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 a cochlear implant and its external transmitter, microphone assembly, and signal processor exempt from Texas sales tax?
Yes. The internal receiver and the external transmitter, microphone assembly, and signal processor were exempt as a hearing aid under Section 151.313(4).
Were stationary billboard rentals and custom-painted logos or lettering on vehicles and equipment taxable in Texas?
Stationary billboard rentals were not taxable because they were real-property rentals. Painting logos or lettering on trucks, cars, and equipment was taxable as printing or imprinting under Section 15…
How did Texas's October 2, 1984 change tax carpet, rug, drapery, and garment cleaning or repair charges?
Charges to clean or repair carpet, drapery, and garments became taxable October 2, 1984, including rug and carpet cleaning at the customer's premises or the provider's plant. One-time customer logo ch…
Were ballet-performance admissions and ballet-class tuition taxable when sold by the tax-exempt organization described?
Neither charge was taxable. The exempt organization qualified for an exemption on ballet-performance admissions, and ballet classes were not regarded as a taxable service.
How much Texas tax was due on impounded-vehicle storage fees when an unpaid vehicle was sold at public auction?
Storage fees were taxable. If auction proceeds covered them, the full storage tax was reported; if net proceeds were short, tax was paid proportionately. No tax was due when there was no bid or the st…
How did Texas tax separately stated hospital charges for patient televisions, guest cots, and telephones?
A separately stated patient television fee was a taxable rental, and the hospital could give its supplier a resale certificate. A guest-cot charge was not taxable, but the hospital paid tax when buyin…
Were rentals of Texas self-storage facilities taxable after the 1984 tax changes?
No. The Comptroller said self-storage facility rentals were not a taxable service and were not affected by the recent tax changes.
When did Texas begin taxing initiation fees and monthly dues charged by privately owned racquetball clubs, and how were earlier contracts treated?
The letter says initiation fees and monthly dues for privately owned racquetball clubs became taxable amusement-service receipts on October 2, 1984, subject to 4.125% state tax plus applicable city an…
Which truck and trailer repair, accessory-installation, remodeling, and freight charges were taxable under this 1984 Texas guidance?
Ordinary repair labor on highway-registered trucks and trailers was not taxable. Separately stated accessory-installation labor was also untaxed, but labor included in an accessory's sales price was t…
When were bowling tournament receipts and newly added league teams protected from Texas sales tax by contracts signed before October 2, 1984?
Bowling receipts under a tournament contract signed before October 2, 1984 were exempt if the contract specified the price, date, location, and similar terms. Teams added to a league after October 1 r…
How did Texas apply the October 2, 1984 amusement-service tax to fitness-center memberships, including medically prescribed memberships and older contracts?
Medically prescribed memberships were excluded from taxable amusement services, but the written prescriptions had to be kept for audit. Contracts or membership periods beginning before October 2, 1984…
Who had to collect Texas state and local sales tax on recreational-event admissions beginning October 2, 1984?
Admissions to recreational events became subject to state and local sales tax on October 2, 1984. A nonprofit organization with tax-exempt status did not have to collect the tax, but a non-nonprofit p…
Was a portable generator mounted on a custom towable platform treated as a motor vehicle or as taxable movable specialized equipment?
It was taxable movable specialized equipment. Tax Administration concluded that the custom towable platform was only a component of the generator unit. The platform's design and construction to the se…
Did Texas tax validated free restaurant parking, separately charged parking, or the services of strolling troubadours?
Validated free parking for restaurant customers was not taxable. A separate parking charge became subject to sales tax on October 2, 1984. The restaurants were not required to collect or report tax on…
Were green fees and annual passes charged by a city-owned municipal golf course subject to Texas sales tax?
No. The Comptroller said no tax was due on the municipal golf course's green fees or annual passes because the city providing the amusement service was an exempt municipality.
Which professional and personal services did Texas say would or would not be taxable under the October 2, 1984 law changes?
Doctor, accounting, and legal fees were not taxable under the October 2, 1984 changes. Group 721 laundry, cleaning, and garment services, plus massage parlors, escort services, and Turkish baths, were…
How did Texas tax aircraft repair labor and parts under lump-sum versus separately stated repair bills?
Labor by certificated aircraft mechanics or repair stations for repairing, maintaining, restoring, or remodeling aircraft, parts, and accessories was not taxable. A lump-sum repairer was the consumer …
How did Texas instruct federal lump-sum contractors to handle the October 2 tax change while an Attorney General opinion was pending?
The change applied only to lump-sum federal contractors; separated contracts kept their existing sales-tax exemption. Permit holders gave suppliers resale certificates and reported the tax, while cont…
When were repairs to medical and therapeutic equipment exempt from Texas sales tax, and when was a prescription required?
Repairs to wheelchairs, walkers, and IPPB machines were exempt because of the item's nature. Repairs to listed therapeutic equipment were exempt when an individual used the item under a licensed pract…
Did Texas tax admissions to carnivals, fairs, amusement parks, and rides beginning October 2, 1984?
Yes. State and local tax applied beginning October 2, 1984, except for events sponsored by a nonprofit or charitable group or under governmental sponsorship. Providers needed a sales-tax permit and co…
Did Texas tax horse-racetrack and horse-show admission fees beginning October 2, 1984?
Yes. State and local sales tax applied beginning October 2, 1984, unless the event was sponsored by a nonprofit or charitable group or under governmental sponsorship. Providers needed a sales-tax perm…
Did Texas tax motion-picture-theater tickets beginning October 2, 1984?
Yes. Motion-picture-theater tickets came under state and local sales taxes beginning October 2, 1984. Theater operators could report and pay admission tax with other sales taxes they already handled, …
Did Texas tax boxing and wrestling admission fees beginning October 2, 1984?
Yes. State and local tax applied beginning October 2, 1984. Events sponsored by nonprofit or charitable organizations or under a government entity's sponsorship were not taxed. Providers needed a sale…
Did Texas tax tennis admissions, court fees, and green fees beginning October 2, 1984?
Yes. State and local sales taxes applied beginning October 2, except to events sponsored by nonprofit or charitable groups or under governmental sponsorship. Providers needed sales-tax permits and cou…
How long did Texas protect pre-October 2, 1984 fitness-club membership contracts, and what happened when annual contracts renewed?
Monthly-dues contracts with an initial fee that were entered into and effective before October 2, 1984 were untaxed only through September 30, 1987; after that, all fees were taxable regardless of con…
Which skating-rink admissions, rentals, facility charges, and lesson fees did Texas treat as taxable in Letter Ruling 8408L0590A01?
Public-session admission for skaters, admission for non-skaters, skate rentals, and a license fee for exclusive use of the rink were taxable. Group lessons taught by salaried rink employees and privat…
Were fees for instructional Jazzercise classes taxable in Texas, and did ownership of the facility matter?
No. The Comptroller treated instructional Jazzercise activities as a nontaxable service, so class fees were not subject to tax. The result did not change based on who owned or operated the facility wh…
Were movie or video club membership fees subject to Texas state sales tax under Letter Ruling 8408L0589D14?
No. The Comptroller said movie or video club membership fees were not subject to Texas state sales tax. The short 1984 letter did not address charges for renting or selling videotapes, local taxes, or…
Did a Texas carpet-cleaning business have to collect state and local sales tax on its cleaning services beginning October 2, 1984?
Yes. The Comptroller told the carpet cleaner that its services would become subject to state and local sales tax beginning October 2. The business had to begin collecting the tax on that date, obtain …
Which vehicle, trailer, boat, wrecker, and transportation charges did Texas treat as taxable in Letter Ruling 8408L0586B11?
Fees to store, park, or garage a motor vehicle—including a trailer—were taxable regardless of owner consent. A single charge for storing a boat on a trailer was not taxable. Wrecker and transportation…
Is installing new linoleum over an entire room's floor a tax-exempt capital improvement, no matter what surface it's glued over?
Installing new linoleum over the floor of an entire room by cementing it down is a tax-exempt capital improvement, regardless of what surface it's glued over — so the homeowner was wrongly charged tax…
Before it opened a formal New York sales office, a Florida homebuilder advertised in New York papers using an officer's home telephone number, and that officer met with prospective customers at his Long Island home. Did that activity amount to 'maintaining an office' in New York, subjecting the company to New York franchise tax even before the formal office opened?
Yes -- Gulf Homes, Inc. was subject to New York's Article 9-A franchise tax even before it opened its formal Massapequa sales office in August 1980. Starting in 1978, Petitioner (a Florida real estate…
Are computer-generated financial reports, like loan amortization printouts made from a client's figures, a taxable information service or exempt personal information?
Computer-generated financial reports, such as loan amortization printouts produced from a client's figures, are a taxable information service, because the exemption for personal information requires t…
Could a company claim omitted fair-market-value deductions for replacement vehicles during a later Texas motor vehicle tax audit?
Only with proof. After an earlier liberal audit, the Comptroller would allow deductions only for vehicles actually identified as replacements or claims inadvertently omitted from the title affidavit. …
A holding company borrows money from its own wholly owned subsidiaries and re-lends those exact funds to its parent corporation at the same interest rate. Must the holding company add back the interest it pays to its subsidiaries as interest 'attributable to subsidiary capital,' even though the borrowed funds never funded an investment in the subsidiaries themselves?
No add-back is required. A Delaware holding company planned to borrow funds from its own wholly owned subsidiaries and immediately re-lend those same funds to its parent corporation at the identical i…
I sold my property and took back a promissory note from the buyer for part of the price, with an option-to-purchase document that mentions the note but was never called a 'mortgage.' Years later, when that instrument was finally recorded, the county clerk demanded mortgage recording tax. Was that tax actually due?
Yes, the tax was due. George and Alberta Smith sold real property to F. H. Simpson Enterprises, Inc. in December 1977 for a price that was partly cash and partly a $31,000 promissory note from the buy…
Could a Texas resident obtain a deficiency redetermination after wrongly claiming the historical $15 new-resident vehicle tax?
Not through the late redetermination request. The taxpayer had sworn on the title affidavit that they were a new resident and paid the historical $15 tax, but the Comptroller found they were already a…
Is a company-owned country club a taxable 'social or athletic club,' and are its storage and restaurant charges taxable?
A company-owned country club whose members have no proprietary interest, no control over management or activities, and open first-come-first-served membership is not a taxable 'social or athletic club…
Does New York's related-party interest add-back rule reach interest a second-tier subsidiary pays directly to its corporate 'grandparent'?
No. McCullagh Leasing, Inc. is a wholly owned subsidiary of Auto Fleet Leasing Corporation, itself a wholly owned subsidiary of Commercial Credit Company -- its corporate 'grandparent.' Commercial Cre…
Does New York's related-party interest add-back rule reach interest a second-tier subsidiary pays directly to its corporate 'grandparent'?
No. Relocation Realty Service Corp. is a wholly owned subsidiary of Auto Fleet Leasing Corporation, itself a wholly owned subsidiary of Commercial Credit Company -- its corporate 'grandparent.' Commer…
Does New York's related-party interest add-back rule reach interest a second-tier subsidiary pays directly to its corporate 'grandparent'?
No. C C Leasing Corp. is a wholly owned subsidiary of Auto Fleet Leasing Corporation, itself a wholly owned subsidiary of Commercial Credit Company -- its corporate 'grandparent.' Commercial Credit Co…
Does New York's related-party interest add-back rule reach interest a second-tier subsidiary pays directly to its corporate 'grandparent'?
No. Commercial Credit Equipment Corp. is a wholly owned subsidiary of Auto Fleet Leasing Corporation, itself a wholly owned subsidiary of Commercial Credit Company -- its corporate 'grandparent.' Comm…
If a second-tier subsidiary borrows from its corporate 'grandparent' -- its direct parent's own parent -- rather than from its direct parent or a more-than-5% stockholder, does New York's related-party interest add-back rule reach that interest?
No. Commercial Credit Development Corp. is a wholly owned subsidiary of Auto Fleet Leasing Corporation, which is itself a wholly owned subsidiary of Commercial Credit Company -- making Commercial Cred…
How did 1984 legislation change the Kansas severance tax exemptions for natural gas, crude oil, and new pools?
It clarified three exemptions. In this 1984 memo to Kansas natural gas and crude operators, the Mineral Tax Bureau explains minor 1984 legislative changes to the severance tax law: (1) the $81-a-day n…
Does New York's related-party interest add-back rule reach interest a second-tier subsidiary pays, at an arm's-length rate, directly to its corporate 'grandparent' holding company?
No. Fleet Factors Corporation, a Rhode Island corporation, is wholly owned by Fleet Commercial Finance Corporation, which is itself wholly owned by Fleet Financial Corporation, a holding company -- ma…
Did Texas apply motor vehicle tax or limited sales tax to concrete pumping trucks, trailers, pumps, and booms?
A truck with a concrete pump attached was subject to motor vehicle tax. A trailer built specifically to pump concrete and not mounted on a motor vehicle was movable specialized equipment subject to li…
What tax liability arose if a licensed Texas dealer let another person operate under the dealer's registration number?
The Highway Department said the arrangement violated its rules and could cost the licensed dealer its license. If nevertheless allowed, the client could buy vehicles for resale without the historical …
When a data processor maintains and prints a client's membership list, is it selling a taxable printed product or an exempt information service?
A data processor that maintains a client's membership list and delivers updated printed lists is selling taxable tangible personal property, not an exempt information service, because the essence of t…
Was tax due when a dissolved incorporated dealership transferred untaxed vehicle inventory to its sole stockholder?
The formal dissolution transfer could be tax-free if prior tax liability was satisfied and the stockholder continued holding the vehicles for resale. If the stockholder used a vehicle, tax became due …
Does a sale-and-leaseback of leased vehicles trigger sales tax, or is it exempt as a purchase for resale?
A sale-and-leaseback of vehicles that stay in a leasing business is made solely for resale, so neither leg is subject to sales tax. Key Capital, an auto-leasing company, proposed to sell its already-l…
If a corporation is part of a federal consolidated group but files its own separate New York franchise tax report, does it report its allocated 'share' of the group's consolidated federal taxable income, or the income it would have reported had it filed its own separate federal return?
A corporation filing a separate New York franchise tax report, even though it's part of a federal consolidated group, must compute its entire net income as if it had filed its own separate Federal tax…
A bank holding company wants to form a new subsidiary to hold stock in out-of-state banks and to own financial-service subsidiaries (finance, leasing, real estate credit) that its own New York national bank isn't authorized to own directly. Can that new subsidiary be included in the bank holding company's Article 32 consolidated franchise tax return?
No. Marine Midland Banks, Inc. proposed forming Marine Midland National Corporation ('National') to hold stock in out-of-state banks and to own new financial-service subsidiaries (finance, leasing, re…
If a more-than-5% shareholder borrows money solely to re-lend it to the corporation, and the corporation pays interest to the shareholder that just passes through to the shareholder's outside lender, is that pass-through interest exempt from New York's 90% related-party interest add-back as a mere 'conduit' payment?
No. Ampal American Israel Corporation asked the Department to confirm that interest it pays to a shareholder owning more than 5% of its stock would be fully deductible where the shareholder borrows th…
If a more-than-5% shareholder borrows money solely to re-lend it to the corporation, and the corporation pays interest to the shareholder that just passes through to the shareholder's outside lender, is that pass-through interest exempt from New York's 90% related-party interest add-back as a mere 'conduit' payment?
No. Dean Witter Reynolds, Inc. asked the Department to confirm that interest it pays to a shareholder owning more than 5% of its stock would be fully deductible where the shareholder borrows the funds…
If a more-than-5% shareholder borrows money solely to re-lend it to the corporation, and the corporation pays interest to the shareholder that just passes through to the shareholder's outside lender, is that pass-through interest exempt from New York's 90% related-party interest add-back as a mere 'conduit' payment?
No. Esselte Pendaflex Corporation asked the Department to confirm that interest it pays to a shareholder owning more than 5% of its stock would be fully deductible where the shareholder borrows the fu…
If a more-than-5% shareholder borrows money solely to re-lend it to the corporation, and the corporation pays interest to the shareholder that just passes through to the shareholder's outside lender, is that pass-through interest exempt from New York's 90% related-party interest add-back as a mere 'conduit' payment?
No. General Discount Corporation and CBT Leasing Corporation asked the Department to confirm that interest paid to a shareholder owning more than 5% of a corporation's stock would be fully deductible …
The Department had told MC Minerals Corporation and Mitsubishi International Corporation, in a March 1981 Advisory Opinion, that interest paid on funds borrowed from a related stockholder and re-lent could escape the section 208.9(b)(5) interest add-back if a four-part pass-through test was met. Two and a half years later, having concluded that answer was legally wrong, does the Department revoke the ruling -- and does that revocation reach back and undo the taxpayer's past reliance?
The Department revoked its own prior ruling, but only prospectively. In March 1981, the Department had issued MC Minerals Corporation and Mitsubishi International Corporation an Advisory Opinion, [TSB…
The Department had told MCF Footwear Corporation and Mitsubishi International Corporation, in a March 1981 Advisory Opinion, that interest paid on funds borrowed from a related stockholder and re-lent could escape the section 208.9(b)(5) interest add-back under a four-part pass-through test. Two and a half years later, does the Department revoke that ruling, and does the correction reach back and undo past reliance?
The Department revoked its own prior ruling, but only prospectively. In March 1981, the Department had issued MCF Footwear Corporation and Mitsubishi International Corporation an Advisory Opinion, [TS…
A Canadian aluminum manufacturer wants to ship a metal-bearing byproduct to an unrelated New York processor, who will reclaim the aluminum for a fee and ship it straight back to Canada, disposing of the unusable waste. Does owning that material while it's being processed in New York, by itself, create New York franchise tax nexus?
No. Aluminum Company of Canada, Ltd. proposed shipping dross (an aluminum-bearing byproduct of its primary aluminum manufacturing) to an unrelated New York processor, who would reclaim the aluminum fo…
A bank's two new securities-dealer subsidiaries (one owning the other) want to file a combined Article 9-A return together, and also want to know whether interest they'll pay on short-term borrowings from the bank -- their common grandparent -- is subject to the related-party interest add-back. What's the answer to both questions?
Two different answers to two different questions. On COMBINED FILING: Chase Manhattan Government Securities, Inc. ('CMGS') is a wholly owned subsidiary of Chase Manhattan Capital Markets Corporation (…
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