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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Are a home electrical safety inspection ('survey') and mandatory municipal code-compliance electrical inspections subject to New York sales tax?
It depends on who buys it and why. A voluntary electrical safety inspection ('survey') is a taxable real-property-maintenance service when purchased by the property's owner or lessee, but is NOT taxab…
Does a New York business have to charge sales tax on dog-walking fees?
No. Dog walking is not subject to New York sales tax because Tax Law § 1105(c) only taxes specific enumerated services, and dog walking is not one of them.
Does a vendor selling zeppoles (fried dough) from a mobile trailer at festivals and carnivals have to charge New York sales tax?
No. Zeppoles sold cooled, bagged, and unheated for takeout from a mobile trailer at festivals and carnivals are exempt food products, similar to donuts, and are not taxed as restaurant food because th…
Can a centralized advertising subsidiary buy and resell promotional materials to its affiliated retail companies tax-free when the materials are mailed free to customers in New York?
Yes. A newly formed advertising subsidiary can purchase promotional materials and related production services tax-free for resale, and its sales of those materials to affiliated retail companies are e…
Is a foreign corporation that stores goods in unaffiliated New York public warehouses using a fulfillment service, and does employees visiting to inspect warehouses and meet customers defeat its Public Law 86-272 protection?
Storing goods in unaffiliated New York public warehouses is the use of a fulfillment service under section 209.2(f), and it does not create nexus. Employees traveling into New York to examine those wa…
Does a foreign corporation become subject to Article 9-A by storing a day's inventory in a New York common-carrier warehouse for just-in-time delivery, or does the fulfillment-services exemption apply?
The storage would otherwise create nexus, but the fulfillment-services exemption applies. A foreign manufacturer's storage of about one day's inventory in a New York common-carrier warehouse for just-…
Does a manufacturer's tooling, provided free to New York subcontractors to make components for its own products, qualify for the investment tax credit?
Yes. Xerox's tooling (dies and molds) that it provides without charge to New York subcontractors -- usable only to make components for Xerox and used under Xerox's supervision -- is not leased within …
After the De Buono decision, is a qualified ERISA retirement plan subject to the New York Article 13 tax on unrelated business taxable income?
Yes. This modified opinion reverses TSB-A-97(10)C on the retirement plan. After the U.S. Supreme Court's De Buono decision -- holding that a New York tax of general applicability that merely burdens a…
How did Texas tax trailers bought for 36-month operating leases, attached accessories, and a lessee's later balloon-payment purchase?
Trailers were motor vehicles, so the lessor paid motor vehicle sales tax when buying one for a 36-month operating lease. Accessories bought attached were included in that tax base; separately bought a…
For leased equipment, who owes Utah personal property tax -- the lessor or the lessee -- under a conditional sales agreement versus a true lease with 'direct pay' terms?
Under a conditional sales agreement (lessee holds title with a mandatory purchase obligation at lease end), the LESSEE is treated as the true owner under Utah's 'essence of the transaction' test and i…
When a multinational company consolidates its delivery-truck fleets from several 100%-owned subsidiaries into one new 100%-owned transportation subsidiary, does that vehicle transfer trigger Utah sales tax?
No sales tax is due. A multinational company's plan to transfer delivery trucks from several wholly-owned subsidiaries into one newly formed, also wholly-owned transportation subsidiary qualifies as a…
Are sales of custom prosthetic and orthotic devices taxable in Kansas, and must the provider register as a retailer?
The described sales are not taxable, but the provider still must register. A company that provides custom prosthetic and orthotic devices, billed to Medicare, Medicaid, insurance, and patients in conj…
Are computer and internet business-center services provided to hotel guests subject to Kansas sales tax?
The services are not taxable, but the provider's own purchases are. A company planned hotel business centers giving guests 24-hour access to a computer, software, the Internet, e-mail, printing, faxin…
Did a Texas professional association become subject to franchise tax because it elected federal S-corporation treatment?
No. The Comptroller looked to the entity's legal formation for Texas franchise-tax status. Assuming the entity was legally organized as a professional association under the Texas Business Corporation …
Two affiliated trucking companies want to consolidate payroll by having a third related company become the formal employer of all their employees, providing payroll and benefits for a management fee — essentially an employee leasing arrangement. Is the management fee subject to Texas sales tax as a data processing service, and does an intercorporate-affiliate exemption apply?
Payroll services are normally taxable as data processing services, but this arrangement looks like it falls under Rule 3.364's staff leasing services category instead — if the requirements of Rule 3.3…
Is labor to maintain and repair a residential swimming pool exempt from Kansas sales tax after the 1998 residential-services exemption?
The labor is exempt; the materials are not. Effective July 1, 1998, 1998 Senate Bill No. 493 exempts services to install or apply tangible personal property when they involve the original construction…
We're restructuring ownership of several producing oil and gas leases (with production equipment already installed and in use) through a series of contributions between related companies, ending with a limited partnership selling the leases — always bundled with their production equipment, never separately — to outside purchasers for a lump sum. Are these sales subject to Texas sales/use tax?
No. None of the transactions are subject to sales tax. The true object of each sale from the limited partnership to a purchaser is the sale of a mineral lease — a nontaxable real property interest — w…
A 501(c)(3) nonprofit is accepting an assignment of a lump-sum general construction contract for a low-income housing project (financed through a partnership with for-profit limited partners who bought low-income housing tax credits), and will serve as the substituted general contractor using separated subcontracts. Can the nonprofit's subcontractors buy materials tax-free, can the nonprofit pass along exemption certificates to them, and who ultimately owes tax on the incorporated materials?
The nonprofit, as a lump-sum general contractor, is the consumer of all building materials and pays tax on them itself — no tax is collected from the project partnership on the lump-sum charge. Becaus…
Must a youth baseball organization collect Kansas sales tax on its candy fundraising sales?
Taxable. A youth baseball program's participation fees are exempt as a 501(c)(3) youth recreation organization serving persons 18 or younger, but its retail fundraising sales are not. The Department f…
Are utilities at a home used for a business taxed as residential or commercial in Kansas?
It depends on how the home is used. Kansas imposes state and local sales tax on gas, water, electricity, and heat sold to commercial consumers. Where a home's business use is de minimis or insubstanti…
Why must a school student organization collect Kansas sales tax on its concession-stand sales?
Because the state requires retailers -- including schools, churches, and non-profits -- to collect sales tax on their taxable retail sales, and student concession-stand sales have been taxable in Kans…
When did the Kansas religious-organization exemption take effect, and are a church's utilities exempt?
The exemption began July 1, 1998, with no refund for earlier purchases. 1998 Senate Bill No. 493 added a new sales tax exemption for religious organizations under K.S.A. 79-3606(aaa), effective July 1…
Do nonprofit associations that support member colleges qualify as exempt 'educational institutions' under the 1998 Kansas definition?
Yes, they qualify. K.S.A. 79-3602, as amended by the 1998 Kansas Legislature (L. 1998, ch. 130, sec. 29), defines 'educational institution' to include nonprofit endowment associations and foundations …
When a corporation or LLC converts into a Texas limited partnership and the partnership sells its assets, who owes franchise tax, and what final filings are required?
The converting corporation files a final report; the resulting limited partnership and its sale gain owe no franchise tax, but a corporate or LLC general partner does. When a corporation (or LLC) conv…
We want to raise financing secured by five operating units within our petrochemical refinery, structured as a sale/leaseback: we'd transfer bare legal title to a lender trust and immediately lease the units back, keeping full operational control, maintenance responsibility, and a repurchase option, while continuing to own the land underneath. Is this transaction subject to Texas sales and use tax?
No. The transaction is a nontaxable financing arrangement using real property (and possibly substituted property) as collateral, not a taxable sale of tangible personal property. This holds even thoug…
Could a lease facilitator handle a lessee's trade-in without the dealer physically possessing the vehicle or title, and what records were required?
Yes. The dealer did not need physical possession of the trade-in, and an authorized lease facilitator could handle title documents under a vehicle-specific power of attorney. But the dealer's records …
Rule 3.288(f) says we can never accept a direct payment exemption certificate from a contractor performing a lump-sum contract, but Rule 3.357(b)(2) says the lump-sum-vs-separated distinction no longer matters for repair/remodeling/restoration work. Can we accept a direct pay certificate for repairing, remodeling, or restoring nonresidential real property under a lump-sum contract?
Yes. When you repair, remodel, or restore real property, you're acting as a taxable service provider rather than a "contractor" improving realty — so your total charge is taxable whether billed lump-s…
Could an oil and gas taxpayer use Rule 3.553 reserve methods for its full-cost pool, and when could proved producing reserves be used?
No. Rule 3.553's four reserve-estimation methods applied only to amortizing intangible drilling costs, not the full-cost pool including leasehold costs and equipment. The ad valorem method required ce…
Our contracts with the Texas Department of Transportation require us to build and equip a fully-equipped lab, for the exclusive use of State Engineers, at our own privately-owned hot-mix plant facility. Are the materials to build and equip that lab subject to Texas sales tax, even though the lab sits on our own private property?
No. Even though the lab is built at your privately-owned plant facility, materials to build and equip it may be purchased tax-free by giving your suppliers exemption certificates, because the lab is c…
Can an asbestos-removal contractor get a refund of the sales tax it paid on disposable supplies (bags, suits, filters, encapsulant) that get contaminated and are transferred to its clients as part of the job?
Yes, mostly. An asbestos-removal contractor may claim a refund or credit for sales tax paid on disposable supplies (filters, bags, suits, gloves, tape, encapsulant, and similar items) that become cont…
Must a church athletic foundation collect Kansas sales tax on sports participation fees paid by its members?
No — the participation fees are exempt, but the foundation's purchases are not. K.S.A. 79-3603(m) taxes fees charged to participate in sports and other recreational activities, but as amended by 1998 …
How can a wholesaler stop being charged Kansas compensating tax on goods it buys and resells to Kansas retailers?
Register and give the vendor a resale exemption certificate. The wholesaler buys refrigerants that its out-of-state vendor (DuPont) ships directly to Kansas retailers and bills to the wholesaler, and …
Does a marriage counseling group qualify for the Kansas religious-organization sales tax exemption?
Not exempt. 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 for wors…
Can a plumbing company cancel its sales tax registration and just pay tax on the materials it buys?
No. The Department advised that the advice to cancel registration and simply pay tax on material and supply purchases was incorrect. A plumbing company typically makes some retail sales and performs l…
Does a 501(c)(3) foundation qualify for a Kansas sales tax exemption because similar named health charities are exempt?
Not exempt. K.S.A. 79-3606(vv) grants a Kansas sales tax exemption to a specific list of named health-related charities, and the general exemptions for schools, educational institutions, hospitals, an…
Did Texas motor vehicle tax or limited sales tax apply to truck-mounted concrete pumps sold as a unit or installed on a customer's truck?
A heavy-duty truck and installed concrete pump sold together in one transaction were entirely subject to motor vehicle sales and use tax, with no portion under limited sales tax. If the seller sold on…
If a company sells computer training classes whose fee includes manuals participants keep, does it charge sales tax on the manuals?
Don't charge tax on the class fee — but pay tax when you buy the manuals. Kansas does not tax gross receipts from the service of providing training or instruction, so the lump-sum fee for computer tra…
Our client sells nationwide Internet-based e-mail/fax subscriptions through a toll-free number, using hand-held devices manufactured overseas by OEMs (who license our client's audio-coupling software into the devices) and sold through unrelated third-party Texas retailers. Our client has no office or server in Texas. Does this create Texas sales tax nexus, is the e-mail/fax service itself taxable, and how do we figure out which local tax rate applies?
Yes, nexus exists, on two independent grounds: the client's licensed software resides in hand-held devices used by Texas customers (creating nexus in every local jurisdiction those devices are used), …
Are repair, refurbishing, and rebuilding services performed in Texas on equipment owned by a company with both Texas and Mexican maquiladora operations subject to Texas sales tax?
Depends on the equipment's own exemption status and where it's used, not on where the repair happens. A company with a Texas manufacturing/warehouse location and Mexican maquiladora operations (holdin…
Did buying raw agricultural materials in Texas and picking them up with company employees and a truck create franchise-tax nexus?
No. The client bought raw agricultural product from a Texas seller, sent three employees and a company truck from Missouri to pick it up, and hauled all of it to the Missouri processing plant. It owne…
Was wine used in a New York winery's wine tastings exempt from sales and use tax before the wine-tasting exemption's December 1, 1997 effective date?
No. New York's wine-tasting exemption (Tax Law § 1115(a)(33)) only applies to wine used in tastings on or after its December 1, 1997 effective date; wine used in tastings before that date remains subj…
Is installing a retractable synthetic awning on a house a capital improvement, so it's exempt from New York sales tax?
Yes. Installing a retractable awning made of a durable synthetic fabric (not canvas), bolted to brackets on the roof so that removing it would damage the roof, is an exempt capital improvement, follow…
Are purchases made by federal employees using government-issued charge cards (like GSA SmartPay/IMPAC or a Department of Interior MasterCard) exempt from Texas sales and use tax?
Yes, exempt, under a three-part test. This combined record includes a short November 1998 letter confirming that an earlier April 2, 1998 ruling extends to a new Department of the Interior MasterCard,…
Are the display 'counterbooks' a sewing-pattern maker sells to retailers, and the equipment used to make them, exempt from New York sales tax?
Yes, largely. A sewing-pattern manufacturer's 'counterbooks' (retailer display catalogs) qualify for the resale exemption when purchased from an outside printer, and machinery and equipment used direc…
Is a membership magazine that's mostly advertising for the publisher's own services taxable when mailed to members, sold to non-members, or handed out free at the counter?
It depends on how the publication is distributed. AAA's 'Destinations' magazine doesn't qualify as an exempt periodical because it's mostly advertising for AAA's own services, but copies mailed free t…
Is a computer company's point-of-sale system maintenance agreement -- covering both hardware repairs and software support -- taxable, and what about travel charges and order-cancellation fees?
A point-of-sale system maintenance agreement that bundles taxable elements (prewritten software upgrades, hardware repair) with nontaxable elements (software consulting, diagnostics, training) is full…
Is rent paid to store inventory in a warehouse, where the space is controlled by the warehouse operator, included in the property factor of the Article 9-A business allocation percentage?
No. The amount a company pays to store its inventory at an unaffiliated warehouse, where the charge is computed by the cubic feet used for a designated space and the space is under the control of the …
Is rent paid to store inventory in a warehouse, where the space is controlled by the warehouse operator, included in the property factor of the Article 9-A business allocation percentage?
No. The amount a company pays to store its inventory at an unaffiliated warehouse, where the charge is computed by the cubic feet used for a designated space and the space is under the control of the …
When a utility buys its parent holding company's publicly traded stock on the open market and keeps it, is that a constructive dividend subject to the section 186 excess dividends tax?
No. When Rochester Gas & Electric buys the publicly traded common stock of its parent holding company on the open market and continues to hold it, there is no distribution of property to its sharehold…
If a nonresident is the sole general partner of a limited partnership that only buys and sells options for its own account through him as an AMEX Options Principal Member, is his distributive share of that income taxable as New York-source income?
No. Because Petitioner traded only as an Options Principal Member (OPM) - who may buy and sell options solely for the partnership's own account and can never act as a Specialist or execute customer/ag…
Does a ministry qualify for the 1998 Kansas religious-organization sales tax exemption, and how does it claim it?
Exempt, if claimed properly. The Ministry provided its by-laws and an IRS letter, which established that it qualifies as a religious organization within the meaning of 1998 Senate Bill No. 493. Accord…
Is a city's charge to install a new residential water line, water meter, or electrical meter subject to Kansas sales tax?
The installation service is not taxable; tax is paid on the materials. Kansas exempts labor to install tangible personal property when it involves the original construction of a building, and 'the con…
Must a non-resident professional athlete or entertainer who earns Kansas-source income file a Kansas income tax return?
Yes. The Department advised that non-resident professional athletes and entertainers who receive income from Kansas sources are obligated to file a Kansas individual income tax return, regardless of t…
A company lets customers come to its office to hold video conferences using its own equipment and phone lines, billing them for facility use plus re-billed long-distance charges. Is this equipment rental plus a telecom pass-through, or something else entirely for tax purposes -- and can the company buy its own phone service tax-free?
The company isn't renting equipment and separately re-billing phone charges -- it's providing a single taxable TELECOMMUNICATIONS SERVICE, and the ENTIRE charge to customers (facility/equipment use pl…
For a company that leases PCs and other equipment routed through Texas for tagging and staging before final delivery to offices in and out of Texas, is Texas sales tax due on equipment ultimately installed and used at out-of-state offices?
No Texas tax on the out-of-state-installed equipment -- correctly handled. A Texas-headquartered company leases computer equipment (including PCs) from an out-of-state lessor permitted to collect Texa…
Is a Texas travel group's lump-sum charge (event ticket plus hospitality access) for an out-of-state amusement event, like the Ryder Cup, subject to Texas sales tax?
No Texas sales tax is due. A group organized to attend the following year's Ryder Cup golf tournament in Massachusetts charged each member a lump-sum fee covering an event ticket and access to hospita…
Are subscription receipts for newspapers, magazines, periodicals, and trade journals mailed to Kansas subscribers subject to Kansas sales tax?
Taxable. When subscriptions for newspapers, magazines, periodicals, trade journals, and publications are taken within Kansas, sent to a printer or publishing house (inside or outside Kansas), and the …
When a hotel charges guests a fee for in-room pay-per-view movies supplied through a video company's equipment, who collects Kansas sales tax and who pays tax on the equipment?
The hotel collects sales tax on the guest movie fee; the video company pays tax on its equipment. The Department ruled the hotel 'should impose and remit Kansas state and local retailers' sales tax on…
Does a sale of a subsidiary in an IRC section 338(a) transaction require the target to recapture the investment tax credit it previously claimed under section 210.12?
Yes. When a section 338(a) election treats the sale of a target's stock as a deemed sale of all its assets, that is a 'disposition' for New York investment tax credit purposes, so the old target must …
Is buying shelving and store fixtures from a business that is closing down subject to Kansas sales tax?
Likely exempt as an isolated or occasional sale — if the facts fit. Kansas exempts 'all isolated or occasional sales of tangible personal property' (K.S.A. 79-3606), meaning a nonrecurring sale by a p…
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