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 charges for legally required private-conservatorship information packages taxable as the packages moved from printer to Judicial Council, courts, and conservatorships?
The printer's sale to the Judicial Council was taxable, but Council-to-court and court-to-conservatorship cost reimbursements were nontaxable government services, not bargained-for sales.
When can a California company's equipment sublease be tax-paid after it leases the property from an out-of-state sister company?
Only if the consignment was a real arm's-length prime lease covering every lessor cost and use tax on its rent was reported timely.
A blood/plasma products company asked which supplies used to collect blood and process it into blood products — collection bags, pooling bags/bottles, saline, separation-device disposable sets, reagents, and related machinery — are taxable versus exempt for Texas sales and use tax purposes.
Supplies used before processing begins to collect blood — Y-sets and 500 ML/600 ML collection bags — are taxable. Pooling bags and pooling bottles are exempt as containers under Rule 3.314 only when…
A company is bidding on a multimillion-dollar heavy equipment job that will be exported to Latin America over about nine months, billed through progress payments, with a contract clause transferring title of designated goods to the customer at each progress payment. Should sales tax be charged/accrued on each progress payment and then refunded after export documentation is obtained?
Yes, tax is due on each progress payment as billed, because the sale is legally completed for tax purposes when title or possession transfers to the customer for consideration — here, that happens…
A landlord leases office space in a multi-story building to a computer software manufacturer, and the electricity (partially sub-metered to cool the tenant's mainframe computers) is purchased by the landlord and passed through as part of the lease. Is that electricity exempt from sales tax as manufacturing-related use, and can the landlord get a refund?
No. The landlord's purchase of electricity and gas to supply leased office space is a commercial use, taxable under Tax Code 151.318 and Rule 3.295, regardless of what the tenant does with the space…
Did deeds transferring partnership-related land to the remaining partner trigger Florida documentary stamp tax when title had remained in another partner's name?
The Department found no basis for tax only if the original partnership agreement was authentic, the land had been deemed contributed to the partnership, all land profits benefited the partnership…
Were post-sale drum-storage and later reconditioning charges subject to California sales tax?
Optional storage after a bona fide taxed sale was not taxable; reconditioning was repair only for used drums restored to their original condition, not new drums or a new purpose.
Are Gore-Tex and GTAM periodontal materials, which are temporarily implanted to help regenerate gum and bone tissue lost to periodontal disease but are later removed, exempt from Texas sales tax as items that remain in the patient's body?
No. Even though these periodontal and bone-augmentation materials aid the healing process, they do not qualify for exemption because they are removed after one to nine months and do not remain…
If an optometrist duplicates a patient's prescription from their existing glasses (by neutralizing/measuring the old lenses) rather than performing a new refraction or receiving a written prescription, does the optometrist have to charge sales tax on the new glasses?
No. Texas Tax Code sec. 151.313(a)(6) exempts corrective lenses dispensed or prescribed by an ophthalmologist or optometrist, and the Comptroller ruled that an optometrist who duplicates a patient's…
A medical equipment seller asked how Texas sales tax applies to four products: therapy mattress replacements/overlays, sequential compression devices, patient weighing systems (scales), and incontinence pads used with hospital/nursing home beds. Are incontinence pads exempt from sales tax?
No, not automatically. The Comptroller classified incontinence pads as therapeutic appliances, which are exempt from Texas sales tax only when sold to an individual under a doctor's prescription;…
When did Texas start applying the agricultural exemption to ostriches, emus, rheas, and cassowaries, and does it matter whether these birds are commonly thought of as food?
The Comptroller's office began applying the agricultural exemption to ostriches in March 1990, after the Texas Department of Agriculture published information that ostriches were being raised as…
A company runs hydrostatic tests on underground storage tanks (USTs) and drills monitor wells/test holes to check for soil contamination, sometimes breaking concrete or restoring it afterward as part of the job. Which of these charges are taxable real property/repair services, and which are nontaxable testing?
A standalone charge for running a test (leak test, contaminated-soil test hole) is not taxable. But once the job moves into breaking concrete, repouring/restoring concrete, capping a hole, or…
Could a surviving corporation petition determinations against companies it acquired through purchase and statutory mergers, and what liabilities did it inherit?
Yes. The purchaser corporation was directly interested in the acquired business's assessment, and each statutory merger made the survivor directly liable for the disappearing corporation's debts as…
How did Texas apply use tax and minimum rental tax to out-of-state buses later placed in Texas rental service?
Generally, a tax-free registered bus brought into Texas for short-term rental carried minimum rental liability equal to use tax on the owner's purchase price. A bus operated interstate for at least…
Which supplies and materials that a restaurant or cafe buys are exempt from Texas sales tax as resale items, and which ones are taxable?
Disposable items a restaurant provides to customers as part of the food service — like paper cups, straws, napkins, to-go containers, foam containers, and food/beverages themselves — can be…
Are retailers required to collect sales tax when they gift wrap a product for a customer, and can retailers buy gift wrapping supplies (paper, ribbons, boxes, bows) tax-exempt for resale?
A retailer that sells a product and charges extra to gift wrap it must collect sales tax on that gift wrapping charge, because the Comptroller treats gift wrapping as a taxable service connected…
Does the owner of an aircraft owe sales tax on the monthly rent it charges a lessee, when the owner did not obtain a resale certificate showing the lessee re-rented the plane?
The owner owes the tax unless it can prove otherwise. Leasing an aircraft is a retail sale of tangible personal property, taxable under Tax Law § 1105(a). The rent is exempt only if the owner…
Is a New York vendor relieved of its duty to collect sales tax if it accepts, in good faith, a properly completed exemption certificate from the customer?
Yes. A New York vendor that takes a properly completed exemption certificate from its customer in good faith — with no knowledge it is false — is relieved of the duty to collect sales tax on that…
How did Kansas define a disruption of oil or gas production for mineral severance tax?
For Kansas mineral severance tax, 1992 Senate Bill 216 defined an oil production disruption as a continuous 24-hour period when a well did not produce, and a gas disruption as a continuous one-hour…
When was a credit-rating report a nontaxable custom search, and when was it a taxable standardized report?
A report requested about one specific person or entity was likely a nontaxable library search; standardized or publicly marketed reports were taxable even with one buyer.
Who owed California sales tax when representatives marketed and sold a photographer's work?
The stock-photo agency was the retailer because it possessed the originals and controlled sale terms. For the other representative, the photographer remained liable unless he proved she was a…
A precast concrete contractor asked how Texas sales and use tax applies to lump-sum vs. separated contracts, to precasters who don't erect their products on site, and to hauling/delivery charges for the concrete components.
A contractor who improves real property is the consumer (not seller) of materials under a lump-sum contract, and pays tax on the materials' purchase price (including in-bound freight) but doesn't…
A hotel or motel buys telecommunications trunk line service partly to resell to guests and partly for its own business calls. Can it issue a resale certificate for that service, and if it already paid sales tax on services it resold, can it get a credit?
A hotel cannot in good faith issue a resale certificate for trunk line service that it also uses for its own business calls — resale certificates may only be issued for lines dedicated to reselling…
A taxpayer sought a refund of Texas sales tax paid on a VCR that was allegedly exported to Canada, but the formal Canadian customs entry document listed a video camera instead of a VCR. Can an affidavit or statement from the purchaser take the place of the formal export document to prove the export and support a refund?
No. Affidavits, statements, or exemption certificates given by purchasers are not acceptable proof of export. The only acceptable proof is the formal entry document from the foreign country (here,…
Does a detective agency's shopping service owe sales tax on merchandise returned for full reimbursement and on the shipping charges for those returns?
The reimbursement for returned merchandise is not taxable — it's treated as a cancelled sale. The shopping service itself is a taxable protective and detective service under Tax Law § 1105(c)(8),…
How did South Carolina Revenue Ruling 92-5 apply sales and use tax to vending-only businesses and businesses also making counter sales?
A vending-only operator generally paid tax when buying inventory. A business also making counter sales could buy common inventory for resale, then report vending withdrawals and counter sales…
When a manufacturer sells to an out-of-state wholesaler who then has the goods drop-shipped directly to a Utah customer, is the manufacturer's sale to the wholesaler taxable, and what documentation does Utah accept to exempt it?
The manufacturer's sale to the wholesaler is not taxable -- it's a sale for resale, so long as the manufacturer holds a sales tax exemption certificate from the wholesaler. Utah will accept an…
When an out-of-state distributor drop-ships goods directly to a Utah customer on behalf of a reseller who has no Utah nexus, what paperwork satisfies Utah sales and use tax law?
The out-of-state seller needs only a sales tax exemption certificate signed by its reseller customer showing that customer's home-state resale number -- not a Utah certificate. Because the reseller…
Were electronic offender-monitoring contracts taxable equipment leases, and how were active units, requested spares, and extra supplies treated?
Active monitoring and its necessary equipment were a nontaxable service, but billed requested spares were taxable leases and separately purchased extra supplies were taxable sales.
Were separately billed consulting charges taxable when a machine shop also fabricated the parts specified by its advice?
Yes. Consulting-only work was nontaxable, but consulting and machine time tied to custom parts entered taxable gross receipts from the fabricated parts.
Did tracing an approved pencil sketch onto separate paper make the sketch part of taxable finished art?
No, if the sketch was genuine qualifying preliminary art and the ink drawing was traced onto separate paper; but the artist could not perform finished-art labor and claim that only the final tracing…
How did California tax a designer's mechanical art, rejected preliminary designs, and printing aids sold through another agency?
Time spent on rejected designs was nontaxable only when the designer resigned, retained every design, and transferred no property; a final product could be sold for resale, but special printing aids…
Is an aircraft charter a lease when the owner insists on supplying the pilot and keeps possession and control during flight?
No. Mandatory owner-controlled pilot meant charter service, not lease; carrier regulation could affect exemptions but not possession/control test.
Is an aircraft transaction a lease when the owner insists on supplying a pilot who keeps control during the flight?
No. Without transfer of possession and control, the owner is providing charter transportation rather than leasing the aircraft, regardless of the owner's carrier certification.
Was the sale of an annual report to a section 501(c)(3) foundation exempt even though it was issued only annually?
Yes under the 1991–1992 statute. The no-advertising foundation report qualified with a Regulation 1667 exemption certificate.
Are the interest spread and note-assignment proceeds taxable California sales receipts when an equipment finance company uses noncancelable contracts labeled as leases?
The contracts were taxable sales from inception because they were noncancelable and let customers buy the machinery for a nominal amount. But the properly accounted interest—including the finance…
Was tax due on the full $6,000 monthly rent when the corporate lessee signed the mortgage note but its shareholders differed from the property's partnership owners?
Yes. The rule's debt-payment exception did not apply because the partnership owners and corporate shareholders were not the same people, so the entities were not related for the rule, and their debt…
Were sale-leaseback rents and court-awarded lease damages taxable after a federal entity became conservator and then receiver of the tenant?
Rents remained taxable while the federal entity acted only as conservator from February 1 to March 8, 1990, but became exempt once it acted as receiver after March 8. Court-authorized withdrawals…
Did a modular-home manufacturer charge sales tax when units went first to a developer's model center or directly onto homeowners' foundations?
Model units delivered on flatbed trailers, unconnected to utilities, were taxable tangible personal property when sold to the developer. Units delivered and set on homeowners' foundations were…
Is a nonprofit student store at a Job Corps Center required to collect Texas sales tax when it sells packaged snack food items to enrolled students?
No. Items sold in the nonprofit student store at the Job Corps Center are exempt from Texas sales tax under 29 U.S.C. § 1707(c), even though proceeds go into a student welfare fund supporting center…
Is a Utah limited liability company (LLC) organized under the Utah Limited Liability Company Act taxed as a partnership or as a corporation for Utah state tax purposes?
Yes, as a partnership. The Utah State Tax Commission ruled that companies organized under the Utah Limited Liability Company Act (Utah Code Ann. § 48-2b-101 et seq.) get the same state income tax…
A business selling exercise, therapy, and orthopedic items asked which of its products are exempt from Texas sales tax as medical/therapeutic items and which are taxable general merchandise. A related, earlier letter also asked about orthopedic supports and an electronic monitoring device called Back Alert. Which items qualify for exemption?
It depends on the item. Soft/moldable lumbar support inserts, compression shorts, and orthopedic braces (lumbar, carpal tunnel, knee, ankle, tennis elbow supports) are exempt as braces. The AcuTemp…
House Bill 11 let telephone utilities pass through an increase in their own tax liability to customers as a billing adjustment. Is that pass-through adjustment itself subject to Texas sales tax?
Yes. The tax increase from House Bill 11 was levied on the telephone carrier, not directly on the customer, so even though the carrier visibly passes it through as a billing adjustment, it's still…
Are sales of a licensed software product taxable when the maker embeds each customer's settings and identity into an otherwise standard program?
Yes, and generally the whole charge is taxable. The Fenics option-pricing program is pre-written software that the maker modifies to each purchaser (embedding time zone, base currency, and the…
A shareholder of our corporation, which owns real property, acquired 44% of our stock back in 1981 -- before either the gains tax or the transfer tax's entity-transfer rules existed. He now wants to acquire another 49% now, and the remaining 7% at some future point. Does his old 1981 stake count toward triggering a taxable 'controlling interest' acquisition when he buys the rest?
The pre-existing 44% stake does not count. A shareholder's acquisition of a 44% stock interest in a corporation before the effective dates of the gains tax (March 28, 1983) and the transfer tax's…
Could a car lessor exclude prepaid federal luxury tax from taxable California rent under a qualifying lease?
Yes. Under the 1992 rules, federal luxury tax imposed on a qualifying lease was excluded from California gross receipts and could be allocated across the initial rental payments.
Could a short-term car lessor exclude federal luxury tax paid on the vehicle purchase from taxable California rent?
No. Under the 1992 rules, the federal tax on a vehicle used for short-term rentals applied to the lessor's purchase, not the later rentals, so no rent was excluded.
Could a lessor exclude prepaid federal luxury tax from California taxable rental receipts on a qualifying automobile lease?
Yes. Because the federal tax was imposed on the qualifying lease, an allocated portion could be excluded from each rental payment even when paid up front.
Could a lessor exclude federal luxury tax from California rental receipts on daily or other short-term automobile rentals?
No. For a nonqualifying lease, the federal tax applied to the vehicle sale to the lessor, not the later rental transaction, so no rental portion was excluded.
Was federal luxury tax on a qualifying vehicle lease excluded from the California sales- or use-tax measure?
Yes. Luxury tax imposed on the lease or its payments was excluded, including an upfront reimbursement or an allocated share of each rental payment.
Could a lessor exclude federal luxury-tax reimbursement from taxable daily or other short-term vehicle rentals?
No. The federal tax applied to the lessor's vehicle purchase, not the later short-term lease, so any passed-through amount remained taxable rental overhead.
Did a secured creditor's prior UCC filing entitle it to the sales-tax reimbursement component of a retailer's receipts?
No. Staff said reimbursement was not part of the selling price or the secured proceeds, and California could retain the collected amount to reduce the retailer's tax debt.
A contractor's job was bid and included in the original new-construction contract, but the work wasn't actually performed until after the building was already occupied. Is that job taxable repair/remodeling labor, or nontaxable new-construction labor?
Generally, remodeling work done after a building is first occupied is taxable repair and remodeling under Rule 3.357. But if the work was already part of the original new-construction contract, was…
If a contractor doing taxable asbestos abatement work on nonresidential real property separately states a charge for air monitoring, does the contractor have to collect sales tax on that air monitoring charge?
No. Air monitoring is direct scientific observation of physical phenomena, not a taxable service, and it is commonly provided as a distinct, stand-alone service. So a contractor performing taxable…
Is a 'continuous passive motion' (CPM) device an exempt orthopedic device or a taxable therapeutic appliance under Texas sales tax rules, and when is it exempt when sold, leased, or rented?
The Comptroller reclassified the CPM device from a therapeutic appliance to an orthopedic device under Rule 3.284(a)(9) after new facts showed it works on joints (not muscles) and doesn't function…
A retailer of new and used manufactured homes repairs/renovates used units before resale, moves and installs units for customers, and a real estate lessor repairs and adds on to rental property — how does Texas sales tax apply to the labor and materials in each of these situations?
It depends on the scenario. Repair/renovation labor on a used manufactured home (treated as residential real property) is not taxable, but the materials generally are. Labor to move and install a…
Are public relations services subject to New York sales or use tax?
No. Public relations services are not on New York's list of taxable enumerated services under Tax Law § 1105(c), so a PR firm's charges are not subject to sales or use tax — as long as no tangible…
Is a custom telephone-survey marketing research report a taxable information service, or is it exempt as personal or individual to the client?
It is exempt. Collecting, compiling, and analyzing information and furnishing reports is normally a taxable information service under Tax Law § 1105(c)(1). But this marketing research qualifies for…
Are a golf and country club's dues taxable when members have no proprietary interest or control and membership is limited only by facility size, and what about locker and food charges?
The dues are not taxable. Because members have no proprietary interest, no control over the club's activities or management, and membership is limited only by the size of the facilities (not by…
How is use tax computed on custom cabinets a manufacturer builds and installs, and does its production machinery qualify for the manufacturer's exemption?
Because the cabinets are custom-built to each job's specifications, they are not 'items of the same kind' as any catalog or inventory product, so the maker's use tax on cabinets it installs is…
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