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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A commissioned salesperson who works only for one company — is he an 'employee' whose commissions are exempt from gross receipts tax, or an independent contractor who owes the tax?
He is an independent contractor, so his commissions are taxable. A traveling salesman who sold industrial parts for Lawson Products on straight commission argued his commissions were exempt as an empl…
Could a public port agency buy construction materials tax-free for a terminal renovation through a direct-purchase procedure?
Yes. The agency's direct purchases were exempt because it issued purchase orders, received vendor invoices, paid vendors, took title at delivery, and bore the risk of loss through insurance before ins…
We sell and install monuments, headstones, and cemetery benches that get bolted to concrete footings in burial plots. Do we charge our customers sales tax, or are we treated as a contractor who just pays tax on our own materials?
It depends on how you bill. If you charge a single lump-sum price covering both the item and its installation, you're a lump-sum contractor under Tax Code Sec. 151.056 — you pay tax on your own materi…
Are a fashion stylist's coordination and consulting services for fashion shows and photo shoots subject to New York sales tax?
No. A fashion stylist's services -- coordinating models and accessories for fashion shows and consulting on the presentation of clothing and merchandise for photo shoots used in catalogs and advertise…
When a hotel strips an entire floor down to bare plaster and rebuilds it, are the painting, wall covering, and new carpet installation charges exempt as a capital improvement?
Mostly yes, with one carve-out. Stripping an entire hotel floor to bare plaster and rebuilding it -- new plaster, painting, wall coverings, fixtures, wiring -- qualifies as a capital improvement, so t…
Are parts purchased in New York to build production equipment exempt from sales tax when the finished equipment is shipped to an out-of-state manufacturing plant?
Yes. Parts used to assemble equipment in New York qualify for New York's manufacturing production-equipment exemption as long as the finished equipment is used directly and predominantly (over 50%) to…
Can a computer reservation system provider buy the equipment it leases to travel-agency subscribers tax-free for resale, and must subscribers pay tax on the full 'monthly fixed charge' even when it's routinely waived through a productivity credit?
Yes and yes. Because the provider leases (not just licenses) computer equipment to its travel-agency subscribers, its own purchase of that equipment qualifies as an exempt purchase for resale -- but t…
Is a car dealer's 'dealer cash' manufacturer incentive, when fully passed through to an employee-purchaser as a price cut, included in the taxable receipt?
No, not to the extent it's passed through. When a manufacturer requires a dealer to pass 100% of a dealer-cash incentive through to a qualifying employee-purchaser as a price reduction, the dealer's t…
Is rent for radio communication tower and building space, where the tenant owns and installs its own antenna, subject to New York sales tax?
No. Where the customer leases a specific location on a communication tower and floor space in the building, provides and installs its own antenna equipment, has free and unrestricted access, and can r…
My general partnership owns two commercial properties in Manhattan. Six family members hold interests directly in the partnership (14.2857% each) plus additional indirect interests through a sub-partnership we also all own equally (MESH Associates) -- so between the direct and indirect layers, each of us actually holds a 16.66% beneficial interest in both properties. We want to transfer each property into its own new LLC, with the partnership and MESH each initially receiving LLC shares proportional to their ownership, then distributing those shares down to us as individuals so each of us ends up with an identical 16.66% stake in each new LLC. Is this two-step, tiered restructuring exempt from New York's Real Estate Transfer Tax?
Exempt -- the look-through beneficial ownership doesn't change despite the multi-step, tiered restructuring. The Denihan Company (the "Partnership"), a general partnership owning two commercial parcel…
Is a New York corporation that never issued stock and never did any business still subject to the Article 9-A franchise tax?
Yes. A corporation incorporated in New York is subject to the annual Article 9-A franchise tax under section 209.1 for every taxable year from the date of incorporation until it is dissolved, regardle…
A dentist worked out of another dentist's professional corporation, which paid him on a 1099 and claimed it already paid gross receipts tax on all the patient money. Does the dentist still owe gross receipts tax on what the corporation paid him?
Yes — the dentist owed gross receipts tax on the pay he received, and the protest was DENIED. Dr. M. Kory Rowberry practiced out of the offices of Nick DeSantis, DDS, PC, which billed the patients, pa…
Were a federal Job Corps center contractor's operating purchases subject to Florida sales and use tax?
No. Federal law preempted Florida sales and use tax on the contractor's purchases for operating the Job Corps center. The ruling applied that immunity only through the documented federal contract end …
Is machinery and equipment sold or leased to an over-the-air radio or television station exempt from Kansas sales tax?
Exempt. On or after July 1, 1998, all sales and leases of machinery and equipment sold or leased to over-the-air, free-access radio or television stations are exempt from Kansas state and local sales …
Are direct purchases by a nonprofit hospital — including subscriptions and motel rooms — exempt from Kansas sales tax?
Exempt, if bought directly by the hospital and used exclusively for hospital purposes. K.S.A. 79-3606(b) exempts sales of tangible personal property or services — including the renting and leasing of …
Did a company earn taxable Texas service income when it solicited beer orders for another corporation and received commissions?
Yes. The company solicited orders for Beck's beer, sent the orders to the manufacturer for processing and sale, and earned only a commission or fee. The Comptroller treated that solicitation for anoth…
How did Texas treat nexus and cash distributions when a REIT placed partnership interests into two wholly owned single-member LLCs?
The non-Texas LLC had no nexus if its only Texas connection was the partnership interest and it proved all activities it could perform occurred outside Texas. Both LLCs remained separate from their RE…
What did Florida's original TAA 98A-099 say about tax on produce-ripening concentrate, and was that result later revised?
The original 1998 TAA said the ripening concentrate was taxable because the resulting ethylene gas did not become part of the produce, and federal pesticide registration alone did not create an exempt…
Which insurance-related investigations were taxable under Florida's tax on detective and protection services?
Investigations for insurance companies and formal self-insurance funds were not taxable because they fit SIC 6411 insurance services. Work for businesses merely paying their own claims without an insu…
Were temporary traffic-control devices taxable rentals when a road contractor possessed, moved, and controlled them?
Yes. The temporary barriers, signs, and other traffic-control devices were taxable rentals because the road contractor possessed and controlled them and handled daily placement and relocation. The con…
What federal taxable income did a non-U.S. corporation report on Texas Schedule B when it was not required to file a federal income-tax return?
None. Section 171.110(d) defined reportable federal taxable income by reference to federal taxable income computed under the Internal Revenue Code. If the non-U.S. corporation was not required to file…
Were subscription fees for an online newsletter and electronic financial information subject to Florida tax?
No. Charges to access, view, download, or obtain the electronic-only newsletter, research, and financial data were not subject to Florida sales and use tax or gross receipts tax. A subscriber's choice…
Could a DOT consultant buy furniture, equipment, and software tax-free for resale when DOT later reimbursed the cost and took title?
No. The consultant's purchases were taxable retail sales because it took title and used the furniture, equipment, and software to perform its contract. DOT's later reimbursement and receipt of title d…
Were repairs, replacement parts, and upgrades to prescription eyeglasses exempt from Florida sales tax?
Yes. Repairs and upgrades to prescription eyeglasses—including frame replacement or repair, nose pads, and lens coatings—were exempt. The exemption applied even if another dealer originally sold the g…
Will the Department issue an advisory opinion on a 'hypothetical' sales tax question when the same issue is already the subject of a pending Division of Tax Appeals proceeding involving the same representative and client?
No -- this is a procedural refusal, not a substantive tax ruling. The Department declined to answer the underlying tax question at all, because the same issue, involving the same law firm's representa…
How does a Nebraska estate or trust figure the 1998 credit for prior year minimum tax on the Nebraska return?
Recompute the federal credit for Nebraska. Under Revenue Ruling 23-98-2, Neb. Rev. Stat. §77-2717 requires an estate or trust to recalculate the federal credit for prior year minimum tax (Federal Form…
How does a Nebraska individual figure the 1998 credit for prior year minimum tax on the Nebraska return?
Recompute the federal credit for Nebraska. Under Revenue Ruling 22-98-2, Neb. Rev. Stat. §77-2715(2) requires an individual to recalculate the federal credit for prior year minimum tax (Federal Form 8…
Could Florida penalize a car-rental dealer for charging tax to an exempt charity when the dealer later refunded it?
No. Although the foundation's rental was exempt and the dealer collected tax in error, Florida law supplied no penalty or sanction when the dealer later refunded the tax. Dealers still had to refund e…
A federally chartered farm-lending cooperative is officially a 'federal instrumentality.' Does that status make it immune from New Mexico corporate income tax under the Supremacy Clause?
No — the Hearing Officer held that this production credit association is subject to New Mexico corporate income tax and DENIED its refund claims. The Production Credit Association of Eastern New Mexic…
Can an out-of-state contractor get a Kansas direct pay permit for its construction contracts, and how is the tax base figured?
No — an out-of-state contractor cannot be granted a direct pay permit, because a direct pay permit may not be used to claim exemption in connection with construction contracts (Notice 98-02). Even a p…
Are purchases made from a state agency's Patient's Benefit, Work Therapy, and Canteen Funds exempt as direct purchases by the state?
Exempt for the state funds, taxable for the employee use fund. The Department concluded that the Patient's Benefit Fund, Work Therapy Fund, and Canteen Fund established under K.S.A. 75-3728e are funds…
Which purchases by a nonprofit youth development program are exempt, and which are taxable as property used for human habitation?
Partly exempt. K.S.A. 79-3606(ii) exempts tangible personal property purchased directly by a nonprofit organization for nonsectarian comprehensive multidiscipline youth development programs, but the e…
Do a radiant heating system and an overhead crane qualify as exempt manufacturing machinery and equipment for a Kansas sales tax refund?
Split answer. The Department reaffirmed that the taxpayer's radiant heating system does not qualify as manufacturing machinery, so no refund is due on it. The overhead crane would likely qualify as ma…
How does a contractor buy materials tax-free for a construction project for a federal entity in Kansas?
Only through a project exemption certificate. Under K.S.A. 79-3606(e), a contractor's purchases of tangible personal property or services for the erection, repair, or enlargement of buildings or other…
Did a lease-contract broker create Texas franchise-tax nexus by hiring Texas agents to repossess and liquidate property after defaults?
Yes. The broker bought and resold short-term rights to lease cash flows and sometimes serviced contracts without owning the leased property. When defaults occurred, it hired Texas companies to reposse…
Which Nebraska sales and use tax revenue rulings did the Department list as no longer valid in Revenue Ruling 01-98-3?
This is a status list, not a new rule. Revenue Ruling 1-98-3 (Sales and Use Tax), issued December 17, 1998, is a housekeeping ruling in which the Nebraska Department of Revenue lists the older Sales a…
Which Nebraska sales and use tax revenue rulings did the Department list as still valid in Revenue Ruling 01-98-2?
This is a status list, not a new rule. Revenue Ruling 1-98-2 (Sales and Use Tax), issued December 17, 1998, is a housekeeping ruling in which the Nebraska Department of Revenue lists the older Sales a…
Under RR 98-23, who could protest a South Carolina beer, wine, minibottle, or retail liquor license, and what made the protest valid?
A county resident or person living within five miles could file a written, timely protest with the required applicant, location, reasons, and hearing-attendance statement. A protest declining a hearin…
Does a company owe Kansas tax on promotional display materials it ships into Kansas at its client's direction?
Taxable. Kansas compensating (use) tax is levied for the privilege of using, storing, or compounding tangible personal property in the state, collected at 4.9% of the consideration paid by the consume…
Could a single-owner LLC deduct the owner's one-half self-employment-tax deduction when computing taxable earned surplus?
No. Although the LLC was treated as a sole proprietorship for federal income tax, Texas treated the LLC itself as a taxable entity. Rule 3.562(f) required it to compute reportable federal taxable inco…
How does a Nebraska estate or trust recompute the 1998 federal alternative minimum tax to figure the Nebraska minimum tax?
Recompute the federal AMT on Nebraska terms. Under Revenue Ruling 23-98-1, Neb. Rev. Stat. §77-2717 requires estates and trusts to recalculate the 1998 federal alternative minimum tax (Federal Form 10…
Did PLR 98-4 exempt propane and a filled tank sold for a barbecue grill at a South Carolina residence?
Yes. Propane sold for an outdoor grill at a person's residence was exempt as residential fuel, and a filled tank was incidental to that exempt sale. Propane for a nonresidential location and an empty …
Does a religious organization qualify for the Kansas sales tax exemption, letting it buy ministry literature tax-free?
Exempt. K.S.A. 79-3606(aaa) exempts all sales of tangible personal property and services purchased by a 501(c)(3) religious organization and used exclusively for religious purposes. The Department fou…
Is converting a Texas corporation into a partnership a taxable event for franchise tax, and does electing to be taxed as a corporation federally make the partnership taxable in Texas?
No to both. The Comptroller's Franchise Tax Administration Division approved a taxpayer's requested rulings that (1) if converting a Texas corporation into a partnership is not a taxable event for fed…
For a company's 'procurement process management services,' which parts are taxable business management services and which qualify for Connecticut's outsourced computer-and-data-processing exemption?
It depends on the service. A company's 'procurement process management services' split two ways for Connecticut sales tax. Its accounts-payable and support functions are computer and data processing s…
Did a treaty-country corporation with a Texas inventory warehouse owe earned-surplus tax when it filed no federal return and had no federal taxable income?
No earned-surplus tax, assuming the treaty meant the corporation filed no federal return and had no federal taxable income. The foreign corporation planned to establish a Texas inventory warehouse. Th…
Did Texas pass a law letting a corporation convert to a partnership to avoid franchise tax, and what are the franchise-tax consequences of such a conversion?
Partly true: a 1997 law created a 'conversion' transaction, and a corporation that converts to a Texas limited partnership does escape franchise tax at the partnership level — but the converting corpo…
My company contracts with insurance companies to review their claims data and identify overlooked reinsurance recoveries they're entitled to but haven't collected — we don't touch the original claims or the relationship between the insurer and the insured. Is this service subject to Texas sales tax?
Yes. Even though you don't affect the original claim or the insurer-insured relationship, reviewing claim data to determine whether an insurance company is eligible for reinsurance recovery benefits i…
Is a utility's charge to install a new residential natural gas line subject to New York State and local sales tax?
No state or local sales tax applies (beyond a possible school district utility tax), even though the customer here was charged the full 8.5% combined rate. The utility's charge for installing a new re…
Did a state military organization's post exchange on a federal reservation have to collect Florida sales tax?
No. When federally activated, the state military organization was a federal instrumentality immune from Florida law. When not activated, the Department still found Florida sales-tax law preempted on t…
How did Florida treat a county's lease, sublease, and leaseback of public facilities for sales, intangible, stamp, and property tax?
The described leaseback payments were not subject to sales tax: the first two leases qualified for resale treatment and the county's sub-sublease payments were government-exempt. The TAA also found li…
Which parent-teacher organization fundraising sales are exempt in Kansas, and which — like carnival games and bingo — are taxable?
Mixed. K.S.A. 79-3606(yy) exempts sales of tangible personal property and services purchased by a parent-teacher association or organization, and its sales of tangible personal property. So tickets ex…
Is an educational institution that is exempt on its purchases also required to collect Kansas sales tax on its own sales?
Yes — being exempt on purchases does not excuse collecting on sales. Schools and educational institutions are exempt from paying Kansas sales tax on their purchases, and the 1998 legislature broadened…
A husband sold and installed blinds on commission and his wife managed the office; part of their pay was reported as self-employment income. Do they owe gross receipts tax on it, and does the state's late assessment excuse the penalty and interest?
Yes to the tax, and no relief on penalty and interest — the protest was DENIED. Bill McConnell sold and installed window blinds for Blinds Direct on commission; his wife Sherri was the office manager.…
Who reported oil-and-gas lease receipts after an unrecorded written transfer of all equitable and beneficial ownership rights?
The equitable or beneficial owner reported the receipts. Although legal title remained with the managing partner, the written transfer moved all rights, obligations, liabilities, benefits, and propert…
How does a Nebraska individual recompute the 1998 federal alternative minimum tax to figure the Nebraska minimum tax?
Recompute the federal AMT on Nebraska terms. Under Revenue Ruling 22-98-1, Neb. Rev. Stat. §77-2715 requires an individual to recalculate the 1998 federal alternative minimum tax (Federal Form 6251, o…
If you file a refund claim and the state never acts on it, then you refile after the deadline, can you still get your money back?
No. A carpet subcontractor who had overpaid gross receipts tax filed a refund claim in September 1997, but the Department never acted on it. When the state doesn't grant or deny a refund claim within …
Which parent-teacher organization fundraiser sales are exempt, and which — like carnival games and pre-sold bingo — are taxable?
Mixed. This ruling (which supersedes a prior December-1998 letter) applies K.S.A. 79-3606(yy), exempting sales of tangible personal property and services purchased by a parent-teacher association or o…
Is hauling leftover nonrecyclable trash away from a recycling plant a taxable trash-removal service?
Yes. Hauling leftover nonrecyclable trash away from a recycling plant is a taxable trash and garbage removal service under Tax Law § 1105(c)(5), the same as trash removal from any other real property …
Are helicopter sightseeing rides and tours a taxable equipment rental or an exempt transportation service, and are aerial photos sold to passengers taxable?
Helicopter rides and sightseeing tours are an exempt transportation service, not a taxable equipment rental, because the operator retains 'dominion and control' -- it keeps possession of the helicopte…
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