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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Is a production credit association, a federal instrumentality under the Farm Credit System, immune from Texas franchise (state) tax?
No. The Comptroller denied the production credit association's request for a Texas state tax exemption. On February 20, 2001 the U.S. Supreme Court decided Director of Revenue of Missouri v. CoBank AC…
Does an out-of-state manufacturer that sells to New York customers, using only an independent sales representative who visits every few months, have to register as a New York sales tax vendor?
Yes. Even a single independent manufacturer's representative who periodically visits New York customers on the manufacturer's behalf creates enough nexus to require the out-of-state manufacturer to re…
How would a qualifying project calculate income and its Florida capital investment tax credit, including after joining a consolidated return?
Project income was its annual taxable income determined under generally accepted accounting principles and section 220.13. If the taxpayer later joined a Florida consolidated return, it had to maintai…
Could a charity use its Florida exemption to directly buy materials for a park construction project under a contractor purchasing-agent agreement?
Yes, for materials directly ordered, invoiced to, paid for, titled to, and insured by the charity for incorporation into the park. The exemption did not remove materials from a contractor's fabricated…
If a trusted, long-time bookkeeper hides the fact that she stopped filing our tax returns, is our company still hit with the negligence penalty?
Mostly no — the protest was GRANTED IN PART and DENIED IN PART. Sandia Oil Company ran gasoline distributorships and convenience stores in five states. Its bookkeeper of 17 years, Lucy Strong, quietly…
Is installing internet wiring and wall plugs in a building taxable in Texas, and does it matter whether the building is residential or commercial?
Labor to install internet wiring and wall plugs as part of new construction, or as a repair/remodel of a residential property, is not taxable if billed lump-sum (though the installer pays tax on the w…
How were investment and employee increases calculated for Kansas business and job development credits at an existing facility?
For an existing qualified business facility, investment and qualified employees were averaged using their values on the last business day of each month in the taxpayer's tax year, then reduced by the …
Was a country club entitled to a refund because members paid tax on dues while the incorporated club paid tax on its own purchases?
No. The incorporated country club and its members were separate legal persons: members paid sales tax on dues, while the club paid tax as final user of supplies and utilities it purchased. Those taxes…
Does delivering goods into Nebraska in my own trucks create corporate income tax nexus?
No. Under Revenue Ruling 24-01-1, delivering goods into Nebraska using a company's own vehicles, from a point outside the state, is a protected activity under Public Law 86-272 (15 U.S.C. §381) and do…
When did an equipment finance lease become subject to documentary stamp tax if payment duties began 16 days after shipment?
The lease became taxable on the sixteenth day after shipment. The master lease expressly incorporated the equipment schedule; together they supplied an unconditional payment obligation, payment amount…
Which office design, installation, furniture-moving, and storage charges are subject to Kansas sales tax?
Design is exempt; installation is taxable. The Department ruled that design services for laying out existing or new offices are not subject to Kansas sales tax, and neither is the labor to move existi…
Does a self-employed lawn mowing person have to charge sales tax if they only make a small amount of money and don't sell materials?
Lawn mowing and yard maintenance are taxable real property services in Texas even when no materials or supplies are billed — but Tax Code § 151.347 exempts a self-employed individual whose total recei…
When a pipeline spill job involves backhoe work, pipeline repair, and hazardous waste removal billed by one contractor, does everything get taxed as one improvement-to-realty charge, or can each service be taxed separately?
A contractor's single pipeline-spill job that bundles backhoe/excavation services, pipeline repair, and hazardous waste removal is not automatically taxed as one lump improvement-to-realty charge just…
Are limousine transportation services subject to Kansas sales tax, and does the operator owe tax on its equipment and supplies?
Not taxable service; taxable inputs. The Department ruled that transportation services provided by a limousine business are not subject to Kansas sales tax. Because the operator is providing a nontaxa…
When a medical kit bundles taxable items (like gloves or scissors) with exempt items (like wound dressings), is the whole kit taxable or exempt?
A bundled medical, dental, or first-aid kit's overall taxability is determined by the predominant cost of its contents: if the taxable items in the kit cost more than the exempt items, the whole kit i…
Does incinerating waste into ash for disposal count as tax-exempt manufacturing/processing under Texas law?
No. Incinerating waste material into ash purely for disposal purposes is not tax-exempt "processing" under Texas Tax Code § 151.318, so a related-party limited partnership performing the incineration …
Does a Georgia LLC owe Texas franchise tax if it only monitors Texas residents' health by phone from Georgia, and does needing a certificate of authority decide the question?
Monitoring Texas residents solely by telephone from Georgia is not, by itself, doing business in Texas, and the certificate-of-authority question is separate. A Georgia LLC provided life-expectancy ev…
Are labor services to install or repair land improvements that surround a residence subject to Kansas sales tax?
Exempt labor, taxable materials. The Department ruled that installation and repair labor on land improvements that immediately surround a residence - sidewalks, driveways, patios, fences, sodding, sep…
Is renting a portable sign trailer taxable as equipment rental, or nontaxable advertising, in Texas?
Whether a portable sign — trailer-mounted or not — is a taxable rental of tangible personal property or a nontaxable advertising service depends entirely on who controls the sign's message: if the sig…
Were disposable perfusion and blood-management supplies sold to hospitals exempt from Florida sales tax?
Yes, when the devices were intended for one-time, single-patient use and bore the federal legend restricting sale to or on the order of a licensed practitioner. Reusable heart-lung machines, cell save…
Are unused country-club dining minimums taxable dues, and may a club buy operating supplies tax-free because members pay tax on dues?
Unused mandatory dining minimums were taxable membership dues because payment was required to retain membership. The country club also had to pay sales tax on sand, seed, fertilizer, pool chemicals, l…
Did a nonprofit licensed only for basic child care qualify for Texas's residential child-care facility vehicle exemption?
No. The exemption required a facility licensed for 24-hour residential care of both basic-care children and emotionally disturbed children living together in one residential group, with the vehicle us…
Is it taxable to hire a vendor to dismantle manufacturing equipment out of state, move it to Texas, and reinstall it?
Charges to dismantle, move, and reassemble manufacturing equipment relocated to Texas are a nontaxable moving service — not taxable, and a lump-sum vendor doesn't need to break the invoice down line-b…
Can the assignee of a retailer's financing contracts claim a bad-debt sales tax refund by stepping into the retailer's shoes?
No -- the refund denial was sustained. The assignee of a retailer's negotiable notes or assignable conditional sales contracts cannot 'step into the shoes' of the retailer to claim a bad-debt sales ta…
When a utility separately bills customers for the city gross receipts tax, does that add-on charge itself get taxed again?
Yes. If an electric utility separately bills a customer a line-item for the Tax Code § 182.022 gross receipts tax (the tax on the utility's receipts from using city property) in addition to the electr…
Could a Florida parent revoke its consolidated-return election after changing its core business and expanding into out-of-state operations?
Yes. The group had disposed of legacy segments, entered new lines, reorganized, and expanded beyond its former Florida-centered business. Because separate filing produced the same or more Florida tax …
When were drain-line bacteria and application devices exempt as Florida pollution-control bioaugmentation products?
The bacteria qualified as bioaugmentation products used to meet a DEP-implemented wastewater rule, but exemption applied only at fixed locations that manufactured, processed, compounded, or produced t…
How did Texas apportion the pre-2008 franchise tax to the state, and does it follow the Multistate Tax Compact's formula?
Texas apportioned the pre-2008 franchise tax using a single gross-receipts factor — Texas gross receipts over total gross receipts — and did not adopt the Multistate Tax Compact's three-factor UDITPA …
May a church let its sponsored Cub Scout troop use the church's Kansas sales-tax registration or exemption documentation?
No. Kansas did not issue exemption numbers to churches or Scout organizations, and one entity could not use another entity's sales-tax registration number. A qualifying church used Form ST-28O for pur…
Which local jurisdiction's sales tax rate applies to a telephone answering service — the location where the phone company technically routes the original call, or the customer's own business or home address?
The customer's own business or personal-residence address, not the location where the phone company technically routes the original ring. A telephone answering service isn't the same thing as telephon…
Does a group selling coupon books have to collect Kansas sales tax on the sales?
Yes - taxable. The Department ruled that any organization selling coupon books - even a group of school students that sells no other tangible personal property or taxable services - must collect Kansa…
Is cable television installation labor subject to Kansas sales tax at a residence versus a commercial building?
Depends on where. The Department ruled that cable television installation services performed at a residence are not subject to Kansas sales tax, under the residential exemption for installation labor …
Which charges by a Kansas construction-equipment rental company were taxable, and when could a contractor rental be exempt?
Rental companies were retailers and collected sales tax on the total customer billing, including damage waivers, delivery, pickup, labor, and fuel. Rentals to contractors were taxable unless the contr…
Were custom, wired-in security and alarm system installations Florida real-property contracts or sales of tangible property?
They were real-property contracts. The systems were custom-designed for each location, screwed into place, and connected through concealed structural wiring. The installer had to pay tax on components…
How does an out-of-state company apportion service revenue to Texas for the franchise tax when it cannot break down receipts by state?
Service receipts are apportioned to where the services are performed, and a company that cannot trace revenue to each state may use another reasonable method. A Georgia-based corporation performed ser…
Is equipment that transports electricity from the generation plant to customers exempt manufacturing machinery when it is not located 'at the plant'?
No -- the refund denial was sustained. The Secretary's Designee held that the manufacturing machinery and equipment exemption in K.S.A. 79-3606(kk) reaches transportation equipment only when it is loc…
Were hotel room-block attrition and cancellation penalties subject to Florida sales, surtax, or tourist development tax?
No. Under the sample contract, the attrition and cancellation charges were penalties or liquidated damages and did not guarantee use or possession of hotel rooms. They were not subject to sales tax, d…
Does the expanded Kansas manufacturing machinery and equipment exemption cover an automated capacitor bank and the labor to install it?
Exempt. The Department ruled that an automated capacitor bank, and the labor to install it, come within the expanded Kansas manufacturing machinery and equipment exemption in K.S.A. 79-3606(kk) (House…
Is a commuter shuttle company's temporary service transporting employees and guests between different 2002 Winter Olympics venues exempt from Utah sales tax?
Yes, with a county-by-county limitation. A regular commuter shuttle company that's already an SIC Code 4111 'establishment' (mass transit over regular routes, confined to a municipality/contiguous mun…
Was a mortgage securing a guaranty connected with tax-exempt nonprofit health-facility bonds subject to documentary stamp tax?
No. The mortgage arose from and secured a guaranty supporting the payment of tax-exempt health-facility bonds. Even though the mortgage did not directly secure repayment of the bonds, sections 154.233…
Is charging customers to take a class over the internet, or to build a custom e-learning course, taxable in Texas?
Charging a customer to take a class over the internet is not subject to Texas sales tax, and neither is a charge to write original course content or lesson plans. Developing a custom interactive cours…
Can a caterer claim the manufacturing exemption on the gas and electricity its stoves and ovens use to prepare meals for events?
No. Gas and electricity used by a caterer to prepare or store food for immediate consumption do not qualify for the sales tax exemption under Tax Code § 151.317(a)(3), because a caterer that prepares …
Could a customer use its Florida direct-pay permit to self-accrue tax on taxable security services?
Yes. Although the permit's title referred to tangible personal property, the self-accrual rule covered leases and purchases and did not bar taxable services. The security company could accept the cust…
Is a chemical solvent that an oil and gas operator injects into a marginal well, and which stays in the produced oil/gas, exempt from Texas sales tax?
Yes. Micelle mutual solvent — a chemical injected into a marginal well to boost production, which becomes part of the hydrocarbons removed from the well and is sold along with the oil or gas — is exem…
Are tickets to a nonprofit sports league's championship game exempt from Texas sales tax, and does hiring a for-profit company to help produce the event jeopardize that?
Tickets to a championship game sold by a 501(c)(6) nonprofit sports league qualify for the Texas sales tax exemption for amusement services exclusively provided by a nonprofit under Tax Code § 151.310…
Is a trade acceptance draft purchased by a company investment capital under section 208.5, or business capital, for Article 9-A?
It is investment capital. A trade acceptance draft purchased by company C is a 'qualifying corporate debt instrument' and is not subsidiary capital in C's hands, so it constitutes investment capital u…
Was a modular turbine intake-air cooling system tangible personal property, allowing resale purchases and tax-free out-of-state delivery?
Yes. The system was industrial machinery or equipment and therefore tangible personal property. Components incorporated into it could be bought for resale; Florida-delivered systems were taxable on th…
Does a company owe Texas use tax on a barge and tugboat it uses to haul waste from Louisiana to Texas, if it doesn't own both vessels?
A follow-up letter correcting an earlier ruling's assumed facts: because the third party actually owns the barge (rather than leasing it) and merely contracts for a manned tugboat from another company…
Is the work of a consultant hired as an interim VP of sales and marketing -- recruiting reps, negotiating contracts, briefing the board, polishing sales materials -- taxable in Connecticut as a business consulting or advertising service?
Mostly taxable. A consultant hired as an interim VP of sales and marketing performed work that DRS treated as taxable business analysis, business management, business management consulting and busines…
Is charging a client to integrate their software onto a company's web-hosting server a taxable data processing service, and does the seller's cash-basis sales tax reporting matter?
Software integration charges are taxable as part of a web-hosting/data-processing engagement — not a nontaxable professional service — when the integration work is performed in connection with placing…
Can a joint venture that tolls (processes) a gas stream owned by the federal government — extracting and cleaning a specific gas molecule — claim the manufacturing exemption on its processing equipment, even though it never owns or sells the gas itself?
Yes. A joint venture that operates a tolling facility — extracting, separating, and cleaning a specific gas molecule (helium) from a gas stream owned by the federal government, and returning the extra…
If a computer's price is discounted at checkout because the buyer agrees to subscribe to a specific internet provider, is sales tax owed on the original price or the discounted price?
Sales tax is due only on the discounted price actually charged for the computer, not the original pre-discount price — when a retailer reduces a computer's sale price at the point of sale in exchange …
When a securities broker-dealer spins off its software-development operations into a separate subsidiary and licenses its trading software back, does that reorganization trigger New York sales or use tax on the software?
Generally no, as long as the software stays custom-built for one purchaser's own specifications and isn't resold to third parties. A joint venture's custom-built trading algorithm licensed to the brok…
If a Connecticut individual owns a mutual fund that invests in other funds holding Connecticut municipal bonds, are the exempt-interest dividends that flow through both funds still exempt from Connecticut income tax?
Yes -- the exemption flows through. A Connecticut individual who owns an upper-tier fund that in turn owns lower-tier funds holding Connecticut (and U.S.-territory) municipal bonds does NOT have to ad…
Are ventilators and related breathing equipment exempt from New York sales tax as prosthetic devices, or only as ordinary medical equipment and supplies?
It depends on function, not the equipment's name. Ventilators and related parts (circuits, filters, oxygen concentrators, suction units) qualify as exempt prosthetic aids when they completely or parti…
Is a large Manhattan health club's membership and initiation fee subject to New York's social/athletic club dues tax, or to New York City's separate tax on gyms and health salons?
No, on both counts. Manhattan Plaza Health Club's membership and initiation fees are not taxable as social/athletic club dues under state law, because members have no control over the club's activitie…
Is an out-of-state manufacturer that keeps inventory at an unaffiliated New York firm which modifies the goods subject to Article 9-A franchise tax and required to register as a sales-tax vendor?
Yes to both. Company A, an out-of-state blower manufacturer, keeps inventory at unaffiliated Company B in New York, which attaches motors and pulleys to order before shipping to customers. Because tha…
Is a nonprofit youth baseball organization exempt from Kansas sales tax on its purchases and its concession, program, and admission sales?
Not exempt. The Department ruled that a nonprofit youth baseball organization is not exempt from Kansas sales tax. It must pay sales tax on its purchases of tangible personal property and taxable serv…
Can someone who buys manufacturing equipment avoid sales tax on the purchase by leasing it out, if the equipment lease is bundled together with a building lease?
No. When an individual buys manufacturing equipment and then leases it together with land and a building to a related company in a single bundled real estate lease — with no separate sales tax charged…
Is a section 183 utility's liquidation into its parent (or conversion to a single-member LLC) treated as paying a dividend for the section 183 franchise tax?
No. A liquidating distribution -- whether the utility is liquidated into its parent or converted into a single-member LLC and dissolved -- is not the payment of a dividend for purposes of the section …
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