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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New York Advisory Opinion TSB-A-85 (1)I: Can a homeowner claim New York's solar and wind energy system tax credit for a rented solar heating unit, plus the installation, piping, and fixtures paid for separately?
No, on both counts. The Department ruled that a homeowner who rents a domestic solar heating unit (rather than purchasing it) cannot claim the section 606(g) credit for that unit, because the statute …
How did Texas classify oilfield welding and determine the city tax rate?
Oilfield welding was presumed to be performed on tangible personal property unless the invoice clearly showed real-property work. The local rate depended on where work orders were accepted; orders acc…
Can a bank holding company's newly organized futures brokerage subsidiary apportion its income between New York and other states, based on maintaining a genuine office in another state (Chicago), even though the state hasn't written specific apportionment regulations for this kind of Article 32 taxpayer?
Yes, assuming the subsidiary is taxable under Article 32 in the first place (which the Opinion doesn't decide). Even though the Tax Commission has never written apportionment regulations specifically …
What made the submitted agricultural exemption certificate acceptable to a Texas seller?
The form relieved the seller when the purchaser completed it, the seller accepted it in good faith, it was signed and dated, the goods were eligible, and the form was tied to the invoice. STAR warns t…
Was bulk material used to make short-lived prototype patterns exempt from Texas sales tax?
No. The bulk material was taxable because the prototype patterns were not directly used in manufacturing and did not qualify for exemption, even though an accurate prototype led to creation of a perma…
Was sawdust used by a meat-packing company to smoke meat taxable?
No. The sawdust was necessary and essential and was consumed in processing the meat. The seller was instructed to obtain a properly completed exemption certificate from the customer instead of collect…
Which pressure-equipment calibration and related charges were taxable?
Customer-equipment calibration and calibration included with rented pressure equipment were taxable. Calibration of the supplier's equipment used by its own personnel was not. Equipment sales and trav…
Could a lessee's trade-in reduce Texas motor vehicle sales tax when a dealer sold the new vehicle to a third-party lessor?
Yes, but only to the extent the lessee's trade-in reduced the cash the third-party lessor paid the dealer. In the letter's example, an $8,000 trade-in reduced an $18,000 vehicle to a $10,000 payment b…
Who remitted tax on event tickets, complimentary tickets, outside-agency sales, and package admissions?
The ticket issuer remitted tax for the event month and could include tax in face value. Responsibility with an outside agency had to be written. Free tickets were untaxed but printing charges were tax…
Are the services of installing (setting up) and dismantling (breaking down) trade-show exhibits taxable in New York, and does it matter that the setup is temporary?
Installing exhibits is taxable; dismantling them is not taxable, but only if that charge is separately stated. I & D Inc. sets up and breaks down trade-show and convention exhibits — uncrating and bol…
Is energy used to heat 'make-up air' — outside air brought in to replace exhausted contaminated air in a plant ventilation system — exempt from sales tax as used directly in production?
It is taxable — the energy is not used directly in production. Weber-Knapp Company runs a mechanical ventilation system that exhausts toxic, flammable or explosive vapors from the work area and brings…
When equipment is leased under a lease that accounting rules treat as a capital lease, is sales tax based on the full periodic payment, the payment minus interest, or the capitalized asset value?
Sales tax is based on each full lease payment — not the payment minus interest, and not the capitalized asset value. Joy Manufacturing Company leases equipment under an agreement that, for accounting …
Were charges for customer time on tanning beds subject to Texas sales tax?
No under this 1985 letter. The Comptroller said charges for time on tanning beds were not taxable, based solely on the new salon's stated facts.
Did an appraisal district collect sales tax on copies of maps, microfiche, and other records?
Not when it furnished only single copies of documents; in that situation, it needed neither a sales tax permit nor tax collection. Sales of multiple copies were taxable.
Did a physician's prescription make the purchase of a waterbed exempt from Texas sales tax?
No. The waterbed remained taxable despite the prescription because the Comptroller said it did not qualify as a therapeutic appliance under Rule 3.284(a)(11).
How was use tax computed when a permit holder withdrew inventory and transferred interests to joint owners?
Taxable value was the transferor's purchase price, not the current market value charged to joint owners. The rate was the one in effect when the item was purchased, and overpaid tax from using the wro…
Did another bowling center's assumption of league contracts end their prior-contract exemption?
No, provided the new center did not change the contracts' rates or lengths. Copies of the old contracts had to be retained with the new contracts.
Are employer-owned country clubs open only to a company's employees 'social or athletic clubs' whose dues are taxable, even though the members have no ownership stake?
Yes — they are social or athletic clubs, and if any member's dues exceed $10 a year, all members' dues are taxable. IBM owns and operates three New York country clubs with golf courses, tennis/basketb…
Does a CAD/CAM computer used to design machine parts and to experiment with new designs qualify for the sales-tax exemption for production machinery or for research-and-development property?
The CAD/CAM computer is not exempt production machinery, but it qualifies for the research-and-development exemption if over 50% of its use is experimental design testing. Houdaille Industries uses a …
Is a records-storage company's charge a taxable storage service, or a nontaxable lease of real property?
It is a taxable storage service, not a nontaxable real-property lease. Record Retention Center Corporation stores customers' financial records in an open warehouse, assigning each customer an unsecure…
Does temporarily handing artwork or mechanicals to a client's printer for reproduction turn a designer's exempt service into a taxable sale of tangible personal property?
No — the temporary transfer for reproduction only does not turn the exempt design service into a taxable sale. Chermayeff and Geismar Associates, a New York design partnership, develops design concept…
Is a marina's charge for off-season land storage of boats a taxable storage service or a nontaxable lease of real property?
It is a taxable storage service. Genesee Marina, doing business as Riverview Yacht Basin, rents land space for off-season storage of boats. Its space-rental agreement puts the boat at the owner's risk…
Which radiator, cooling-system, air-conditioning, and related repair charges were taxable?
Automobile-repair parts were taxable but labor generally was not; complete radiator sales and incoming freight were taxable. Resale-certificate work was exempt. Off-road and other personal-property re…
Was an insurer's settlement for a stolen rental tractor a taxable sale?
No. The payment was indemnity for the dealer's loss, not a sale to the insurer, so the dealer did not report it as a taxable sale or collect tax. A replacement tractor for rental or resale could be bo…
For New York's alternative minimum-tax computation (which adds officer salaries back to income), does an employee's honorary or prestige job title -- like 'Managing Director' or 'Principal' -- make them an 'officer' whose salary must be added back, even if they don't actually perform officer functions?
It depends on which title. Employees with the specific titles listed in Tax Law Section 208.12 -- Chairman, President, Vice-President, Secretary, Assistant Secretary, Treasurer, Assistant Treasurer, o…
Is a computer system used partly for medical research and education, and partly for billing and other tasks, exempt from sales tax as research-and-development property?
The computer is exempt only if over 50% of its use is directly in qualifying research and development. Doctors Aquavella and Jackson bought a large computer system they said was used predominantly for…
Is a utility's payment to relocate underground gas mains and repave the street — forced by city construction — a taxable repair of real property or a nontaxable capital improvement?
It is a nontaxable capital improvement, not a taxable repair. Brooklyn Union Gas relocates its underground mains when New York City construction projects would interfere with them, excavating and layi…
Are a building designer's services and the illustrations he sells taxable, and can he buy the underlying materials tax-free for resale?
It depends on the end result: design work that culminates in completed, engineer-sealed working drawings under one contract is a nontaxable service, but selling a standalone drawing or illustration is…
Which items in a contractor's construction jobs are nontaxable capital improvements, and how is tax handled when one job mixes capital improvement work with a taxable installation?
Work that permanently improves the building is a nontaxable capital improvement, but a job that mixes capital-improvement work with a taxable installation is taxable in full unless the taxable part is…
When were oilfield free-point, back-off, and cutting services taxable?
Removing downhole tubing, rods, or pumps was taxable, while removing drill pipe or casing was not. If formation work or casing repair accompanied an otherwise taxable service, the whole job was nontax…
How were oilfield-pipe cleaning, repair, yard movement, sales, and returns taxed?
Cleaning was taxable maintenance, but the subsidiary's cleaning and repair of the parent's resale inventory was exempt. End-user sales, cleaning, and repairs were taxable; yard movement depended on ti…
Was injected Conray solution exempt, and how were mixed diagnostic kits classified?
Yes. Conray used as a saline medium for radioactive dye injected by a doctor was exempt as a drug or medicine. Past tax could be claimed by amended returns within the stated four-year limit. For singl…
Were computers used by contractors on federal real-property contracts taxable?
Yes for purchases, leases, or rentals effective October 2, 1984, including parts and supplies. A contractor could claim the historical preexisting-contract exemption for a federal contract entered bef…
Was a lump-sum charge to deliver, set up, and operate concert sound equipment taxable?
No under the stated arrangement, if one lump-sum amount covered both equipment and operating personnel. The provider instead paid sales tax on the equipment and supplies used to deliver that nontaxabl…
Which conservation-district items and services were taxable, and which qualified for farm or ranch treatment?
The 1985 letter classified a list item by item. Agricultural-use fertilizer, lime, irrigation systems, grass seed, and some farm equipment were not taxable, while home-use or erosion-control purchases…
How did the October 2, 1984 rate change affect old leases, later leases, purchases, and early payoffs?
Pre-October 2 leases kept the old rate under the historical prior-contract exemption through September 30, 1987. Later leases needed a pre-October bid to qualify. Financing-lease purchases and qualifi…
Were tire repairs taxable on highway motor vehicles and on non-motor-vehicle workover rigs, and where was local tax due?
The 1985 letter said motor-vehicle tire repairs were not taxable, but repairs to workover rigs and other non-motor vehicles were taxable. It sourced local tax to the repairman's place of business; STA…
Were mites sold for fire-ant control exempt when used on a farm or ranch?
Yes under the stated facts, when purchased for exclusive farm or ranch use. The 1985 letter treated the mites as farm or ranch work animals and required an exemption certificate; STAR warns that regis…
Is a vending operator's purchase of a video game machine a nontaxable purchase for resale because he later 'contributes' it to a partnership with the location owner?
The purchase is taxable — it is a purchase for use, not a purchase for resale, and later contributing the machine to a partnership doesn't change that. Folz Amusement & Game Co. buys a video game mach…
How did Texas treat bundled and separately stated postage, handling, and insurance charges?
A single combined postage, handling, and insurance charge was taxable. When separately identified, insurance was not taxable, handling was taxable, and postage was taxable unless the contract passed t…
If an individual repays income they earlier reported under a 'claim of right' and uses the federal section 1341 special tax computation, does Nebraska use that same section 1341 result for its income tax?
Yes. If a taxpayer computes federal income tax under Internal Revenue Code section 1341 -- the special rule for a taxpayer who repays a substantial amount (over $3,000) that was earlier received and r…
Were softball-team league fees taxable as admissions to an amusement?
No under the stated facts. The 1985 letter treated the league fees as entry fees, not amusement admissions, because teams paid them to compete, the fees funded the games, and they substantially exceed…
When a New York corporation with unused investment tax credit and employment incentive credit is statutorily merged into an out-of-state parent, can the surviving out-of-state corporation carry those unused credits forward, and does the merger trigger recapture of credits already claimed?
Yes, the unused credits carry forward, and no recapture is triggered by the merger itself. Because a statutory merger under IRC section 368(a)(1)(A) is a transaction described in IRC section 381(a), t…
Did the October 2, 1984 sales-tax changes make the two-step Crimp-Kote pipe process taxable?
Yes. The 1985 letter said services that remodel tangible personal property became taxable on October 2, 1984, making the total charge for both Crimp-Kote steps taxable. An attached 1980 letter had rea…
Does a video post-production company's studio equipment and building qualify for New York's investment tax credit as property used in the production of goods by 'processing'?
Yes, for the equipment, and conditionally for the building. Unitel Video Services' activities -- recording, editing, and duplicating television commercials and programs, transferring film to videotape…
Is a private ambulance company that also provides emergency medical care en route taxed as a New York transportation corporation (barred from electing S corporation status), or as an ordinary Article 9-A business corporation (eligible to elect S status)?
The ambulance company is a transportation corporation under Sections 183-184, not an Article 9-A business corporation, and therefore cannot elect S corporation status. Even though it provides emergenc…
Is a corporation that owns trucks and leases them to a related transportation company taxed as a transportation corporation itself, or as an ordinary Article 9-A business corporation -- when the petitioner's own factual statements about who controls and drives the equipment contradict each other?
It depends on facts the Department could not resolve from a contradictory petition. If Petitioner truly relinquished supervision and control of its tractors and trailers to Sheehan Carriers, Inc. and …
Does New York's franchise tax exemption for 'limited-profit housing companies' organized under Article 2 of the Private Housing Finance Law also cover nonprofit 'housing development fund companies' organized under Article 11 of that same law -- and if not, can an Article 11 company still be exempt some other way?
No, the Section 209(4) exemption itself does NOT extend to Article 11 housing development fund companies -- it's narrowly construed to cover only limited-profit housing companies organized under Artic…
Could a physician's verbal order or a signed health-care referral count as a prescription for exempt therapeutic items?
Yes on the stated facts. After consulting State Board of Pharmacy personnel, the Comptroller treated both the physician's verbal orders and the submitted signed referral forms as prescriptions, so the…
How did Texas treat lump-sum subcontracts, itemized change orders, and freight under separated construction contracts?
The Comptroller examined each subcontract separately. A lump-sum subcontract improving real property made the subcontractor responsible for tax; itemized change orders kept the original lump-sum chara…
Were perennial food-producing plants exempt in the same way as the edible products they produced?
No. The 1985 letter distinguished the food product from the plant: apples, strawberries, and perennial herbs sold as food were exempt, but apple trees, strawberry plants, and perennial herb plants wer…
Were materials incorporated into an eight-ton-or-larger paddlewheel charter boat and restaurant exempt?
Yes under the stated exclusive commercial-use facts and Section 151.329. Component materials and attached items qualified, but personal use would trigger tax on the boat's fair-market rental value.
Was machinery and equipment bought to make wine exempt when the winery was owned and operated by the original grape producer?
Yes under the stated facts. The Comptroller distinguished winemaking from denim manufacturing and said machinery and equipment bought by a winery owned and operated by an original wine-grape producer …
Could a ticket seller give collected sales tax to promoters to report, and who remained accountable if they did not remit it?
Temporarily, the seller could pass collected tax to an accepting promoter while reprogramming, but the Comptroller did not release the seller from liability. Without a written assumption of responsibi…
Are a bottle-bill container handler's charges for collecting, transporting, processing, and accounting for empty deposit containers, and its sale of the processed materials, subject to sales tax?
None of the charges are taxable. Western New York Beverage Industry Collection and Sorting picks up empty non-refillable deposit containers from dealers, transports them, sorts and processes them into…
How did Texas distinguish seller-installed bowling equipment from equipment bought and installed by the bowling center?
Seller-installed automated scoring machines, pin-setting machines, alleys, returns, and related equipment permanently affixed to realty remained real-property improvements. The brochure's taxable-purc…
Who paid and collected tax under lump-sum versus separated home-improvement contracts?
Under a lump-sum contract, the contractor was the consumer: it paid suppliers' tax on materials and did not collect tax from the customer. Under a separated contract, the contractor was a retailer of …
Were admission tickets sold to preregister bidders at an auction taxable as amusement admissions?
No. The 1985 letter said auctions were not amusement services, so selling admission tickets to an auction for bidder preregistration was not taxable.
Were charges for laboratory blood typing and dentists' wax impressions taxable within a child-identification service?
No. The Comptroller said charges for blood typing and wax dental impressions were not taxable, whether the company retained the resulting information or transferred it to clients.
When were delivery charges taxable for fresh water, taxable goods, and a water-KCL mixture?
Delivery of nontaxable fresh water was not taxable, but mixing it with taxable KCL made the mixture taxable. Delivery of taxable goods was taxable unless separately stated and occurring after the sale…
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