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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For a company that licenses proprietary hardware/software to religious organizations, sells consulting, design, and web services, and lets the public download audio/video content, which parts of the business are taxable in New York?
The proprietary hardware/software package's monthly license fee is taxable prewritten software, and a bundled setup fee is taxable unless split from its nontaxable custom-programming portion; but genu…
When is South Carolina's 2007 sales tax holiday and what is exempt (per SC IL #07-12)?
August 3-5, 2007. SC Information Letter #07-12 sets South Carolina's 2007 sales tax holiday for the weekend beginning Friday, August 3, 2007 at 12:01 a.m. and ending Sunday, August 5, 2007 at midnight…
Does an airline's baggage-handling-system renovation at its leased airport terminal, which becomes city property upon completion, qualify as a tax-exempt capital improvement, and how are the government's own security screening machines treated?
Yes, the baggage-handling system renovation is a doubly-exempt capital improvement (both as a capital improvement and as work on government-owned real property), so its labor and materials escape sale…
Could a Florida dealer sell components tax-free to a nonresident when it delivered them to another Florida dealer for assembly before export?
No. The selling dealer had to collect Florida sales tax because it delivered the parachute canopies to another Florida dealer acting as the nonresident customer's representative for assembly. The good…
Does the 1,820-hour employment requirement in the Texas Enterprise Zone Program include paid leave?
Yes. The Governor's Office of Economic Development and Tourism advised the Comptroller that the 1,820-hours requirement in Government Code Section 2303.401 for the Texas Enterprise Zone Program is inc…
Which fuel-wholesale, tank, testing, retrieval, delivery, and travel charges did Kansas treat as taxable sales or services?
Kansas treated tank filtration and maintenance, equipment cleaning, tank repair, most tank installation, tank delivery with a sale, tank leases, product delivery, and travel charges tied to taxable se…
Could a Kansas-registered drop shipper accept a resale certificate from an out-of-state seller that was not registered in Kansas?
Yes, beginning July 1, 2007. A Kansas-registered drop shipper could accept an out-of-state seller's home-state resale certificate or a multijurisdictional certificate even if the seller had no Kansas …
Could New Mexico use IRS information reports to assess unreported income when the federal reports were unsigned and the taxpayer disputed only the procedure?
Yes. The IRS properly disclosed information about Salomon Rael's unreported wages and nonemployee compensation under its coordination agreement with New Mexico. The transmitted reports did not need an…
Could a New Mexico resident avoid personal income tax on wages by arguing that federal income tax is invalid or voluntary?
No. James Avant did not deny receiving compensation for services in New Mexico or challenge the Department's calculation. Courts had repeatedly rejected his claims that wages are not income, individua…
Could New Mexico reject a successor-liability protest as late when it did not prove when the assessment was actually mailed?
No. The Department had to prove that it mailed the assessment more than 90 days before the August 7, 2006 protest. A GenTax copy dated April 3 and testimony from a protest auditor who had no mailroom …
Can proceeds from selling an old vehicle to a relative reduce Texas motor vehicle sales tax on a new vehicle bought from a dealer?
No. Only a vehicle transferred directly to the seller of the new vehicle as part of that purchase can reduce taxable consideration. Cash proceeds from a separate sale to a relative or other third part…
Are the various fees a jukebox company charges its jukebox operators for music downloads, database access, background music, and telephone support subject to Utah sales and use tax?
Mostly yes. An electronic jukebox company's music-service package fees (flat-rate, revenue-percentage, and per-play plans), additional song download charges, and Tune Central database-access fees are …
Can a franchised dealer use its Texas rental permit to defer tax when rental-plan vehicles are titled to the manufacturer's finance affiliate?
Yes. Under the described manufacturer rental-purchase plan, the dealer could use its Texas rental permit on Form 130-U even though title named the manufacturer's affiliate in care of the dealer. The d…
When did an airplane bought outside Louisiana become subject to Louisiana use tax after entering the state?
Use tax became due when an out-of-state-purchased airplane entered Louisiana, came to rest, and had a taxable moment outside continuous bona fide interstate commerce. Merely intending future interstat…
Did brief Florida visits during a yacht's first six months of ownership trigger Florida use tax?
No, under the stated limits. The out-of-state-purchased, federally documented, Delaware-registered yacht could enter Florida during the first six months without use tax if its presence did not exceed …
Would Florida use tax apply when an out-of-state-purchased yacht entered Florida after more than six months of use in other states?
No, on the stated facts and conditions. The yacht was purchased and titled outside Florida, was not bought for Florida use, and would be used for more than six months under conditions giving other sta…
Is selling an alphanumeric code that lets someone download digital music -- whether the code is emailed or printed on a plastic card -- subject to New York sales tax?
No. A download code is treated like a gift certificate regardless of the physical medium used to deliver it, and the digital music itself is intangible property when downloaded electronically -- neith…
Is an email-marketing company's fee to run targeted email campaigns for clients subject to New York sales tax?
The company's charges to clients for running targeted email marketing campaigns are exempt as nontaxable marketing services (not information services), but its own purchases of the databases used to r…
Is an out-of-state company subject to New York's corporate franchise tax when its only New York activity is delivering equipment it sold, including occasional deliveries in its own truck?
No. An out-of-state party-equipment seller whose only New York activity is delivering goods it sold - by common carrier or occasionally its own truck - is not doing business, employing capital, owning…
I own a Queens shopping center and want to ground-lease a small newly-created parcel (less than half the shopping center's total rentable space) to a new retail tenant for more than 49 years, with substantial construction planned but no purchase option. The lease easily clears two of the three tests for a taxable long-term lease -- but does the third test, requiring the lease to cover 'substantially all' of the real property, look at just this one parcel or at my entire integrated shopping center?
No RETT is due on signing this ground lease, because the relevant 'premises' for the 90% test is the ENTIRE integrated shopping center, not just the newly-created parcel. A shopping center owner in Qu…
What are South Carolina's latest state and county per capita income figures used for tax incentives (per SC IL #07-11)?
$29,515 statewide. SC Information Letter #07-11 publishes the most recently available per capita personal income figures for South Carolina — $29,515 for the state, plus a figure for every county — wh…
Did Louisiana's tax exemption for DROP account benefits continue after the money was transferred into an IRA?
No. Money paid from a qualifying DROP account was exempt from Louisiana income tax under La. R.S. 11:405 because it was a Chapter 1 retirement benefit. After transfer to an IRA, later IRA payments wer…
When a corporate parent eliminates an affiliate through dissolution, merger into the parent, conversion to a single-member LLC, or an F reorganization, does the parent (or its financial institution unitary group) get to use that affiliate's unused Tennessee net operating loss carryforward?
No, generally. A parent corporation cannot use an eliminated affiliate's Tennessee NOL carryforward whether the affiliate dissolved, merged into the parent, converted to a single-member LLC, or underw…
Does an out-of-state printer of clinical research materials have to collect Tennessee use tax on products it warehouses out of state and ships to Tennessee pharmaceutical customers months or years after the sale, and does that extend to shipping and handling charges?
Yes, if the taxpayer has Tennessee nexus: use tax is owed on the initial shipment and on every later shipment to a Tennessee customer, collected when each shipment actually goes to Tennessee (with cre…
How did South Carolina's annual and alternative monthly job tax credits work for small businesses under the 2007 guidance?
A qualifying business with 99 or fewer worldwide employees generally needed a monthly average increase of at least two new full-time South Carolina jobs. It could use an annual credit claimed in years…
The Department already issued an Advisory Opinion on my $1 sale-leaseback-repurchase structure for the Brooklyn Bridge Park redevelopment (TSB-A-06(3)R), which said the eventual assignment of my lease to the condominium's Board of Managers would automatically be taxed like a sponsor-to-cooperative-housing-corporation conveyance. On further review, does that specific conclusion still hold?
This is a MODIFIED Advisory Opinion, correcting one specific conclusion from the Department's original November 30, 2006 ruling (TSB-A-06(3)R) on the same facts -- everything else stays the same. Same…
Did relying on a tax service excuse interest and penalty when a sole proprietor made income-tax estimates but filed no gross-receipts returns?
No. Lee Reeves made quarterly estimated income-tax payments after hiring Jackson Hewitt but filed no CRS returns for 2003 or early 2004. He had filed an earlier gross-receipts return and should have n…
Did an acquired group's Florida consolidated-return election continue after the group ceased to exist for federal tax purposes?
No. When the acquired affiliated group ceased to exist for federal consolidated-return purposes and its members joined the buyer's group, its Florida consolidated election ended too. The buyer's exist…
Could a later federal contract amendment toll New Mexico's refund deadline when it retroactively changed where research hardware was first used?
No. When the gross receipts tax was paid, the Air Force contract called for the research testbed's first use in New Mexico, so the payments followed the law then in effect. A 2003 amendment changing f…
How did South Carolina update its April 17, 2007 filing relief to cover the storm, Virginia Tech, and Intuit e-filing problems (per SC IL #07-10)?
SC Information Letter #07-10 updates the Department's relief for returns originally due April 17, 2007, expanding on SC Information Letter #07-9. It reflects that the IRS extended the April 16, 2007 N…
Did South Carolina extend the April 17, 2007 tax deadline for people affected by the April 16 Northeast storm or the Virginia Tech shooting (per SC IL #07-9)?
Yes. SC Information Letter #07-9 announces that the South Carolina Department of Revenue will provide the same filing and payment relief the IRS granted for returns originally due April 17, 2007, to t…
Can Tennessee limited partnerships that received federal low-income housing credits in 1987-1989, before an extended low-income housing commitment was federally required, still claim Tennessee's affordable-housing franchise and excise tax exemption without one?
No. Tennessee's affordable-housing franchise and excise tax exemption requires an extended low-income housing commitment under IRC § 42(h)(6)(B) to be in effect, and lacking one — even because it wasn…
Are enrollment fees for a private airport 'Registered Traveler' expedited-security program subject to New York sales tax?
No. Enrollment fees for a TSA-authorized Registered Traveler expedited security-screening program are not a taxable sale of tangible personal property or any enumerated taxable service, though the com…
Does Nebraska sales tax apply to the deductible a vehicle owner pays under a maintenance agreement or extended warranty?
No. Revenue Ruling 01-07-1 concludes that a deductible amount a motor vehicle owner is required to pay under a vehicle maintenance agreement or extended warranty contract is not subject to Nebraska sa…
Can the individual members of a religious or apostolic organization exempt under IRC section 501(d) claim a pass-through share of the organization's New York investment tax credits and other tax incentives?
No. Even though a section 501(d) organization files a federal partnership return (Form 1065) to report its common-treasury income, it remains a corporation, not a partnership, and Tax Law section 607(…
When a deceased parent's IRA is split equally between two beneficiaries, does each beneficiary get the full $20,000 pension and annuity income exclusion, or must they share a single $20,000 amount?
They must share it. Under 20 NYCRR 112.3(c)(2)(iv), the decedent's $20,000 annual pension and annuity exclusion is allocated among multiple IRA beneficiaries in the same ratio as the distribution is s…
Will adding another party - Queens West Development Corporation (QWDC) - to a brownfield cleanup agreement and Certificate of Completion jeopardize the brownfield tax credits otherwise allowable to the original petitioners under Tax Law sections 21, 22, and 23?
No. The Department ruled that adding QWDC to the brownfield cleanup agreements and Certificates of Completion for the sites does not jeopardize the Petitioners' own brownfield redevelopment, real prop…
Is the sale of a video delivered electronically over the Internet subject to New York sales or use tax?
No. Videos delivered electronically for download, like electronically delivered music and photographs, are treated as intangible property and are not subject to New York sales or compensating use tax,…
To obtain property tax and other benefits under New York's Cultural Resources Act, I plan to convey one condominium unit of my building (currently leased to a public TV station) to the Trust for Cultural Resources of the City of New York for just $10, subject to my existing mortgages -- then immediately lease it back from the Trust for $10/year for up to 4 years, after which title automatically reverts to me. I'll stay liable for all the mortgage debt and expenses, and remain the beneficial owner for tax purposes the whole time. Do these title conveyance, leaseback, and reversion steps trigger New York's Real Estate Transfer Tax?
All three steps -- the Title Conveyance, the Leaseback, and the Reversion -- are exempt from RETT. The owner of a Manhattan office building planned to create a condominium with two units: one covering…
Did the Department's failure to answer Margaret Palumbo's letter stop penalty and interest on her unpaid 2002 personal income tax?
No. The negligence penalty had already reached its statutory 10% maximum in September 2003, two years before Margaret Palumbo wrote the Department, so no penalty accrued after her letter. Interest rem…
Were shareholder distributions taxable rent when a related business occupied real property without a written lease?
Yes, on these facts. A landlord-tenant relationship existed because one entity occupied property owned by another, even without a written lease. Distributions routed through the owners were rental con…
How can taxpayers find South Carolina advisory opinions by subject (per SC IL #07-8)?
Use the index attached to SC Information Letter #07-8 to find South Carolina advisory opinions. It indexes the advisory opinions issued by the Department from 1987 to March 31, 2007, and it explains t…
How can taxpayers check whether an older South Carolina advisory opinion was modified or superseded (per SC IL #07-7)?
Use the citator attached to SC Information Letter #07-7. It helps you determine what effect newer South Carolina advisory opinions have on previously published ones — whether an opinion was modified, …
Does a company that retrieves and delivers a patient's confidential medical records to insurers, attorneys, or the patient have to charge New York sales tax on its fee?
No. Retrieving and delivering an identified patient's own confidential medical records is not a taxable sale of tangible personal property or a taxable information service, but a separately stated cha…
Does converting interior warehouse space with new walls, flooring, and a ceiling qualify as exempt 'original construction' labor in Kansas?
Taxable. Finishing a 50,000-square-foot interior warehouse space with new walls, flooring, and a ceiling to convert it to a different use does not qualify as the 'original construction' of a building,…
Can an employer claim Georgia's child care tax credits for 2006 when its child care facility was fully built in 2006 but not licensed and operating until January 2007?
No. Georgia's employer child care tax credits under O.C.G.A. § 48-7-40.6 -- both the cost-of-operation credit and the qualified-child-care-property credit -- require the facility to be licensed and op…
Were a county's charges to private users and vendors for firing-range space subject to Florida sales tax?
Yes. The county's agreement granted private users a license to occupy and use the firing-range property, and vendor-space charges were also licenses to use real property. The governmental-purchase exe…
Were restaurant rent payments at a municipally owned beach exempt as a food concession at a public recreational facility?
Yes. Florida treated the municipal beach as a publicly owned recreational facility and the restaurant lessee as a food-and-drink concessionaire, so base and percentage rent were not taxable. The opera…
Did a registered out-of-state drop shipper have to collect Florida tax from an out-of-state dealer when goods went by common carrier to Florida?
No, under the stated three-party facts. Both the vendor and purchasing dealer were outside Florida, the goods were outside Florida when sold, and a common carrier delivered them to the dealer's Florid…
Does a corporate group that owns home-care-organization subsidiaries and is affiliated with one hospital qualify as a Tennessee 'hospital company' entitled to combined-return franchise and excise tax credits?
No. A corporate group whose subsidiaries are licensed only as home care organizations, and which is affiliated with just one hospital, does not qualify as a Tennessee 'hospital company' for franchise …
Is installing a hard-wired access control security system a tax-exempt capital improvement, or a taxable sale of tangible personal property?
It depends on the component: the credential readers, alarm sensors, and control panel can qualify as an exempt capital improvement if they're permanently affixed and the owner receives full, unremovab…
Could a new New Mexico resident claim a credit for Pennsylvania tax on gain that he allocated entirely outside New Mexico?
No. Clarence Garrett allocated all gain from his pre-move sale of Pennsylvania real estate outside New Mexico, so New Mexico did not tax that gain and no other-state tax credit was available. Using to…
Were diagnostic test kits, calibration and control materials, and qualifying research products exempt from Florida sales tax?
Yes, within the ruling's categories. Diagnostic test kits, calibration and control materials, and related chemical compounds used to diagnose human disease were exempt, as were qualifying consumable m…
How did South Carolina tax wireless-system equipment, design, installation, and in-wall cabling under this private letter ruling?
The taxpayer was selling equipment, not primarily improving real property. Antennas, electronics, and related design charges were taxable; reasonable separately stated installation labor was not. Sepa…
Does a commercial landlord have to charge sales tax when it resells submetered electricity to tenants, and are its CAM and trash-removal charges also taxable?
Yes for electricity resold to tenants through submeters (the landlord must register as a vendor and collect tax) and for the related meter-reading fee, but no for CAM charges billed as additional rent…
In a New York combined franchise tax report, does the federal IRC section 382 limitation and the SRLY-overlap rule of Treasury Regulation 1.1502-21(g) apply when computing the net operating loss deduction?
Yes. In a New York combined Article 9-A report, the net operating loss deduction follows the federal rules: the IRC section 382 limitation and the SRLY-overlap provision of Treasury Regulation 1.1502-…
Is a progesterone topical cream marketed as 'not intended to diagnose, treat, cure, or prevent disease' exempt from New York sales tax as a drug or medicine?
No. Because neither the seller nor the manufacturer claims the cream treats, cures, or prevents any illness or disease -- the manufacturer's own website disclaims that use -- it doesn't qualify as an …
Does a subscription investment-analysis publication qualify for New York's tax exemption for periodicals, in both its hardcopy and electronic versions?
The hardcopy version qualifies as an exempt periodical because it's published quarterly, isn't a book, has continuity of subject and format, and is available to any subscriber, but the electronic vers…
What is South Carolina's tax interest rate for the period July 1, 2006 through June 30, 2007 (per SC IL #07-6)?
8%. SC Information Letter #07-6 sets South Carolina's interest rate on tax underpayments and overpayments at 8% for the period July 1, 2006 through June 30, 2007. Interest is compounded daily, except …
Were healthcare providers' access, implementation, and training charges for a private communications network taxable under this SC PLR?
Yes, on the stated facts. Monthly access and use charges were taxable communication-service charges, and mandatory implementation and training fees were part of taxable gross proceeds. The charges wer…
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