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 a city's direct-purchase procedures make construction materials for its utilities expansion project exempt from Florida sales tax?
Yes, except for contractor or subcontractor off-site fabrication. The city qualified as the purchaser when it issued documented purchase orders, took title and liability at delivery, was invoiced and …
Does an organization that sells coupons or discount cards redeemable by third-party merchants have to collect Kansas sales tax?
Yes, the seller must remit sales tax. The Department's policy is that an organization engaged in the retail sale of coupons or discount cards that are redeemable by third-party merchants is the retail…
Was an investor's deed of real property to his wholly beneficially owned common-law business trust subject to documentary stamp tax?
Yes. The beneficial trust units received by the investor were property with exchangeable value and therefore consideration for the deed; the existing mortgage was consideration too. Tax was based on w…
Which concessionaire location fees qualified for Florida's event-facility percentage-of-sales lease exemption?
Only the dinner-theater agreement qualified, and only to the extent a monthly payment exceeded its fixed minimum and was based on sales. Minimum payments were taxable. All fees at the theme park, priv…
How was qualified business facility investment calculated for the Kansas HPIP credit, especially for existing facilities and phased projects?
The HPIP credit equaled 10% of qualified business facility investment above $50,000. Investment was averaged using property values on each month's last business day during the taxpayer's tax year and …
Was severance paid by a Louisiana employer sourced to Louisiana after the former employee moved to another state?
Only payments received while the former employee was a Louisiana resident were sourced to Louisiana. Because the severance was not related to services, payments received after the employee established…
When a leasing subsidiary liquidates and distributes its leased equipment to its two corporate-partner owners, is that a taxable sale, and does it matter whether the subsidiary's debt gets paid off first?
It depends on whether there's consideration. A liquidating distribution of leased equipment from a subsidiary to its corporate-partner owners is not a taxable sale if it's a true no-consideration cont…
Did an entity's federal Form 8832 election to be taxed as a corporation determine whether it was subject to Louisiana corporation franchise tax?
No. A check-the-box election established federal income-tax treatment, not the entity's actual legal form, and had no significance in deciding Louisiana franchise-tax liability under the ruling.
Can a manufacturer claim a 100%-exempt sales tax refund on steam purchases by citing the "predominant use" test that applies to natural gas and electricity?
No -- wrong exemption theory, though a narrower one may still apply. The "predominant use" test in Rule 3.295/Sec. 151.317(e), which lets a taxpayer claim 100% exemption on natural gas or electricity …
Which of a property management company's typical fees are taxable -- standalone building-management services, insurance-related inspections/claims, and markup fees for rebilling contracted repair or construction work?
Mixed, by category. Standalone property management (lease administration, rent collection, accounting, ad valorem consulting, vendor/maintenance coordination, non-insurance property inspections) is no…
In Texas's deregulated electric market, is a transmission/distribution utility's delivery charge to a retail electric provider taxable, and can a municipal franchise fee passed on to the end customer be taxed too?
CORRECTION of a prior letter. A transmission and distribution utility's (TDU) delivery charge to a Retail Electric Provider (REP) is NOT a taxable service, so no resale certificate is needed or availa…
Are construction materials bought with STAR bond or IRB proceeds, and the construction labor, exempt from Kansas sales tax?
The materials and the construction labor are exempt. The Department agreed with a company financing a retail and distribution facility with STAR bonds and industrial revenue bonds (IRBs) that: (1) mat…
How broadly does the Tax Code Sec. 111.206 exception to the statute of limitations reach - only to a regulatory final determination, or to any refund from that period?
Narrowly. This internal Comptroller memo resolves a disagreement between the Audit Division and the Tax Policy Division over Tax Code Sec. 111.206, which creates an exception to the general statute of…
If I start a business putting on fashion shows and selling calendars/posters of the models, do I owe Texas sales tax on ticket admissions and on the calendars/posters, and do I need a tax permit?
Yes to both. Admission charged for a fashion show held in Texas is taxable, and selling calendars and posters of the models is also taxable (though you can buy the printed calendars/posters tax-free f…
Were a food-service equipment supplier's lounge and medical-center contracts taxable sales or real-property improvement contracts?
They were taxable sales of tangible personal property. Although some lounge items could become improvements and made that project a mixed contract, the supplier did not perform the plumbing or electri…
How are the payments an oil-and-gas producer receives under commodity swap agreements treated for Texas franchise-tax apportionment?
The full gross amount received counts as gross receipts, not the net. An oil-and-gas producer entering non-netted commodity swaps asked how the payments it receives are treated for franchise-tax appor…
A printer using offset litho (not web offset or rotogravure) asks: does a new 2001 exemption for out-of-state-mailed printed materials apply to its process, and does it change what it must collect on jobs bought from a sister company?
No, offset litho doesn't qualify. The exemption is limited by its terms to printed materials produced by web offset or rotogravure printing processes -- items printed on offset litho don't qualify, so…
In a two-step resale chain (seller to out-of-state Company A to a Texas Company B), who is responsible for Texas sales/use tax if Company A isn't itself "engaged in business" in Texas?
The original seller's sale is exempt as a sale for resale -- Company A (the out-of-state reseller) can issue a Texas resale certificate, validated with its own state's (South Carolina) retail registra…
Could a parent company revoke its Florida consolidated-return election after major changes in its group's market, operations, and organization?
Yes. Although the group did not prove a law-driven adverse tax effect, its market, operations, and affiliated structure had changed enough to make continued consolidation imprudent. Permission require…
Were the phosphate industry's listed facilities, machinery, equipment, and chemicals exempt as pollution-control purchases?
Yes. The listed items qualified because they were used more than 50% to control pollution as required by a DEP law or permit at phosphate mining and production locations. The purchaser still had to gi…
When New Mexico audits an individual's income tax by treating unexplained bank deposits as unreported business income, which deposits count — and which are excluded as loans, transfers, or income already reported?
It was a split decision — the protest was GRANTED IN PART and DENIED IN PART, deposit by deposit. The Department audited Don Hetter's personal income tax by reconstructing his construction business's …
Can a sole-proprietor furniture manufacturer occasionally install pieces that get permanently attached to real property, without losing manufacturing tax exemptions on the equipment used to make them?
It depends on the structure. A manufacturer can form a genuinely separate legal entity (a partnership or corporation -- not just another DBA under the same sole proprietorship) to sell to and install …
How did Florida's industrial machinery repair exemption apply to phosphate operations, preventive maintenance, replacements, and stored parts?
The mining, chemical, and terminal operations qualified, and most listed items were industrial machinery. Repairs included preventive maintenance and replacement of equipment integral to a discrete pr…
When two exempt political subdivisions jointly finance and own a new office building through a loan, cotenancy, or joint venture, do construction materials stay sales-tax exempt regardless of the ownership structure, who buys them, or a modest amount of private tenant use?
Yes to all three questions. Purchases of construction materials for the office building are sales-tax exempt no matter which financing/ownership structure the two exempt entities choose (a loan betwee…
If a taxpayer says she mailed her gross receipts tax payment on time but the state never received it and the check was never cashed, can New Mexico still charge interest for late payment — and does a ten-month delay in notifying her excuse it?
Interest was upheld, so the protest was DENIED. East Mountain Speech Pathology claimed it mailed its January–June 1997 combined-reporting (CRS) tax payment before the July 25, 1997 due date, but the D…
When one company charges a lump-sum guide-service fee for an adventure race and a related company separately rents out kayaks and gear, who owes sales tax on what?
Split treatment. A guide service's single charge to a race participant for the guide service itself (orienteering, hiking, trekking, running, team challenges, etc.) is not taxable. The related gear co…
How does a corporation obtain an exemption from the Texas franchise tax, and what does it have to submit?
Texas has no separate exemption application form. Under Tax Code Sec. 171.051, a corporation obtains a franchise-tax exemption by filing evidence of its qualification, and Franchise Tax Rule 3.541 giv…
Are T-shirt sales taxable in Kansas if all the profits go to charity, and must consignment sellers collect the tax too?
Yes, the T-shirt sales are taxable. Even though the profits are going to charity (the United Way Fund in New York City), the Department ruled that under K.S.A. 79-3603(a) the seller must collect, repo…
Did a facility performing complete scheduled overhauls and restoration of commercial aircraft or aircraft engines count as a manufacturer for Louisiana's inventory tax credit?
Yes. The facility did more than repair nonfunctioning equipment: it completely restored aircraft or engines to original design specifications, giving new qualities or combinations to processed matter …
Could a parent corporation stop filing Florida consolidated returns after its affiliated group's core business and structure changed substantially?
Yes. The Department approved separate returns because the group's primary businesses, size, acquisitions, and subsidiary structure had changed substantially. Approval carried four conditions addressin…
Does a private company operating a city-owned prison under a management contract owe sales tax on its own purchases to run the facility, just because its customer is a tax-exempt city government?
Taxable, on these facts. A private company operating a city-owned prison under a management contract owes Texas sales tax on its own purchases to run the facility -- the city's tax-exempt status does …
If manufacturing software qualifies for Texas's manufacturing exemption, does that exemption also cover the software's installation, training, and maintenance/technical-support charges?
Mostly favorable, with one nuance on why training isn't taxed. Software used directly and exclusively by a manufacturer to produce or test tangible personal property for sale qualifies for the manufac…
Does an individual working as an independent contractor owe New Mexico gross receipts tax on his earnings even if he never charged the tax and did not know it applied — and can interest and a penalty be reduced for that lack of knowledge?
Yes, he owed the tax, and no, the interest and penalty were not reduced — the protest was DENIED. Marcelino Sanchez performed auto-repair services in 1996 as an independent contractor for a car dealer…
Could a Florida consolidated group deconsolidate after an unrelated company acquired over 80% of its parent and merged it into a different affiliated group?
Yes. The acquisition changed ownership, eliminated the original affiliated group, and made the former parent a subsidiary in the buyer's group, which had never filed a Florida consolidated return and …
Could a parent company stop filing Florida consolidated returns after its affiliated group expanded into new markets, services, and products?
Yes. The group's market share, geography, products, services, acquisitions, and foreign operations had changed enough to affect the prudence of continued consolidation. Permission required the stated …
Were easements and other land interests acquired by a private pipeline company under written threat of condemnation subject to documentary stamp tax?
No. A private company with eminent-domain power could acquire easements or other real-property interests through an out-of-court condemnation settlement without documentary stamp tax, provided owners …
Did future interest under an adjustable-rate note increase the amount subject to Florida documentary stamp tax at execution?
No. Unaccrued and unearned interest under the adjustable-rate note was contingent rather than an absolute, computable sum certain when the documents were executed. The tax base therefore remained the …
After the court injunction was lifted, must Kansas fuel distributors remit tax on deliveries to retailers on Indian reservations?
A federal District Court for the District of Kansas lifted its injunction that had barred the Kansas Department of Revenue from collecting motor fuel tax on fuel sold or delivered to retailers on the …
Would aircraft transferred into a new Florida LLC be exempt when the LLC planned rentals and flight instruction?
A direct corporate conversion was not authorized under the cited Florida LLC statute, but an aircraft transfer through a qualifying merger or section 368 reorganization solely for stock could be exemp…
Were separately itemized septic, electrical, and other real-property improvements included in the taxable price of a mobile home?
No. The dealer's contract was a mixed contract that reasonably allocated the mobile home's price from separately listed site improvements. Those improvement charges were excluded from the home's taxab…
Is materials/labor for building or modifying a jet engine prototype exempt as manufacturing or resale, since the prototype itself won't be sold?
As of this 2001 letter: fully taxable. A prototype is an original model or sample used as the pattern that other, later production items will copy -- it's generally not itself offered for sale, so mat…
Is repair and handyman labor (and mileage) taxable in Kansas, and is work done to a residence exempt?
Service labor and mileage are generally taxable — but residential repair labor is exempt. The Department explained that Kansas taxes labor to install, apply, alter, maintain, service, or repair tangib…
Which roadside services — towing, winching, unlocking, jump starts, tire changes — are subject to Kansas sales tax?
It depends on the service. Because Kansas taxes services only when they are specifically enumerated, the Department ruled that towing, winching, unlocking and jump-starting vehicles, and delivering fu…
Is a student loan origination company's fee taxable as data processing, given that its contracts include some loan-management, some debt-collection, and some data-compiling activities?
Generally nontaxable, with two specific exceptions. Guaranteed student loan origination services (approving applications, handling inquiries, disbursing proceeds, updating accounts, reporting to lende…
For the Texas franchise tax, when are dividends and interest a corporation receives from a bank counted as Texas gross receipts?
It depends on where the bank is based. For the pre-2008 franchise tax, dividends and interest from a national bank are Texas gross receipts only if the bank's principal place of business is in Texas (…
Was folding customer-supplied preprinted invoices and placing them into customer-supplied preprinted envelopes a taxable sale or service?
No, when that was the entire transaction. The work was not an enumerated taxable service, did not transfer property for consideration, and did not fabricate a new product. If performed with another ta…
Are hydrovacing (hydro-excavation) services subject to Kansas sales tax?
Not taxable, if separately stated. The Department ruled that hydrovacing services should be given the same sales-tax treatment as excavating services and are not subject to Kansas sales tax — provided…
Can New Mexico forgive or reduce a valid gross receipts tax assessment because the taxpayer genuinely cannot afford to pay it?
No — the assessment could not be forgiven for inability to pay, so the protest was denied. James Stadler, a musician, did not know gross receipts tax applied to his band's performance income and never…
Did a trust or its Florida beneficiary owe 2001 annual intangible tax when two trustees lived in Florida but the beneficiary lacked revocation and appointment powers?
No. Beginning with 2001, trustees were exempt regardless of their residence. The Florida beneficiary had a current right to trust income but lacked both a power to revoke the trust and a general power…
Did a federal section 482 imputation of rent create Florida commercial-rent tax when related companies had no lease or actual rental payment?
No. The related companies had no lease or other occupancy agreement and exchanged no cash, property, services, or other consideration for use of the premises. Rent imputed only on federal and state in…
Can an independent contractor deduct gross receipts by relying on the wrong type of nontaxable transaction certificate, and is he liable for gross receipts tax on his former wife's business income after they divorce?
No and mostly yes — the protest was DENIED, with one limit on collection. Craig Rawlings, an independent contractor who machined and assembled parts for a manufacturer (Warp Speed Light Pens), did not…
Can a hospital take New Mexico's gross receipts tax deduction for selling tangible personal property to the government when it sells medical supplies and equipment to Medicare patients, given that the state already allows that deduction for Medicaid patients?
Yes — the hospitals won the core issue and the two 1995 assessments denying the deduction were abated in full. Two HCA hospitals sold medical supplies and equipment to Medicare patients and claimed th…
Can High Performance Incentive Program (HPIP) income-tax credits be transferred to a related company?
Yes, if the conditions are met. The Department read the credit-transfer statute, K.S.A. 79-32,156(a) — which lets the investment and job-creation credit under K.S.A. 79-32,153 pass to a related taxpay…
For a sports collectibles/memorabilia show, is general admission taxable, are vendor booth rentals taxable, and is a separate charge for celebrity autographs taxable?
Mixed, by charge type. General admission to a sports collectibles and memorabilia show is taxable, as an amusement service. Booth rental charges to outside vendors exhibiting at the show are NOT taxab…
How are insurers and HMOs taxed on the coverages they issue for the Children's Health Insurance Program (CHIP), and what stays taxable?
This internal Comptroller memo summarizes how insurers and HMOs are taxed on Children's Health Insurance Program (CHIP) coverages. Their CHIP coverages are exempt from general revenue premium taxes (T…
Are a city's building materials to construct an electricity-generation facility taxable, and is the generation machinery exempt?
It splits by what is bought. The Department ruled that machinery and equipment used directly and primarily to generate electricity for resale by a city are exempt under K.S.A. 79-3606(kk), and the lab…
Were booth subleases at an annual art-industry show exempt from Florida commercial-rent tax as trade-show subleases?
Yes. Using the ordinary meaning of industry trade show, the Department found that the annual event for art galleries and frame shops qualified. The organizer paid sales tax on the convention-center pr…
Can a partner in a licensed title agency claim the Texas franchise-tax exemption for title insurance agents subject to the premium receipts tax?
No. This internal Comptroller memo explains that a taxpayer who was one of several partners owning a licensed title agency was denied a franchise-tax exemption. The exemption for licensed insurance co…
Does an unincorporated nonprofit association have to file or pay Texas franchise tax, and must it send proof of its nonprofit status?
No. The Texas franchise tax is simply not imposed on unincorporated entities or associations, so an unincorporated nonprofit association does not file or pay it and does not need to send proof of nonp…
Which parts of a sponsor-branded solar golf-course radio system were exempt, and were sponsor payments taxable as equipment leases?
The solar panel, solar batteries, and metal housing supporting the batteries were exempt. The decorative plastic golf ball, radio transmitters and receivers, and conventional indoor base were taxable.…
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