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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Does a nonprofit support group qualify for a Kansas sales tax exemption?
No. Not every non-profit organization is exempt from Kansas sales tax. Senate Bill 493 (effective July 1, 1998) added exemptions for certain groups such as non-profit zoos and parent-teacher organizat…
Can an entity that is not a nonprofit hospital get a project exemption certificate to build a medical office complex tax-free?
No. The K.S.A. 79-3606(b) exemption is for property and services purchased directly by a public or private nonprofit hospital and used exclusively for hospital purposes. Because the entity is not a no…
Did four New Mexico LLCs have Texas franchise-tax nexus when Texas-resident members performed administration, financing, and purchase decisions in Texas?
Yes. Although the four LLCs operated exclusively in New Mexico, had no Texas receipts, and were taxed under New Mexico law at the member level, their Texas-resident members performed administrative se…
Did a service member stationed in Germany qualify as a new Texas resident when bringing home a foreign-purchased vehicle?
No. A service member who maintained Texas as his home of record was not a new resident for this rule. The 1999 letter imposed ordinary use tax on a Texas resident's foreign-purchased vehicle brought i…
We lease Internet-access equipment (computers, modems, printers, etc.) to assisted care living facilities so residents can go online, charging a per-resident fee plus an installation fee. Do we owe sales tax on our charges to the facility, and can we buy the equipment tax-free for resale?
You collect Texas sales tax (8.25% in this case) on both the installation charge and the per-resident/monthly facility fee — but you don't owe any additional local tax for other cities/counties you de…
Our telecom company is leasing fiber-optic cable (which will run through conduit we own) from a leasing company, under a lease that says both parties intend the fiber to remain tangible personal property, is cancellable, and lets the leasing company repossess the fiber on default. We're having a third party install the leased fiber. How is the fiber classified for sales tax, and is the installation charge taxable?
The telecommunications fiber is classified as tangible personal property, not a real property improvement — based on the lease terms showing both parties intend it to stay personal property, the lesso…
I run a home-based S-corp doing computer animation and multimedia work for clients, using purchased computers, printers, scanners, and modems. Does my business qualify as tax-exempt, and can I buy my equipment tax-free?
Producing computer animation for sale counts as manufacturing, so equipment used ONLY to produce animated images that will be sold — computers, printing devices (including ink cartridges), and scanner…
I want to buy a complete coin-operated photo booth (camera, computer, and laser printer that produces a black-and-white photo on paper) and pay sales tax on the coin/bill income it generates instead. Does the booth itself qualify for a manufacturing exemption when I purchase it?
Yes. A complete coin-operated photo booth that produces/manufactures a printed photo qualifies for exemption from sales tax as manufacturing/processing equipment under the Sec. 151.318 manufacturing e…
My client publishes 10-20 page industry reports (mostly narrative articles, less than 10% statistics) by subscription, sent by mail, e-mail, Internet, or fax at varying frequencies. Do these qualify as nontaxable magazines, and does the delivery method or frequency change the answer?
No, they're not exempt magazines — they're a taxable information service, because the reports don't meet the Sec. 151.320(b) statutory definition of a magazine (a usually-paperbacked publication appea…
Did Florida documentary stamp tax apply to equipment lease agreements whose payment obligation began only after delivery, or to separate delivery-and-acceptance receipts?
No. The operating and financing leases did not contain an unconditional obligation to pay a sum certain because payment depended on equipment delivery, and the separate receipts contained no promise t…
Did a deed transferring real property from a general partnership to the same partnership after conversion to a limited partnership owe more than minimum documentary stamp tax?
No. If the statutory conversion requirements were met, only minimum documentary stamp tax was due because the converted limited partnership was the same entity as the former general partnership, not a…
Are a fraternal organization's membership dues subject to Kansas sales tax?
Only if the organization maintains a facility for recreation or entertainment. Under K.S.A. 79-3603(n), dues are taxable when payment entitles a member to use recreation or entertainment facilities. L…
If New Mexico's income tax forms confuse you and you invent your own way to split income between states, can you avoid penalty and interest when the state later corrects it?
No. A CPA who found New Mexico's 1994 income tax forms confusing and devised his own method of splitting income and exemptions between New Mexico and Washington lost his protest against the resulting …
Did Florida documentary stamp tax apply to the master leases, schedules, acceptance certificates, or progress-payment documents used in these equipment leases?
No. The master leases and schedules left payment subject to unfulfilled conditions; the acceptance and progress-payment certificates contained no promise to pay; and the progress-payment agreement rem…
Which armored transportation, ATM repair, cash-vault, and coin-wrapping charges were subject to Florida sales tax?
Armored transportation was taxable. ATM repair treatment depended on whether the machine was real property and whether parts were supplied; cash-vault and coin-wrapping charges were taxable in whole w…
Were in-flight air-ground telephone services and FAA-certified aircraft communication-system installations subject to Florida tax under the 1999 rules?
No. The air-ground radiotelephone service did not fit the cited 1999 definition of taxable telecommunications, and the aircraft system, parts, and installation were exempt because the modification was…
Could a Florida school district buy construction materials tax-free through a direct-purchase program while a construction manager built the schools?
Yes. The district was the exempt purchaser because it issued purchase orders, provided its exemption certificate, received vendor invoices, paid vendors directly, took title, and bore the insured risk…
Who owed Florida sales or use tax when a skylight seller installed units under fixed-price contracts using unitemized sealant and fasteners?
The contractor owed sales or use tax as the ultimate consumer of the skylights and installation materials. Because sealant, fasteners, and other supplies were not specifically itemized and priced, the…
My company leases electronic radio tags that customers attach to expensive, theft-prone items, and I track those items by radio frequency within a service area if they're stolen. Am I subject to Texas telecommunications utility assessments, and do I owe sales tax on my tracking service?
You're not subject to the Universal Service Fund or Telecommunications Infrastructure Fund (TIF) assessments — those apply to carriers, not to a tracking service like this. But your tracking service m…
Can a multistate retailer use its own generic multijurisdictional exemption certificate in Utah instead of Utah's own state-specific exemption form?
Yes, the Commission approved it. A multistate home-improvement retailer's own generic, multijurisdictional exemption certificate is acceptable in Utah instead of the state's own exemption form, as lon…
Does a 501(c)(3) religious organization qualify for a Kansas sales tax exemption, and how must it make exempt purchases?
Yes. K.S.A. 79-3606(aaa) exempts a 501(c)(3) religious organization's purchases of tangible personal property and services used exclusively for religious purposes. The Department found this organizati…
Is a wireless broadband data connectivity service taxed as telephone service in Utah, and if so, how are its subscriber fees, connection fees, and per-megabyte charges sourced?
Yes, taxable as telephone service, with nuance. A company providing wireless broadband connectivity that lets clients reach their own office networks acts as a telephone provider, not an internet/LAN …
If a New Mexico contractor builds roads for federal agencies that insist the work is tax-exempt, does the contractor still owe gross receipts tax on that income?
Yes. A road-building contractor owed New Mexico gross receipts tax on everything it earned building roads for the National Park Service and U.S. Forest Service, and its protest was denied. The federal…
Is waste water hauling subject to Kansas sales tax?
No. Waste water hauling services are not currently subject to Kansas sales tax. But because the hauler is the final consumer of what it uses, it must pay sales tax on all tangible personal property an…
I build and host websites. A potential client (a for-profit business) is getting part of its website funded by a federal grant, and I'll be invoicing the grant administrator directly for 75% of the design cost, with the business itself paying the other 25% plus quarterly server hosting fees. How much of this do I charge Texas sales tax on?
Charges for website development and for hosting/storage are both subject to sales tax, and the full amount billed to the for-profit business is taxable — including its 25% share of design and the quar…
Does a nonprofit endowment association that holds and invests funds for the sole benefit of a college qualify as an 'educational institution' under Kansas law?
Yes. The Department ruled that a nonprofit endowment association organized and operated exclusively to receive, hold, invest, and administer money and property as a permanent fund for the sole benefit…
Are a not-for-profit organization's membership dues and fund-raising sales subject to Kansas sales tax?
It depends, and fund-raising sales are taxable. Under K.S.A. 79-3603(n), membership dues are taxable only when payment entitles the member to use a facility for recreation or entertainment; the Depart…
Are labor services to repair or remodel a residence exempt from Kansas sales tax, and what about the materials?
The labor is exempt; the materials are not. Effective July 1, 1998 (1998 Senate Bill No. 493), services to install or apply tangible personal property in the original construction, reconstruction, res…
Are outsourced customer-care (call center) voice and data communication services subject to Kansas sales tax?
Not taxable. The Department ruled that a company's customer-care services — handling inbound calls, technical and help-desk support, enrollment, complaint resolution, and satisfaction surveys on behal…
Is a parent-teacher association or organization exempt from Kansas sales and compensating tax on both its purchases and its sales?
Yes, both ways. Effective July 1, 1998, K.S.A. 79-3606(yy) exempts all purchases of tangible personal property and services by a parent-teacher association or organization, and all sales of tangible p…
How were three tiers of related-party product sales sourced when Texas inventory was drop-shipped to U.S., Canadian, and overseas customers?
Each related entity transferring title for consideration recognized a gross receipt. Because the first two buyers did not take possession, the transactions were drop shipments and ultimate customer de…
My company processes prescription drug claims (all processing work done in Arizona) for both insurance carriers and self-insured employer plans, with members and carriers/plans located in different combinations of in-state and out-of-state. When is this claims-processing service subject to Texas sales tax?
It depends on two things: whether the coverage is a real insurance policy (versus a self-insured plan) and where the covered member lives — not on where your processing company is located. Processing …
Are the commissions an authorized dealer earns selling another company's merchandise subject to New Mexico gross receipts tax, even when the manufacturer already pays tax on the sale?
Yes, the commissions are taxable, but the penalty was waived. A Sears authorized dealer in Alamogordo argued its commissions shouldn't be taxed because Sears already pays gross receipts tax on the mer…
Are the commissions an authorized dealer earns selling another company's merchandise subject to New Mexico gross receipts tax, even when the manufacturer already pays tax on the sale?
Yes, the commissions are taxable, but the penalty was waived. A Sears authorized dealer in Hobbs argued its commissions shouldn't be taxed because Sears already pays gross receipts tax on the merchand…
Are the commissions an authorized dealer earns selling another company's merchandise subject to New Mexico gross receipts tax, even when the manufacturer already pays tax on the sale?
Yes, the commissions are taxable, but the penalty was waived. A Sears authorized dealer in Silver City argued its commissions shouldn't be taxed because Sears already pays gross receipts tax on the me…
Are the commissions an authorized dealer earns selling another company's merchandise subject to New Mexico gross receipts tax, even when the manufacturer already pays tax on the sale?
Yes, the commissions are taxable, but the penalty was waived. A Sears authorized dealer in Carlsbad argued its commissions shouldn't be taxed because Sears already pays gross receipts tax on the merch…
If a store owner sells another company's merchandise as its authorized dealer, are the commissions the owner earns subject to New Mexico gross receipts tax — even though the manufacturer already pays tax on the sale?
Yes, the commissions are taxable, but the penalty was waived. A Sears authorized dealer in Gallup argued its commissions shouldn't be taxed because Sears already pays gross receipts tax on the merchan…
I'm a home-based independent distributor for a direct sales company, and I believe I overpaid Texas sales tax on products I later shipped to out-of-state customers. The company told me to seek a refund directly from the Comptroller's office. Is that right, and how does the refund process actually work?
No, that's incorrect — you should request the refund from the direct sales company itself, not the Comptroller. The direct sales organization is the one required to collect and remit sales tax from it…
What records did a Texas selling dealer need to keep when a lessor, rental company, or dealer claimed a retired-vehicle fair market value deduction?
Section 152.063 required the sales invoice, payment instrument or cash receipt, and receipt for the title application and motor vehicle sales tax. No statute or formal rule required more, but the Comp…
Does Connecticut's health care center tax apply to the claim payments and administrative fees a health care center receives for administering a self-insured employer's benefit plan under an administrative-services-only (ASO) contract?
Not taxable. When a health care center administers a self-insured employer's benefit plan under an administrative-services-only (ASO) contract -- processing and paying employee claims solely from fund…
How did Texas treat salvage-vehicle sales, late tax on vehicles brought into Texas, and new-resident claims by existing Texas residents?
The 1999 letter put unrepaired salvage-title, salvage-certificate, and insurer-total-loss vehicle sales under limited sales tax; after repair, later sales returned to motor vehicle tax. It required ou…
My firm sends technicians to cell tower sites to test antennas and transmission lines for radio frequency loss (using an electronic network analyzer), and we just report our findings to the carrier — we don't do any hands-on repair work. Is this testing service taxable in Texas?
No. Testing cell tower antennas and transmission lines to measure frequency loss, and simply reporting the findings to the carrier (with no hands-on repair or construction work performed by your firm)…
I sell rubber stamps as a distributor for a Utah-based direct sales (home-party) company that requires distributors to collect sales tax from customers on shipping charges. Is that correct, and does it matter whether I'm buying product to resell versus for my own use?
It depends on why the distributor is buying the product. When a direct sales company ships product directly to an end customer who ordered from a distributor, tax must be collected on the shipping cha…
Is the electricity a manufacturer uses to run production equipment exempt from Kansas sales tax?
Yes, for the production portion. Under K.S.A. 79-3606(n), electricity that is essential to the process, used in the actual production at the location, immediately consumed in the process, and used to …
If a trucking audit is full of errors — counting Texas miles as New Mexico miles and disallowing a reduced tax rate without support — can the whole assessment be thrown out?
Yes. A trucking company beat a $47,000 weight-distance and fuel-tax assessment in full because the audit was riddled with errors. The auditor treated local Texas miles (already taxed in Texas) as unre…
My out-of-state mail-order/Internet client has no employees, salespeople, or locations in Texas, but plans to exhibit a booth (no sales, no installs) for about seven total hours at a one-time, four-day educational industry conference in Texas, and separately sells downloadable digital content (clipart, music, possibly software) to Texas customers online. We believe this limited, non-recurring conference display doesn't create substantial nexus under Quill and Complete Auto. Is that right?
No — the Comptroller found nexus on two independent grounds. First, based on prior Comptroller hearing precedent, even a single, non-recurring exhibit/display booth at an industry conference (with no …
Did a pickup with a hayloader mounted on a multipurpose flatbed qualify for Texas's farm-machine motor vehicle tax exemption?
No. Section 152.001(12) covered self-propelled vehicles specially adapted for crop production, livestock rearing, feedlots, or applying agricultural materials, but excluded vehicles designed or adapte…
If the state takes more than a year to finish an audit, can you escape the interest and penalty on the tax you underpaid?
No. A caterer wrongly deducted receipts from catering sold to government and non-profit customers — the exemption certificates it held cover sales of goods, not services — and underreported gross rece…
A company hired me (a one-off contractor, not normally in this line of work) to design and develop custom software for a factory automation system. Do I need to charge Texas sales tax on this?
No, not if you're creating the program from scratch and transferring the exclusive rights to the program to your customer. Under Rule 3.308(b)(4), charges to create a program (or modify an existing on…
Homeowners in our area received FEMA disaster grants to repair their homes, and some are trying to buy materials tax-free by using their FEMA claim number as proof of a government exemption. Are these purchases actually exempt?
No. The purchases are taxable. Texas exempts purchases made by the U.S. Government and its agencies/instrumentalities themselves — but in this situation, FEMA is not the purchaser, the individual home…
How does Kansas sales tax apply to premium cable, pay-per-view, video games, and internet a hotel provides to guests?
Under K.A.R. 92-19-24, a hotel buys premium cable channels, special-events (pay-per-view) channels, and video game rentals that it separately bills to guests exempt (for resale), and collects sales ta…
Federal government employees use government-issued credit cards at our retail stores, and some refuse to fill out the state's Tax Exempt Certificate. Do we have to require the certificate anyway, should we photocopy the card, and what backup documentation do we need for an audit?
No separate Tax Exempt Certificate is required. If the charge slip or invoice you keep shows the statement "U.S. Govt. Tax Exempt," you may treat the purchase as tax exempt based on that alone. If the…
Do bars and restaurants owe use tax on liquor, beer, or wine given away free with a fixed-price meal or Happy Hour drink special?
No, as long as the total price the customer pays for the meal or drinks (including the free extra) is more than the restaurant or bar's combined cost of the food and drinks served, the free item, and …
For New York sales tax, is a single-member LLC treated as a separate entity from its sole corporate owner, so that property passed through the LLC and leased back to the owner can qualify for a resale exemption?
Yes. Even though a single-member LLC (SMLLC) may be disregarded for federal income tax purposes, New York treats it as a separate entity from its sole member for sales tax purposes -- so an intermedia…
Is a sports-event planning company's package charge, its fees for arranging athlete appearances, and its corporate-sponsorship commissions subject to New York sales tax?
No, in all three scenarios. A company's charge for planning a sports-event package (tickets, merchandise, hotel, limousine), its fee for arranging an athlete's appearance or speech, and its commission…
Are architectural building signs and their installation taxable, or exempt as a capital improvement to real property?
It depends on how permanently each sign is installed. Signs that can be removed without materially damaging the sign or the building -- surface-mounted directories, taped or screwed single signs, floo…
Which of a utility's distributions to its holding company during a PSC-mandated restructuring are excess dividends under section 186, and which are not?
The within-the-mandate test controls. Central Hudson's investment of its generation-auction proceeds into unregulated operations through the holding company, and the holding company's distribution of …
Did a timeshare developer's receivables loan, secured by previously taxed consumer notes and mortgages, owe Florida documentary stamp or nonrecurring intangible tax?
No. The loan qualified as a wholesale warehouse mortgage agreement because previously taxed consumer mortgage notes were pledged as collateral, and it created no new lien on Florida real property. The…
Two Texas banks want to outsource their 'live operator' telephone customer service reps to a third-party call center company, which will staff, train, and supervise operators who use a telephonic link into the banks' own data center to answer customer questions like account and loan balances. Is this outsourcing arrangement subject to Texas sales and use tax?
No. Providing live operators who access and relay a bank's own customer account information over the phone, under a service agreement where the call center company handles staffing, training, and supe…
Are the proceeds a utility receives from a PSC-mandated auction of its generating facilities gross earnings under section 186, and how are they treated for section 186-a gross income?
The auction proceeds are not gross earnings under section 186, but the profit is gross income under section 186-a. A utility's PSC-mandated divestiture of its fossil and hydro generating facilities by…
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