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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Must Kansas sales tax be charged when an equipment lessor separately bills a lessee for reimbursement of the lessor's property tax?
Yes. When an equipment lease requires the lessee to reimburse the lessor for property tax the lessor paid, that reimbursement is part of the total lease payment and is subject to Kansas sales tax. K.A…
How did Kansas tax, license, report, and refund biodiesel produced, distributed, or used within the state under revised Notice 06-06?
Kansas treated B100 and biodiesel blends as taxable special fuel. Clear biodiesel and biodiesel placed in a vehicle tank were taxable; indelibly dyed fuel used only off highway was exempt. A first sal…
Did sales and long-term leases of barges qualify for South Carolina's historical maximum tax as boats under RR 06-6?
Yes. RR 06-6 treated a barge used as water transportation as a boat eligible for the historical $300 maximum tax. A lease qualified only if written, stated for more than 90 continuous days, and kept i…
Could a registered gas-station owner shift gross receipts tax to informal operators and defeat reconstructed assessments without producing business records?
No. Abdul Al-Kasir remained responsible for gross receipts tax from Gas For Less and Super Save because registrations, returns, bank accounts, checks, federal returns, and continued operation tied the…
For the Texas franchise-tax capital investment credit, what costs count as a qualified capital investment?
Transportation and direct labor costs count, but the full federal depreciable basis does not. For the pre-2008 franchise-tax capital investment credit, the Comptroller advised that a qualified capital…
Does building and operating a new natural gas vehicle-fueling station count as a 'new business,' so the owner can get a refund of unused investment tax credit instead of just carrying it forward?
Yes. Because Petitioner's compressed natural gas fueling station is not substantially similar in operation and ownership to his existing farming, mortgage, life insurance, and investment businesses, i…
Does the payroll a payroll/employee-leasing company processes for its clients' employees count as the company's own gross payroll when computing the fixed dollar minimum tax?
No. The clients' employees are not the company's employees - the clients keep full control over hiring, firing, pay, and duties - so the payroll the company merely processes for clients is excluded fr…
If an incapacitated Florida resident is moved into a New York nursing home, does that make her a New York resident for personal income tax and estate tax purposes?
No — for both taxes. A person is a New York resident for personal income tax only if domiciled in New York, or, if not, only if she keeps a permanent place of abode in New York for substantially all t…
How did Florida's $5,000 surtax limitation apply to hospital linens and diagnostic equipment bought in one transaction?
Hospital clothing and linens qualified as bulk sales by line item, so the $5,000 limitation applied separately to each invoice line rather than the whole mixed invoice. Two ultrasound systems bought t…
Is a condominium board of managers' resale of submetered electricity and steam to unit owners subject to sales tax, and may a utility include the section 186-a gross receipts tax in its transmission charges?
Yes, the board's resale of submetered electricity and steam is taxable and it must register as a vendor. Water through mains is exempt; residential energy is exempt from the state sales tax but not lo…
How did Florida tax alternative home-acquisition and mortgage-replacement financing transactions?
Florida treated both arrangements as mortgage financing. The full obligation owed documentary stamp tax and nonrecurring intangible tax, and the original home-purchase deed separately owed deed tax. A…
Were later software programming, implementation, training, and related charges taxable as part of the original sale?
Yes. The original perpetual software-and-equipment agreement incorporated the professional-services addendum and set hourly rates. Programming, project management, training, implementation, testing, m…
When was furnishing a trash dumpster part of a nontaxable waste-removal service, and when was it a taxable equipment rental?
Regular trash-removal arrangements were nontaxable when the dumpster merely facilitated the service, even with separate invoice lines. A separately priced daily, weekly, or monthly right to possess a …
Are an airline's galley carts, passenger safety cards, and blankets/pillows exempt from New York sales tax under the commercial aircraft exemption?
Galley carts and their parts qualify as exempt equipment installed on commercial aircraft, but pillows, blankets, and laminated passenger safety instruction cards are not equipment installed on the ai…
Which deeds and notes were taxable when an intermediary handled a buyer-funded installment real-estate sale?
The seller-to-intermediary deed was taxable on the property's entire sales price, and the intermediary's promissory note to the seller was also taxable. The intermediary-to-buyer deed was not taxable …
Did a worker abandon New Mexico domicile by taking a California job and apartment while keeping and renewing New Mexico vehicle documents?
No. Cary Brooks physically lived and worked in California during part of 2000, but his conduct did not show that he abandoned New Mexico domicile: he returned to buy and register a vehicle in New Mexi…
Could taxpayers recover voluntarily paid tax because the Department's assessment deadline had expired, and avoid penalty and interest for correcting their own returns?
No. Phillip and Peggy Soice's 1998-2000 tax debts were not extinguished when the Department's three-year assessment period expired. Their 2005 amended returns validly self-assessed the still-owed tax,…
Could a unitary business allocate Florida start-up expenses and use separate accounting instead of standard apportionment?
No. The Florida recruiting, payroll, stocking, utilities, and similar expenses were unitary with the taxpayer's nationwide operations and could not be allocated to Florida as nonbusiness expenses. Sta…
If a nonresident leases out a membership (seat) in a New York stock or commodity exchange, or later sells it, is that rental income or sale gain New York source income?
Generally no for a single lease or a single sale contract - a lone transaction usually lacks the continuity and regularity needed to be a business carried on in New York, so the income isn't New York …
Did a bank's automatic-investment account qualify as an exempt money deposit under Florida's 2006 intangible-tax rules?
In this 2006 ruling, the automatic-investment account was a mere time deposit of money and was not subject to Florida intangible tax. The result did not extend to taxable securities held by the bank a…
Were four Loanliner credit documents taxable as written obligations or as recorded liens under Florida law?
As independent documents, the four reviewed forms were not taxable under section 201.08(1)(a) because none contained both an unconditional obligation to pay a sum certain and the borrower's signature,…
Did converting cooperative apartments to condominium units trigger additional documentary stamp tax on the deeds?
No. The same tenant-stockholders received title to the condominium units they already occupied, documentary stamp tax had already been paid on their cooperative occupancy rights, and the conversion de…
Were airport concession fees and required improvements taxable as rent for Florida sales-tax purposes?
The airport privilege, franchise, or concession fees were not payments for leasing or licensing real property and were not taxable under section 212.031. Required capital improvements were different: …
Which contractor labor charges became exempt from Nebraska sales and use tax under LB 968?
Effective July 1, 2006, Laws 2006 LB 968 exempted contractor labor from Nebraska sales and use tax for four categories of construction: (A) the first or original construction of a new structure, build…
Are purchases by a nonprofit certified community-based developmental disabilities service provider exempt from Nebraska sales and use tax, and how do they claim it?
Yes. Effective July 1, 2006, purchases by any nonprofit organization certified by the Nebraska Department of Health and Human Services to provide community-based services for persons with developmenta…
Did Louisiana preserve corporate charitable contributions that federal law converted into a net operating loss carryover?
No. Louisiana used its own net operating loss rules and recognized the charitable deduction only when taken on the federal return, so the portion converted to a federal NOL carryover was lost for Loui…
How did tax apply when a fabricator sold roof timbers directly to exempt owners but also installed them?
A governmental or qualifying nonprofit owner could buy the roof timbers without sales tax through a documented direct purchase using its exemption certificate and funds. But the fabricator also instal…
If I roll over money from another state's 529 plan into Utah's own SAVINGS PLAN (UESP), can I claim the Utah state income tax deduction on the rolled-over amount — and if I roll money OUT of a Utah SAVINGS PLAN account into another state's 529 plan, do I have to pay back deductions I already claimed?
Yes, rolling money INTO Utah's own 529 plan (SAVINGS PLAN, now UESP) from another state's 529 plan qualifies for the Utah income tax deduction in the year the rollover funds are received — the full ro…
Were a restaurant's separately stated, voluntary gratuity charges subject to Florida sales tax?
No. The suggested gratuity was voluntary, separately stated on the guest's bill, adjustable at the guest's request, and distributed to employees without a benefit to the restaurant. Florida therefore …
Which Local Option Sales and Use Tax revenue rulings did Nebraska declare invalid in 2006?
Revenue Ruling 09-06-3 lists three older Local Option Sales and Use Tax revenue rulings that are no longer valid: 9-77-1 (Leases), 9-94-1 (Rent or Lease of Vehicles), and 9-94-2 (Limitation on Submitt…
Is a federally chartered credit union exempt from Utah's motor and special fuel taxes on fuel used for its courier vehicles and backup generators, and if so, how does it recover tax already paid?
Yes. Federal credit unions are exempt from state and local taxes under 12 U.S.C. section 1768 (except property tax), and Utah law separately exempts sales of motor fuel and special (diesel) fuel to fe…
Do the master tapes of television programs a broadcaster produces in New York qualify for the New York investment tax credit?
Yes, if the life test is met. Master tapes of television programs are tangible personal property principally used to produce goods by manufacturing or processing, so they qualify for the investment ta…
Are a mall landlord's unmetered electricity reimbursement, trash-removal, and CAM charges to tenants subject to New York sales tax?
No for all three: a landlord's fixed, unmetered monthly electricity reimbursement is part of the rent (not a taxable utility sale) because it isn't tied to actual usage, and flat trash-removal and CAM…
Were technical services exceeding the original software project's estimated hours subject to Florida sales tax?
Yes. When the purchaser executed the software-license and hardware-purchase agreements, it agreed to pay for technical services beyond the initial hours if needed to complete the project. The later an…
Is a federal qualified settlement fund subject to New York's corporate franchise tax, or treated as a trust for New York State and City personal income tax?
No to both. A federal qualified settlement fund is not deemed a corporation for the Article 9-A franchise tax, because it only collects and distributes income rather than conducting a business. And be…
Is an out-of-state manufacturer that solicits New York orders through a sales representative working from a New York home protected from the franchise tax by Public Law 86-272?
Yes. An out-of-state plastics manufacturer whose New York activity is limited to soliciting orders - approved and shipped from outside New York - is exempt from the franchise tax under Public Law 86-2…
Was a corporation's transfer of semitrailers to its wholly owned single-member LLC exempt from sales tax?
Yes, under the reorganization exemption. The stand-alone semitrailers did not qualify for the commercial-motor-vehicle exemption because they neither used fuel nor met the weight test apart from separ…
Who had to remit tax and the rental-car surcharge collected when a customer signed a vehicle lease?
The dealership had to collect and remit Florida sales tax on the down payment and first month's rent it received at lease signing. It also had to collect and remit the rental-car surcharge. Those amou…
Was durable medical imaging equipment taxable when the sales contract transferred title and risk before the vendor installed it in a Louisiana hospital?
Yes. Title and risk passed while the equipment was still movable property, so sales or use tax applied before installation. The lump-sum contract made the entire amount taxable.
Could a taxpayer exclude business-asset sale proceeds or treat payments to contractor entities as payroll?
No. Gross proceeds from the sale of business assets belonged in the sales factor, while fees paid to separate professional entities were not the taxpayer's payroll because their workers were not its e…
Which city and contractor purchases for repowering an electric generating unit qualified for exemption?
Machinery and equipment permanently integrated into producing electricity from natural gas and distillate oil qualified for exemption when bought by the city or its contractors using the required affi…
Does an out-of-state factoring subsidiary — with no Tennessee offices, employees, or property, but whose affiliated originators pursue collection actions on its behalf against Tennessee customers — have enough nexus to owe Tennessee franchise and excise tax, and if so, must it file a combined return with another affiliated financial institution?
Yes to both. Even with zero physical presence in Tennessee, the factoring company has substantial nexus because its affiliated originators pursue collection agencies, attorneys, and court judgments in…
Can a corporation deduct the royalty payments it makes to a related, commonly-owned intellectual-property-holding affiliate when computing its Tennessee excise tax net earnings, and what factors determine whether that structure is a legitimate business arrangement rather than a tax-avoidance sham?
Yes. Because the IP-holding affiliate has its own offices, employees, and independent operations outside Tennessee, holds legal title to the intangibles, sets royalty rates through independent transfe…
When were rigging labor, point charges, and equipment-use charges services rather than taxable rentals?
Rigging labor and point charges were nontaxable services. Equipment charges were also service charges when the taxpayer supplied an operator and retained control and direction. A taxable rental occurr…
Is a non-profit's unrelated business income subject to Texas franchise tax?
It depends on whether the non-profit has obtained a Texas franchise-tax exemption. A non-profit corporation doing business in Texas is subject to the franchise tax, and it must file and pay until the …
Were 25-cent candy sales from coin-operated machines sponsored by a section 501(c)(3) organization exempt?
Yes. Candy sold for 25 cents or less through coin-operated machines was exempt while a written sponsorship agreement with the section 501(c)(3) organization remained in effect and the machines display…
When a loss-making subsidiary merges into a newly formed, not-yet-capitalized single-member LLC owned by its sister corporation (as part of a corporate simplification), does the subsidiary's unused Tennessee net operating loss carry over to the LLC or become usable by the sister corporation going forward?
No on both counts. The disregarded SMLLC is treated as a division of its corporate owner, so the merger is really treated as the loss-making subsidiary merging directly into its actively-operating sis…
Is the sale of a prepaid satellite TV programming card subject to Nebraska sales tax, and where is the tax collected?
Yes -- and the tax is collected at the point of sale. Revenue Ruling 01-06-4 concludes that 'gross receipts' include the proceeds from selling prepaid satellite television programming cards, and Nebra…
When a buyer and seller jointly elect under IRC § 338(h)(10) to treat a stock purchase as a deemed asset sale, and that deemed sale generates a loss for the acquired corporation, does that loss properly show up in the corporation's Tennessee excise tax base, and can the corporation carry that loss forward to later years even though federal tax rules treat it as a legally distinct "new" corporation after the transaction?
Yes to both. The loss from the deemed asset sale properly flowed into the corporation's Tennessee taxable income because Tennessee doesn't require any adjustment to override the federal Section 338(h)…
Is a drug-eluting coronary stent system — a permanent artery-support implant coated with a restenosis-preventing drug, sold pre-mounted on a disposable delivery system — exempt from Tennessee sales and use tax as a prosthetic device?
Yes. The stent augments the coronary artery's function by holding it open so blood can flow to the heart, qualifying it as an exempt prosthetic device, and because the disposable delivery system is us…
Could a corporate group stop filing Florida consolidated returns after extensive changes in its business?
Yes, subject to conditions. The group had changed extensively since its original election through acquisitions, divestitures, product-line diversification, geographic expansion, and growth. Florida al…
How did Louisiana apply the corporate franchise-tax rule that reclassified 50% of excess related-party debt when the corporation's capital account was negative?
Louisiana transferred half the excess related-party debt into capital stock, surplus, and undivided profits, but capped the transfer so related-party debt could not fall below zero.
How did Louisiana treat tax shelters that the IRS listed as abusive, and what penalties did the Department say it would impose?
Louisiana also treated IRS-listed abusive tax shelters as abusive for state income-tax purposes and said it would impose false-or-fraudulent-return and negligence penalties, plus any other applicable …
Does an airplane leased to fly aerial pipeline-leak-detection surveys qualify as an exempt 'commercial aircraft' under New York's sales tax law?
No. An aircraft leased to fly laser and camera equipment over pipelines to detect leaks does not qualify as an exempt commercial aircraft, because using a plane to perform an aerial photography/imagin…
Are interest receipts a combined-group parent earns on loans to affiliates outside the combined group excluded from the combined group's business receipts factor?
No, they are included. In a combined report, only intercorporate receipts between members of the combined group are eliminated. Interest the parent earns on loans to affiliates that are outside the co…
Is installing new wall-to-wall carpet during a commercial tenant's office renovation an exempt capital improvement, or a taxable installation?
Taxable. Floor covering like carpet has its own narrower capital-improvement rule -- it's exempt ONLY as the initial finished floor covering installed in brand-new construction, a new addition, or the…
Is installing a hard-wired emergency home generator a tax-exempt capital improvement in New York?
Generally yes. Installing an emergency home generator that's permanently piped to a gas line, hard-wired into the building's electrical system with a required transfer switch, and mounted on a concret…
Does software that lets customers upload digital graphic files to a printing company's server qualify for Utah's manufacturing equipment sales tax exemption?
No. A digital printing manufacturer bought 'canned' software letting its customers upload graphic files to the company's server for later printing. Because that software only delivers and stores files…
For a credit-card company, how are annual membership fees and merchant discount fees sourced for Texas franchise-tax apportionment?
They are sourced differently. In this internal franchise-tax policy memo to an auditor, the Comptroller treated a credit-card company's annual membership fee as the sale of an intangible right, source…
What Kansas motor-fuel changes in 2006 affected biodiesel incentives, the E-85 tax rate, electronic filing, and storage-tank reimbursements?
Kansas enacted three major motor-fuel changes. Senate Bill 388 created a qualified biodiesel producer incentive of $0.30 per gallon sold, with quarterly claims beginning July 1, 2007. Senate Bill 544 …
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