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 Florida city use a direct-purchase program to buy public-works materials tax-free?
Yes. The city's direct purchases could be exempt when its contract preserved the city as the real purchaser through city purchase orders, direct vendor payment, title, and insured risk of loss. The re…
I could have gotten the tax certificate any time — does it matter that I only obtained it after the state's 60-day deadline had passed?
It matters, and the protest was DENIED. David Montoya did construction work as a subcontractor for Robert Paiz Construction in 1995 but did not know his receipts were subject to gross receipts tax and…
Are over-the-counter items sold at an optometry office — like nonprescription sunshades, contact solution, and eyeglass repair parts — exempt from Texas sales tax as drugs or medicines?
As of this 2000 letter, most of the listed items sold from an optometry office — eyeglasses, nose pads, nonprescription and clip-on sunshades, eyeglass cords, artificial tears, contact solutions, magn…
Must an out-of-state Florida dealer collect tax on a third-party drop shipment into Florida?
No, under the stated facts. With both vendor and buyer outside Florida, no buyer nexus, and delivery by common carrier, the vendor-to-buyer transaction was not a Florida sale. The Florida customer ord…
Are corporate-event production services and extra video copies taxable in Florida?
The production services were not taxable when no tangible property went to the client. The producer owed use tax on the tangible elements of master tapes it used, and extra copies sold to clients were…
Are concrete cutting and coring services (core drilling, wall sawing, hydro-sawing) taxable in Kansas?
They are taxable, with a highway exception. The Department ruled that core drilling, wall sawing, and hydro-sawing of concrete are taxable services under K.S.A. 79-3603(q), which taxes 'repairing, ser…
I used H&R Block and paid my income tax, but nobody told me about New Mexico gross receipts tax. Do I still owe the penalty and interest?
Yes — the protest was DENIED. Debbie Garcia (Ingram) worked as an independent contractor for the Cibola County DWI Program in 1996–1998 and had H&R Block prepare her income tax returns from her 1099s,…
Do a home-improvement retailer's cardboard baler and its in-store lumber, pipe, and flooring cutting machines qualify for New York's manufacturing/production sales tax exemption?
No, none of them. Lowe's cardboard baler/compactor doesn't qualify because Lowe's isn't producing anything for sale with it — it just compacts scrap for a hauler to remove and later resell. The saws a…
If a utility spins off its retail gas and electricity supply business into a separate company while keeping its transmission and distribution operations, does the phased-out reduced sales tax rate on transmission and distribution charges still apply?
Yes. Once a utility's transmission-and-distribution (T&D) charges are billed separately from a different company's sale of the actual gas or electricity, those T&D charges qualify for the phased-down,…
Are sales of large decorative carved wooden horses (Dala Horses) for a community purpose subject to Kansas sales tax?
Yes, they are taxable. The Department ruled that sales of large Dala Horses — carved, gaily colored wooden horses used as a community-development display in Lindsborg — are subject to Kansas sales tax…
Are monthly satellite radio subscription fees subject to Kansas sales tax?
Yes. The Department ruled that monthly fees for a satellite radio service — here, transmissions of music and advertisements played over grocery-store intercoms — are subject to Kansas sales tax. Kansa…
If I lose the paperwork proving my sales commissions came from tax-free sales, can New Mexico still tax those commissions?
Yes — the protest was DENIED. Kimberly Ann Caylor worked in 1996 as an independent commissioned salesperson for a store selling antiques and fabrics. Commissions earned on nontaxable sales — out-of-st…
Must state employees informally reselling used books for charity collect Kansas sales tax, and can they give donors a deduction receipt?
No tax, and no donor receipt. The Department ruled that an informal, ad hoc group of state-agency employees reselling used books to raise money for a good cause — where the agency does not collect or …
Is a wholesaler of prepaid telephone calling cards required to collect Texas sales tax when selling the cards to a retailer who will resell them?
A wholesaler selling telephone prepaid calling cards is engaged in selling taxable tangible personal property — Tax Code § 151.01032 defines a prepaid calling card (a card, item, or access code repres…
Can a taxpayer carry over a Business and Job Development Credit in a year when it no longer maintains the required number of qualified employees?
No -- the denial was sustained. Under K.S.A. 79-32,160a(d), a taxpayer must continue to maintain the required minimum number of qualified business facility employees to carry over an unused Business a…
What consideration was taxable when homeowners granted avigation easements for sound insulation?
Documentary stamp tax was due on $2,400 for each easement, the value approved by the FAA. The sound-insulation construction was a separate program benefit and did not add to consideration for the avig…
Could an expanded affiliated group stop filing Florida consolidated corporate returns?
Yes, conditionally. Florida approved separate returns because the affiliated group had changed substantially in size and business mix. The approval depended on four stated conditions and, for the firs…
Can a building-supply store accept a government or nonprofit customer's Type 9 tax certificate to sell construction materials tax-free in New Mexico?
No — the protest was DENIED. Roswell Lumber Co., a building-materials retailer, accepted Type 9 nontaxable transaction certificates (NTTCs) from government agencies and nonprofit organizations and sol…
If a janitorial vendor bills separately for general building cleaning and for special decontamination cleaning inside a semiconductor cleanroom, is the cleanroom-specific charge exempt from Texas sales tax?
Yes, when separately billed. General building janitorial services are a taxable service under 34 TAC § 3.356(a)(7), but the separate line-item charge for daily decontamination cleaning performed speci…
In a motor-vehicle leasing like-kind exchange under IRC § 1031, does the Qualified Intermediary that holds the escrow funds have to register as a New York sales tax vendor?
No. A Qualified Intermediary that only receives, holds, and disburses escrow funds in a like-kind exchange — without ever taking title to or possession of the vehicles — isn't a 'vendor' under New Yor…
When an auto-leasing finance company sells 60% of its vehicle lease portfolio (with the leases already assigned and the leased vehicles already taxed) to a related finance company, is that bulk transfer of vehicles a tax-exempt resale, and who owes tax going forward?
Yes, the bulk transfer of the leased vehicles is a tax-exempt sale for resale, since the buyer will exclusively re-lease them to the existing lessees rather than use them itself — but the buyer must g…
Are materials and supplies a federal government contractor purchases in its own name, for use in performing a cost-reimbursement services contract, excluded from sales tax as purchases for resale even though the government takes title to them?
No, they're not resale-exempt. Even though the U.S. government eventually takes title to the materials and reimburses the contractor for their cost, the contractor is buying them to use in performing …
We're the Habitat for Humanity NYC affiliate's housing development fund company. We give 20-30 year interest-free mortgage loans to low-income homebuyers to finance construction, and take back a mortgage from each homeowner as security. Are those mortgages -- where WE are the lender/mortgagee, not the borrower -- exempt from mortgage recording tax?
Exempt. Habitat for Humanity Housing Development Fund Company, Inc. is the contracting entity for Habitat for Humanity - New York City (HFH-NY), a 1984-founded affiliate of Habitat for Humanity Intern…
Are FCC-licensed personal communications services a local telephone business under section 184, and does section 184 reach such a business conducted through a partnership with corporate partners?
Yes, PCS is a local telephone business, and section 184 reaches the corporate partners. Personal communications services provided under FCC licenses are 'telecommunication services' constituting a loc…
Is a GAP (Guaranteed Auto Protection) premium subject to Kansas sales tax?
Not taxable. The Department ruled that a GAP (Guaranteed Auto Protection) premium is viewed as the sale of insurance in Kansas, so it is not subject to Kansas sales tax. Kansas sales tax applies to se…
Is labor to build and paint a new water tower exempt from Kansas sales tax as original construction, and is later repainting taxable?
Exempt for the new build, taxable for later work. The Department ruled that the original construction of a new water tower qualifies as the original construction of a building (an enclosure that house…
May a contractor deduct overhead and profit when figuring the Kansas sales tax base on an installation contract?
No deduction. The Department ruled that on a taxable contract to install or apply tangible personal property, a contractor may not deduct overhead expenses or profit when figuring the Kansas sales tax…
Could a public authority directly buy wastewater-project materials without sales tax?
Yes. The authority's direct material purchases were exempt when it issued purchase orders, paid vendors, held title and liability, and bore insured risk of loss under the contract. Contractor-manufact…
When were prescription pet food and veterinary health products exempt from Florida sales tax?
They were exempt when a licensed veterinarian ordered and dispensed curative or remedial products as treatment or prevention for a diagnosed health disorder. Independent off-the-shelf sales without a …
Was a patient-specific medical-record information service subject to Florida sales tax?
No. The requested patient-specific record summaries were not taxable information or enumerated investigative services. The provider instead had to pay sales or use tax on the materials and supplies co…
Are the gross receipts from selling discount dining cards subject to Kansas sales tax?
Taxable. The Department ruled that gross receipts from selling discount dining cards are subject to Kansas sales tax. An organization that sells coupons or discount cards redeemable by third-party mer…
Does Texas's use tax exemption for repair and replacement parts on licensed self-propelled carriers extend to pipeline components purchased out of state and installed in Texas?
No. Texas Tax Code § 151.330(i) exempts, from use tax, out-of-state repair/replacement parts affixed in Texas only to a self-propelled licensed and certificated carrier (like an aircraft, ship, or mot…
As an independent contractor, do I owe New Mexico gross receipts tax on the materials I buy and get reimbursed for, when the store already charged me tax?
Yes — the protest was DENIED. Larry L. Cotton worked in 1996 as an independent maintenance contractor for a rental-management company, billing an hourly rate plus reimbursement for materials he bought…
If we pay our New Mexico withholding tax on time but file the return a couple of days late, can the state still charge the full late-filing penalty?
Yes — the protest was DENIED. Moriarty Municipal Schools paid its March 2000 withholding tax on time (the payment arrived April 4) but a new pay manager forgot to enclose the CRS-1 return, which was n…
Can a road contractor buy vehicle safety equipment (crash boxes) tax-free because the vehicles are used on a state highway job for the Texas Department of Transportation?
No. "Crash boxes" — devices mounted on the rear of a contractor's pickup trucks to lessen collision damage to the vehicle — do not qualify for exemption, even though the contractor's contract with the…
Which parts of a new manufacturing plant — wiring, air conditioning, the building itself — qualify for New Mexico's manufacturing investment credit?
Partly — the protest was GRANTED IN PART and DENIED IN PART. Rea Magnet Wire Company built a magnet-wire plant in Las Cruces and applied for New Mexico's manufacturing investment credit (5% of qualifi…
Could a Florida consolidated group exclude section 338 asset sales from its sales factor?
No. The group had to include the elected asset-sale receipts in its Florida sales factor. A roughly 4.5% change in the overall apportionment formula was not gross distortion, especially where most und…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Who had to prove Florida's residential-electricity exemption, and who owed tax after misuse?
The account owner had to prove exclusive residential household use. If a utility followed its tariffs and accepted a residential declaration in good faith, Florida generally pursued the customer for t…
Is a separately stated processing fee added to small orders subject to Kansas sales and use tax?
Taxable. The Department ruled that a flat processing fee added to small orders is subject to Kansas sales and use tax, even when set out as a separate line item on the invoice. Kansas tax is measured …
Were a country club's equity memberships, resale commission, and initiation fees taxable?
True equity membership contributions were not taxable if separately treated as paid-in capital, unused for operations or lower dues, and backed by qualifying asset-distribution rights. A 20% resale re…
Are leases of stadium suites, hospitality chalet/tent rentals, and seat-rights memberships at sporting events subject to Kansas sales tax?
Mixed. The Department ruled that leasing a stadium suite is part of a taxable admission charge to a place providing amusement, and that a seat-rights membership is likewise taxable as part of an admis…
Are receipts from coin-operated air compressors at convenience stores subject to Kansas sales tax, and how is the tax computed?
Yes, they are taxable. In this follow-up letter the Department ruled that money collected from coin-operated air compressors at convenience stores is subject to both state and local Kansas sales tax. …
If an IT services vendor asks a multi-state customer to issue a Texas multi-state benefit exemption certificate under a tax-included contract, is the customer required to issue one?
No. Issuing a Texas multi-state service benefit exemption certificate under Rule 3.330(f)(3) is a choice available to a multi-state customer buying data processing and similar taxable services that be…
For a direct-mail company, is marked-up postage taxable, does labeling a task 'data processing' on an invoice make it taxable, and do they owe tax on printing they buy and mark up for mass mailings?
A direct-mail company received four answers: (1) a markup on U.S. postage is not subject to Texas sales tax, whether charged at cost or marked up; (2) calling a work activity "data processing" on an i…
If a mailing company subcontracts address-imprinting work to another company that doesn't do the actual mailing, is that imprinting charge taxable — even though direct mail services themselves are nontaxable?
Yes, it's taxable — because the charge depends on who is actually doing the mailing. A company that imprints addresses onto mail pieces for another mailing service, but does not itself mail those piec…
Were hot soft-baked pretzels taxable even when a bakery sold them for off-premises consumption?
Yes. In this revised ruling, hot soft-baked pretzels were taxable as hot prepared food even though the shop was licensed as a bakery, offered no dine-in seating, and sold the pretzels for off-premises…
Were an open-end credit application, disclosures, consent, and line agreement stamp-taxable?
Not by themselves. The reviewed documents lacked a signed written obligation to pay a sum certain and did not expressly incorporate one another. But a notice or check could create a taxable combined o…
As a New Mexico artist, do I owe gross receipts tax on art a gallery sells for me, and can I deduct rent from letting a film crew use my studio?
Mostly in the artist's favor — the protest was GRANTED and the assessment abated in full. Brian Blount, a Santa Fe artist, was assessed gross receipts tax after the IRS reported his 1994 business inco…
If a contractor rents equipment for a government job and later sells it (leaving it on-site instead of taking it back), does it become tax-exempt "consumed" material instead of taxable equipment?
No refund. Crane mats rented to a contractor for a Texas Department of Transportation project, then sold to the contractor and left on the project site at the end of the job, do not qualify for the ta…
Are receipts from coin-operated air compressors at convenience stores subject to Kansas sales tax?
Yes. The Department ruled that money collected from coin-operated air compressors at convenience stores is subject to both state and local Kansas sales tax. The imposition is K.S.A. 79-3603(f), which …
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