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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Does a manufacturer have to collect Utah sales tax when its customer resells the goods online, or when a no-nexus out-of-state reseller has the manufacturer drop-ship straight to the reseller's Utah customer?
It depends on who has nexus and what documentation is on file. A manufacturer selling to a Utah reseller does NOT have to collect sales tax on that sale if it obtains a valid resale exemption certific…
How did the July 1, 2002 Kansas state sales tax rate increase work, and how are transitional sales reported?
Under 2002 Senate Bill 39, Section 6, the Kansas state sales and use tax rate rose from 4.9% to 5.3% on July 1, 2002, applying to sales subject to tax on and after that date; local rates were unchange…
What penalties and interest applied to late Kansas sand-royalty reports and payments beginning July 1, 2002?
Beginning July 1, 2002, delinquent Kansas sand-royalty payments accrued interest at 0.667% per month and a tax penalty equal to 10% of the royalty due; fraud increased the penalty to 50% of the royalt…
Were payments under a real-property lease agreement taxable as commercial rent when the overall transaction functioned as financing?
No. Considering all transaction documents, the Department found a mortgage-like financing arrangement rather than an operating lease. The special-purpose lessor held title as security, payments reflec…
If a state-contracted nonprofit pays a vendor directly for equipment that becomes a grant recipient's property, does the government sales tax exemption apply?
No. Even though the association pays the vendor directly and briefly holds a lien on the property, the government exemption under § 59-12-104(2) doesn't apply because the association never takes title…
If a motor-vehicle leasing company uses a Qualified Intermediary to structure its vehicle sales as an IRC Section 1031 like-kind exchange, does the Qualified Intermediary have to register as a New York sales tax vendor?
No. Because the Qualified Intermediary only manages the escrowed sale proceeds and never takes title to or possession of any vehicle, it isn't a sales tax 'vendor' and doesn't have to register or coll…
Can a mail-order company that used to have traveling sales representatives in New York, but no longer has any physical presence there, stop collecting New York sales tax and surrender its vendor registration?
Yes. Once a mail-order company has no employees, independent sales representatives, or other physical presence in New York, catalog and website solicitation alone doesn't create nexus, so it may surre…
Is a highway contractor's purchase of steel materials to build a temporary traffic-detour crossover for a state expressway interchange exempt from sales and use tax?
Yes. Because the steel crossover becomes the property of the New York State Department of Transportation upon installation and functions as an integral, if temporary, part of the state highway, the co…
Do the fork trucks used to unload raw materials and the storage racking that holds them before production qualify for New York's manufacturing exemption from sales tax?
Yes, both do. Because the manufacturer only visually checks and counts raw materials without weighing, testing, or measuring them, production is considered to begin at unloading -- so equipment used t…
Can interest from cash items other than bank deposits be allocated by a zero investment allocation percentage when cash is treated as investment capital?
Yes for cash items other than bank deposits. When a taxpayer treats its cash on hand and on deposit as investment capital under section 208.7(a), the interest is investment income under section 208.6 …
Were Canadian Registered Retirement Savings Plans exempt from Florida's annual intangible personal property tax?
No. Although Canadian RRSPs resembled U.S. individual retirement accounts, they did not qualify under Internal Revenue Code section 408(a), as required by Florida's exemption. The taxpayers had correc…
How did 2002 changes affect the Kansas estate tax, and what is the new succession tax?
Two things changed for 2002. First, the Kansas estate tax stays tied to federal law as it existed on December 31, 1997, so the 2001 federal cuts (higher exclusions, phase-out of the state death-tax cr…
Is a VEBA subject to New York's Article 13 tax on unrelated business income because it received and invested insurance demutualization proceeds?
No. Although a voluntary employees' beneficiary association (VEBA) has unrelated business taxable income for federal purposes under IRC section 512(a)(3), it is not regularly carrying on an unrelated …
Who is responsible for collecting and remitting New York sales tax when an insurance administrator sells extended service contracts on automobiles through credit unions and dealerships?
Both. When credit unions and dealerships sell extended service contracts on behalf of an out-of-state administrator, they become co-vendors jointly and severally liable, with the administrator, for co…
Is a hotel relieved of its duty to collect sales tax on a New York State employee's room just because the employee pays with a credit card embossed 'tax exempt'?
No. A credit card embossed 'tax exempt' issued to a New York State employee is not, by itself, enough to relieve a hotel of its duty to collect sales tax on the room, because the card's receipt doesn'…
Are Vitoss and Cortoss, two synthetic bone void fillers, exempt from New York sales tax as prosthetic aids when sold to hospitals and physicians?
It depends on the product. Vitoss, which dissolves and is gradually replaced by the patient's own bone, does not qualify as a prosthetic aid and is taxable when sold to a for-profit medical practice (…
Are charges for web site design and development services subject to New York State sales tax?
No. Web site design and development services are not subject to New York sales tax, whether the finished site is delivered by uploading it to a hosted server or by sending the client a CD-ROM, because…
Is the labor to install landscaping and build ponds during original construction of a building exempt from Kansas sales tax?
The labor is exempt, but the materials are taxable. The Department advised that labor services for installing landscape materials and constructing ponds are exempt from Kansas sales tax when they are …
Are a business's purchases of bills of lading and packing slips subject to Kansas sales tax?
Yes. The Department advised that a business's purchases of bills of lading and packing slips are subject to Kansas sales tax. Purchases of sales tickets, cash-register receipt paper, invoice forms, bi…
What four changes did 2002 Senate Bill 39 make to Kansas withholding tax?
2002 Senate Bill 39 made four changes to the Kansas Withholding Tax Act, effective June 6, 2002. First, it extended withholding to distributions distributable to nonresident shareholders or partners o…
How does Kansas apply local tax to in-state vehicle sales and long-term leases after July 1, 2002?
Effective July 1, 2002, 2002 House Bill 3032 imposed a local compensating use tax so that buyers of vehicles sold within Kansas pay the higher of the sales tax rate at the seller's location or at the …
How much did the Kansas cigarette tax increase in 2002, and what inventory (floor-stocks) tax applied?
2002 Senate Bill 39 raised the Kansas cigarette tax to $.70 per pack of 20 (or $.875 per pack of 25) effective July 1, 2002, and to $.79 per pack of 20 (or $.99 per pack of 25) in January 2003. Becaus…
What cigarette and tobacco compliance and reporting changes did 2002 legislation impose on Kansas wholesalers?
Under 2002 House Bill 2982, Kansas licensed cigarette wholesalers and tobacco distributors are prohibited from stamping or paying tax on products from manufacturers not in compliance with the Master S…
Is a company's purchase of reports subject to Kansas sales or use tax, or is there an exemption?
No exemption — the purchase is taxable. The Department advised that Kansas sales and use tax law provides no exemption for the sale of the Reports at issue, so the company must pay the appropriate Kan…
Do a Texas corporation's franchise-tax business loss carryovers survive converting to a Texas LLC, and then converting that LLC to an out-of-state (Nevada) LLC?
Yes to both steps. A Texas corporation's Texas business loss carryovers remain available for use on the future franchise tax reports of the Texas LLC it converts into, and they continue to be availabl…
Can a bank deduct interest earned on federal funds from its earned surplus (or taxable capital) for Texas franchise tax under Sec. 171.106(h)?
No. Texas Tax Code Sec. 171.106(h) is an apportionment provision only: it requires a banking corporation to exclude from the numerator of its apportionment factor the interest earned on federal funds …
Are advertising space and subscriber access fees on an online 'electronic bulletin board' subject to Kansas sales tax?
No, for the online service itself. The Department advised that the sale of advertising space on a nationwide data bank or 'electronic bulletin board' is not subject to Kansas sales or use tax, and nei…
What Florida tax returns and claim priorities applied when the Department of Insurance liquidated insurers as receiver?
The receiver had to file required corporate income-tax returns for pre- and post-receivership periods. Insurer assets were exempt from intangible tax for 1999 and later, but earlier returns remained r…
Are the food, beverage, and lane-rental charges for a bowling alley's 'bowling party' packages subject to New York sales tax?
It's split. The lane-rental charge for a bowling party is exempt from sales tax as a participatory-sporting-activity admission charge, but the food and beverage charges (and any gratuities paid over i…
Does a New Mexico estate owe interest on estate tax paid late under a valid filing extension, when a botched by-pass trust and confusion over the estate's obligations caused the delay?
Yes. The Estate of Inez Van Tubergen paid $22,284.23 of New Mexico estate tax on December 15, 2000 under a valid six-month extension, after the tax was originally due June 15, 2000. The Department ass…
Are stock options granted to a corporation's officers and directors added back to earned surplus for Texas franchise tax, and in what year?
Yes. Under Texas Tax Code Sec. 171.110(a)(1), a corporation that is not exempt from the add-back must add officer and director compensation back to its earned surplus to the extent that compensation w…
Is a 'core charge' on a replacement part taxable, and is the tax refunded when the customer returns the old part?
Yes, the core charge is taxable — and the tax is refunded on the return. Kansas treats a 'core charge' (an added fee when the customer has no old part to trade in) as part of the selling price, so sal…
When does a homeowners association's Texas franchise-tax exemption take effect, and what must it still file to reinstate its charter?
A homeowners association qualifies for the Texas franchise-tax exemption under Tax Code Sec. 171.082 only once voting control of the organization is vested in the owners of the individual lots or unit…
Are repair labor and repair parts for manufacturing machinery taxable when the customer and delivery are out of state?
Labor is taxable; the parts are not, on these facts. The manufacturing machinery exemption in K.S.A. 79-3606(kk) applies only to machinery 'used in this state,' so a repair job for a customer located …
What qualifies for Kansas's ingredient-or-component-part sales tax exemption, and when are containers and packaging exempt?
An item qualifies for the ingredient-or-component-part exemption (K.S.A. 79-3606(m)) only if it is (1) necessary and essential to the finished product, (2) used in or on it, (3) becomes a physical par…
We're a 501(c)(3) nonprofit running four different disability-services programs at one leased building -- only one of which (a Diagnostic and Treatment Center) is a licensed 'hospital' under state law. We took out one leasehold mortgage to renovate the whole building. Does the mortgage recording tax exemption for nonprofit hospital corporations cover the WHOLE mortgage, or only the part used for the hospital program?
Only partially exempt -- apportioned by actual use. Tax Law section 253.3 exempts mortgages executed by a "voluntary nonprofit hospital corporation" from mortgage recording tax, and Petitioner -- a 50…
When can a venue accept an exemption certificate for tickets, drinks, and desserts bought by hospitals, religious groups, schools, PTAs, or government?
Any direct purchase — including tickets, meals and drinks — by a not-for-profit hospital, religious organization, school or educational institution, or parent-teacher association (in state or out of s…
Are gross receipts from cleaning a customer's equipment (chains) subject to Kansas sales tax?
No. The Department advised that cleaning a customer's chains is not subject to Kansas sales tax. K.S.A. 79-3603(q) taxes repairing, servicing, altering or maintaining tangible personal property, but t…
Are gross receipts from cleaning a customer's pans, frames, and racks subject to Kansas sales tax?
No. The Department advised that cleaning a customer's pans, frames, and racks (soaking, drying, and re-coating them with oil) is not subject to Kansas sales tax. K.S.A. 79-3603(q) taxes repairing, ser…
Could a controlled entity use a resale certificate for prepaid mall rent, and was refunded unearned rent taxable?
Yes. Because the controlled entity would sublease nearly all the mall and lease any remaining space back to the owner, it could give the owner an annual resale certificate and avoid tax on prepaid pri…
We're the Battery Park City Authority. We sublease-back a developer's leasehold so we can be named co-mortgagor on their construction financing -- without pledging our own fee interest -- and this mortgage will be split, modified, and refinanced many times over the years as buildings are completed and converted to permanent financing. Is all of that exempt from mortgage recording tax?
Exempt for mortgages naming the Authority as co-mortgagor; later increases in debt remain taxable. The Battery Park City Authority, a public benefit corporation of New York State formed to redevelop t…
What Florida documentary stamp, intangible, and sales taxes applied when a mortgage was restructured as a synthetic lease?
The deeds into and out of the bare-title entity were not subject to deed tax, but the synthetic lease was subject to documentary stamp tax on the acquisition cost and nonrecurring intangible tax as a …
How does a homeowners association apply for the Texas franchise-tax exemption, and does it also cover sales tax?
A homeowners association has two routes to a Texas franchise-tax exemption. Under Tax Code Sec. 171.063, if it has obtained a federal exemption under IRC Sec. 501(c)(2), (3), (4), (5), (6), (7), (8), …
Is a company's licensed equity-trading software, along with its customer support, training, and customization charges, subject to New York sales and use tax?
It depends on whether the software is 'prewritten' or truly custom. If the FLEXTRADE software (or its updates) wasn't designed and developed to each specific customer's own specifications, it's taxabl…
Does a professional membership association get the Texas franchise-tax exemption, and does calling itself 'educational' qualify it - or exempt it from sales tax?
A professional membership association that holds a federal 501(c)(6) exemption qualifies for the Texas franchise-tax exemption under Tax Code Sec. 171.063 - here effective January 1, 1998. It does not…
Is a court-ordered litigation settlement fund a corporation or trust subject to New York State or City franchise or personal income tax?
No. A court-ordered litigation settlement fund that is a qualified settlement fund under IRC section 468B is not a corporation subject to Article 9-A (its activities are not the conduct of a business)…
Does Public Law 86-272 protect a company whose New York salespeople solicit free-publication subscriptions and sales of advertising space?
No. Public Law 86-272 only protects soliciting orders for sales of tangible personal property. The company gives its publications away free (no sale, no receipts) and earns its money selling advertisi…
Are prospectuses, proxy materials, offering circulars, and SEC forms that a securities printer mails free to shareholders exempt from New York sales tax as promotional materials?
It depends on the document. Prospectuses, red herring prospectuses, offering circulars, tender offer materials, private placement memorandums, and Forms 10-K/10-Q qualify as exempt promotional materia…
Are telephone answering services subject to Kansas sales tax?
Yes. The Department advised that telephone answering services are subject to Kansas sales tax. Kansas imposes sales tax on telephone services under K.S.A. 79-3603(b) and specifically on answering serv…
When must a New Mexico corporation make quarterly estimated income tax payments, and does a regulation excuse it just because its tax was under $6,000 in the two prior years?
A New Mexico corporation must make quarterly estimated corporate income tax payments whenever its tax for the year 'can reasonably be expected to be $5,000 or more' (Section 7-2A-9.1). Malcolm Service…
Is a hotel's floor-by-floor reconstruction project -- including wall demolition, skimming, painting, wall coverings, and new carpet -- exempt from New York sales tax as a capital improvement?
Mostly yes, with one exception. Hilton's multi-million-dollar floor-by-floor reconstruction -- demolishing and re-plastering walls, painting, and installing wall coverings -- qualifies as an exempt ca…
Can a member-owned private ski club avoid sales tax on members' ski lift passes by billing them separately from annual dues instead of bundling them together?
No. Because the ski club is a member-owned social/athletic club, any charge to members for use of its ski lifts and slopes counts as taxable club 'dues' under New York law regardless of how it's bille…
Is an out-of-state company that hires New York subcontractors to do janitorial work, with no office or employees here, doing business in New York?
No, if the subcontractors are genuine independent contractors. A foreign corporation with no office, employees, representatives, or inventory in New York that merely hires New York subcontractors as i…
Is Subpart F income and section 956 inclusions from a controlled foreign corporation treated as income from subsidiary capital excluded from entire net income?
Yes. A taxpayer's pro rata Subpart F income under IRC section 951(a)(1)(A) and its section 956 investment-in-U.S.-property inclusions under section 951(a)(1)(B) from a wholly owned controlled foreign …
Are a new media company's web site development, design, consulting, and maintenance services subject to New York sales and use tax?
Web site development, design, implementation, consulting, and content maintenance are not subject to sales tax, even when the site is delivered on a CD-ROM. But the company's own purchases of prewritt…
How much did Kansas motor fuel tax rates increase in 2002, and what inventory tax applied?
2002 House Bill 3011 increased all Kansas motor fuel tax rates by $.02 per gallon effective July 1, 2002. The new rates were: gasoline $.23, gasohol $.23, special fuel (diesel) $.25, and L.P. gases $.…
Were employee fees for mandatory airport ID badges and parking decals subject to Florida sales tax?
Badge fees were not taxable because the badge transfer was incidental to a required condition of airport employment. Parking fees were taxable because employees paid for parking spaces, and a Florida …
Were a building-material seller's delivery and rooftop-loading charges part of the taxable sales price?
Delivery charges were taxable because they were included in the materials' unit price instead of separately stated. Rooftop-loading charges were not taxable because they were separately stated and cus…
May a Texas vehicle rental company accept a photocopy of a motor vehicle rental exemption certificate from a school district?
Yes. A rental company could accept a photocopy when the renter was a qualified exempt entity, such as a school district, and the original certificate had been properly completed and signed by an autho…
How were Florida nonrecurring intangible and documentary stamp taxes calculated on a loan secured by real and personal property?
The closing calculations were correct. Nonrecurring intangible tax applied only to the portion secured by Florida real property and could not use a tax base above that property's fair market value. Do…
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