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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Were lime and crushed limestone used as a feedlot desiccant exempt from Texas sales tax?
Yes. The products qualified for exemption, and the purchaser could give the supplier an exemption certificate instead of paying tax.
Are a distributor's sales of candy to schools and PTAs that resell it for fundraising exempt from sales tax?
It depends on whether title passes to the fundraising organization, and tax applies unless the distributor gets a proper certificate. Miss Chocolate Company sells confectionery to groups like schools …
Could a health club treat on-site equipment as rented to members because membership fees were taxable?
No. Members' on-site use was not an equipment rental, so the health club owed tax when purchasing its equipment and supplies.
Could trip tickets or truck logs prove export to Mexico under the new Texas export regulations?
No. The letter said trip tickets and truck logs were no longer acceptable; customs-broker documentation or a Mexican pedimento appeared suitable for these transactions.
Which charges for moving, assembling, setting, loading, and hauling a pumping unit were taxable?
Setting an assembled unit on its base was not taxable, but assembly was taxable; a combined assembly-and-setting charge was fully taxable, as were the invoiced loading and hauling charges.
Could a storage-trailer lessor buy repair parts tax-free for resale when attaching them to rented or leased trailers?
Yes under the rule described. Storage trailers were motor vehicles taxed under Chapter 152, but their repair parts were taxable items governed by Chapter 151. Rule 3.285(a) allowed resale treatment wh…
Was a cervical pillow taxable when sold to a hospital, and could a prescription change the result?
The pillow was taxable when sold to a hospital, but it could qualify as an exempt therapeutic device when sold to an individual on a doctor's prescription.
Were membership fees charged by a video dating and social club subject to Texas sales tax?
No. The club's membership fees were not taxable where members used video technology and resumes to screen potential dates.
Is equipment a gravel plant rents from a related corporation to assemble the plant exempt as production machinery, and is the related-party rental taxable?
Equipment used directly to assemble the plant may qualify for the production exemption, but the related-corporation rental is still taxable. Gernatt Asphalt, a gravel producer, rented welding and eart…
Is a country club's separately stated mandatory monthly gratuity charge taxable as club dues, even the portion paid to employees?
Yes — the mandatory monthly gratuity charge is taxable club dues, and the food-and-drink gratuity exclusion does not help. Park Country Club is a 'social or athletic club' because its members control …
Are hostess personal-service fees taxable when charged by an establishment that also sells beverages?
Yes — the hostess personal-service fees are taxable, along with the beverage sales. WHK Restaurant Corporation sells alcoholic and non-alcoholic beverages and charges patrons a personal-service fee fo…
Were Ensure, Nutriment, and the Complete B tube-feeding formula exempt from Texas sales tax?
Yes. Ensure and Nutriment were exempt food products, and Complete B was also exempt based on its marketing and food ingredients.
Could an airline buy or temporarily store materials tax-free before shipping them to Saudi Arabia?
Yes, under the stated conditions. Airline-carried items qualified under the common-carrier exemption; sea shipments needed export proof, and qualifying out-of-state purchases could be stored temporari…
If a bulk-sale purchaser defaults and returns the business assets to the seller in lieu of foreclosure, is she released from liability for the seller's unpaid sales taxes?
No — returning the business assets did not cancel the sale, and the purchaser remains liable for the seller's unpaid sales and use taxes under the bulk-sale rules. Susan Jane Jankowski bought a bar an…
Is a customer's purchase order marked 'tax exempt' enough to support an exempt sale, or must the customer give the vendor a properly completed exemption certificate on the prescribed form?
A customer's purchase order marked 'tax exempt' is not a valid exemption certificate — the vendor should collect tax unless the customer furnishes a properly completed certificate on the form the Tax …
Must an out-of-state computer seller with no office, employees, salespeople, or advertising in New York collect New York sales tax on computers shipped to New York buyers?
No — as described, the out-of-state seller has no obligation to collect New York sales tax, because it neither maintains a place of business nor solicits business in New York; but its New York custome…
How is a charter fishing/hunting 'package deal' taxed — item by item — and what happens if the whole trip is billed as one flat fee?
It depends on how the bill is written: itemize, and each part is taxed under its own rule; charge one flat fee without separating the parts, and the entire fee is taxable. Outdoor Pursuits, Inc. arran…
Is the sale and installation of a wood or coal burning stove — and its chimney and masonry — a tax-exempt capital improvement to real property?
The stove itself and its installation stay taxable, but the permanent masonry work — a brick chimney, fireproofing, and concrete base — is an exempt capital improvement; a metal chimney depends on how…
May a prepared-food seller accept resale certificates instead of collecting sales tax, and credit its customers' remitted tax against its own liability?
No — there is no resale exemption for prepared food taxed under 1105(d), so accepting resale certificates was improper and the seller owes the tax it failed to collect; it cannot simply credit its cus…
Did assigning or factoring equipment leases accelerate Texas sales tax, and who remained liable?
Assignment generally made tax due on remaining operating-lease payments unless it was loan collateral. On the stated cash-basis facts, tax continued as payments arrived, but the lessor remained ultima…
Who owed Texas sales tax on corrugated steel pipe used for erosion control on farms and ranches?
The pipe was not agriculturally exempt. A landowner owed tax on what it bought; the exempt district did not owe tax on its share, with contractor rules depending on lump-sum versus separated billing.
When did charges for intrastate facsimile transmissions become taxable in Texas?
October 1, 1985. New legislation classified intrastate telecommunications as taxable services, and the letter applied that change to intrastate fax transmissions.
Were a nonprofit's public and season-ticket-holder parking charges exempt from Texas sales tax?
No. Daily public parking and parking sold to season-ticket holders were taxable, even though the organization was exempt under Section 501(c)(3).
My 1982 lease and companion interim lease with a tenant, both signed before the gains tax's March 28, 1983 grandfather cutoff, contain purchase options and have been amended several times since. We now want to fix a firm commencement date for the main lease and separately convert the interim lease into essentially a full net lease with the purchase option removed, plus have the tenant take over certain operating responsibilities in exchange for a lump-sum payment. Do any of these amendments cause us to lose the pre-1983 grandfather exemption, and does the lump-sum payment or the interim-lease conversion itself count as a taxable transfer?
It depends on which amendment. 52 Habitat Co., landlord of a Manhattan office building under a 1982 Net Lease and companion Interim Lease with Morgan Guaranty Trust Company (both containing purchase o…
Did an office-furnishings dealer have to collect tax from a freight carrier for repairing damaged inventory?
No. The dealer could buy repair materials with a resale certificate, collect tax when the restored merchandise was sold, and did not have to collect tax from the carrier.
How should a computer-maintenance company buy and tax repair parts used under old and newly taxable service agreements?
It could keep parts in tax-free resale inventory. Parts used for agreements entered before October 2, 1984 required accrued use tax; the Comptroller agreed with the stated procedure for taxed agreemen…
How did Texas classify swabbing, paraffin cutting, fishing, offshore work, and swab-tank rentals?
Results depended on the job: swabbing and frac-related fishing were nontaxable, paraffin cutting and ordinary fishing were taxable, offshore work beyond Texas limits was not, and bare swab-tank rental…
Was removing paraffin from the producing string of an oil well subject to Texas sales tax?
Yes. The service was taxable, and the provider was told to collect and remit tax going forward while retaining the letter for any examination of earlier periods.
Were components of a specialized honey house used only to process the beekeeper's own honey exempt?
Yes, on the stated facts. The on-farm structure was built only for extracting and bottling the beekeeper's own honey and was not used for storage or offices.
How did discounts and refunds for unused diamonds affect tax on diamond drill-bit sales?
A cash discount at sale reduced the taxable price, but a later credit for returned unused diamonds did not. A supposed deposit stayed in the tax base unless fully refunded with its tax.
Are the membership dues of a public beach club taxable as dues of a 'social or athletic club,' when a permanent-member board can override the elected members' committee?
Yes — the beach club is a 'social or athletic club' and its membership dues are taxable, because the members control the club's activities through an elected governing committee. The Silver Gull Club,…
Does the production exemption cover the equipment and supplies a company uses to demolish railroad bridges and cut up the resulting scrap for sale?
No — the equipment and supplies are used predominantly for demolition, which is not production, so the production exemptions do not apply and the purchases and rentals are fully taxable. Sheldon Const…
Can a company claim the resale exemption on aircraft it also used to fly its own personnel before reselling them?
No — because the company used the aircraft to transport its own personnel before reselling them, the resale exemption is lost, and both planes are taxable. John B. Pike and Son, Inc. bought a Rockwell…
Were single-use Quick Cups consumed in mandatory metal-casting quality control exempt from Texas sales tax?
Yes. The cups qualified because they were used and consumed in the manufacturing process, and the manufacturer could give its supplier an exemption certificate.
Was corrugated metal pipe used for soil conservation on a farm or ranch exempt from Texas sales tax?
No. The pipe was taxable, and the purchaser had to pay tax on its full purchase price; the described agricultural exemption covered qualifying machinery or equipment.
Can a travel-agency cooperative's headquarters treat 'override commissions' generated by its out-of-state member agencies' bookings as non-New York receipts for franchise tax allocation purposes, on the theory that they're really royalty-like income?
No. Petitioner's override commissions are not analogous to royalty income -- they're payment for services Petitioner itself performs (negotiating commission packages for member agencies and providing …
Were charges to clean commercial vessels and marine cargo containers taxable in Texas?
Not when the vessel exceeded eight tons displacement and was used exclusively for commercial purposes. Cleaning was taxable if the vessel displaced less than eight tons before loading.
When did an 800-number parts-locator hotline fee become taxable?
The fee was then nontaxable, but the entire member charge would become taxable October 1 under new intrastate-telecommunications legislation.
How did tank capacity and reclaimed-oil credits affect tax on oil-tank cleaning?
Cleaning tanks over 500 barrels was nontaxable real-property maintenance; cleaning tanks of 500 barrels or less was taxable before the reclaimed-oil credit.
Why did Texas require conservation districts to collect tax on farm erosion-control pipe?
The Comptroller treated the pipe as part of real property, not exempt farm machinery or equipment, based on a court decision about a concrete irrigation ditch.
New York Advisory Opinion TSB-A-88 (13)I: Issues raised are (1) whether upon the death of a nonresident, the spouse and sole beneficiary of the deceased nonresident is entitled to a stepped-up basis for an installment sale thereby eliminating any future taxable gain for purposes of the personal income tax imposed under Article 22 of the Tax Law and (2) whether interest paid to a nonresident on an installment sale is taxable for purposes of the personal income tax imposed under Article 22 of the Tax Law.
No step-up in basis for the surviving spouse: because she filed a joint return with the decedent and personally signed the section 654(c)(4) agreement, she remains personally liable for the full tax o…
East River Savings Bank's mutual-to-stock conversion was already ruled tax-free for New York franchise tax purposes -- does it also matter, for New York purposes, whether IRC section 382(b) limits the converted bank's federal net operating loss carryovers as a result of the reorganization?
No, it's immaterial for New York purposes. This is a MODIFIED Advisory Opinion -- it appends a new discussion to the original Advisory Opinion issued to East River Savings Bank on June 11, 1985, addre…
Which charges connected with rented downhole tools were taxable?
Thread protectors, repairs, and delivery were taxable; inspection, lost-tool damages, and restocking were not. The lessor owed tax on materials for free ring gauges.
Is transferring trucks from a dissolved partnership to a corporation owned by the former partners taxable, when no stock or payment changes hands?
No — if the books document it as a genuine contribution to capital with no stock or other consideration, the transfer is not a taxable retail sale. Anacola Trucking Service, Inc. is a refuse-collectio…
Must a village collect sales tax on the sewer user charges it bills residents, when it hires a private firm to run the treatment plants?
No — the village's sewer user charges are exempt, because a municipal instrumentality is not required to collect tax on a service not ordinarily sold by private persons, and hiring a private operator …
Are a trucking company's vehicles exempt from sales/use tax as interstate commerce when its NY-to-NY trips merely pass through other states?
No — trips that begin and end in New York are intrastate even if they pass through other states, so the trucks are not used in interstate commerce and are subject to sales and use tax. S.T.L. Transpor…
For a regulated investment company whose entire New York taxable income for a year consists solely of foreign taxes withheld on foreign investments, must the investment allocation percentage be computed using ALL of the company's investment capital, or only the specific foreign investments that produced that income?
All of the company's investment capital, not just the specific foreign investments that produced its taxable income. Tax Law Section 210.3(b)(1) requires the investment allocation percentage to be com…
When a New York mutual savings bank converts to a FEDERALLY chartered stock savings bank (crossing from state to federal charter, not staying state-chartered), is the conversion still tax-free for New York bank franchise tax, and does the bank's change in regulatory charter affect its New York filing obligations?
The reorganization itself is tax-free for New York Article 32 franchise tax purposes, same as a same-charter mutual-to-stock conversion -- Article 32 has no modification addressing an IRC section 368(…
Does New York's rule requiring interest paid to a more-than-5%-stockholder to be added back to income also reach interest a corporation pays to its 'grandparent' corporation -- the parent of its direct parent?
No. Tax Law Section 208.9(b)(5) requires an add-back only for interest paid on debt owed to a stockholder owning more than 5% of the taxpayer's own capital stock, or to a subsidiary of such a stockhol…
Does New York's rule requiring interest paid to a more-than-5%-stockholder to be added back to income also reach interest a corporation pays directly to its 'grandparent' corporation -- the parent of its direct parent?
No. Commercial Credit Business Services, Inc. was a second-tier subsidiary, wholly owned by Commercial Credit Business Loans, Inc., which was itself wholly owned by Commercial Credit Company. Petition…
If a subsidiary switches from borrowing through its direct parent to borrowing directly from its 'grandparent' corporation, does New York's related-party interest add-back rule apply to the interest it now pays?
No. Commercial Credit Financial Services, Inc. was a second-tier subsidiary, wholly owned by Textile Banking Company, Inc., which was itself wholly owned by Commercial Credit Company. Since January 1,…
We're a nonprofit that runs an intermediate care facility for people with developmental disabilities, and we just recorded a mortgage to build it. Do we qualify for either of the mortgage recording tax's nonprofit exemptions -- as a 'voluntary nonprofit hospital corporation' or as a 'community mental health service company'?
No exemption on either theory. United Cerebral Palsy and Handicapped Children's Association of Chemung County, Inc. executed a $2,436,800 mortgage in December 1982 to build an intermediate care facili…
Were separately billed spool removal, wire-line repair, replacement, and installation charges taxable?
Yes. All described charges were taxable repairs; out-of-state work required use tax on the total when the customer returned the unit to Texas.
When should sales tax be included in freight or insurance claims for damaged goods?
Treatment depended on claimant and salvage facts. Consumer claims included prior tax; seller or resale-inventory claims generally did not, with tax collected on later salvage sales.
Did sending employees or contractors into Texas for computer repairs create taxable representation?
Yes. A repair employee established representation, making repair charges and later property sales taxable; contractor-performed repairs rebilled by the seller were also taxable.
Were installation-instruction labels affixed to windows exempt from Texas sales tax?
Yes. The labels qualified for exemption when they were affixed to the windows and sold together with the windows. The letter did not address unattached labels or any other facts.
Was furnishing and finishing installation of a marble whirlpool tub a sale or an improvement to realty?
It was an improvement to realty, not a sale-and-installation transaction. If the stated single-line billing controlled, Company A acted as a lump-sum contractor: it paid tax to suppliers on materials …
I own three contiguous residential buildings that are legally, structurally, and operationally separate (separate systems, entrances, tax lots, and registrations), and I'm selling all three to the same buyer by separate deeds. Do I have to add the sale prices together when testing against the $1 million exemption threshold for New York's Real Property Transfer Gains Tax, or does each building's price stand on its own because the buildings are legally distinct?
Aggregated -- because they were used for the same purpose. 340 West 89th Corporation owned three contiguous residential rental buildings (345, 347, and 349 West 87th Street) that were legally and phys…
Must an exempt organization that sells books through a room with a cash register and by mail collect sales tax, and can it refund tax it already collected to customers?
The organization must collect tax because it is operating a shop or store, and tax it already collected must be paid over to the State — it cannot be refunded to customers by the organization. The C.G…
Are custom-modified computer programs the vendor tailors to each customer's ATM system taxable, or exempt intangible property?
Under the rule in effect at the time, the programs are exempt intangible personal property, because the vendor must analyze each customer's requirements and modify the actual program for that customer…
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- 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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