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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Could a commercial tenant exclude separately stated trademark and logo fees from taxable Florida rent?
No exclusion was allowed. Although genuine trademark or logo payments can be nontaxable, the tenant did not prove a reasonable market-value allocation, actual use, independent value, or legitimate bus…
If a Utah government transit agency leases rail cars under a long-term, non-cancelable lease with a nominal purchase option, are the rail cars exempt from Utah property tax?
The Commission did not issue the binding, case-specific ruling requested. Instead it gave general guidance: under Utah Code § 70A-1-201(37)(b) and *Salt Lake County v. First Security Leasing Co.*, 881…
Are free videotape catalogs (with promotional labels attached) and their plastic cases exempt from New York sales tax as 'printed promotional materials' when mailed free of charge to prospective customers within New York?
Only partly exempt. Videotape catalogs and their plastic cases with advertising labels attached do count as 'promotional materials' under New York law, so copies mailed free of charge to prospective c…
Is the service of cleaning storage tanks subject to Kansas retailers' sales tax?
No. The gross receipts from the service of cleaning storage tanks are exempt from Kansas retailers' sales tax. K.S.A. 79-3603(q) taxes services of repairing, servicing, altering, or maintaining tangib…
How did Louisiana's former first-purchase exclusion apply to digital television conversion equipment, multiple units, back orders, and pre-June 25, 2002 purchases?
A qualifying television licensee could designate one first purchase per statutory equipment category. Singular categories allowed one item; plural categories allowed multiple items on the same purchas…
Were Jose Arrieta's 1999 paralegal receipts exempt employee wages or deductible services for resale when he reported Schedule C income and issued an NTTC to the attorney instead of receiving one?
Neither treatment applied. Arrieta identified himself as an independent contractor, reported $17,394 on Schedule C, deducted business expenses, and paid self-employment tax, so the receipts were not e…
Is a retailer's sale of an AT&T prepaid Internet service card -- and a refill card for an existing prepaid account -- subject to Utah sales tax?
No. The Tax Commission ruled that a retailer's sale of AT&T prepaid Internet service cards, and the refill cards that add time to an existing account, are nontaxable in Utah. The object of the transac…
In a drop-ship arrangement where an out-of-state distributor ships directly to customers, which company owes Utah sales tax: the Utah-based website operator or the out-of-state distributor?
It depends on which company is legally the seller, not on where the goods physically ship from. If the Utah-headquartered internet retailer (Company A) is the seller, it must collect Utah sales tax on…
Can a common pay agent file a single combined W-2 report using its own EIN for several related client companies in Utah?
No, not combined. Utah Code Ann. §§ 59-10-402(1) and 59-10-406 require each employer to withhold and file its own returns, so Utah has never allowed a common pay agent to submit a single combined W-2 …
Were initial and renewing memberships for an online diet-information service taxable in Florida?
No. The online diet-program membership delivered information electronically rather than tangible personal property, so Chapter 212 sales tax did not apply. The monthly access fees also were outside co…
Did a Texas retiree who moved to New Mexico owe New Mexico income tax on a lump-sum payment for accrued vacation and sick leave he earned over 20 years in Texas but received after becoming a New Mexico resident?
Yes. As a full-year New Mexico resident who reported income on the cash basis, Kevin Pierce owed New Mexico income tax on the $24,293.83 the El Paso Police Department paid him in February 2001 for acc…
Are plumbing labor services taxable in Kansas, and does the residential construction-labor exemption apply?
It depends on where the work is done. Under K.S.A. 79-3603(p) (from 1998 Senate Bill 493, effective July 1, 1998), labor services to install or apply tangible personal property are exempt when they in…
Is a 501(c)(3) charity's thrift store (selling donated items and consigned goods, run almost entirely by volunteers with only two part-time paid staff) exempt from collecting Utah sales tax on its sales, given that operating the store is a regular activity described in the charity's own constitution and by-laws?
Yes. Because operating the thrift store is a regular function and activity described in the charity's own constitution and by-laws, its sales are exempt from Utah sales and use tax under Utah Code Ann…
Which public-works materials could the owner buy tax-free, and when did the contractor owe use tax?
Owner-direct purchases could be exempt when the owner ordered, paid vendors, took title, and bore the risk of loss. But the owner's exemption did not cover materials the contractor fabricated in its o…
Can someone avoid New Mexico income tax by arguing that a private citizen isn't an 'individual,' or that the state can't estimate their income when the IRS hasn't assessed them?
No. The protest was DENIED. John and Martha Gilliam didn't file New Mexico income tax for 1994–1995, and the Department estimated the tax. Their arguments that a 'private citizen' isn't a taxable 'ind…
If someone stops filing New Mexico income tax returns and the Department estimates the tax from IRS data, who has to prove fraud before a 50% penalty sticks — and is a prior history of filing enough to prove it?
The tax and interest stood, but the 50% fraud penalty was thrown out — a split result. Kent and Gail Carter stopped filing New Mexico income tax after 1993; the Department estimated 1995–1998 tax from…
How is the 2002 federal credit for prior year minimum tax (Form 8801) recomputed for an estate or trust to figure the Nebraska credit, and where does it go on Form 1041N?
Revenue Ruling 23-02-3 directs that an estate's or trust's 2002 federal credit for prior year minimum tax -- from Federal Form 8801 -- be recalculated for Nebraska fiduciary income tax purposes to det…
Does the alternative minimum tax on a 2002 federal fiduciary return (Form 1041, Schedule I) have to be recomputed to figure the Nebraska minimum tax, and which Form 1041N lines change?
Yes. Revenue Ruling 23-02-2 directs that the 2002 federal alternative minimum tax for estates and trusts -- from Federal Form 1041, Schedule I -- be recalculated for Nebraska fiduciary income tax purp…
How is the 2002 federal credit for prior year minimum tax (Form 8801) recomputed for an individual to figure the Nebraska credit, and where does it go on Form 1040N?
Revenue Ruling 22-02-3 directs that an individual's 2002 federal credit for prior year minimum tax -- from Federal Form 8801 -- be recalculated for Nebraska individual income tax purposes to determine…
Does the alternative minimum tax on your 2002 federal individual return have to be recomputed to figure the Nebraska minimum tax, and which Form 1040N lines change?
Yes. Revenue Ruling 22-02-2 directs that the 2002 federal alternative minimum tax -- from Federal Form 6251 or the Form 1040A Alternative Minimum Tax Worksheet -- be recalculated for Nebraska individu…
Was a Florida-built vessel used only outside Florida in interstate commerce subject to use tax?
No. Although self-fabrication normally creates use tax on full fabricated cost, the vessel qualified for interstate-commerce apportionment and had no Florida mileage. Its Florida apportionment ratio w…
If a multi-state company doesn't pay New Mexico gross receipts tax on tuition because its outside accountants never flagged it, can it avoid the negligence penalty by saying it relied on those accountants?
No. The protest was DENIED. Dlorah, which runs National American University, didn't pay New Mexico gross receipts tax on tuition and blamed its outside accounting firm for never flagging it. But the r…
If New Mexico agrees you overpaid, can it still refuse to pay your refund because you didn't protest in time when the Department sat on your claim — and will a phone call from a Department employee estop the state from enforcing the deadline?
Yes, the refund was lost — the protest was DENIED. Val Kilmer and Joanne Whalley were entitled to a $304,217 New Mexico refund after Whalley was determined to be a California resident, but under Secti…
Are a gas seller's receipts from selling natural gas to the New York Power Authority taxable under the section 186-a utility tax?
Yes. The seller is a utility subject to the section 186-a tax, and its receipts from selling natural gas to the New York Power Authority for the Authority's consumption in New York are taxable. Althou…
Is a utility's auction sale of its fossil and nuclear generating plants treated as one transaction for the section 186-a tax, with profit measured on the aggregate?
Yes. The PSC-mandated auction sale of the utility's fossil and nuclear generating plant assets is treated as one transaction for section 186-a gross income. Profit equals the amount the consideration …
Are packet data-transmission offerings (X.25 and Frame Relay) taxable as telecommunications services or as computer and data processing services in Connecticut, and can the underlying telecom services be bought for resale?
They are taxed differently. The company's Frame Relay Service is a telecommunications service, taxable at 6%, and the telecommunications services the company buys to provide it CAN be purchased for re…
Are required minimum distributions from a New York City Teachers' Retirement IRC 403(b) tax-deferred annuity plan exempt from New York State personal income tax?
Yes. Distributions from a New York City Teachers' Retirement System IRC 403(b) tax-deferred annuity plan are exempt from New York State personal income tax under section 13-561 of the New York City Ad…
Are metal alloy ingots sold to a dental laboratory exempt from Kansas sales tax, and which exemption certificate should the lab use?
Yes. Metal alloy ingots a dental laboratory uses exclusively to fabricate crowns and bridges may be bought exempt from Kansas sales and use tax as ingredient or component parts. A registered lab gives…
Is 'cleaning-up after the trades' construction cleaning of new condominium units — removing plaster, paint, dust, and packaging debris before occupancy — exempt from sales tax as part of the underlying capital-improvement construction project, or is it taxable maintenance?
Exempt. Cleaning newly built condominium units to remove construction debris (plaster, paint, packaging, dust) before occupancy — 'cleaning-up after the trades' in construction-industry terms — is tre…
We're Empire State Development Corp (formerly UDC), and our subsidiary Queens West Development Corporation is redeveloping the Hunters Point waterfront in Queens. A private developer will borrow from outside lenders, and our subsidiary will be named mortgagee before assigning its interest to the lenders -- with the mortgage likely severed, split, and refinanced many times as multiple parcels are built out over years. Is all of that exempt from mortgage recording tax?
Exempt for mortgages naming UDC or its subsidiary as mortgagee; later increases in debt remain taxable. The New York State Urban Development Corporation (UDC, now Empire State Development Corp.) is a …
Could a Louisiana LLC earn the former motion-picture investor credit using prepaid distributor funds, and when would the credit pass through to its members?
Yes, assuming an approved state-certified production and at least a $300,000 investment. The source of the LLC's capital did not disqualify it. Partnership tax treatment allowed member pass-through; c…
Are entry fees for organized singles-dating events ('Jewish Singles' meetups and 'Netparty' young-professional mixers) subject to New York sales tax as an admission charge to a place of amusement?
No. Fees to attend organized singles/networking events aren't subject to sales tax, because the events' primary purpose is to facilitate dating and business networking — providing a forum for people t…
When an empire zone is designated around a business's existing location, is the business treated as having been in the zone for the whole base period for the QEZE employment test?
Yes. When an empire zone is newly designated around a business's location (the zone comes to the business), the business is treated as having always existed in the zone during the entire base period f…
How does the section 186-a utility tax apply to gas and electricity sold to a municipality, resold by a municipality, and passed through to customers?
A supplier that sells gas or electricity to a municipality for the municipality's own consumption owes the section 186-a tax on that receipt. If the municipality instead resells the commodity, the mun…
When a New York advertising agency acts as a formal agent for an out-of-state client to produce and place a national advertisement, which parts of the engagement — creative fees, production costs, media placement — are subject to New York sales tax, and how does the agency-client relationship change the answer?
Pure advertising consulting/campaign-development fees and media-placement fees are not taxable at all — those are excluded 'advertising agency services.' But once the agency actually produces tangible…
Was documentary stamp tax due when spouses transferred unencumbered property to their identically owned LLCs?
No. Under the stated facts, the spouses transferred unencumbered Florida property to LLCs in exactly the same ownership proportions and received no other consideration, so beneficial ownership did not…
Did Florida documentary stamp tax apply to pay-as-cut timber contracts with and without an advance payment?
Both contracts conveyed an interest in Florida real property. Documentary stamp tax was due on the contract with an advance payment, measured by that payment. No tax was due on the no-advance contract…
Is a nonprofit water supply corporation exempt from the Texas franchise tax, and what sales/use tax exemption does it get?
A qualifying nonprofit water supply corporation is exempt from the Texas franchise tax under Texas Tax Code Sec. 171.065. Separately, because this corporation is designated by the Texas Commission on …
Did CDD bond assessments count as consideration when 185 lots were sold for a nominal cash price?
Yes. Documentary stamp tax applied to the $1 purchase price plus the non-ad valorem special assessments tied to the community development district bond financing, because the buyer took the lots subje…
Did Florida documentary stamp tax apply to the bank's line-of-credit agreement and access methods?
No. The agreement was signed but did not contain an unconditional promise to pay a sum certain when executed; checks lacked promise-to-pay language, ATM and overdraft access used no paper, and the doc…
For Texas franchise tax, how are receipts from licensing seismic data apportioned - by where the license is used or where any service is performed?
Receipts a company earns from licensing already-collected seismic data are apportioned to Texas to the extent the license is used in Texas (Texas Tax Code Secs. 171.103(4) and 171.1032(a)(4); Rule 3.5…
When a company both gathers/analyzes seismic data and licenses it, which receipts are apportioned as services and which as a license for Texas franchise tax?
It depends on whether the work was done for a specific customer. If the company contracts to do specific seismic data work for a customer, those receipts are for services and are apportioned to the lo…
Does a parent-teacher organization (PTO) qualify for the Kansas sales and compensating tax exemption for parent-teacher associations/organizations under K.S.A. 79-3606(yy)?
Yes. The parent-teacher organization qualifies for exemption from Kansas retailers' sales and compensating tax under K.S.A. 79-3606(yy), so it may buy tangible personal property and services without p…
Did documentary stamp tax apply to retirement-plan loans when participants signed only the loan checks?
Yes. The trustee signed the note as the participant's agent, and the participant's required check endorsement accepted and incorporated the note. Together they supplied a promise to pay, a sum certain…
When could a cabinet manufacturer buy natural gas under Florida's boiler-fuels exemption?
The natural gas was exempt from sales and use tax only if used exclusively as combustible fuel in the manufacturing process. Any nonmanufacturing use made the entire purchase taxable; the manufacturer…
How did Florida tax transfers of beneficial interests in motor-vehicle leases among a trust and series LLCs?
The beneficial-interest transfers were not retail sales because vehicle title and possession stayed with the trustee. Florida generally followed federal LLC classification, but transfers involving the…
How could a certified Louisiana film investment use partnership allocations, letters of credit, escrow, and borrowed funds under the former investor and employment-credit rules?
Written partnership agreements could allocate up to 100% of the credits to one member. Investor-obtained irrevocable letters of credit or investor-funded escrow qualified when immediately available, a…
Are charges to set up and reconfigure movable office wall panels and furniture into work cubicles subject to Kansas sales tax?
Yes. Charges to set up new movable wall panels and furniture into work cubicles, and to tear down and reconfigure existing ones, are taxable Kansas services. Reinstalling panels is 'installing tangibl…
Was electronically downloaded software taxable when the customer also received an incidental manual?
No. A stand-alone electronically downloaded license was a nontaxable service because no tangible personal property changed hands. An included manual remained exempt when it was inconsequential and car…
Could a county buy office-building materials tax-free under its owner-direct purchase procedure?
Yes. The county's procedure qualified when it issued purchase orders and exemption documents, received vendor invoices, paid vendors directly, took title and liability at delivery, and bore the insure…
Could a county buy courthouse-construction materials tax-free under its owner-direct purchase procedure?
Yes. The county's procedure qualified when it issued purchase orders and exemption documents, received vendor invoices, paid vendors directly, took title and liability at delivery, and bore the insure…
Does a desktop publishing business qualify for the Kansas integrated plant (manufacturing) exemption on its equipment?
No. A desktop publishing business does not qualify for the integrated plant (manufacturing machinery and equipment) exemption in K.S.A. 79-3606(kk). Like drapery makers, custom tailors, T-shirt printe…
Can an independent trucker treat his pay as business income on his federal return but then call it exempt employee wages for New Mexico gross receipts tax — and can he still deduct sales for resale if he gets the certificate a few days late?
No on both counts — the refund protest was DENIED. Oscar Herrera hauled as an independent contractor, so his pay wasn't exempt employee wages; and because he reported it as business income on a federa…
Does Texas's motor vehicle purchase exemption for orthopedically handicapped people also exempt short-term vehicle rental receipts?
No. Section 152.086 exempted qualifying purchases but did not extend to motor vehicle rentals of 180 days or less. The rental provider had to obtain a permit and collect rental receipts tax; an older …
Was documentary stamp tax due when an owner deeded mortgaged property to a trust for which he was sole beneficiary?
No. Because the owner remained the trust's sole beneficiary, beneficial ownership did not change and the deed to the trustee was exempt even though the property remained mortgaged. The rule did not ex…
When could Louisiana's credit for donations to assist qualified playgrounds be claimed, and could an unused amount carry forward?
The credit was claimable only for the taxable period in which the donation was made. The statute provided no carryforward for any unused credit.
Were built-in hotel armoires, TV towers, drawers, and shelves taxable furniture or real-property improvements?
They were improvements to real property. The designer should not have separately charged tax on those items, but the cost-plus calculation left no materials-tax refund due. The hotel owner was entitle…
Could a public authority buy bridge-and-roadway materials tax-free through direct purchases?
Yes, based on the submitted contract section. The authority had to issue purchase orders and exemption documents, receive invoices, pay vendors directly, take title and liability at delivery, and bear…
If a bank wrongly bounces a business's tax check and the tax department doesn't resubmit it, does the business still owe interest on the resulting late payment?
Yes. The protest was DENIED. A dental practice's $10,150.12 CRS tax check for October 2001 was mistakenly dishonored by its bank, and the practice argued the Department's failure to resubmit the check…
Are subscriber charges for access to a searchable database maintained for internet access subject to Kansas sales or use tax?
No. Charges for access to a database maintained for internet access — letting subscribers search an archive and print out relevant information — are not subject to Kansas sales or use tax. The Kansas …
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