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 was sales tax computed when schools or photographers collected payment for student photograph packages?
When the school handled orders, delivery, and collection and remitted proceeds less commission, the photographer collected tax on its net proceeds and the school commission was not taxable.…
What South Carolina tax assistance was offered to businesses affected by Hurricanes Andrew or Iniki in 1992?
Affected South Carolina businesses with offices in Florida or Hawaii could seek filing and payment extensions, suspension of enforced collection, waiver of related penalties, free replacement…
Texas Letter Ruling 9209L1195A01: Airlines/Licensed Carrier — Complimentary/Noncomplimentary Alcoholic/Nonalcoholic Beverages Served To Passengers — Nonreusable Items Used (Cups/Stir Sticks/Napkins)
No. The Comptroller ruled that plastic cups, paper napkins, and stir sticks used by an airline to serve alcoholic and non-alcoholic beverages are not exempt from Texas sales/use tax. The exemption…
Is a manufacturer's waste-removal bill exempt as 'industrial solid waste' under Texas Rule 3.356?
No, not automatically. Texas taxed the waste-removal charges here because most of the plant's trash was empty paint/glue/varnish containers and shipping refuse, not waste from the actual…
For privacy, my husband and I formed a corporation to hold title to our residence, which we occupy exclusively as our home -- we've never rented it or claimed depreciation on it. If we later sell the property, does New York's Real Property Transfer Gains Tax's personal residence exemption apply, even though a corporation technically owns it?
The exemption MAY apply, but it has to be earned on the specific facts -- a corporation can't automatically claim the residence exemption just because its shareholders live in the house, but it can…
What should readers use instead of the original TAA 92A-068 for fast-food delivery effective sales-tax rates?
Use TAA 92A-068R. The original rejected a taxpayer-specific statistically sampled rate and allowed the historical concession rates, but the December 15, 1992 revision clarified that those published…
Which heart-surgery products were exempt or taxable when sold separately, and what happened when exempt and taxable components were bundled?
Implanted heart valves, the aortic valved graft, annuloplasty ring, and balloon-tipped catheter were exempt when sold separately. Cautery units, sizers, the pump console and limiter disk,…
Was a hotel's fee for a convention customer failing to use its agreed room block subject to Florida sales tax?
Generally no, when unused rooms returned to the hotel and were available for other guests on the fee date. The ruling said the fee became taxable only if the hotel recorded it as rental income.
Can the 1992 point-of-delivery rules in TAA 92A-065 still be used to source Florida discretionary sales surtax?
No. Florida marks the ruling obsolete because section 212.054 was amended effective January 1, 1994. Historically, a dealer in a surtax county charged no surtax for delivery into a nonsurtax county,…
Can a Texas construction contract be changed from lump-sum to separated (or vice versa) by an addendum or change order, and how are cost-plus contracts and profit percentages treated for sales tax?
Yes — a contract amendment, addendum, or change order can convert a lump-sum construction contract into a separated contract (or vice versa) for Texas sales tax purposes, but only if it is made…
Texas Letter Ruling 9209L1195G12: Military Base — Federal Contract For Both New Construction And Repair/Remodeling Of Real Property
A contractor on an Air Force base job covering both new construction and repair must pay tax on consumable materials and equipment used for either part of the work. Materials incorporated into the…
If an unpermitted company sells a third airplane within 12 months of two earlier sales, is the third sale taxable in Texas, and are the first two sales retroactively taxed?
Yes, the third airplane sale within the same 12-month period is taxable under Rule 3.316(b)(2). The first two sales won't be retroactively taxed as long as the company wasn't in the business of…
Texas Letter Ruling 9209467L: Chamber Of Commerce — Contract From 10/1/91 — 10/1/93 To Build Building To Be Donated To City
A Chamber of Commerce that qualifies as a tax-exempt organization can issue an exemption certificate to its prime contractors, who can in turn issue resale certificates to subcontractors and…
Is a subcontractor's concrete sawing, breaking, and lifting for a road repair job taxable in Texas, and can the general contractor take a tax credit for it?
Yes. A subcontractor who saws, breaks, and lifts out concrete as part of repairing a road patch is performing a taxable nonresidential repair service. The subcontractor must collect Texas sales and…
Is electricity used to power tanning beds at a tanning salon taxable in Texas?
Yes. The Texas Comptroller ruled that electricity used by a tanning salon to power its tanning beds is taxable. The taxpayer argued it should be exempt by analogy to the exemption for electricity…
Texas Letter Ruling 9209434L: Tours — Package Includes Transportation, Catered Meals, Prepaid Fees To Exhibits
It depends on the tour's essence. If the tour is primarily a guided, scenic tour of Texas attractions, the total charge (including transportation) is taxable as an amusement service. If the company…
Is encoding machinery a satellite broadcaster uses to make its own broadcast disks exempt Connecticut manufacturing machinery?
No -- it's taxable. A satellite broadcaster ran about 80 channels from a Connecticut facility. To beam a movie, it first used high-speed 'encoding' machinery to convert the movie from analog…
Texas Letter Ruling 9209L1198D05: Donation/Gift Of Printed Book Covers/Brochures/Posters To Schools
The business selling advertising space on posters donated free to a school may give the printer an exemption certificate instead of paying tax on the posters, but owes tax as the consumer of other…
Is a company's service of testing computer circuits taxable when the circuits will be assembled into products held for resale?
No — not taxable here. Testing computer circuits is a taxable service on tangible personal property, but because the circuits will be assembled into products held for resale, the testing isn't…
Were photographs sold to publishers or advertising agencies purchases for resale, and could stock-photo film be bought for resale?
A publisher's copying use made the physical-photo sale or lease taxable. An advertising agency could buy a specific photo for resale only if title passed to its client before use, or could act as…
Texas Letter Ruling 9209L1209E03: Property Management Company — Services Performed At Bank That Uses Building For Own Operations And For Rental
No. Because the bank uses the building for its own operations in addition to renting it out, the bank is not holding the property solely for rental. That means the company managing the building does…
Texas Letter Ruling 9209L1196G11: Hot Air Balloon Services — Used For Promotional/Advertising Purposes — Nontaxable Services
The charges billed to the client for travel, equipment, and operating the hot air balloon are not subject to Texas sales tax, because providing the balloon and crew for another company's advertising…
Texas Letter Ruling 9209L1195G05: Grounds Cleaning — Around Structures/Units That Are Not Buildings — Taxable Cleaning Services
Yes. Texas ruled that a contractor's service of picking up used materials (like spent welding rods and rags) around a chemical plant's manufacturing units is a taxable real property service, fitting…
Texas Letter Ruling 9209L1193A01: Speed Bumps/'No Parking' Signs — Installed By City And Charges Billed To Citizens — Treated As Reimbursement To City
It depends on ownership and installation. If the sign stays city property and the citizen's charge is pure reimbursement, it's not taxable. If the sign becomes the citizen's property, the charge can…
Texas Letter Ruling 9209L1192G09: Heating Manufacturing/Processing Areas — Gas/Electricity Used
When a shop area is used partly for taxable repair work and partly for exempt re-manufacturing, the natural gas used to heat and cool that area must be allocated. First separate production/repair…
Texas Letter Ruling 9209L1197E02: Partnership — Dissolution/Liquidation/Termination — Liability Of Individual Partners
No. The Comptroller advised that, based on the facts described, individual partners could liquidate their partnership without fear the Comptroller would pursue them personally for sales tax that a…
Is a publication sold by the State Bar of Texas exempt from Texas sales tax under Tax Code Section 151.312?
No. The Comptroller found the State Bar of Texas to be an exempt governmental entity, and publications sold by a governmental entity do not qualify for the Tax Code Section 151.312 exemption, which…
Is a warehouse club's annual membership fee subject to sales tax when it buys members access to lower merchandise prices?
Yes. Because the club's low prices are funded by the membership fee, the fee is in substance a prepayment for the merchandise members buy, so it's taxable under Tax Law 1105(a) — not treated as…
Did a condominium-hotel manager owe sales tax on rented linens and towels even though room rent already included and was subject to accommodation tax?
Yes. The linen company correctly charged tax on its rental to the condominium-hotel manager. The towels and linens were taxable business inputs used to provide transient accommodations; including…
Were lemon-glycerin swabs, a temporary surgical cannula, and a respiratory suction catheter exempt medicines?
No. California taxed all three as devices used to facilitate therapy, circulate blood temporarily during surgery, or remove mucus during respiratory treatment.
Texas Letter Ruling 9209L1196D11: Municipal Franchise Fee/Access Fee — Cable Television Services — To Use City Rights — Of — Way/Easements
Yes. The Comptroller ruled that an access fee for local government programming, when passed on to cable television customers, is taxable — even if the fee is separately stated on the customer's bill…
Could an insurer exclude ceded quota-share premiums from its apportionment factor when the corresponding profit or loss was excluded from its tax base?
Yes, to the extent inclusion caused distortion. Because the insurer ceded 100% of the related profit or loss and that business was absent from its federal tax base, excluding the matching premiums…
Could an insurer that wrote no new 1990 premiums obtain a refund for negative premiums caused by cancellations of earlier policies?
No for 1990. Return premiums could offset only direct premiums written in the year returned, and the insurer wrote none in 1990; they could not be carried back by amending 1989. The Department…
Could a Florida property-and-casualty insurer include assumed reinsurance premiums in its apportionment factor when the standard direct-premium formula distorted Florida income?
Yes, to the extent excluding the assumed reinsurance caused distortion. Because the reinsurance significantly increased the tax base but mostly covered non-Florida risks, the Department permitted an…
Could an automobile painter buy paint hardeners and catalysts for resale when they cured the paint and remained in the finished film?
Yes. The hardeners remained in the paint film and continued providing gloss, chip resistance, durability, and protection, so they became resold components.
Did sales tax apply when tangible personal property passed through a statutory merger of nonprofit public-benefit corporations?
No. Sections 6010–6022 made the survivor succeed without another transfer to a disappearing nonprofit public-benefit corporation's property. Counsel treated that succession as occurring by operation…
Did a pre-July 15, 1991 county radio-system contract qualify for fixed-price rate protection, and were its removable communications components fixtures?
The main contract qualified because convenience termination still required payment for work done; later change orders did not. Removable radio components were machinery and equipment.
Texas Letter Ruling 9209L1194E11: Change Orders To Contracts — Rule Amendment — Being Applied Prospectively To Contracts Executed On And After 7/23/92
The Comptroller told this trade association that whether a change order is taxed as part of the original contract now depends on the date of the original contract, not the date of the change order.…
Does a company owe sales tax on a computer lease it shares with two other companies through time sharing?
Yes, in most cases. If one company leases a computer system and separately charges two other companies for time sharing, sales tax applies to the lease and the time-sharing charges are a taxable…
Texas Letter Ruling 9209439L: Change Orders To Contracts — Rule Amendment — Being Applied Prospectively To Contracts Executed On And After 7/23/92
The Comptroller changed how it applies Rule 3.291(b)(5) to construction change orders: instead of taxing all change orders issued on or after July 23, 1992 the same way regardless of when the…
Texas Letter Ruling 9209424L: Software — Contract Programmer Develops For A Specific Customer — If Exclusive Legal Rights Are Retained By Customer And Program Created From Scratch — Exclusion Applies
It depends on who keeps the right to sell or license the software. If the programmer keeps that right, the sale is taxable, even for a program's first sale. If the customer alone gets the right to…
Texas Letter Ruling 9209193L: Are subrogation services taxable as security services, debt collection, or insurance claims adjustment?
The Comptroller confirmed that the firm's subrogation activities are taxable as security services (not merely as debt collection or insurance claims adjustment), because performing them requires a…
How did Florida tax a mutual savings bank's asset-for-stock reorganization into a mutual holding company and stock bank?
If the reorganization produced zero federal taxable income and no Florida adjustment applied, it produced zero Florida franchise-tax base; all twelve requested federal-style nonrecognition…
Were dealer-preparation or make-ready charges included in the Texas motor vehicle sales-tax base?
Yes. The Tax Administration Division said dealer-preparation and make-ready charges were subject to motor vehicle sales tax because § 152.002(a) included labor or service costs in total consideration.
Could a taxable generic survey report become nontaxable by binding and delivering it together with a separately ordered custom report?
No. Generic report copies remained taxable even in one binder with a nontaxable custom report; combining delivery did not erase the separate property sale.
Were software-library licenses taxable when developers embedded library code in applications sold to customers?
No for publication and distribution, but yes for internal-use applications. A signed purpose statement was evidence, not protection from seller liability.
In a corporate restructuring, is a subsidiary doing business in Texas, how are dividends and interest allocated, and is a partnership subject to franchise tax?
A partnership is not subject to the pre-2008 Texas franchise tax, even if it is characterized as a corporation for federal income tax purposes. In a corporate restructuring, the Comptroller also…
Do insurance companies in receivership have to pay Texas sales tax on goods and services bought to wind down and liquidate the company?
It depends on who is making the purchase. If purchases to liquidate an insolvent insurance company's receivership are made by, on behalf of, or paid for by the Texas Department of Insurance (or its…
After Texas amended its rule on construction contracts, do change orders on contracts signed before the amendment have to be redone under the new rule?
No. This internal Comptroller memo confirms that Texas's amended rule on how change orders are taxed applies only prospectively — to contracts executed on and after July 23, 1992. Change orders on…
How did Florida's historical intangible tax apply to an out-of-state investment trust and to shareholder value when its year-end portfolio mixed exempt and taxable assets?
The trust's investment-company assets were exempt, and only intangible property arising from Florida business conducted with Florida customers through its personnel could be taxable. Shareholder…
Did a Florida clay miner owe solid-minerals severance tax or a late-return penalty when its attapulgite Fuller's earth clay was shipped to Georgia for processing and later sold?
No severance tax was due because the clay was sold for further processing under Chapter 212. The miner still had to file the producer's return, but it incurred no penalty for the missed returns…
What portion of advances under a wholesale warehouse mortgage agreement was exempt from documentary stamp tax?
The agreement itself was not wholly exempt. Advances up to the outstanding principal balances of pledged mortgage documents on which proper tax had been paid were exempt; any excess advance was…
Were golf handicap and tournament-report services taxable, and how were printed scorecards and labels treated?
The handicap and tournament services were exempt because the customer-owned data and reports were personal, individualized, and could not be reused for others. Generic scorecards and scorecard…
What South Carolina tax interest rate applied for the period beginning October 1, 1992?
The rate was 7%. Interest was compounded daily, except that simple interest applied to an underpayment of a declaration of estimated tax.
Texas Letter Ruling 9209L1192A07: Can a mail-order seller cancel its Texas sales tax permit after the Quill Corp. v. North Dakota Supreme Court decision?
Yes. The Comptroller's office agreed to cancel this seller's Texas sales and use tax permit, effective October 1, 1992, based on the seller's representation that it was not engaged in any of the…
Can a mail-order business get its Texas sales and use tax permit cancelled by showing it no longer has nexus in Texas after Quill Corp. v. North Dakota?
Yes, in this case. The Comptroller cancelled the taxpayer's Texas sales and use tax permit after the taxpayer represented, following the U.S. Supreme Court's Quill Corp. v. North Dakota decision,…
Does a Texas soil remediation company owe sales tax on its cleanup service, on materials it uses, or on remediated soil it later sells?
The remediation service itself is not taxable, and soil cleaned and left on-site isn't a taxable sale of tangible personal property. But if the taxpayer removes contaminated soil, treats it, and…
Are a risk management consultant's services taxable as insurance services under Texas sales and use tax?
Yes. The Comptroller confirmed that a risk manager's services are taxable as insurance inspection and/or insurance loss prevention services under Rule 3.355(a)(2) and (a)(6), reaffirming a 1988…
Does a Texas risk management consultant have to charge sales tax on services performed for insurance carriers, insureds, or policyholders?
Yes. The Comptroller confirmed that a risk management consultant's services are taxable insurance services in Texas -- specifically insurance inspection services under Rule 3.355(a)(2) and loss…
Did a free monthly periodical qualify for Florida's advertising-publication sales-tax exemption when its advertising content hovered around 50%?
No. The publisher did not clearly prove that the periodical was primarily advertising because its advertising content hovered around 50%, so printing costs remained taxable and no refund was…
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