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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Must a voluntarily dissolved corporation that merely holds record title to real property file Article 9-A franchise tax returns?
No. A voluntarily dissolved corporation that is merely the record title holder of real property, and is otherwise inactive, is not doing business in New York under section 209.3, and is not subject to…
In a PSC-driven utility restructuring, are spin-off transfers subject to the real estate transfer tax, and do they generate section 186 gross earnings, 186-a gross income, or excess dividends?
A spin-off that is a mere change of identity with no change in beneficial ownership is exempt from the real estate transfer tax under section 1405(b)(6); a spin-off that does change beneficial ownersh…
If a commercial lender that finances a retailer's inventory later seizes a blocked lockbox bank account that happens to contain sales tax the retailer collected from customers, does the lender become liable to New York for that sales tax money?
Yes. Even though a commercial finance company isn't a 'vendor' with its own duty to collect sales tax, once it takes control of a bank account it knows contains sales tax collected by the retailer fro…
Are the single-use 'fistula needles' used to connect a hemodialysis patient's blood vessels to the dialysis machine exempt prosthetic aids, or taxable medical supplies?
Exempt. Fistula needles -- the two short, sharp, single-use needles connected to tubing that link a hemodialysis patient's surgically created arteriovenous fistula to the dialysis machine -- qualify a…
Does a defense contractor owe sales tax on the materials and services it buys to maintain and caretake Navy-owned facilities under a cost-reimbursement government contract?
Yes, generally. Even though the contractor performs caretaker maintenance under contracts with the Navy (a tax-exempt federal agency) and gets reimbursed for its costs, the contractor -- not the Navy …
If a New York municipal bond mutual fund invests its short-term cash in a money-market mutual fund that also pays exempt-interest dividends, do those dividends stay exempt from New York State and City income tax as they pass from the money-market fund up to the bond fund and then out to the bond fund's own shareholders?
Yes. As long as each fund in the chain (the money-market "lower-tier fund" and the municipal bond "upper-tier fund") independently qualifies under IRC § 852(b)(5) to pay exempt-interest dividends, the…
For a DSL Internet provider, which billing components are taxable in Kansas — Internet access, installation labor, or leased customer equipment?
It splits by component. The Department ruled that Internet access charges are not subject to Kansas sales tax (never enumerated as taxable, and protected by federal law), but the underlying telephone …
What property could reduce the Texas sales-tax base or motor vehicle tax base as a trade-in?
A dealer could allow a trade-in credit for a motor vehicle or customer-dismantled vehicle parts against a sale of tangible personal property. But when the dealer sold a motor vehicle, only another mot…
When a Texas-permitted seller (Company A) drop-ships an item to a Texas customer (Company C) on behalf of a reseller (Company B), who is responsible for collecting the Texas use tax?
Texas use tax is owed on the sale, but the drop-shipping seller (Company A) doesn't have to collect it as long as it gets a properly completed Texas resale certificate from the reseller (Company B). W…
Is a security guard service — hiring a guard from a security company to walk a business's premises at night — subject to Texas sales tax?
Yes. Charges for providing security services to property or persons located in Texas are subject to Texas sales tax, so the security company was correct to charge sales tax on its hourly guard-service…
When the Port Authority charged an airline its pro-rata share of common-area guard services and a federally mandated armed 'Boarding Security Program' at JFK Airport's international terminal, were those charges subject to sales tax?
No, on both counts, but for different reasons. The airline's pro-rata share of the Port Authority's common-area guard service charges is treated as 'additional rent' under the lease rather than a sepa…
Is the sale and delivery of an aircraft in Kansas to a nonresident buyer exempt from Kansas sales tax if the plane is flown out of the state within ten days?
Yes, if two conditions are met. The Department agreed that a simultaneous sale and delivery of an airplane in Kansas is exempt from Kansas retailers' sales tax when every entity in the ownership chain…
A commercial mortgage held by a REMIC securitization trust is being defeased: the borrower gets a fresh loan secured by U.S. Treasury securities instead of real property, a new special-purpose successor entity takes over that Treasury-backed obligation, and the ORIGINAL mortgage and note get assigned to a brand-new lender as consideration -- with the original borrower still on the hook for the original mortgage debt, just now owed to the new lender. Does any of this trigger fresh mortgage recording tax, and can the new lender record a supplemental mortgage afterward tax-free?
No new mortgage recording tax on the assignment itself; a later supplemental mortgage stays tax-free too, unless it adds new debt. In a commercial mortgage defeasance, the original borrower owes a bal…
For a Kansas STAR bond project, do sales taxes on event tickets sold off-site count toward the bond repayment increment, and does the seller need an on-site office?
Off-site ticket sales still count. For a motorsports facility financed with STAR bonds, the Department ruled that all ticket sales the operator reports as gross receipts and pays sales tax on — whethe…
Is a tenant's late rent fee subject to Texas sales tax as a taxable 'debt collection service,' and does it matter that a property management firm collects the fee on behalf of the property owner?
A tenant's late fee for paying rent late (a straightforward contractual sanction, not yet a delinquent-account collection effort) is not a taxable debt collection service under Rule 3.354, so the tena…
When a retailer sells its credit-card receivables to a financial institution, can the retailer claim a sales tax bad debt deduction for accounts the institution later writes off — and does it matter whether the sale to the institution is a true recourse arrangement or a discounted factoring sale?
It depends on which one the arrangement actually is: a retailer that factors receivables with a genuine recourse provision can claim a bad debt deduction on accounts written off as a result of that re…
When could a homeowners' or property owners' association qualify for the former Texas franchise-tax exemption, and was there a fixed percentage of lots that had to be sold?
An association could be considered only if it was a nonprofit corporation organized and operated primarily for residential property, the development was legally restricted to residential use, and indi…
Does the Texas exemption for labor and materials to repair large commercial vessels (Rule 3.297(b)(2)) cover charges for renting equipment like scaffolds used during the repair?
No. Rule 3.297(b)(2)'s exemption covers labor and consumed materials (like sand for sandblasting or solvents) used to repair a commercial vessel over eight tons, but it does not cover equipment — incl…
Does forming a Montana holding company to buy and register a motor home avoid Utah sales and use tax if the vehicle is actually kept and driven in Utah?
No, it doesn't work. If a motor home is purchased and titled through a Montana holding company but is actually operated and stored in Utah, Utah law treats the vehicle as subject to Utah sales and use…
A man took irregular 'draws' to run his mother-in-law's New Mexico store instead of a wage. Did that money owe New Mexico gross receipts tax, or was it exempt employee pay?
Denied. The $18,365 he drew for managing the family gas-station/grocery/bar in 1994 was subject to gross receipts tax. He was not an employee — no one supervised or directed his work and he considered…
A 501(c)(3) organization planned to sell taxable items at a Texas convention spanning two days. Does that use up both of its allowed one-day tax-free sales for the year, or does it still count as just one?
It uses up both. A Texas-exempt 501(c)(3) organization gets two one-day, tax-free sale days per calendar year (and the same allowance applies to each bona fide chapter), but selling over a two-day per…
When a business that provides a taxable service separately bills a client for its own travel expenses (airfare, meals, hotel), are those reimbursed expenses part of the taxable sales price?
Yes. Travel expenses billed by a provider of a taxable service are part of the taxable sales price and are subject to Texas sales tax — Tex. Tax Code § 151.007(a) does not allow the sales price of a t…
Are membership dues paid to a professional/trade association subject to Texas sales and use tax?
No. Membership dues paid to a professional association are not subject to Texas sales and use tax.
If a Texas seller ships or personally delivers a taxable item to a customer outside Texas, is Texas sales tax due — and what proof should the seller keep?
No Texas sales tax is due when a Texas seller ships or delivers a taxable item to a location outside Texas. The seller should keep documentation proving the out-of-state delivery — a shipping invoice …
Were fees for licensing country-club kitchens, ballrooms, and restaurant space to a food concessionaire subject to Florida sales tax?
No. Florida treated the golf course as a recreational facility, so licensing clubhouse dining areas to an operator providing restaurant and catering services qualified for the food-and-drink concessio…
Where did Florida impose sales or use tax and local surtax when a contractor fabricated modular homes and erected them elsewhere?
Florida taxed the contractor's direct material costs where it fabricated the factory-built homes, even when it erected one in Georgia. Any local surtax was based on the fabrication county, not the Flo…
When a country club bills its golf members a monthly assessment to pay for a capital improvement (like a new cart path), is that assessment subject to Texas sales tax — for both equity members (who've vested capital in the club) and non-equity members?
Yes for both. A capital improvement assessment billed to a private club's golf members is taxable regardless of whether the member is an equity member (who has vested capital and voting rights) or a n…
A meat packaging plant uses a hot-water pasteurization cabinet, acetic acid sprays, dust-removal acid wash, sanitizing chemicals, conveyors, and a cooler as part of USDA-mandated processing. Which of these qualify for Texas's manufacturing/pollution-control sales tax exemption?
It's item-by-item, not all-or-nothing. The hot water pasteurization cabinet and acetic acid used to kill bacteria qualify for the exemption, and sanitizing/cleansing chemicals used on the processing a…
Can a Texas local taxing jurisdiction impose local sales tax on direct-to-home satellite television programming?
No. The federal Telecommunications Act of 1996 preempts local taxing jurisdictions from imposing sales tax on direct-to-home satellite programming, so no local sales tax is due on satellite programmin…
When a restaurant building is subleased to a franchisee together with a separately billed charge for the restaurant equipment, is sales tax due on the equipment rental charge?
No. Under Rule 3.294(k)(1), if a real property lease/rental contract also includes the lease or rental of tangible personal property (like restaurant furniture or equipment) as part of the same agreem…
Is filter fabric used under railroad ballast an exempt railroad supply, and is the labor to install it in an existing track repair taxable?
The filter fabric itself is exempt, the same as the ballast, rails, cross ties, plates, and spikes it's installed alongside — it qualifies as a supply essential to the operation of locomotives and tra…
Does a financial-risk-analysis firm owe sales tax on the prewritten software it buys and uses to generate its reports, and does it have to charge customers sales tax on its portfolio risk-analysis and stress-test services?
Two different answers for two different things. The prewritten Algorithmics software the company buys and uses internally to help generate its risk reports is a taxable purchase, since it's used in pe…
Are pool tables and shuffleboard tables in a bar subject to Texas sales tax, and does it matter whether they're coin-operated?
It depends on how customers pay. Amusement services like pinball games, pool tables, and shuffleboard provided through coin-operated machines that the consumer operates directly are exempt from sales …
When did a trust administered by an out-of-state bank avoid Florida's annual intangible personal property tax?
A trust was exempt when the specified trustee location was outside Florida and no one in Florida managed or controlled its assets. A Florida employee's investment advice alone did not create taxable s…
A radiator repair shop wants to charge customers an environmental disposal fee. Is that fee taxable, and does it matter whether the radiator being repaired belongs to a motor vehicle or to other equipment?
The environmental disposal fee is taxable only if the underlying radiator repair itself is taxable — it's treated as just another cost of the repair, folded into the taxable sales price under Sec. 151…
What did the original TAA 00B4-001 say about documentary stamp tax on Florida real estate transferred through two mergers?
The original ruling said no tax applied if the governing out-of-state law vested the property in each surviving entity by operation of law without a deed. The document expressly directs readers to rev…
A mobile-home set-up contractor's Type 5 resale certificates were lost in a move and the dealers had gone out of business. Could he still deduct those receipts from New Mexico gross receipts tax?
Denied. To deduct receipts from selling a service for resale (Section 7-9-48), the contractor had to have the buyers' nontaxable transaction certificates (NTTCs) in hand within 60 days of the Departme…
What local sales tax rate does a lump-sum contractor pay on materials for a new construction project, when the contractor buys those materials from a Houston vendor?
A lump-sum contractor performing new construction is the consumer of the materials incorporated into the building and pays sales tax based on the VENDOR'S location and delivery point — not the job sit…
Is 'fishing' (retrieving lost tools or equipment from a wellbore) a taxable service under Texas's oil and gas well service rules?
It depends on when the fishing happens. Rule 3.324(d)(1)(C) generally makes fishing for rods or tubing a taxable activity, but Rule 3.324(d)(4) carves out an exception: fishing services are NOT taxabl…
When is a Kansas sale exempt because the goods are shipped out of state, and what proof of out-of-state delivery does Kansas accept?
It depends on how the goods leave Kansas. When a Kansas seller is obligated to deliver property to a point outside Kansas, or delivers it to an interstate common carrier or the mails for shipment out …
Can a Kansas retailer buy promotional merchandise tax-free for resale, and how is tax handled when the items are given away as premiums or prizes?
Yes, with a resale certificate — and the give-away treatment varies. A Kansas retailer can buy promotional merchandise exempt with a resale exemption certificate, because at purchase it isn't known wh…
Did an electric utility's securitization issuer owe pre-2008 franchise tax on transition charges or short-term earnings, and did the letter decide property tax?
The described issuer excluded transition-property transactions, transition charges, and short-term earnings on accumulated bond funds and the initial cash requirement from taxable capital and taxable …
How is scaffolding erection and dismantling labor taxed for a Texas contractor across five different scenarios: periodic maintenance, a taxable service, new construction, re-renting scaffolding as the rental company, and erecting/dismantling a customer's own scaffolding?
There is no single answer — it depends entirely on what's actually being sold. As a general rule, contractors performing real property services are the 'consumer' of scaffolding they use and must pay …
Can a security company buy its 'security vehicles' tax-free for resale, when some vehicles are leased out with a uniformed driver providing patrol services and others are leased out empty for customers to park and move themselves?
It depends on how each vehicle is used, and it can't be mixed. Vehicles the company leases out WITH a licensed security-guard driver are an inseparable part of a taxable protective/patrol service -- t…
Is an online service that authenticates a customer's identity and electronically delivers a 'Digital ID' (a digital certificate for secure internet transactions) subject to New York sales tax?
No. Delivering a Digital ID -- an electronic identity credential, not a text file or software product -- over the internet doesn't match any of New York's specifically listed taxable services, so char…
Is professional 'proficiency testing' of Connecticut labs a taxable service, and does the out-of-state provider owe Connecticut use tax on the test materials it ships into the state?
Two answers. The proficiency-testing service itself is NOT taxable: though it looks like taxable 'business analysis,' it's excluded because it is performed by a profession (pathologists) under the pro…
Are receipts from coin-operated car washes subject to Kansas sales tax, and how does the operator calculate the tax from the money in the machine?
Yes, they are taxable. The Department ruled that receipts from car washes of all types are subject to Kansas sales tax, including every coin-operated wash whether fully automatic or a manually operate…
How is a water softener sold and installed in a Kansas residence taxed?
Tax the softener, not the residential installation. The Department ruled that when a vendor sells a water softener to a homeowner, it charges sales tax on the full retail selling price of the softener…
Does an aircraft-owning LLC's lease of its jet to an aviation operator, which then charters the plane exclusively to one affiliated company at cost-reflecting rates, qualify for New York's commercial-aircraft sales tax exemption even though the plane serves only a single customer?
Yes. Because the charter payments the aviation operator receives reasonably reflect its actual costs of maintaining and flying the aircraft -- and the plane is devoted entirely to providing transporta…
Is a country club's capital improvement fee on its members subject to Kansas sales tax?
Yes, based on the facts given — the capital improvement fee is taxable dues. The Department ruled that under K.A.R. 92-19-73, which taxes dues charged for the use of club facilities for recreation and…
Could New Mexico tax Kmart's Michigan trademark subsidiary on royalties from New Mexico store sales even though it had no offices or employees in the state?
Yes — New Mexico could impose corporate income, franchise, and gross receipts taxes on Kmart Properties, Inc. (KPI), but the negligence penalties were improper, so the protest was GRANTED only as to p…
Could an affiliated group stop filing Florida consolidated corporate income-tax returns after major business expansion?
Yes, with Department permission and stated conditions. Although continued consolidation caused no identified adverse tax effect or income distortion, the group's acquisitions, increased size, and expa…
A company plans to hold a Texas seminar training pharmacists on preparing compounded pharmaceutical products, and will provide notebooks and workbooks as part of the training. Is the training taxable, and who pays sales tax on the materials?
The training itself is not subject to Texas sales tax. If the seminar provider gives materials like notebooks or workbooks to attendees as part of the seminar (bundled into the price), the PROVIDER mu…
In a four-party chain — a telecom provider (Company A) selling to a reseller (Company B), which sells a bundled WAN service to a service company (Company C), which in turn charges a property owner (Company D) — where in the chain is Texas sales tax actually due?
Wide-area network (WAN) charges are taxable as telecommunications services, but the tax only attaches at certain points in this four-party chain. Company A's charge to Company B is taxable. Company B'…
Is replacing the vinyl liner of an in-ground swimming pool -- pumping out the water, removing the old liner, repairing the pool walls, and installing a new liner -- a tax-exempt capital improvement, or a taxable repair?
It's a capital improvement, not a taxable repair. Replacing the vinyl liner of an in-ground pool -- along with the related draining, removal, wall repair, and reinstallation work -- substantially prol…
Is a public university's $5 'vehicle registration fee' -- which the university says isn't a parking fee, but which its own rules describe as buying a parking permit -- subject to sales tax as a charge for parking?
Yes. Even though the university calls it a 'vehicle registration fee' rather than a parking fee, its own parking rules repeatedly describe the same $5 payment as buying a 'parking permit' that lets th…
When a company buys a 25% 'interest' in a private jet through a fractional-ownership program -- where a separate management company controls scheduling, pilots, maintenance, and can substitute other aircraft -- is that purchase a taxable acquisition of an aircraft, or a nontaxable transportation service?
It's a nontaxable transportation service, not a taxable purchase of an aircraft. Because the fractional-ownership program's independent Manager -- not the purchasing company -- retains real dominion a…
When disregarded single-member LLCs charge their tenants for utility services, which entity files the Form CT-186-A utility services tax return?
Each LLC files its own return, not the parent. Where domestic single-member LLCs (S1, S2, S3) -- disregarded for federal income tax but each owning an office building and charging tenants for utility …
A contractor performs actual repairs (not maintenance) to nonresidential real property and buys parts/materials at a hardware store to incorporate into the job. Can the contractor use a resale certificate to buy those materials tax-free, and does it matter whether the bill to the customer separates labor from materials?
Yes — because nonresidential real property repair is itself a taxable service, the contractor may give the hardware store a resale certificate and buy the materials tax-free, since the materials will …
Are rented uniforms and 'lab coats' costing less than $50 exempt from Connecticut sales tax, or are they taxable 'protective' clothing?
Exempt. Rented uniforms and 'lab coats' that cost less than $50 each and simply identify employees or protect against soil and stain are exempt articles of clothing under Conn. Gen. Stat. § 12-412(47)…
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