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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Did Kansas's local compensating use tax apply after July 1, 2003 to equipment leases with Kansas franchisees that already existed?
Yes. State and local compensating use tax applied to equipment-lease receipts for reporting periods after July 1, 2003, even when the lease contract already existed. The new law contained no grandfath…
Did an extension until August 15, 2003 to pay Zelma Kingsley's 2002 New Mexico income tax also stop interest from accruing after the April 15 due date?
No. Sections 7-1-13(E) and 7-1-67(A) expressly required interest on unpaid tax despite an extension of time to pay. The Department employee's failure to warn Kingsley about interest could not override…
Did a nonresident owner owe Florida use tax when a yacht entered Florida solely to be sold through a registered Florida yacht broker?
No, if the yacht entered Florida solely for retail sale under the specified listing arrangement, immediately passed into a registered Florida yacht broker's care, custody, and control, and had no pers…
Is a Christian nonprofit charity exempt from Kansas sales tax on its purchases?
No. Kansas has no blanket sales-tax exemption for 501(c)(3) charities, so this Christian children's-relief nonprofit is not exempt just because it does faith-based charitable work. The only category e…
For Kansas's 10-day aircraft fly-away exemption, does the removal period begin when title to a green aircraft passes or when the buyer accepts the completed aircraft?
The 10-day period began when the out-of-state buyer took delivery of the aircraft in its completed, final condition, not when title and risk of loss passed on the flyable but unfinished green aircraft…
Could James Crowe avoid New Mexico gross receipts tax on $28,875 from an Albuquerque company by testifying that much of his marketing work occurred out of state after he destroyed the supporting records?
No. The Department accepted Terry Crowe's 1099s as proof that her $4,900 of consulting services occurred outside New Mexico, but James Crowe could not document where he performed work for Albuquerque-…
Does a nonprofit apprenticeship fund qualify for the Kansas educational-institution sales-tax exemption?
No. A nonprofit apprenticeship fund is not an 'educational institution' as Kansas now defines that term (a nonprofit school/college/university offering education above the twelfth grade, or an entity …
Is providing on-hold message equipment to businesses taxed as a service or as a lease of equipment?
It's taxed as a lease of tangible personal property, not as a taxable 'telephone answering service.' A company that installs on-hold message equipment at a customer's premises (playing a pre-recorded …
Under Kansas destination-based sourcing, how are a contractor's materials and labor taxed, and what about out-of-state jobs?
The contractor is the consumer of the materials it installs. Under destination-based sourcing, Kansas state and local use tax applies where the contractor receives the materials (its business location…
Was a separately stated newspaper carrier-delivery charge nontaxable when subscribers could avoid it by choosing pickup or mail?
Yes. The independent-carrier delivery charge was nontaxable if the publisher disclosed carrier and mail charges when a subscription began or renewed, told the subscriber that pickup or mail could avoi…
Under Kansas destination-based sourcing, where is a contractor taxed on materials pulled from its own inventory?
At the warehouse. A subcontractor that keeps garage doors and fireplaces in inventory (bought tax-free for resale) is the consumer of those materials when it withdraws them to install them. Under dest…
Does the Texas franchise tax wholesale-center exemption still apply to an out-of-state company that leases trade-show space in Texas but also uses an independent representative soliciting in Texas year-round?
No. The Tax Code Section 171.084(c) wholesale-center exemption does not apply. Although HB 2424 expanded the definition of a 'wholesale center' (a permanent wholesale facility with permanent tenants t…
Did resident-only physical therapy prevent a for-profit nursing home from claiming Florida's residential-facility electricity exemption?
No. The nursing home qualified for the residential-facility electricity exemption because its contracted physical therapy was ordered for residents, unavailable to the public, directly related to resi…
Are dietary and health-care supplements subject to Kansas sales tax?
Yes — taxable. Kansas imposes sales tax on retail sales of tangible personal property under K.S.A. 79-3603(a), and there is no exemption for dietary or health-care supplements. A company selling them …
Was a carpet seller-installer making taxable retail sales, or acting as a contractor selling immovable property, when customers took title before installation?
The customers took title before installation, so the taxpayer sold tangible personal property and collected sales tax on carpet and padding. Separately stated optional installation was not taxable, an…
Are boat and camper storage charges subject to Kansas sales tax?
Storage itself is not taxable. Charges for boat storage and camper storage — the rental of space for storage — are not among the services Kansas enumerates as taxable, so no sales tax applies. But mai…
For the broker-dealer investment tax credit, does having 83% to 88% of administrative and support employees in New York satisfy the substantial-portion requirement?
It appears yes. For the broker-dealer/investment-advisor investment tax credit under section 210.12(b)(i)(D), (E) and (F), all or a substantial portion of the administrative and support employees tied…
For the broker-dealer investment tax credit, does having 87% to 92% of administrative and support employees in New York satisfy the substantial-portion requirement?
It appears yes. For the broker-dealer/investment-advisor investment tax credit under section 210.12(b)(i)(D), (E) and (F), all or a substantial portion of the administrative and support employees tied…
After 2003 law changes, can a non-life insurance company taxed on premiums still claim the QEZE tax reduction credit, and how is the tax factor computed?
Yes. Even though, starting in 2003, a non-life insurance corporation is taxed on gross direct premiums under section 1502-a instead of on income/capital under section 1501, it remains eligible for the…
Does a New York City sporting and fitness facility (rock climbing, boxing, aerobics, and traditional gym equipment) owe state or city sales tax on its initiation fees, monthly membership dues, and extra charges for personal training and boxing lessons?
No. Because the club's members don't control any social or athletic activities, don't participate in selecting members or management, and hold no proprietary interest in the club, it isn't a taxable '…
As part of a public 42nd Street/Times Square urban redevelopment project, I (a private landowner) am being asked to voluntarily deed my site to the state's development subsidiary for no money, with a simultaneous reversionary interest going to the City -- then lease it back for 40 years at $10/year rent, retaining all the practical costs, income, mortgage rights, and appreciation, with the site guaranteed to revert or be sold back to me at a nominal $10 option price. Even though a purchase option coupled with a lease is normally always a taxable conveyance regardless of term, does this three-step public-private redevelopment structure trigger New York's Real Estate Transfer Tax?
All three steps are exempt from RETT. As part of Empire State Development Corporation's (ESDC) 42nd Street/Times Square redevelopment project, a private landowner (Milstein) holding Site 8 North (then…
Were optional monthly credit-insurance premiums included in a mortgage note's taxable principal for documentary stamp and nonrecurring intangible tax?
No. The monthly insurance premiums were voluntary, cancelable without penalty, calculated on the outstanding balance, and not added to or financed as loan principal. Although the borrower made one com…
Is an ASP dictation / website file-transfer service subject to Kansas sales tax?
Not taxable. An ASP service that lets customers call an 800 number to record dictation or use a website to transfer files is not one of the services specifically enumerated in the Kansas sales tax act…
When a condo manager's agreement set a $7 tax-inclusive price for a beach-chair setup, what amount did it owe the rental vendor and who remitted tax?
The manager owed the vendor the full $7 specified by the agreement: $6.58 of rental charge plus $0.42 of separately identified tax, with the vendor remitting the tax to Florida. The ruling found no ev…
Could a boat club buy boats tax-free for rental when each membership assigned one boat and a limited number of nonconsecutive use days?
Yes. Each agreement identified one member, one boat, a membership term, allotted use days, and consideration consisting of initiation and membership fees. The days did not need to be consecutive for t…
Was Benny Nevarez limited to the New Mexico income tax withheld from his wages, or did he still owe the additional $282 shown on his 2000 return?
He still owed the $282, plus penalty and interest. New Mexico imposed personal income tax on a resident's net income, and employer withholding was only a credit against that liability—not a cap or dis…
Did acquisitions and expanded customers justify deconsolidation when the affiliated group continued the same service business and separate filing would reduce tax?
No. Acquisitions expanded the group's revenue, customers, and geography, but Florida found that it still provided the same kind of services as when it elected consolidated filing. The group had benefi…
Did acquiring and later spinning off companies justify ending a Florida consolidated return election when the group's core business remained the same?
No. The parent bought companies and later spun them off, but Florida found the group remained substantially in the same form and continued the same core business it had when making the consolidated el…
Could an affiliated group stop filing Florida consolidated returns when legal changes and fundamental business changes were sufficient only in combination?
Yes. Florida found that neither the cited legal changes nor the group's growth and new business focus was sufficient alone, but together they justified ending the consolidated election. Permission was…
Did an airline's cancellable hotel-room agreement qualify as a bona fide lease, and was tax on the first six months refundable?
No on both questions. The agreement was not a bona fide written lease because it did not require a stable minimum number of rooms and either party could terminate without cause or penalty. After the a…
Did a marital settlement create a taxable commercial lease when a former spouse paid monthly rent, utilities, and property-tax increases for business space?
Yes. The marital settlement identified the parties, business space, term, and rent, so it created a lease even though it was not a separate lease document. Under the commercial-rent law then in effect…
Are labor and materials to repair a flood-damaged spillway subject to Kansas sales tax?
Taxable — both labor and materials. Kansas taxes the labor of installing or applying tangible personal property under K.S.A. 79-3603(p), with an exception for original construction, which includes res…
Did registering to vote in Texas and making trips to Texas rental properties change Paul and Lo Ree Bunch's domicile from New Mexico for 1999 income-tax purposes?
No. The Bunches kept their Los Alamos home, mailing address, telephone, vehicles, and family life in New Mexico; Lo Ree Bunch never intended to move, and their Texas stays were short trips to rental p…
Can a company undo sales tax owed on lease payments by dissolving the leasing LLC and unwinding the sale-leaseback back to the original purchase date?
No, not retroactively. A company set up an LLC to buy its equipment and lease it back, but the lease didn't qualify as a nontaxable sale-leaseback under § 59-12-102(24)(c), so the lease payments were …
Did hospital-owned medical linear accelerators, accessories, and replacement parts qualify for Louisiana's medical-device sales-tax exemption?
No. Although prescribed, supervised, and used to treat disease, the durable equipment repeatedly served many patients. The exemption required a device used exclusively by, or administered exclusively …
Were cellular providers taxed on communications services used in their network facilities and in support locations such as call centers, stores, offices, and warehouses?
No, on the ruling's facts. Services used at cell sites, microcells, switching offices, and the switch were integrated into cellular service sold to customers and could be bought for resale with the re…
How are receipts from Texas oil and gas production payments treated as mortgage loans under IRC Section 636 apportioned for the earned-surplus and taxable-capital components of the Texas franchise tax?
The two franchise tax components can source the same receipts differently. For earned surplus, a corporation uses the same accounting method it uses for reportable federal taxable income (Tax Code Sec…
What purchases can a Kansas county make exempt from sales tax, and does the exemption cover hotel/transient guest tax?
A Kansas county's direct purchases used exclusively for political-subdivision purposes are exempt from state and local sales tax under K.S.A. 79-3606(b) — covering utilities, telephone service, vehicl…
Does an Internet Service Provider owe New York sales tax on the Digital Subscriber Line (DSL) connections it buys from a telecom carrier to link its customers to its network, even though the ISP's own Internet-access charges to its customers are tax-exempt?
Yes, in part. The ISP's own charges to its customers for Internet access are exempt under Tax Law § 1115(v). But the DSL connections the ISP buys from its telecommunications provider to link customers…
Does a merged homeowners-association-and-golf-club corporation owe sales tax on its 72 homeowner-members' monthly maintenance charges, on nonresident golfers' membership-style fees for playing the club's golf course, or on occasional guest and golf-league fees?
No, neither is taxable, but for two completely different reasons. The 72 homeowners' monthly maintenance charges qualify for New York's homeowners-association exclusion (since membership consists excl…
Does a trade show and special events decorating contractor owe New York sales tax on its design, set-building, staging, and decorating services, and on the props/materials it provides — and does it owe New York City's separate local tax on top of the state tax?
Yes, both the contractor's services and the tangible items it provides are subject to New York State and local sales tax when delivered in New York. Its design, set-building, staging, lighting, and de…
Does a tax-exempt museum have to collect sales tax on proceeds from its charity auctions, and does the answer change depending on whether the art is donated to the museum outright versus loaned to it on consignment, or whether the museum's own staff or an outside professional runs the auction?
It depends on who owns the item being sold, not on who runs the auction. Sales of artwork and other items that have been donated outright to the museum (so the museum owns them) are NOT subject to sal…
Did a Canadian corporation remain subject to Florida corporate income tax if it revoked its federal election to treat Florida rental income as connected with a U.S. trade or business?
Yes. The corporation derived income through a Florida limited partnership that owned and leased Florida commercial real estate, which established Florida nexus. Revoking the federal effectively-connec…
Was a country club's separately billed mandatory capital assessment taxable as an admission or membership charge?
No, while the stated conditions continued. The assessment was separate from regular dues, demanded from equity members, deposited and accounted for separately, and restricted to mortgage payments and …
For empire zone credits, does a bank count employees in all empire zones, or only in the zones where it is certified?
It depends on the step. For the QEZE eligibility employment test under section 14, the bank counts its employees in all empire zones, whether or not it is certified in a given zone. But for the credit…
When a veterinary practice treats farm livestock, which of its purchased items (medications, syringes, sutures, diagnostic reagents) qualify for a sales-tax refund as 'drugs or medicine,' can the practice ever buy items tax-free for resale, and could it set up a separate pharmacy or retail store to sell animal-health products without paying tax on its own purchases?
A veterinarian must pay sales tax up front on everything it buys to practice veterinary medicine — it can never use a resale certificate for animal-health items like medicine, collars, or flea spray, …
Did an out-of-state merger trigger Florida documentary stamp or nonrecurring intangible tax when Florida property and debt passed to the survivor?
It depended on the governing merger law and transaction documents. Florida would not impose documentary stamp tax on the property conveyance or debt assumption if another state's law vested the proper…
Did transferring three unencumbered Florida parcels to a newly formed LLC trigger documentary stamp tax when the owners kept identical 50% beneficial interests?
Only minimum documentary stamp tax was due. The three parcels were unencumbered, the LLC gave no money, property, or additional membership interests for them, and the pre-transfer owners each retained…
Were a clinical laboratory's diagnostic test kits, calibrators, controls, chemicals, and reusable analytical columns exempt from Florida sales tax?
Partly. Consumable diagnostic test kits, calibration and control materials, and the described chemical compounds were exempt when used to diagnose human disease or injury. Calibrators and controls qua…
For the Texas franchise tax taxable-capital component, must accrued but unused vacation pay be added back to surplus, or does it count as a debt that is excluded?
Accrued but unused vacation pay is generally added back to taxable capital as 'surplus' unless it qualifies as a true debt - certain as to both amount and time. Under Tax Code Sec. 171.109(a)(1), an e…
Could an affiliated group stop filing Florida consolidated returns after major growth, new business lines, acquisitions, facilities, marketing changes, and regulatory change?
Yes, subject to four conditions. Florida found that the group's substantial growth, expanded markets and product lines, acquisitions, facilities, marketing changes, and regulatory environment changed …
For a Texas refiner shipping fuel out of state through a common-carrier pipeline, are the sales Texas receipts, and when does the franchise tax throwback rule apply?
It turns on care, custody, and control - and, if delivery is not in Texas, on the throwback rule. If the buyer has care, custody, and control of the product once it is injected into the pipeline in Te…
How do Kansas's destination-based sourcing rules apply to specific businesses like ticket sellers, florists, dry cleaners, repair shops, and funeral homes?
This notice supplements Notices 03-01 through 03-05 by applying Kansas's July 1, 2003 destination-based sourcing rules to specific industries. Admissions, recreation-participation fees, and club dues …
Is an optometry and ophthalmology practice a 'retailer' that cannot claim the Enterprise Zone sales tax exemption for a new facility?
No exemption -- the denial was sustained. An optometry and ophthalmology practice sought a Project Exemption Certificate for a new facility under the Enterprise Zone Act (K.S.A. 79-3606(cc)). Because …
Was federal gasoline excise tax passed through in the consumer price included in Louisiana corporation income- and franchise-tax sales ratios?
Yes. The federal tax was imposed on the producer, not collected from the customer on the government's behalf. Passing that cost through—even as an itemized amount—was sales revenue included in both ra…
Could a registered low-speed vehicle originally powered by alternative fuel qualify for Louisiana's clean-burning motor-vehicle fuel property credit?
Yes. The 2003 law treated a registered low-speed vehicle as a motor vehicle. The credit was 20% of qualifying fuel-system component cost or, if that basis was not determined, 2% of vehicle cost capped…
Does a Delaware holding company that only owns a Texas bank's stock and collects dividends have Texas franchise tax nexus, and are those dividends part of the Texas parent's Texas receipts?
No on both. A newly formed Delaware holding company whose only activity is owning a Texas bank's stock and receiving dividends - with no Texas employees, assets, services, or meetings - is not doing b…
Was a country club's separately billed prepaid service charge taxable when it funded employees' guaranteed 17% share of food-and-beverage sales?
Yes. The club used the prepaid service charges to guarantee food-and-beverage employees 17% of actual sales and covered shortfalls itself. Florida found that the club benefited from the funds and was …
Should a water-submeter installer charge customers sales tax when meters became permanent plumbing improvements under a mixed lump-sum and cost-plus contract?
No customer sales tax was due under the described contracts. The plumbed-in submeters became real-property improvements, and the agreement did not itemize every material in advance as required for a r…
How are the federal treatment of nuclear decommissioning trusts and a utility's sale of nuclear units treated for Article 9-A entire net income and for the section 186-a utility tax?
For Article 9-A, entire net income starts from federal taxable income and section 208.9 contains no modification for the decommissioning trusts, so the federal treatment of the qualified and non-quali…
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