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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At the end of an open-end vehicle lease, are extra charges (or refunds) for actual depreciation and maintenance subject to sales tax?
In an open-end motor-vehicle lease, extra charges billed at the end of the term for actual depreciation or maintenance that exceeded the amounts already paid are part of the taxable lease price and ar…
A wholesaler pays full-time commission salesmen, assigns them exclusive territories, and requires daily call-ins and sales-meeting attendance, but doesn't control their day-to-day sales routine, doesn't withhold payroll taxes, and doesn't reimburse expenses. Are these salesmen 'employees' for purposes of the corporate franchise tax's business allocation percentage?
No. El Greco Leather Products Co. Inc., a wholesale importer of women's shoes, asked whether its full-time, commission-paid salesmen counted as 'employees' for purposes of computing the business alloc…
Is a stated 10–15% restaurant service charge taxable when it is labeled a gratuity and paid entirely to the employees?
A stated 10% or 15% service charge on a restaurant's bills is not subject to sales tax where it qualifies as a gratuity — meaning it is separately stated on the bill, specifically designated as a grat…
Does a contractor owe sales tax on construction equipment it rents to perform public-works contracts for the State and other government agencies?
A contractor that rents heavy construction equipment to perform public-works contracts for the State or other government agencies must pay sales tax on those rentals; the government's own tax exemptio…
In a manufacturer's audit: are cleaning tools and supplies exempt, are tenant HQ alterations capital improvements, does 'tax included' billing count, and can tax be refunded on property used out of state?
This four-part audit opinion holds: (1) naphtha, alcohol and wipers used to clean leather in manufacturing are 'tools' and 'supplies,' not exempt 'machinery or equipment' under § 1115(a)(12) — but und…
Are a tenant's animal-cremation units (removable trade fixtures) a capital improvement, and is the fuel used to run them taxable?
A tenant's animal-cremation units — set in concrete, vented through the walls and plumbed to the building's oil supply — are removable trade fixtures, not a capital improvement, so their installation …
In 1972, a corporation was a one-bank holding company owning a national bank. Federal law at the time restricted how states could tax national banks, and New York had chosen to tax national banks on their net income under a different tax article rather than through the shares of a holding company. Did the holding company have to include its national-bank shares in the subsidiary capital taxed under the general corporate franchise tax?
No. C.I.T. Financial Corporation, a one-bank holding company that owned National Bank of North America during 1972, asked whether it had to include its investment in that bank's shares in the subsidia…
Are a commercial fitness/tennis club's membership fees, court-time charges and room rentals taxable 'dues' of a social or athletic club?
A commercially run health-and-fitness and tennis club is not a 'social or athletic club,' so its listed charges — hourly and unlimited-summer court time, party-room rentals, and health-club, tennis, a…
Were dealer preparation and documentary fees included in the Texas motor vehicle tax base?
Dealer preparation or make-ready charges were taxable because manufacturer-required inspection, adjustments, lubrication, washing, and waxing were integral to the sale and part of total consideration …
New York Advisory Opinion TSB-A-83 (2)I: Do payments from IBM's Total and Permanent Disability Income Plan qualify for New York's age-59½ pension/annuity exclusion under section 612(c)(3-a)?
Only as an 'annuity,' and only for payments received on or after December 16, 1982. IBM's Disability Plan pays a totally and permanently disabled employee a declining percentage of salary until age 65…
How did Texas calculate taxable vehicle value when a sale included a markdown, trade-in, pre-sale freight, and dealer preparation?
The taxable value started with the original price, subtracted a genuine markdown or qualifying trade-in, and added freight from the manufacturer to the retailer plus dealer preparation. The letter tre…
Are customized market-research reports drawn from a common database a taxable information service, or 'personal or individual in nature' and excluded?
Customized market-research reports that track warehouse movements of goods — built from a common database but formatted to each client's needs — are a taxable information service, because they don't m…
Is a supplier's discount that applies only if the buyer pays within a set time a nontaxable trade discount, or a taxable early-payment discount?
A supplier's discount that applies only if the buyer pays within a set number of days is an early-payment (cash) discount, not a trade discount, so it cannot be deducted from the taxable receipt — eve…
Did federal excise or retail sales taxes enter the Texas motor vehicle tax base for heavy trucks and trailers after April 1, 1983?
For vehicles manufactured before April 1, 1983, Texas included the old ten-percent federal manufacturer excise tax in total sales price but excluded the additional two-percent federal retail tax on la…
For a publicity-booklet producer: which production inputs are exempt, are out-of-state deliveries taxed, is a clipping service resale, and when are charges to charities exempt?
For a company that produces publicity booklets and sends them to newspaper editors, this opinion resolves four issues. (1) Because it manufactures booklets for sale, its production inputs — artwork, s…
When a supplier places coin-op video games in a store and splits the money, who owes sales tax — the store owner, the supplier, or on the game play?
When a video-game supplier places coin-operated machines in a store, maintains them, and each month splits the receipts 50/50 with the store owner: (1) the game-play receipts are not subject to sales …
Can a federal cost-plus-fixed-fee contractor buy materials tax-free by invoking the government's immunity, when title passes to the U.S.?
A federal cost-plus-fixed-fee contractor cannot buy materials tax-free just because title passes to the United States; its purchases are taxable unless they truly qualify as purchases for resale. Sect…
Is a tenant's installation of a fire-sprinkler system a nontaxable capital improvement to the leased real property?
A tenant's installation of a fire-sprinkler system in its leased premises is a capital improvement, so the charge for installing it is not subject to sales or use tax. Under the three-part test in § 1…
Must a company that isn't in the car business collect sales tax when it occasionally sells a company car to an employee or outsider?
A company that occasionally sells its company cars to employees or outsiders must collect and remit New York State and local sales tax on those sales, even though it isn't in the business of selling c…
Can an advertising agency buy materials tax-free by relying on its exempt client's status, when it isn't the client's designated purchasing agent?
An advertising agency must pay sales tax on materials it buys to perform a client's contract, even when the client is a tax-exempt organization, unless a true purchasing-agent relationship makes the c…
Who owed Texas minimum tax after rental-purchase plans were reclassified as conditional vehicle sales?
TR 870 reclassified manufacturer-to-dealer rental-purchase plans as conditional sales despite delayed title transfer. Dealers became responsible for minimum tax on vehicles put into service on or afte…
Is natural gas used to control a furniture plant's humidity and temperature exempt as used 'directly and exclusively' in production, when the heat also keeps employees comfortable?
Natural gas a furniture maker uses to control plant humidity and temperature is used 'directly' in production, but only the portion used exclusively for production is exempt — so gas that also serves …
When a business sells food and drink and is paid in Canadian currency, what amount is the sales tax figured on, and how must it be remitted?
When a business sells food and drink and is paid in Canadian currency, the sales tax is figured on the US-dollar value of that Canadian money at the time it is delivered to the business — not on the f…
For flowers ordered through a florists' wire service, which florist collects the sales tax and at what rate, when the sending or receiving florist may be in another state?
For flowers ordered through a florists' telegraphic or telephonic delivery association, the florist that TAKES the order from the customer collects the sales tax, at the combined state and local rate …
Is a tenant's installation of a fire-sprinkler system in leased premises a nontaxable capital improvement to real property?
A tenant's installation of a fire-sprinkler system in its leased premises is a capital improvement, so the charge for the installation is not subject to sales or use tax. The Department applied the th…
When a mobile-home manufacturer gives dealers a price reduction, is the sales tax based on the reduced price, and can tax already charged on the full price be refunded?
A manufacturer's price reduction lowers the sales tax only if it actually reduces the taxable price on the invoice. Here Titan Homes cut each mobile home's price by $1,000. Under Method #1 the reducti…
For a mobile-home manufacturer's sales to dealers, which discounts reduce the taxable receipt, and are transportation charges taxable?
The type of discount decides whether it reduces the sales tax. Trade discounts and volume discounts represent a reduction in the selling price, so they are deductible and the manufacturer should not c…
Can a mobile-home dealer get a refund of the difference between the tax it paid the manufacturer and the tax that would apply in its customer's county?
A mobile-home dealer cannot get a refund simply because it sold a home to a customer in a New York county with a lower tax rate than the dealer's own county. When a dealer buys homes from a manufactur…
Is a sandpit operator's charge for letting a customer dump clean fill at the excavation site subject to New York sales tax?
A charge for allowing a customer to dump clean fill at an excavation site is not subject to New York sales tax. New York taxes only the services it specifically lists (enumerated services) under § 110…
When a tenant installs a private telephone system, which components are nontaxable capital improvements and which parts (and the custom software) remain taxable?
A tenant's private telephone system is taxed component-by-component. Only the parts that become part of the real property are a nontaxable capital improvement: the lines run through the walls and ceil…
New York Advisory Opinion TSB-A-83 (1)I: Can a nonresident employee who works part of each day in New York and part outside New York allocate income by hours worked, rather than by counting whole working days?
Yes. The Department confirmed that the standard method under 20 NYCRR 131.17(a) allocates a nonresident employee's New York-source compensation using the ratio of total working days employed within Ne…
Is a subcontractor's back-hoe excavation taxable, and does it matter whether the prime contractor is doing a repair or a capital improvement?
Whether a subcontractor's back-hoe excavation is taxable turns on the end result of the prime contractor's work, not on who owns the property. If the prime contractor is repairing real property (e.g.,…
Are advertising-printed envelopes used to mail promotional material out of state, but mailed from New York, subject to New York sales or use tax?
Envelopes used to mail promotional material to out-of-state recipients are subject to New York sales or use tax when they are mailed from a New York location. The envelopes are 'used' in New York the …
Can a gas supplier buy cryogenic converters tax-free as production equipment when its customers, not the supplier, use them to make products for sale?
A gas supplier can buy cryogenic converters without paying sales tax when the converters are bought solely to be used, by the supplier's customers, directly and predominantly in producing tangible per…
Are a foundry's charges for storing customers' pattern equipment a taxable storage service, or a nontaxable lease of real property?
A foundry's charges for storing its customers' pattern equipment are a taxable storage service under § 1105(c)(4), not a nontaxable lease of real property. Section 1105(c)(4) taxes the service of stor…
New York Advisory Opinion TSB-A-82(11)I: Is an employer's understanding of the rules for employees claiming New York State and City withholding exemptions correct?
Mostly, with three technical corrections. The Department confirmed that an employee generally may claim the same number of State/City exemptions as federal exemptions under Tax Law § 671(c)(1), but cl…
New York Advisory Opinion TSB-A-82(10)I: Does working as a consulting fund raiser qualify as the 'practice of a profession,' exempting the income from New York's Unincorporated Business Income Tax?
No. The Department ruled that Gordon C. Dixon's activities as a consulting fund raiser during 1978-1980 did not constitute the practice of a profession under Tax Law § 703(c), even though more than 80…
How is an amusement park taxed on its ride-lease payments, its Pay-One-Price admissions, and its various concession arrangements?
An amusement park's Pay-One-Price admission (a single fee for entry plus unlimited rides) is a taxable admission charge under § 1105(f)(1), taxable in its entirety even though some visitors, once insi…
When a corporation buys a boat to bareboat-charter it, when can it buy tax-free, and can it shift the tax to the charterer's use tax?
A corporation can buy a vessel tax-free for resale only if the bareboat charter is a true arm's-length rental — the charter fee must be reasonable versus comparable vessels and fairly reflect acquisit…
Does a harness-racing program qualify as a tax-exempt newspaper or periodical, or is it taxable?
A harness-racing program does not qualify as a tax-exempt newspaper or periodical, so its retail sale is taxable. Section 1115(a)(5) exempts newspapers and periodicals, and § 528.6 requires (among oth…
Are capital-fund-drive contributions that give donors priority to buy season tickets 'admission charges' subject to sales tax?
Capital-fund-drive contributions that only give a donor priority or the right to buy season tickets — at the same price everyone else pays — are not taxable 'admission charges.' Section 1105(f)(1) tax…
Must an amusement park pay sales tax when it rents coin-operated amusement devices and when it buys amusement rides?
An amusement park owes sales tax both on its rental of coin-operated amusement devices and on its purchase of amusement park rides — neither is a tax-free purchase for resale. Because payments for ope…
Can a paving contractor buy materials tax-free when it repaves state and municipal roads, even though it works as a subcontractor for a private utility?
A contractor can buy paving materials tax-free when the materials become an integral component part of real property owned by an exempt entity — here New York State and municipal roads — even though t…
Does a newspaper distributor pay sales tax on the twine, strapping, and wire it buys to bundle newspapers for delivery to dealers?
No. A newspaper distributor can buy the twine, strapping, and wire it uses to bundle newspapers for delivery without paying State or local sales tax. Tax Law § 1115(a)(19) exempts cartons, containers,…
A Delaware corporation exists purely as a passive title-transfer conduit at the US-Canada border -- taking momentary title to imported natural gas and instantly passing it to its own shareholders, with an escrow agent (not the corporation) handling the money, no office or employees in New York, and no profit earned on the gas. Does it owe New York's utility franchise tax or utility services tax if some shareholders end up consuming some of that gas themselves rather than reselling it?
Not taxable under either statute. Boundary Gas, Inc., a Delaware corporation, exists solely to take momentary title to natural gas at the US-Canada pipeline border and instantaneously transfer that ti…
When a design firm bills a 'design fee' plus reimbursed expenses for producing annual reports, is sales tax charged on the whole bill or just the design work?
The whole bill. A firm that designs annual reports and delivers printer-ready designs is making a retail sale of tangible personal property, so its sales tax is based on the entire amount the customer…
Does a company that sells blank printed flight-plan forms to pilots have to collect sales tax on them?
Yes. A company that designs, has printed, and sells blank flight-plan forms to pilots must collect New York State and local sales tax on them. The forms are tangible personal property, the pilots do n…
Are telecommunications devices for the deaf (TDD/TTY) that convert telephone and teletype signals exempt from New York sales tax?
They are exempt. Telecommunications devices for the deaf (TDD or TTY) — used with a conventional telephone to convert between telephone and teletype signals so a hearing-impaired person can communicat…
A trash-removal company charges customers separately for containers. Does it pay sales tax when it buys those containers, or are they bought for resale?
The containers are bought for resale — no tax on the hauler's purchase. A commercial trash-removal company that charges a separate fee for supplying containers (based on container size) is treated as …
Could a vehicle operator satisfy Texas reciprocity use-tax duties by offering records for audit instead of filing Form 14-112?
No. Section 152.043 required use tax on qualifying reciprocity-agreement vehicles by the day they entered Texas. Form 14-112 identified the tax and vehicles being paid. As an administrative accommodat…
New York Advisory Opinion TSB-A-82(9)I: Does a taxpayer's capital gains tax preference item get taxed twice under New York's minimum income tax computation - once directly, and again by reducing the net operating loss carried forward?
No. The Department explained that Henry and Lois Schwaeber misread the minimum income tax computation form (Form IT-220): the net operating loss carryover reduction entered on the form is the taxpayer…
When a printer produces magazines or sports programs for (or on behalf of) a tax-exempt organization, which of its purchases and sales are taxable?
It depends on which purchase or sale you mean. A printer producing magazines or sports programs — whether contracting directly with a tax-exempt organization or with a corporation acting for it — can …
Can a not-for-profit golf club buy topsoil, seed, fertilizer, and chemicals tax-free by arguing they are 'resold' to members through their dues?
No — those purchases are taxable. A not-for-profit golf club must pay sales tax on the topsoil, seed, fertilizer, and chemicals it buys to maintain its course. The materials are not resold 'as such or…
Are 'ad slicks' a retailer buys to send to newspapers exempt from sales tax as production machinery and equipment?
Yes, they qualify for the production exemption — except for New York City tax. Ad slicks a retailer buys and then mails to newspapers to print its advertisements are exempt from sales and use tax unde…
Does a gas utility owe sales tax when it reimburses a city's contractors for taking precautions to protect its gas mains during city capital improvement work?
No — those reimbursements are not taxable. When a gas utility reimburses a city's construction contractors for precautions they take to protect the utility's gas mains — using caution generally, subst…
New York Advisory Opinion TSB-A-82(8)I: Is a death benefit received by a public safety officer's widow under the federal Public Safety Officers' Benefits Act subject to New York personal income tax?
No. The Department ruled that death benefits Doris Palmore received under the Public Safety Officers' Benefits Act of 1976 (paid by the Law Enforcement Assistance Administration following a determinat…
New York Advisory Opinion TSB-A-82(7)I: Can a New York resident use the resident credit for taxes paid to another state to offset New York's minimum income tax on a capital gain that both states taxed?
No. The Department ruled that Alan S. and Billie Ballou could not apply New York's section 620 resident credit (for income tax paid to another state, here New Jersey, on a capital gain from selling Ne…
A second-tier subsidiary (90%-owned by an intermediate holding company, which is in turn wholly owned by a foreign parent) borrows directly from that foreign grandparent and pays it arm's-length interest. Does the corporate franchise tax's related-party interest add-back reach interest paid to a grandparent, or only to a direct shareholder?
No add-back applies. The Ore and Chemical Corporation posed a hypothetical: a German company (P) wholly owns a Delaware holding company (S), and S owns 90% of a third corporation (T), with an unrelate…
Is a health-fitness center a taxable 'social or athletic club,' and which of its membership fees, dues, and service charges are subject to sales tax?
The center is not a taxable social or athletic club, so its membership fees and club dues are not taxed — but several of its other charges are. Because members do not control the center's activities, …
New York Advisory Opinion TSB-A-82(6)I: Can a former New York resident carry back an operating loss on New York rental property - his only New York-source item in a nonresident year - to an earlier year when he was still a New York resident?
No, but he can carry it back or forward to other nonresident years. The Department reconciled two seemingly conflicting precedents: Graham v. Tax Commission holds a nonresident is entitled to a net op…
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