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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Are wheelchairs, motorized scooters, and vehicle wheelchair lifts exempt from Kansas sales tax, and what about home ramps?
Mostly exempt, except the ramps. The Department ruled that an electric or manual wheelchair (whether sold or rented), a motorized scooter, and a wheelchair lift that attaches to a vehicle all come wit…
Are the wages you earn from a job taxable income in New Mexico, and can the state recompute your federal adjusted gross income when you report zero?
Yes, wages are taxable income, and yes, the state can recompute a zero return — so the refund was denied. James and Terri Holt filed a 1999 New Mexico return reporting zero income and claiming a full …
If a company assembles a septic tank system and sets it into a pre-dug hole on a vacant lot, but someone else later connects it to the home's sewer and electrical lines, is that a tax-exempt real-property-improvement contract or a taxable sale and installation of tangible personal property?
Taxable sale and installation of tangible personal property, not an exempt realty improvement. A subdivision developer's subcontractor assembled septic tank systems and set them into pre-dug holes on …
Which purchases qualified for Louisiana's construction exemption for vessels of at least 50 tons after the Showboat Star decision?
The exemption covered a qualifying builder's vessel sale and original construction components permanently installed so removal would damage the item or vessel. Removable, function-specific, replacemen…
How did 2001 House Bill 2011 change the Kansas ethanol producer incentive payments?
2001 House Bill 2011, effective July 1, 2001, revised the Kansas Qualified Agricultural Ethyl Alcohol Producer Fund. Producers already in production before July 1, 2001 receive 5 cents per gallon of a…
A private partnership leases university land, built and operates a student dormitory there for the university's benefit under a tightly restricted ground lease, and title to the building already belongs to the university's governing board -- is mold-remediation and repair work on the dormitory exempt from Texas sales tax?
Exempt. Repair, remodeling, and mold-remediation work on a university dormitory qualifies for the Sec. 151.311 exemption for improvements to realty performed for the direct benefit of an exempt entity…
Did an international art show qualify as an industry trade show so exhibitor booth subleases were exempt from Florida commercial-rent tax?
Yes. The organizer paid tax on its prime convention-center lease, while booth subleases to exhibitors were exempt because the show served the art industry through displays, sales, seminars, workshops,…
Does a church get one tax-free fundraiser a year, and is the charitable portion of a golf-tournament entry fee exempt from sales tax?
Yes to the free event; no charitable offset on the rest. The Department ruled that under K.A.R. 92-19-67 a religious organization is allowed one fund-raising event per year for which no sales tax is d…
Can a community action group buy materials to repair or weatherize low-income housing without paying Kansas sales tax, and is the repair labor taxable?
Yes — the materials are exempt. The Department ruled that under K.S.A. 79-3606(oo), a community action group or agency may buy tangible personal property free of sales tax when it is bought 'for the e…
Are cigarette 'buydown' reimbursements and shelf-display payments a retailer gets from manufacturers taxable gross receipts, and can New Mexico assess interest and a penalty on the unpaid tax?
Yes to all — the protest was DENIED. A tobacco retailer received 'buydown' payments (manufacturers reimbursing her for discounting cigarettes) and 'shelf-display' payments (for letting manufacturers p…
Could an airline buy a contractor-built automated people mover tax free for installation in its leased county airport terminal?
Yes, for purchases on or after July 1, 2000. The airline acted as the county airport's agent under its lease, public funds paid for the system, and the people mover and its parts became county-owned t…
If most members join a collectibles club mainly for the intangible right to buy exclusive pieces later, is the membership fee still taxable because a low-value welcome kit and newsletter come with it?
Taxable, rejecting a "true object" argument. The company argued that surveys showed new members primarily wanted the intangible benefit of exclusive club status and future purchase rights, not the low…
Were payments for refrigerated and non-refrigerated port-authority warehouse space exempt when the lease also permitted other cargo use?
The lease, ad valorem payments, and stated pass-through utilities were exempt only while the space was used exclusively to store transient cargo for loading or unloading. The lease's permission for ot…
Were an affiliate marketer's charges for reselling automated prerecorded-message telemarketing subject to Florida sales or communications taxes?
No. The marketer resold per-call and setup telemarketing services, did not separately charge customers for telephone service, and transferred no tapes or other tangible property. Its customer charges …
Were an affiliate marketer's charges for reselling automated prerecorded-message telemarketing subject to Florida sales or communications taxes?
No. The marketer resold per-call and setup telemarketing services, did not separately charge customers for telephone service, and transferred no tapes or other tangible property. Its customer charges …
Were per-call and setup charges for automated prerecorded telemarketing taxable as telecommunications or tangible-property sales?
No. The operator sold a telemarketing service, not telecommunications, communications services, or tangible personal property. Its per-call and setup charges to affiliated marketers were not subject t…
Are dietary/nutritional supplements like Coenzyme Q10, glucosamine, spirulina, amino acids, and various herbal and vitamin products exempt from Texas sales tax?
Exempt. The Comptroller confirmed a lengthy, specific list of vitamin, herbal, and nutritional supplement products -- Coenzyme Q10; MSM; glucosamine sulfate; various combination herb/vitamin/mineral p…
A contractor paid tax in full on a lump-sum new-construction contract to install a manufacturing process line -- can it now claim a manufacturing exemption refund on the qualifying equipment, even though the contract was lump sum?
No refund available for new construction, but repair/remodel work is different. The manufacturing exemption is categorically NOT available for equipment installed under a lump-sum contract for NEW con…
Is a pipeline company's purchase of a friction-reducing additive it injects into oil moving in its pipeline exempt from Kansas sales tax?
It depends on whether the pipeline movement is interstate or intrastate. The Department ruled that if the additive is used in an interstate pipeline for movement directly and immediately in interstate…
Is a court-ordered sheriff's sale of used manufactured (mobile) homes subject to Kansas sales tax?
No — the sales are exempt, and any tax collected should be refunded. The two homes were bought used, and K.S.A. 79-3606(bb) grants an outright exemption for sales of used mobile or manufactured homes,…
Can a linen and apparel rental/laundry business buy the consumables used to clean the rented items without paying Kansas sales tax?
Yes for the taxable service, no for coin-operated machines. Because renting linens and apparel and providing laundry/dry-cleaning are taxable services on which the business collects sales tax, the con…
What choice did the 2001 Clean Drinking Water Fee give Kansas public water supply systems?
2001 Senate Bill 332 created the Clean Drinking Water Fee and gave each Kansas public water supply system a choice: pay the Fee of $.03 per 1,000 gallons of water sold at retail (and, in exchange, cla…
Were reusable prescription electrical stimulator devices exempt when sold to patients or to medical practitioners for office use?
A device sold to the patient under a licensed practitioner's prescription was exempt. A practitioner buying the same device for use in the medical practice rather than resale to a patient owed tax. Th…
Were security services protecting foreign banks' currency shipments to and from Florida exempt because the purchaser's primary benefit was outside Florida?
Yes. The foreign banks owned the currency, contracted for the protection, were compensated for losses, and were billed outside Florida; about 90% of mileage also occurred abroad or in international ai…
How could a hotel document exempt room rentals when a government or exempt-organization employee paid and the funding source was unclear?
The hotel could obtain the employee affidavit described in Rule 12A-1.001(2)(d)2., certifying direct payment by the government or exempt organization. For an authorized Florida P Card, it retained the…
Can a company escape a negligence penalty when its office manager, left in sole control of the books, quietly stopped filing the company's tax returns for years?
No — the penalty stood and the protest was DENIED. MZA Associates, a federal software contractor, gave its office manager near-total control over its finances and tax filings. Starting in 1997 she fil…
Can a brand-new business avoid a gross receipts tax negligence penalty when it hired an attorney and CPA to guide it but they never mentioned the tax — and does interest still apply?
The penalty was abated because the owners had exercised ordinary business care, but interest still applied — so the protest was granted in part and denied in part. The owners of a new Children's Orcha…
Was a New York-domiciled Foreign Service officer taxable as a New York resident during a stateside stint in New Jersey and Washington, D.C. that fell between two overseas assignments otherwise covered by the 548-day nonresident rule?
Yes, for part of the gap period. Because the petitioner was not present in a foreign country and did not maintain a permanent place of abode outside New York during the September 23, 1998 through May …
If someone becomes a statutory resident of New York City, is income they receive that year - like restricted stock, bonuses, and deferred compensation - taxable to the city even though it was earned in earlier years while they lived elsewhere?
Yes. Because Kenneth Freeman was treated as a statutory New York City resident for all of 1996 rather than someone who changed from nonresident to resident mid-year, the special accrual rules that let…
Are the annual membership fees a marine towing and assistance membership organization charges recreational boaters subject to New York sales tax as club dues or a taxable service?
No. Sea Tow's $95 annual membership fee is not subject to New York sales tax, because Sea Tow is not a 'social or athletic club' subject to the club-dues tax, and the fee is not a charge for an enumer…
Does a retailer have to collect New York sales tax on the commission a distributor or cellular phone carrier pays it for selling cellular telephones and prepaid calling cards?
No. The commission a distributor or cellular phone carrier pays a retail establishment for selling cellular phones or prepaid calling cards is not itself a taxable receipt, so the retailer doesn't col…
Is a Web site development company's charge for consulting on, designing, and building a client's Web site subject to New York sales tax, and does the developer owe tax on the software it buys or writes in-house to do that work?
Web site development services — consulting, design, and building the site, plus any future hosting fees passed through from an ISP — are not a taxable service in New York and stay untaxed no matter wh…
Must a large bank recapture part of its New York bad debt reserve under Article 32 when current-year loans or the experience ratio fall below base-year levels?
No recapture is required. When a large bank's current-year loans outstanding or experience ratio fall below base-year levels, it simply gets no section 1453(i) deduction for that year. Section 1453 co…
For a barge bare-rental business run through one entity and a related towing-services business run through a separate entity, which charges -- surveys, inspections, repairs, cleaning, brokered personnel, cargo contracts, and boat supplies -- are taxable, and does splitting billing between the two entities create tax problems?
A detailed, multi-part answer. Barge damage surveys are taxable to the customer when passed through as part of the bare barge rental price (Sec. 151.007(b)), regardless of whether they're specifically…
Must a direct sales/multi-level marketing company collect and remit Texas state and local sales tax on the sales its independent distributors make, and how should it account for local tax rates that vary by distributor location?
Yes. Under Rule 3.286 and Tax Code § 151.024, a direct sales organization (including a multi-level marketing company) is automatically responsible for collecting and remitting Texas state and local sa…
Is a direct sales/multi-level-marketing company responsible for collecting and remitting Texas sales tax on its independent distributors' sales, and how should it account for varying local tax rates?
Yes, automatically -- no special agreement needed. A direct sales organization (including a multi-level-marketing company) is responsible under a longstanding Comptroller rule (Rule 3.286, backed by T…
If I cut and haul timber I don't own as a subcontractor, is my work exempt from gross receipts tax because timber severance is taxed under the Resources Excise Tax Act?
Yes, the services are taxed — the protest was DENIED. Ernest Rose worked as a subcontractor for Rose Wood Products in 1996, cutting, skidding, loading, and hauling logs to a Cimarron sawmill and clean…
For customer-owned property like a trade show exhibit booth, what distinguishes taxable 'assembly' labor from nontaxable 'set-up' or 'installation' labor?
The distinction turns on function, not label. 'Installation' — placing property in position without changing its form so it works as intended (e.g., hanging a picture or chandelier) — is not taxable, …
When are a Kansas spa retailer's sales to out-of-state customers subject to Kansas sales tax, and how are delivery, repairs, and shipping charges taxed?
It turns on where the customer takes delivery. Spas are taxable tangible personal property (not exempt). If the buyer takes delivery in Kansas — including an out-of-state customer who picks the spa up…
Are a collectors' club's membership sales subject to Kansas sales tax, and does the company owe Kansas use tax on the club kits it ships to Kansas members?
The memberships are not taxable, but the club kits are. The Department ruled that the sale of the collectors' club memberships is not subject to Kansas retailers' sales tax, because Kansas taxes membe…
When a single medical device kit bundles a tax-exempt prosthetic component with non-exempt equipment (needles, guide wires, sheaths), is the whole kit taxable or exempt?
It depends on cost, not just contents. When a single-charge kit bundles an exempt item with taxable items, the predominant cost determines the whole kit's taxability: if the taxable items cost more th…
Our company is financing its new world headquarters condominium unit through a 'synthetic lease' -- an off-balance-sheet structure where a bank trustee will take legal title to our unit and lease it back to us, even though for tax and financial-risk purposes we remain the true owner and the arrangement is really just a loan secured by the property. The building is being constructed by a multi-member LLC that will convert to condominium ownership, with each member beneficially owning only its own unit from day one. (1) Is the trustee's taking title, and our unit's eventual reversion to us, subject to real estate transfer tax? (2-4) Are the lease itself and the various loan-related conveyances exempt as financing? (5-6) Does recording the trustee's deed, and the various related mortgage documents, trigger mortgage recording tax, and if so on what amount?
The RETT analysis favors the taxpayer across the board; the mortgage recording tax analysis is more nuanced. Time Warner Inc. (post-merger, AOL Time Warner) was financing its new world headquarters --…
Were diagnostic kits used by veterinarians and laboratories to detect viruses, bacteria, protozoa, or parasites in animals exempt from Florida sales tax?
No. The statutory exemption covered chemical compounds and test kits used to diagnose or treat human disease, illness, or injury. Kits used solely by veterinary clinics and laboratories to diagnose an…
Are a catalog producer's advertising-agency-type services taxable in Kansas, and how are its printing purchases and its customers' locations treated?
The company's services are not taxable, but it owes tax on everything it buys. The Department ruled that a catalog producer operating like an advertising agency has its services treated as advertising…
Does a massage therapist who provides lymphatic compressive therapy need a sales tax permit to buy the bandages used in the treatment, and are those bandages tax-exempt?
No exemption, and no resale certificate. Bandages a massage therapist buys and applies while performing lymphatic compressive therapy are taxable purchases — the therapist is the end user/consumer of …
Did making an otherwise revocable trust temporarily irrevocable from December 1 through January 31 avoid Florida's January 1 annual intangible tax?
No. The brief period when the grantor agreed not to exercise trust powers did not remove those powers or change the trust's revocable character. Because the Florida grantor retained income, revocation…
Did one purchase order combining five quotes for all doors and millwork on a building job receive one $5,000 discretionary surtax cap?
Yes, if the purchase order specified the quantities and a definite final delivery date. Combining five vendor proposals did not prevent one sale, and the doors and millwork for a single job met the bu…
Are horse and horsemanship training services subject to Kansas sales tax?
No. The Department ruled that horse and horsemanship training services are not subject to Kansas sales tax. Because the provider is furnishing a nontaxable service, it must pay sales tax on all articl…
Did Louisiana apply a throwback rule to a Louisiana corporation's sales into a state where P.L. 86-272 prevented income taxation?
No. Louisiana had not enacted UDITPA's throwback approach, so its corporation income- and franchise-tax statutes did not return those sales to Louisiana merely because the destination state could not …
Were single-patient anesthesia, infusion, and apheresis products exempt when federal law required an Rx-only or physician-order legend?
Yes. One-time-use medical products required by federal law to bear “Rx only” or the physician-order caution legend were exempt. The exemption did not extend to prescription-legend devices intended for…
Are the gross receipts from an internet information service that converts paper documents into an electronic file subject to Kansas sales tax?
No. The Department ruled there is no imposition in the law to tax the described service — an internet business process that converts physical (paper) forms or documents into an electronic file that is…
Does Kansas recognize a single-member limited liability company as a separate legal entity for sales and compensating (use) tax purposes?
Yes. The Department ruled that Kansas recognizes single-member limited liability companies as legal entities for purposes of Kansas sales and compensating taxes. It pointed to the sales-tax definition…
Do repairs to a power plant's electricity-generating engines and an upgrade of its control (SCADA) system qualify for Kansas's manufacturing machinery and equipment exemption?
The production equipment is exempt; the building is not. The Department ruled that because the internal combustion engines are used to generate electricity for resale, the repair service and repair pa…
Is a monthly retainer fee an advertising/marketing agency charges to reserve staff and account-management time subject to Texas sales tax?
No. A monthly retainer fee that a marketing/advertising services company charges clients to reserve account-management staff time (not tied to any specific taxable service) is a charge for an intangib…
For Texas franchise-tax apportionment, what do 'location of payor' and 'legal domicile' mean, and are they the same for taxable capital and earned surplus?
The definitions are the same for both taxable capital and earned surplus apportionment. Under Franchise Tax Rule 3.549(b)(7), the 'location of payor' is the payor's legal domicile. Under Rule 3.549(b)…
If I retire in New Mexico and cash out a 401(k) I built up while living in another state, does New Mexico tax the whole thing?
Yes — the protest was DENIED. DeWayne Maloy worked for Hertz from 1982 to 1997 in Texas, Oklahoma, and (from October 1994) New Mexico, building up a 401(k) along the way. In 1997, while a New Mexico r…
If a customer gives me an exemption certificate that turns out to have been altered, do I lose my deduction, or does good-faith acceptance protect me?
Good faith protected the seller — the protest was GRANTED and the refund ordered. Duke Engineering & Services provided nuclear engineering services to Johnson Controls, which resold them to Los Alamos…
Can a business that repairs tangible personal property accept a resale exemption certificate on the repair services and parts it sells to other retailers?
Yes. The Department ruled that a business repairing tangible personal property may accept a resale exemption certificate when it sells repair and maintenance services and parts to other retailers. The…
When a corporation restructures its employees into a partnership's general-partner entity to satisfy an employee stock purchase plan requirement, is that arrangement an exempt staff-leasing arrangement or a taxable one?
The proposed arrangement did NOT qualify for the staff-leasing exemption. Even though the company met two of the three Rule 3.364 conditions (including the new-business exception), its own contract st…
Is oilfield 'swabbing' — running cable and rubber cups down a well to remove hydrostatic water and start/restart production — a taxable service in Texas?
It depends on the specific downhole task. Swabbing done to start or restart a well — running cable with rubber cups to remove hydrostatic water, even with incidental sand or paraffin — is a nontaxable…
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