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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When two corporations form a Texas limited partnership, who owes Texas franchise tax — the partnership, the general partner, or the limited partner?
The general partner owes the tax; the limited partner generally does not. Under the pre-2008 Texas franchise tax, a limited partnership itself is not subject to the tax, even if it elects to be taxed …
Is a separately priced plain car wash taxable when it is performed together with a wax treatment?
Yes. A plain wash performed with a taxable wax job was part of one taxable transaction even when separately priced and nominally optional. A documented plain wash by itself remained exempt, while the …
Is Connecticut's controlling interest transfer tax due when a parent merges a subsidiary into its own subsidiary that owns real estate, if the parent controls the property both before and after?
No tax. Connecticut's controlling interest transfer tax applies only when there is a transfer of ultimate control of an entity owning Connecticut real property. When a parent merges its first-tier sub…
If a contractor is building out a state agency's exempt facility (like the Texas State Preservation Board's history museum theater), which of the contractor's own purchases are tax-exempt, and which stay taxable?
Materials/supplies incorporated into realty for an entity exempt under Sec. 151.309 (government) or 151.310 (religious/charitable/educational/501(c)(3),(4),(8),(10),(19) organizations) are exempt, in …
A CPA asked about three new clients: a coin-operated apartment laundry business, an advertising/marketing firm, and an internet-based construction-tracking software company — what's taxable for each?
Coin-operated laundry revenue itself isn't taxed, but the business owes Texas use tax on the washers/dryers it buys (and must collect sales tax on any vending-machine soap sales). An advertising scrip…
Which bulk-mail fulfillment charges (sorting, folding, collating, stuffing, shipping) are subject to Texas sales tax?
Fulfillment mailing services — sorting, stuffing, metering, folding, labeling, and collating printed matter supplied by the customer, plus set-up fees, storage, packaging, and shipping/freight charges…
How did Texas tax long-term leases and purchases of ready-mix trucks, garbage trucks, and truck-mounted mixer equipment?
The lessor owed motor vehicle sales tax when buying ready-mix or garbage trucks for leases longer than 180 days, while lease receipts were not taxed. A mixer unit might qualify for the Chapter 151 man…
When an insurer pays a repair bill on behalf of a tax-exempt hospital but the invoice is billed directly to the hospital, is the repair exempt from Kansas sales tax?
Yes — it is an exempt direct purchase by the hospital. A company that provides technical-equipment coverage for a tax-exempt hospital asked whether repairs it pays for are taxable. Because the hospita…
Does a nonprofit corporation that runs craft shows to fund charities automatically qualify for a Kansas sales tax exemption?
No — the nonprofit is not exempt and must register, collect, and remit tax. A corporation organized not-for-profit for charitable and educational purposes, which promotes craft shows and distributes t…
After an audit assessment was paid and later reversed, did Texas pay interest for the period between the taxpayer's payment and refund?
No. The taxpayer was entitled to recover the interest it had paid on the reversed audit assessment, but Texas would not pay additional interest for the time between payment and refund. Senate Bill 132…
Did a corporate partner include its share of each partnership's net profit or gross receipts in its own Texas franchise-tax receipts factor?
Yes. Although each partnership was a separate legal entity, the corporate partner had an intangible right to its share of partnership profit and had to recognize its share of each partnership's net pr…
Were a credit union's four open-end loan forms subject to Florida documentary stamp tax?
No. None of the reviewed forms contained a signed, unconditional promise to pay a sum certain, and the documents did not expressly incorporate one another. The Department therefore found none taxable …
Are admission ticket sales — including service charges — taxable in Kansas, and are free ticket give-aways taxable?
The paid tickets are taxable; the free ones are not. The Department ruled that admission ticket sales, including any service charges, are subject to Kansas sales tax under K.S.A. 79-3603(e), which tax…
Is transferring a company vehicle from the individual officers who financed it into the corporation's name subject to Kansas sales tax?
Yes — it is a taxable isolated or occasional sale, but two exceptions can avoid the tax. Corporate officers financed a pickup in their own names because the company had no credit history; the company …
Can an architecture firm use its tax-exempt school client's exemption certificate to buy blueprint copies tax-free from a copy shop, even though the copies are for the school's project?
No, not just because the client is exempt. An architect's or engineer's professional services are themselves nontaxable, so the firm — as the provider of a nontaxable service — must pay sales tax on t…
Does a company that promotes and sells bleacher-seat tickets to a public outdoor festival need to collect Texas sales tax on admission charges?
Yes. An outdoor festival qualifies as an amusement service, and sales tax is due on the admission charge. The seller of the amusement service (here, the ticket promoter/handler) must collect and remit…
Is asbestos abatement (collection, encapsulation, removal, disposal) taxable in Texas, and what about the repair work done to restore the building afterward?
The asbestos abatement service itself (collection, encapsulation, removal, disposal) is not taxable. But replacing insulation, siding, ceiling tiles, paint, and other realty improvements done in conne…
Can a mutual fund (regulated investment company) subject to Connecticut corporation business tax deduct the tax-exempt bond dividends it passes through to shareholders, plus the related expenses federal law disallows?
Yes. Connecticut's corporation business tax (unlike the federal income tax) normally includes municipal-bond interest in a company's gross income. But there's a special exception for a regulated inves…
If a sports facility operator rents its facility long-term to instructors who use it only to teach students (no tournaments, leagues, or open play), is the facility rental taxable even though the instructors' own teaching services are tax-exempt?
Yes, the facility rental to the instructors is still a separately taxable amusement-service transaction, even though the instructors' downstream charge to their students for sports instruction is a di…
At a gas processing plant, is repairing equipment incorporated into realty taxable, are H2S monitors exempt as pollution-control equipment, and is new underground gas-line construction taxable?
It depends on the specific item. Repair labor on gas-plant equipment that's been incorporated into realty (which most is) is taxable real property repair, though separately stated repair parts are exe…
Can a retailer keep filing Texas sales tax returns on a 4-5-4 fiscal accounting schedule instead of strict calendar months for the year 2000?
Yes. A 4-5-4 fiscal accounting schedule is an acceptable basis for filing Sales and Use Tax Returns, with due dates set by where the accounting period falls in the month: if the period ends on the 1st…
Did a remote Internet seller create Texas franchise-tax nexus by having a Texas corporation drop-ship hardware and software to customers nationwide?
No, on the assumptions stated. A remote seller used an out-of-state server to sell hardware and software, while a Texas corporation shipped products from its inventory by common carrier. If there was …
Could a Florida auto dealer deduct a trade-in when title went to a financing LLC under its inventory arrangement?
Yes, on the facts reviewed. The trade-in reduced the taxable selling price because it was accepted at the vehicle sale for resale, the invoice identified it, both entities were registered motor-vehicl…
Are sales of beverages for human consumption subject to Kansas sales tax?
Yes. The Department ruled that Kansas sales and use tax law provides no exemption for the sale of beverages for human consumption, so the seller must collect and remit the appropriate Kansas sales or …
A contractor's earlier ruling exempted consumable supplies (sandpaper, saw blades, rags, tape, cleaning products) used in remodeling work for tax-exempt entities — does the same exemption apply when the contractor does identical remodeling work for a commercial business like a retail store or restaurant instead?
No. The § 151.311 exemption for consumable supplies used in remodeling only applies when the work improves realty belonging to a tax-exempt entity. The same supplies used in an otherwise-identical tax…
Is a referral fee paid by a nursing home or retirement community to a locator service (that helps senior citizens find a home, at no charge to the senior) subject to Texas sales tax?
No. The referral fee paid by the nursing home or retirement community for the locator service is not subject to Texas sales tax, when the senior citizen being referred is not charged.
Is installing a new sign on top of an existing pole-mounted sign, under a lump-sum contract, considered new construction (potentially nontaxable) or remodeling (taxable)?
It's remodeling of real property, not new construction, so the lump-sum charge for adding the new sign is subject to sales tax. *Note: the scraped subject heading references "painting," but the letter…
At an iron-casting foundry, is the hoist/trolley system moving castings into a blast-cleaning machine taxable, and are hoists used to manipulate castings during grinding exempt?
The hoist/trolley system moving castings into the blast machine is taxable intraplant transportation equipment under Sec. 151.318(c)(1), which specifically excludes such equipment (including piping an…
Is pre-press equipment (mag etching, rubber plates, film master, velox print, photopolymer-to-engraving conversion) that a manufacturer buys to print its own packaging artwork exempt from Texas sales tax?
Yes. Under the newly added Sec. 151.318(t) (House Bill 3211, 1999), pre-press machinery, equipment, and supplies necessary/essential to the printing process — including the items listed (etching plate…
If a Texas repair/calibration company sends its own inspection equipment out of state for repair, does it still owe Texas use tax when the equipment comes back?
Yes. A repairman must pay tax on its own machinery and equipment used to perform repair services, and repair services performed on that equipment are also taxable. If the equipment is sent out of stat…
Does a ministry keep its Kansas religious-organization sales tax exemption after it stops holding worship services?
No — the ministry lost its religious-organization exemption when it stopped worshipping. A ministry had been granted the Kansas religious-organization sales tax exemption under K.S.A. 79-3606(aaa) by …
Are prepaid paging cards and bundled pager packages taxed as tangible personal property or as telecommunications services in Kansas?
They are taxed as telecommunications (beeper) services, not as tangible personal property, and the airtime provider collects the tax. A company that sells pagers and one-way airtime asked whether prep…
Is equipment a contractor rents (not buys) for use on a tax-exempt entity's job covered by the same exemption that applies to purchases of a taxable service for that job?
No. A contractor's rental of equipment/machinery for a job on exempt realty is legally a "sale"/"purchase" of tangible personal property under Sec. 151.005 (which defines rental the same as a sale), n…
New York Advisory Opinion TSB-A-96(5.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-93(3.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-93(11.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
New York Advisory Opinion TSB-A-91(3.1)I: Now that the federal Amtrak Reauthorization and Improvement Act (ARIA) exempts rail employees who work in more than one state from multi-state income taxation, which Metro-North job categories actually qualify for that exemption?
Only two categories of Metro-North positions: 'train and engine' positions (engineers and conductors) and 'Maintenance of Way' positions (track maintenance workers) - and only when the position is ass…
Is a medical device an orthopedic surgeon implants to help bones heal after surgery exempt from Kansas sales tax?
Yes — the bone-healing device qualifies for the prosthetic and orthopedic appliance exemption. A device that an orthopedic surgeon uses during surgery and that is absorbed into the body to assist the …
How does Kansas sales tax apply to sales of gas, electricity, heat, and water?
It depends on who uses the utility and how. Kansas imposes state sales tax on sales of gas, water, electricity, and heat (K.S.A. 79-3603(c)), then exempts from the state tax utilities delivered for no…
New Mexico residents worked overseas for the Navy and later thought they had overpaid state income tax. Can they get a refund years afterward — and did they even owe the tax while abroad?
No refund — the claim came too late. A Las Cruces couple took Navy civilian jobs in Rota, Spain from 1990 to 1993 and, to be safe, sent New Mexico estimated income-tax payments while abroad. They almo…
Which manufacturing-related equipment and supplies — cleaning chemicals, cleaning equipment, safety apparel, quality-control gear, prepress equipment — qualify for Texas's manufacturing exemption under new 1999 law HB 3211, and are the changes retroactive?
The manufacturing-exemption changes in HB 3211 (amending Tax Code § 151.318) are treated as clarifications and applied retroactively to October 1, 1997. Under that framework: required health/safety cl…
Is applying a fabric or protective coating to furniture and carpets taxable in Kansas, and does cleaning them count as a taxable service?
Applying fabric treatments or protective coatings is taxable; cleaning carpets and furniture is not. The Department ruled that cleaning carpets and furniture is not subject to sales tax because it doe…
When can a contractor claim the sales tax exemption on a U.S. government (or other exempt-entity) project, and what happens to purchases made before the certificate is issued?
The exemption only becomes available once the exempt entity (here, one contracting for a U.S. government project) has secured a project exemption certificate from the state. Under K.S.A. 79-3606(d) an…
Is a flat fee for helping someone collect on a small claims court judgment, without the helper ever handling the money, a taxable debt collection service?
Yes. Charging a flat, one-time fee to act as a third-party intervention service helping a judgment-holder collect on a small claims court judgment is a taxable debt collection service under Rule 3.354…
In a three-party sale-leaseback chain (Company A sells to Company B, which sells to Company C, which leases the equipment back to Company B), who owes Texas sales tax and at which step?
Only one step in the chain is taxable. If Company B and Company C each issue a properly completed resale certificate on their respective purchases, Company A doesn't collect sales tax on the sale to C…
Is a medical transcription service subject to Texas sales tax as a data processing service, and can past tax already collected be refunded?
No. Following a 1996 court decision the Comptroller chose not to appeal, medical transcription (including oral/taped dictation transcribed into patient records and letters) is not a taxable data proce…
Did Texas new-resident motor vehicle tax treatment apply when a company leased the vehicle out of state and a newly resident employee drove it in Texas?
No. The new-resident provision required the new resident to be the person who leased the vehicle. Here the company was the lessee and was not a new resident, so the letter applied the ordinary 6.25% t…
Which of a third-party IT consultant's on-site network services — server maintenance, hardware repair, software support, network administration — are taxable in Texas?
It splits item by item. Separately stated charges for designing/testing network architecture, general network administration not tied to a taxable item sale, installing/configuring software you didn't…
Does a bar have to charge sales tax on its beer sales, or does the alcohol gross receipts tax cover it instead?
It depends on whether the bar has a TABC mixed beverage permit. Without one, the bar must collect and report sales tax on beer sales (and on items like chips and candy) and can buy those goods tax-fre…
Is piano tuning done at a residence exempt from Kansas sales tax under the residential repair exemption?
No — piano tuning remains taxable even when done at a home. The Department has historically taxed piano tuning as a service of servicing tangible personal property, and asked whether Senate Bill 493's…
Is a company's separate contract to provide a physician with secretarial, bookkeeping, and drug-study-contract administrative support taxable as insurance claims processing or data processing services, even though the same company also does taxable medical billing for other clients?
No. Secretarial duties, bookkeeping for the physician's outside CPA, reviewing pharmaceutical drug study contracts for fee schedules, and reconciling reimbursement checks against contract terms are no…
What interest did Texas pay on franchise-tax audit refunds before and after Senate Bill 1321's January 1, 2000 effective line?
Texas had paid no interest on refunds since December 14, 1985. Senate Bill 1321 authorized variable interest only for erroneous payments associated with report periods due on or after January 1, 2000;…
How did Florida tax mandatory cleaning and guard charges for transient condominium rentals?
Mandatory rental, guard, processing, and cleaning charges billed to guests were all part of the taxable transient-rental charge. The association's own purchase of residential condominium cleaning was …
Does the sale, rental, or lease of a power washer used exclusively to clean exempt farm/ranch equipment qualify for Texas's agricultural sales tax exemption?
Yes. A power sprayer/washer leased or sold for use exclusively to clean exempt farm equipment (to prevent fire hazards from dust/oil buildup or corrosion) qualifies for the agricultural exemption unde…
Were sales of tangible personal property Texas receipts when an affiliated distributor took possession at an out-of-state warehouse before shipment to customers?
No. The taxpayer retained title while an affiliate finished and stored the products outside Texas, then sold them to a distributor. The affiliate selected, packaged, and delivered the products to carr…
Did a New Jersey corporation create Texas franchise-tax nexus when independent contractors solicited consumers and merchants for its promotional program?
Yes. The independent contractors owned their territories, worked without supervision, could hire employees and represent other companies, and earned commissions from merchant billings. Even so, their …
How did Texas determine the legal domicile of grantor trusts holding leased aircraft or buildings, and what amount did the corporate beneficiary apportion?
A trust's legal domicile was its principal place of business—the location of day-to-day operations—or, if operations were fairly even across states, its commercial domicile. The letter lacked enough a…
Is photo processing equipment used by a pharmacy's photo department — cameras, enlargers, darkroom equipment, film, chemicals — exempt from Texas sales tax as manufacturing equipment?
Yes, largely. A photo processor is considered to be printing or imprinting tangible personal property for sale and qualifies as a manufacturer under Sec. 151.318. Prepress machinery, equipment, and su…
Are vent hoods over restaurant fryers and broilers exempt from Texas sales tax as manufacturing equipment?
Only in two specific situations: if the vent hood becomes a component part or accessory of a qualifying piece of manufacturing equipment, or if it's tangible personal property used in actual manufactu…
Can a Florida community college buy materials for a public construction project tax-free through a direct-purchase program?
Yes, under the procedures reviewed. The college was the actual purchaser because it issued purchase orders, was invoiced and paid vendors directly, took title and liability at delivery, carried the ri…
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