed insurance packages?
Premiums and agent commissions for obtaining coverage were not taxable, but loss prevention, claims adjustment, and other defined insurance-service fees were. Mixed packages were presumed fully taxabl…
Which supplies could a Texas word-processing business buy tax-free for resale, and which items were taxable business-use purchases?
Paper, mailing labels, and report covers transferred to clients could be bought for resale. Printer ribbons, computer hardware, and software used by the business were taxable when purchased.
Were fees an insurance carrier paid to third-party administrators exempt as insurance premiums when used to buy taxable insurance services?
No. The administrator fees were taxable payments for insurance services, not premiums for insurance protection, even when the carrier funded them from premium revenue.
Does a repair subcontractor have to charge a video-equipment retailer sales tax on repairs, when the retailer marks up the charge and collects tax from the final customer?
No — the subcontractor doesn't collect tax from the retailer if the retailer gives a proper resale certificate, because the repair is for resale. Video Systems Service sets up service departments insi…
Were a seller's meat products, sandwiches, and other food ready for immediate consumption taxable in Texas?
The meat products were not taxable, but sandwiches and any other food ready for immediate consumption were taxable. The letter did not separately analyze whether smoking changed the result.
Can a Nebraska S corporation with an Employment and Investment Growth Act (LB 775) agreement elect the single sales-factor apportionment formula, even though the credit itself flows through to shareholders?
Yes. Under Revenue Ruling 29-88-1, an S corporation may elect to use the single (sales-only) factor apportionment formula provided in Neb. Rev. Stat. section 77-4105 of the Employment and Investment G…
Is an unincorporated cattle-breeders' club that runs a commission cattle auction, but issues no stock or ownership certificates, subject to New York's corporate franchise tax?
No -- because the club is an unincorporated association that issues no stock, certificates, or other written instruments evidencing ownership interests, it doesn't meet the regulatory definition of a …
Did out-of-state testing prevent Texas tax on aircraft components installed before the customer took possession of the aircraft in Texas?
No. Texas tax was due on the components because the customer took possession of the aircraft in Texas, even though the aircraft then went out of state for required testing.
Could a Texas remodeler exclude separately stated engineering, drafting, architectural, and related postage charges from its taxable remodeling price?
Yes. Separately stated professional-service charges and their postage were nontaxable, but telephone, equipment, and extra-copy costs directly related to remodeling stayed in the tax base.
Was tenant showroom finish-out in a decades-old warehouse converted into a design center taxable remodeling or nontaxable new construction?
It was taxable remodeling under Rule 3.357(a)(6). The total charge to the tenant was taxable, and tenants who had not paid tax were told to pay the remodeler or the state.
New York Advisory Opinion TSB-A-88 (3)I: Issue raised is whether the Petitioner, as a shareholder of an S corporation, is entitled to a pass through of the S corporation's employment incentive tax credit provided for under section 210.
No. The Department ruled that S corporation shareholders are not entitled to a pass-through of the corporation's employment incentive tax credit under Tax Law section 210.12-A, because that credit is …
Could a part-year resident moving into South Carolina allocate the full allowable moving-expense deduction to South Carolina instead of apportioning it?
Yes. A part-year resident moving into South Carolina could allocate the full allowable moving-expense itemized deduction to South Carolina to match the related reimbursement included in South Carolina…
Who had to report the annual income earned in a revocable pre-need funeral trust: the funeral-home trustee or the customer and beneficiary?
The customer. Because each customer could revoke the pre-need contract and recover the account balance and accruals, the customer was treated as the trust owner for income-tax purposes and had to incl…
Was fuel used in tugboats exempt from South Carolina sales and use tax when the tugs moved ships, barges, and cargo or assisted ships in Charleston Harbor?
Fuel was exempt when XYZ's tugs generated motive power to transport ships, barges, or cargo. Fuel used only to assist ships in Charleston Harbor was taxable because the ruling did not treat that harbo…
Could a security company exclude separately stated insurance, patrol-vehicle, polygraph, or administrative costs from its taxable service charge?
No. All were taxable as costs directly related to the security service, even when separately stated. A polygraph examination performed apart from security service was not taxable.
When were sales, installation, and repair of blinds, drapes, or shades taxable under Texas's 1988 rules?
Selling and installing them was taxable on residential or commercial property, as were sales alone and repairs. Installation was not taxable when the installer did not sell the items.
We're restructuring NBC's occupancy of Rockefeller Center through a complex package: assigning an old RCA lease to NBC (its GE sibling), amending and consolidating existing leases, creating a brand-new 37-year Tower Lease, a separate Studio-RCA West Lease with an eventual purchase option, additional-space leasing rights, and an Industrial Development Agency sale-leaseback for tax benefits. Which pieces of this multi-part transaction trigger New York's Real Property Transfer Gains Tax?
Out of the entire multi-part restructuring, only ONE piece is taxable: the Studio-RCA West Lease, because it's coupled with a future purchase option, with tax due -- based on the present value of net …
Was a medical billing and practice-management company's percentage fee taxable merely because it used outside computer services?
No. Its basic management and billing fee was not data processing, but separately billed claims preparation or debt collection was taxable, and bundled taxable services over 5% made the whole charge ta…
When did repair work make a real-property maintenance contract taxable, and what records and historical prior-contract rules applied?
Repairs at 5% or less did not change the nontaxable contract. Above 5%, the whole contract was taxable unless repairs were separately stated, and inadequate records caused full taxation.
When did Texas presume an 800-line call originated in Texas for sales-tax purposes?
If station-message records did not establish that the call originated outside Texas, the call was presumed to originate in Texas and Texas sales tax was due.
Did Texas classify oil-and-gas flowlines as tangible personal property whether they were above or below ground?
Yes. The Comptroller retained its industry-wide position that flowlines above and below ground were tangible personal property and declined to change it in 1988.
Was mesquite, hickory, or pecan wood used by restaurants to cook food for sale exempt from Texas sales tax?
Yes. Wood used to cook food for sale qualified for exemption, provided the seller obtained a properly completed exemption certificate from the purchaser.
Which grapefruit packing activities counted as processing, and when could the separately metered facility's electricity qualify for exemption?
Waxing was processing, but washing, grading, and packing were not. More than 50% of the facility's electricity had to be used in waxing for the electricity to qualify for exemption.
Was the proposed Texas electricity sales-tax exemption certificate acceptable, and what was missing when a nonregistered engineer certified the study?
The certificate was otherwise acceptable, but it needed the owner's certification when the study was certified by an engineer who was not registered. Identifying the engineering college was suggested.
How did Texas's 1988 state, city, county, and transit sales taxes apply to residential and nonresidential electricity?
Residential electricity was exempt from state, county, and transit tax and usually city tax. Nonresidential electricity owed adopted half-percent city and county taxes on 1988 service billings.
After Texas revised its answer, were the described typing service and additional résumé copies taxable?
The March 22 response said the typing service was not taxable data processing, reversing the February 1 answer. Additional résumé copies remained taxable, and printing bought for resale could use a re…
My company arranges trip leases with independent truckers and never directly employs the drivers. Am I still liable for New York's highway use tax and fuel use tax on those trucks?
Possibly yes, depending on control, not labels. New York's highway use tax (Tax Law § 503) and fuel use tax (§ 503-a) fall on the "carrier," defined as the owner or anyone else with control of or the …
New York Advisory Opinion TSB-A-88 (2)I: Issue raised is whether, under Article 22 of the Tax Law for taxable years 1984, 1985 and 1986, an investment tax credit is allowed for the equipment used in a frozen custard business.
No. The Department ruled that preparing frozen custard for retail sale is food preparation, not 'manufacturing' or 'processing' within the meaning of Tax Law § 606(a), so Keith and Gloria Wilson could…
How did Texas tax title-company charges for government certificates, joint-plant reimbursements, copies, delivery, and tax-search information?
Government pass-throughs and joint-plant reimbursements could be nontaxable, while added title-company fees, plant copies, taxable-item delivery, and purchased tax-search information were taxable.
Were a forensic engineer's accident, fire, or loss investigations taxable insurance services, and was separately stated court testimony taxable?
The investigative engineering services were taxable claims adjustment or processing under Rule 3.355(a)(5). Separately stated charges for testifying in court were not taxable.
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