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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Can a nonprofit buy materials tax-free to publish a calendar it distributes free of charge?
No. A 501(c)(3) nonprofit preparing to publish a 1999 environmental calendar (illustrated by schoolchildren's art) for free distribution asked whether its purchases of materials and supplies are exemp…
A seller of early childhood educational products wants a full breakdown of how to tax sales to Head Start programs and other buyer categories -- which need an exemption certificate, which are automatically exempt, and which require a resale certificate?
The Comptroller sorted the buyer categories into four types: (c) exempt by statute, no certification needed from the purchaser -- Head Start Programs/Delegates/Grantees, Federal/State/Local Government…
When a customer's tax consulting firm requests a blanket vendor's-right-to-refund assignment letter, must a schedule listing the specific invoices be attached at the time the assignment is sought or filed, in order to stop the refund statute of limitations from running?
No. A schedule listing the specific invoices covered by a blanket refund assignment is NOT required at the time the assignment is sought or filed with the Comptroller in order to toll (stop the clock …
Are a nonprofit's fundraising-event sales, used to sponsor youth organizations, exempt from Kansas sales tax?
No. A nonprofit that holds one fundraising event a year to sponsor a variety of youth organizations asked whether the event's gross receipts are exempt. Kansas broadly taxes sales of tangible personal…
When a private company operates a municipality's wastewater treatment facility under a service contract, does the company have to pay sales tax on its own operating supplies, given that the municipality itself is tax-exempt?
Yes, generally taxable. A contractor operating a municipality's exempt facility under a service agreement (not an agency contract) owes sales and use tax on its own purchases of supplies used to run t…
Are physician-targeted 'drug sample plus prescription pad' promotional mailers exempt from sales tax as promotional materials mailed free of charge to customers, even though the physicians who receive them don't buy the drug themselves?
No, not exempt. New York's promotional-materials exemption only covers materials mailed free to a company's own customers or prospective customers -- and physicians who receive drug samples and prescr…
Does transferring title of a car to your own revocable living trust for estate planning purposes trigger New York sales tax?
It depends on consideration. Re-registering a vehicle from your own name into your revocable living trust is a transfer of tangible personal property to a separate legal entity, so sales tax applies i…
Does in-store paint-tinting equipment at a retail paint store -- machines that mix custom colorant into a base paint for each customer -- qualify for New York's manufacturing-equipment sales tax exemption?
Yes. A paint retailer's Color Matching Systems, Automatic Colorant Dispensers, Shakers, and related computer equipment used to blend custom colorant into white base paint for each customer are used di…
Does a multi-layered aircraft lease -- owner leases to an operator, who charters it through an agent to a single related company that gets exclusive use -- qualify for New York's commercial-aircraft sales tax exemption?
Yes. Where over half of an aircraft's use transports people or property for compensation that reasonably reflects the operator's costs, it qualifies as commercial aircraft primarily engaged in commerc…
Does a multi-level marketing company's $20 annual distributor-renewal fee, and the shipping/handling charges added to product orders, count as taxable receipts in New York?
Split answer. A multi-level marketer's annual distributor renewal fee (covering a newsletter subscription and support services) isn't a taxable retail sale or enumerated service and stays exempt, but …
Is a company's electronic document-processing service (data conversion, merging, storage, and multi-format broadcast delivery, which happens to end with a transmission) a taxable telephone/telegraph service, or a non-taxable data processing service?
Not taxable as telephone/telegraph service, as long as charges are billed as one all-inclusive fee. A company that converts, merges, stores, and formats customer data before broadcasting it to multipl…
We're structuring a mortgage that will advance and re-advance funds to reimburse or fund real property improvements, but we're not signing a formal Lien Law building loan agreement. Does skipping that paperwork let the mortgage qualify as a tax-advantaged 'credit line mortgage' under Tax Law § 253-b, so mortgage recording tax is paid once on the maximum principal instead of on every advance?
No -- skipping the formal building loan agreement doesn't matter; the substance controls. First American Title's underwriting counsel asked the Department whether mortgages that advance and re-advance…
Does an aluminum manufacturer that began doing business in New York through a merger qualify as a new business eligible for the refundable investment tax credit?
Yes. An aluminum-ingot manufacturer that began doing business in New York on June 30, 1997 through a merger qualifies as a new business for the refundable investment tax credit under sections 210.12(j…
Does a tax-exempt educational organization have to charge sales tax on its overwhelming majority of book sales that come through mail, phone, and fax orders, when it also makes some taxable on-site sales at its own conference center and seminar locations?
No, for its mail order sales. A tax-exempt educational organization's 'shop or store' sales -- here, on-site book sales at its own Conference Center and seminar locations -- are taxable, but its mail,…
How does a company that guarantees advertisers a television audience -- but is not a broadcaster -- allocate its receipts for the Article 9-A receipts factor?
As service receipts. A company that contracts with advertisers to guarantee their commercial messages reach a specified audience at a specified cost-per-thousand is not a broadcaster, so it cannot use…
How are an exchange's monthly market-data subscription fees from licensing vendors sourced for the receipts factor of the Article 9-A business allocation percentage?
The monthly market-data subscription fees the New York Mercantile Exchange receives from its data vendors are other business receipts under section 210.3(a)(2)(D) of the Tax Law. They are New York rec…
Did machinery in a sulfuric-acid plant that also generated electricity qualify for Florida sales-tax and pollution-control exemptions?
Largely, yes. Producing sulfuric acid as a coproduct did not prevent machinery needed to generate electricity or steam from qualifying. Permit-required pollution-control equipment also qualified, but …
Which grocery-store packaging supplies (bags, boxes, trays, shrink wrap, containers) qualify for the manufacturing/processing exemption in departments like cheese, produce, bakery, and bulk foods, and does it matter if the department is also selling exempt products?
It depends on whether the department is truly PROCESSING (exempt packaging) versus merely REPACKAGING (taxable packaging) -- and a grocery store can purchase all its packaging supplies tax-free if it'…
Which of a country club's various member charges -- handicap fees, golf association dues, driving range fees, private lessons, club repairs/rentals, and homeowners assessments -- are subject to Texas sales tax?
It's a mixed bag charge-by-charge: handicap fees are taxable only if calculated on a computer; men's golf association dues collected by the club are NOT taxable if association membership isn't mandato…
Is a construction contractor exempt from sales tax when building a rental-car service center on city-owned airport land, where the building will eventually revert to the city, on the theory that the traveling public ultimately benefits from having rental car facilities at the airport?
No. Even though the public benefits from having car rental facilities at the airport, and even though the building will become city property at the end of the 20-year lease term, the primary beneficia…
If the state sits on your refund claim for a long time and finally pays it with no interest, can you still collect interest for the delay — or does refiling the claim wipe out your back interest?
Refiling wipes out the back interest. A bank waited nearly two years for a $70,000 corporate income tax refund and, when it finally arrived with no interest, tried to collect roughly $18,375 in intere…
When a New Mexico company performs services for an out-of-state buyer, does gross receipts tax turn on where the 'product' of the service is delivered and first used — and what counts as the product?
It turns on delivery and first use of the product of the service, and the case split down the middle. A munitions-demilitarization company performing all its work in New Mexico could deduct receipts f…
Can newspaper publishers buy digital cameras tax-free when the cameras connect to a computer that outputs film/paper for the printing press, and can a publisher who already paid tax get a refund?
Yes. Because the digital camera directly inputs data through the computer to the press that incorporates the image into the newspaper, newspaper publishers may purchase digital cameras tax-free by giv…
Is the electricity a mall pretzel shop uses to bake pretzels exempt from sales tax, given that the pretzels are baked on-site and sold hot to customers?
No, this electricity is taxable, not exempt. Even though the pretzels are baked on the premises using electric ovens, the pretzels are sold to customers in a heated state -- taken directly from the ov…
Were condominium assessments taxable when they included the master association's cost of employing security personnel?
No. The association's security staff were employees serving their employer, and owners paid proportionate common-expense assessments rather than an itemized security charge or service package. The per…
Were membership and daily-use fees for a private Florida dog park taxable admissions?
Yes. Both membership and daily fees were taxable admissions because every dog had to be accompanied by an owner or handler, so the fee admitted a person and dog to a recreational facility.
Is machinery and equipment used to process feed at a feedlot exempt from Kansas retailers' sales tax as farm machinery and equipment?
Yes. The Department ruled that a feedmill segment of the operation is a feedlot, and because farming and ranching include feedlot operations, the machinery and equipment used to process feed qualifies…
Are gross receipts from pager (beeper) services subject to Kansas retailers' sales tax, and are the pagers themselves taxable?
Yes. Kansas imposes sales tax on the gross receipts from pager services under K.S.A. 79-3603(t), which covers telephone answering, mobile phone, beeper, and other similar services. The pagers the prov…
A teacher wants to order rockets from an out-of-state company for a class project. Is it better for each student to order and pay individually, or for the school to place one order and collect money from students as "donations"?
Have the school place the order. If students order directly from the out-of-state company themselves, Texas use tax is still due — there's no exemption for kids buying school supplies. But if students…
Is electricity used to irrigate fields where cattle graze exempt from Texas sales tax, and does it matter if some of that electricity might also be used for a home garden?
Electricity used on a farm or ranch to irrigate fields growing food, feed, grass, or other agricultural products sold in the regular course of business IS exempt under Tax Code Section 151.316, and gr…
I run a paintball field. Do I charge sales tax on field-use fees? Do I owe use tax on data processing done by an out-of-state company? And do I have to list shipping charges separately from the item price?
Yes to all three, with one nuance. A fee to use the paintball field is a taxable amusement service (though a genuine tournament/contest entry fee can be exempt). Yes, you owe Texas use tax on an out-o…
I run a horse breeding and show stable. Which of my supplies, equipment, fencing, buildings, and trailers qualify for Texas's farm/ranch sales tax exemption?
It depends heavily on the specific item and where it's used. Horses and horse feed are always exempt. A long list of supplies and equipment is exempt ONLY when used exclusively on the farm/ranch (not …
An out-of-state Internet retailer plans to fulfill orders by drop-shipping from a related Texas limited partnership's warehouses, and will also pay commissions to unrelated Texas retail stores that host invisible order links on their websites. Does any of this create Texas sales/use tax nexus for the out-of-state retailer?
Yes. The Texas limited partnership doing the drop-shipping doesn't itself create nexus for the out-of-state retailer (it can just take a resale certificate). But paying commissions to Texas retail sto…
Do school student clubs qualify for the youth-development sales-tax exemption, and when are PTA/PTO sales exempt?
School student clubs and activity funds do not qualify for the nonsectarian youth-development exemption in K.S.A. 79-3606(ii); the Department noted public schools have their own specific exemption in …
Does a booster club qualify as a PTA or PTO for the Kansas sales-tax exemption?
No. Effective July 1, 1998, K.S.A. 79-3606(yy) exempts all purchases and all sales of tangible personal property by or on behalf of a parent-teacher association (PTA) or parent-teacher organization (P…
Does a booster club qualify as a PTA or PTO for the Kansas sales-tax exemption?
No. Effective July 1, 1998, K.S.A. 79-3606(yy) exempts all purchases and all sales of tangible personal property by or on behalf of a parent-teacher association (PTA) or parent-teacher organization (P…
Could an interstate common carrier recover tax overpaid on trucks, parts, and separately itemized installation during 1996 and 1997?
Yes. The carrier could recover tax paid above the interstate-commerce prorated amount. It should seek refunds from vendors or obtain assignments of vendor refund rights, and the full invoice for parts…
Are repair and calibration services taxable in Kansas, and what about related consulting, inspection, and sales of test standards?
Repair and calibration are taxable. The Department ruled that repairing, servicing, altering, or maintaining tangible personal property — including calibration, setting parameters on milling machines,…
Did preparing a Nevada subsidiary's incorporation documents in Texas create franchise-tax nexus for the passive holding company?
No, on the facts presented. The Nevada subsidiary would primarily be a passive holding company, hold its board meeting outside Texas, and own a 99% limited-partnership interest in a Texas limited part…
Are towing services subject to Kansas sales tax?
No. Kansas taxes only enumerated services, and the Department ruled that towing services are not currently subject to Kansas sales tax. However, the towing provider must pay sales tax on all articles …
How do accrual and cash basis accounting affect when a Kansas retailer owes sales tax, and can bad debts be deducted?
It depends on the retailer's accounting method. A Kansas retailer on the accrual basis records a sale -- and owes sales tax on it -- when the earnings process is complete and the amount due is measura…
Were computer components delivered through Texas border facilities Texas receipts when the ultimate customers were maquiladora operators in Mexico?
It depended on where the buyer took possession or control. Delivery to a Texas freight forwarder hired by the purchaser was not a Texas receipt when the forwarder delivered the goods to the purchaser …
Were computer components delivered through Texas border facilities Texas receipts when the ultimate customers were maquiladora operators in Mexico?
It depended on where the buyer took possession or control. Delivery to a Texas freight forwarder hired by the purchaser was not a Texas receipt when the forwarder delivered the goods to the purchaser …
Is a labor auction — where volunteers do work for the high bidder — subject to Kansas sales tax?
No. In the labor auction described, volunteers offer to do work for whoever is the high bidder for the service. Because the labor is provided by volunteers in this way, the Department ruled the transa…
Which local sales tax applies to airplane sales and rentals — and how is the location determined?
Local sales tax is sourced to the retailer's place of business. The Department explained that, for local sales tax purposes, all retail sales occur at the retailer's place of business — here, the sale…
Is interest from state and municipal bonds and bond mutual funds subject to Kansas income tax?
Generally yes, with a Kansas-bond exception. Interest from any state or municipal obligations — bonds and mutual funds — is subject to Kansas income tax, reduced by related expenses like management or…
What counts as property and services 'used exclusively for religious purposes' for the Kansas 79-3606(aaa) exemption?
K.S.A. 79-3606(aaa) exempts sales of property and services purchased by a 501(c)(3) religious organization and used exclusively for religious purposes. The Department explained that 'used exclusively'…
Was electricity separately billed by a tax-exempt county airport to its tenants taxable as rent?
Yes. Because the exempt county airport bought the electricity without paying tax, its separately billed tenant charges became part of the taxable total rent or license fee.
If the state's tax instructions don't spell out your exact situation, can you avoid the negligence penalty for not paying gross receipts tax on services you performed in New Mexico?
No. A consultant who moved from Texas to Albuquerque to perform services under a contract owed gross receipts tax on that work, and the negligence penalty stood. He had access to the state's CRS-1 Fil…
Our direct sales organization has given distributors conflicting information about whether they owe sales tax on products bought from us. Who actually owes the tax, and does it matter whether a distributor has a retail store versus sells from home?
The direct sales organization is responsible for collecting and remitting sales tax on products sold to its distributors — the idea that distributors don't owe tax to the organization is incorrect. A …
Does an organization qualify for the Kansas religious-organization sales-tax exemption if it lacks an established place of worship with regularly scheduled services?
Not on these facts. K.S.A. 79-3606(aaa) exempts purchases by a 501(c)(3) religious organization used exclusively for religious purposes, and defines a 'religious organization' as a group that gathers …
Did an Illinois S corporation create Texas franchise-tax nexus merely by owning an interest in a Texas LLC that did business in Texas?
No. The Texas LLC filed and paid its own franchise tax, while the Illinois S corporation's only income came from its LLC interest. The Comptroller said mere ownership of a membership interest in an LL…
Did a flatbed truck qualify for Texas's farm-machine motor vehicle tax exemption when a feeder occupied only part of its bed?
No. A qualifying farm machine included a self-propelled vehicle specially adapted to distribute feed or fertilizer. A flatbed or other truck with only a feeder attachment on its bed did not meet that …
Does a tax-exempt nonprofit senior-housing operator have to collect sales tax on the meal portion of its residents' monthly rent, even though the nonprofit itself is exempt from sales tax?
Yes, taxable. Even though the nonprofit operator is itself exempt from sales tax, providing meals to residents in a dedicated dining room -- billed as a defined portion of their monthly rent, whether …
Are subscription voice mail services subject to Kansas retailers' sales tax?
Yes. The Department ruled that a monthly-subscription voice mail service is a taxable 'telephone answering service' under K.S.A. 79-3603(t), which also covers mobile phone, beeper, and other similar s…
Is the labor to complete a building left unfinished by a defaulted contractor exempt from Kansas sales tax as original construction?
Yes. The Department ruled that labor services to complete a building — where the original contractor defaulted partway through and a new contractor finishes the work under the original plans — are dee…
Must an out-of-state internet seller register and collect Kansas sales or compensating (use) tax on goods shipped to Kansas customers?
It depends on nexus. The Department ruled that an out-of-state internet seller has Kansas sales/use tax nexus if it has an office or place of business in Kansas, has people soliciting sales in Kansas,…
Does a school support group that acts as the functional equivalent of a parent-teacher organization qualify for the Kansas 79-3606(yy) exemption?
Yes, on these facts. Where a school has no PTA or PTO and the group is the sole parent organization functioning as a parent-teacher organization — raising funds for curriculum materials and equipment …
Is installing tangible personal property a taxable service in Kansas, and can a reseller buy that installation service free of tax?
Yes to both, with conditions. The Department's opinion is that Kansas imposes sales tax on the service of installing tangible personal property (K.S.A. 79-3603(p)), and the person performing the insta…
I'm a fixture contractor installing cash register stations, clothing racks, display cases, and gondolas in a newly built retail store — the store owner supplies all materials and I just assemble and install them. Is my labor taxable?
Yes. Even though the fixtures are bolted to the floor of a brand-new store, they remain tangible personal property — not improvements to realty — because they don't lose their identity as personal pro…
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