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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For a software company that labels its programmers' department 'Research and Development,' does the computer equipment those programmers use to write mass-market software for sale qualify for the Texas manufacturing exemption?
Yes, exempt -- the department label doesn't control. A software company organizes development into marketing, research & development, and production departments, with the 'R&D' department's programmer…
We're an investor-owned utility. Years ago, a state energy authority issued bonds to finance pollution-control facilities at our power plants, backed by our first mortgage bonds, and the Department ruled that arrangement was exempt from mortgage recording tax. Now the authority wants to refinance (refund) those bonds with new ones, requiring us to amend and restate the same mortgage bonds. Does the exemption still apply to this refunding transaction?
Still exempt. Niagara Mohawk Power Corporation's first mortgage bonds had originally secured 1985 pollution-control revenue bonds issued by the New York State Energy Research and Development Authority…
Does a company owe Utah's oil recycling fee on motor oil bottles shipped through its Utah distribution center for resale outside the state, and does the environmental assurance fee apply to its packaged automotive products?
Split answer. The oil recycling fee ($0.16/gallon) properly applied when Mobil sold the motor oil to the company as the FIRST sale of that lubricating oil in Utah (§ 19-6-714) -- but if the company su…
Which of a farmer's water-well and irrigation purchases are exempt as farm machinery and equipment, and which are taxable?
It depends on the item. Under K.S.A. 79-3606(t), farm machinery and equipment — including irrigation pivot systems, pumps, motors, valves, and the well pump assembly — is exempt when purchased for far…
Is a table whose sole purpose is to support an electric rotisserie or mixer exempt from Texas sales tax as manufacturing equipment?
Taxable. A business asked whether a table whose sole purpose is to support an electric rotisserie or mixer would be exempt as manufacturing equipment. The Comptroller said the table is taxable, citing…
Does a 'Vapor Scrubber' that controls pollution while a finished product is in storage (after manufacturing is complete) qualify for the Texas manufacturing pollution-control exemption?
No, not exempt (as of this 1998 letter, but see the currency alert below). Pollution control equipment located within the actual manufacturing process area still qualifies for the Tex. Tax Code Sec. 1…
How is Kansas sales tax calculated on funeral charges, and is the state-paid portion of a burial taxable?
Under K.A.R. 92-19-15, the portion of a burial paid directly by the state of Kansas (or another political subdivision) is not subject to sales tax. For the rest, the taxation depends on how the funera…
Is a school choir's sale of 'Music Cards' -- which give the buyer a discount on future CD/audio tape purchases -- subject to Texas sales tax?
Not taxable -- the card itself is an intangible. A school choir contracted with a company to sell 'Music Cards' as a fundraiser: buyers pay a set price per card, the choir keeps a portion, and the car…
How should Kansas county appraisers adjust the agricultural use value of farmland that floods frequently, and under what legal authority?
Agricultural land that floods frequently gets a 20% reduction in its agricultural use value. This 1998 Division of Property Valuation memo tells county appraisers that if flooding has occurred at leas…
Does a nonprofit endowment association qualify as an exempt educational institution in Kansas, and must it still collect sales tax on its own sales?
Exempt on purchases, but it must collect tax on its own sales. The 1998 Legislature broadened 'educational institution' to include nonprofit endowment associations and foundations operating exclusivel…
A surveyor got the required nontaxable transaction certificates from his customers during the audit, but the version of the law in force then required him to have held them when he claimed the deduction years earlier. Does obtaining them late save the deduction?
No — under the stricter 1992–1997 version of the law, the certificates had to be in the taxpayer's possession when the deduction was claimed, so getting them during the audit was too late, and the pro…
Under the now-superseded RR 98-21, how were hotel room charges, mandatory fees, optional services, packages, and cancellations taxed?
Room charges and mandatory services generally used the ruling's 7% accommodations rate. Optional guest services often used a 5% additional-guest-charge rate or another sales-tax rule. RR 14-5 expressl…
Does a nonprofit that gives administrative support to a medical school's teaching faculty qualify as an exempt 'educational institution' in Kansas?
Not exempt. The 1998 broadened 'educational institution' definition (1998 Senate Bill 493) reaches groups of schools, endowment associations, athletic-receipt entities, and research foundations organi…
What must an organization show to qualify as an exempt 'religious organization' under Kansas sales tax law, and did this taxpayer qualify?
Not exempt on these facts. K.S.A. 79-3606(aaa) exempts purchases by a 501(c)(3) 'religious organization' used exclusively for religious purposes, but the statute defines that term narrowly: a group th…
If a manufacturer generates its own electricity on-site using natural gas engine generators, does the natural gas used to make that electricity qualify for the same manufacturing sales tax exemption as purchased electricity?
Yes, exempt. A plastic injection molding company already had a sales tax exemption on purchased electricity (backed by an engineering study showing 95% use in the molding process) and planned to start…
For a fine-art and antiques handling company, which of its services (airport supervision, packaging/crating, moving, installation, and storage) are subject to Texas sales tax?
Mixed, service by service. A company that handles and stores fine art and antiques asked the Comptroller to confirm the taxability of five services. Airport supervision of art transfers is TAXABLE as …
Did a foreign corporation create Texas franchise-tax nexus when its only asset and activity was an interest in an LLC doing business in Texas?
No. The foreign corporation's sole asset was a membership interest in an LLC doing business in Texas, it conducted no other activity, and it had no Texas certificate of authority. The Comptroller conc…
Does a funeral home or cemetery need to charge sales tax on an outer-burial container sold as part of a preneed or at-need funeral contract?
Depends on whether services come with it. A funeral home or cemetery should NOT charge sales tax on an outer-burial container -- whether sold preneed or at-need -- if it also provides services like th…
Is a purchase exempt from Utah sales tax if it's paid for with a U.S. government purchase, travel, or fleet credit card?
It depends on how the charge is billed. Utah sales tax does not apply to purchases made with a U.S. government purchase, travel, or fleet credit card when the transaction is billed directly to and pai…
Does a group have to collect Kansas sales tax on a food fundraiser it holds on behalf of an exempt youth development organization?
No tax to collect. K.S.A. 79-3606(ii) exempts sales of tangible personal property purchased directly by a nonprofit for nonsectarian comprehensive multidiscipline youth development programs, and 'all …
Are repair and installation labor services taxable in Kansas, including when performed for farmers?
Generally taxable. Under K.S.A. 79-3606(q), the service of repairing, servicing, altering, or maintaining tangible personal property is taxable, so servicing a lawnmower for a farmer or business owner…
Can a city split its taxable Solid Waste fee into a separate, untaxed 'Environmental Fee' covering community cleanup and environmental services?
No -- the whole fee stays taxable. A city proposed splitting its taxed Solid Waste fee into two components: a Waste Fee and a separate Solid Waste Environmental Fee (funding cleanup days, illegal-dump…
Can a company building a facility through an Industrial Development Agency deal buy, lease, install, and maintain the project's property tax-free when it acts as the agency's disclosed agent?
Yes, largely. When a company acts as the disclosed agent of an Industrial Development Agency (IDA) -- with purchase invoices and contracts naming the IDA as purchaser, lessor, or lessee -- its purchas…
A stucco subcontractor had a nontaxable transaction certificate but lost it and couldn't produce it during the audit. Can the state still deny the construction deduction — and does an early cashier's-check payment stop interest from running?
Both answers went against the taxpayer, and the protest was DENIED. Actionside Lath and Plaster, a stucco subcontractor, deducted $16,790 it received from a general contractor (Omega Sunspaces) as a c…
Is a nonprofit 501(c)(3) science-education organization exempt from Kansas sales tax on its purchases?
Not exempt. The Department could find no subsection of K.S.A. 79-3606 that exempts the purchases of a nonprofit 501(c)(3) organized to promote science education. Kansas sales tax exemptions are strict…
When a customer both resells and personally consumes the same type of product, does the supplier charge sales tax on everything, or can the customer buy it all tax-free and self-report the tax on what it consumes?
Buy everything tax-free and self-report. When a purchaser (like a veterinarian) can't separate, at the time of purchase, which goods will be resold from which will be personally consumed, Utah Admin. …
Is a homeowners association exempt from Kansas sales tax on its purchases?
Not exempt. Although 1998 Senate Bill 493 added sales tax exemptions for certain organizations (such as nonprofit zoos and parent-teacher organizations), the Department advised that 'not every non-pro…
Are oil and grease used in a commercial printer's presses exempt from Kansas sales tax as consumed in production?
Yes. The Department concluded that oil and grease used in a commercial printer's printing presses are exempt from Kansas sales tax as consumed in production. Lubricants used in manufacturing equipment…
Is a computer systems-integration consulting firm's charges for hardware, software, and support services subject to New York sales tax?
It depends on which service is being billed. Pure consulting, project management, systems management, and technology planning are not taxable; selling and installing computer hardware is taxable; sell…
Does a prescribed medical device that treats a bodily malfunction qualify for the Kansas sales tax exemption for prosthetic and orthopedic appliances?
Exempt when prescribed. K.S.A. 79-3606(r) exempts sales of prosthetic and orthopedic appliances prescribed in writing by a licensed healing-arts, dentistry, or optometry practitioner, defined to inclu…
Are Habitat for Humanity's materials and construction services for its housing projects exempt, and must it still collect tax on fundraising sales?
Materials and construction labor are exempt; fundraising sales are not. K.S.A. 79-3606(ww) lets Habitat for Humanity buy tangible personal property tax-free when it is incorporated into a housing proj…
Did a licensed Texas emergency shelter qualify for the residential child-care motor vehicle sales tax exemption?
Yes. The Texas Department of Protective and Regulatory Services said a licensed emergency shelter qualified under the Human Resources Code to provide the described 24-hour residential care. The facili…
Is rebuilding the tee boxes on an existing golf course taxable remodeling, or nontaxable new construction, for Texas sales tax purposes?
Taxable remodeling, not new construction. A country club completely demolished and rebuilt the tee boxes on its golf course and asked whether that counted as nontaxable new construction since the tees…
Is a vacuum-truck company's charge for hauling and disposing of drilling mud and saltwater from oil and gas production wells subject to Texas sales tax?
No, not taxable. Hauling and disposal charges for waste are generally taxable real property services in Texas, but Rule 3.356(a)(3)(B) carves out materials resulting from oil, gas, or geothermal explo…
Is a nonprofit hospice group exempt from Kansas sales tax on its purchases?
Not exempt. Although 1998 Senate Bill 493 added sales tax exemptions for certain organizations (such as nonprofit zoos and parent-teacher organizations), the Department advised that 'not every non-pro…
Are a community action group's materials and labor to repair or weatherize low-income housing exempt from Kansas sales tax?
Both are exempt. K.S.A. 79-3606(oo) exempts tangible personal property a community action group or agency buys to repair or weatherize housing occupied by low-income individuals, so the materials are …
How did Texas tax a sole proprietor's motor vehicles leased to a corporation for more than 180 days versus rented for 180 days or less?
For one contract exceeding 180 days, the lessor's vehicle purchase was taxable and the lease payments were not, whether the vehicles had already been used or were newly bought for leasing. A contract …
Is a service that collects driving-complaint calls and reports them to the vehicle owner subject to New York sales tax?
No. A service that collects driving-complaint calls through a toll-free number and reports them only to the individual subscriber (never incorporated into reports shared with others) qualifies as exem…
Our nonprofit hospital is building a new emergency facility, ICU, and parking structure using an off-balance-sheet 'synthetic lease' financing: we'll ground-lease our own land to a trust controlled by our lender for 49 years (nominal $1/year rent), the trust will lease it right back to us on a triple-net basis for up to 15 years while we actually build and pay for the improvements, and at the end we'll almost certainly exercise an option to buy back the trust's position. We have a sales tax exemption certificate as a nonprofit. Does this lease-and-leaseback structure trigger sales tax on construction materials/services, mortgage recording tax on the lease documents, or New York's Real Estate Transfer Tax on any part of the transaction (including our eventual buyback)?
Exempt across all three taxes, though for different reasons in each case. Beth Israel Medical Center ('Petitioner'), a voluntary nonprofit hospital and Tax Law Section 1116(a)(4) exempt organization, …
How are New York's College Choice Tuition Savings Program and its participants taxed for franchise tax, personal income tax, and estate and gift tax purposes?
The Program (and its trust fund and LLC) is a governmental arrangement, not a corporation or association, so it owes no franchise tax, income tax, or unrelated-business income tax. For participants: c…
A Texas company plans to resell satellite phone service (from a Netherlands provider, with ground stations in South America) to customers mostly based in Texas. What Texas taxes apply?
Sourced by where the call originates, not by billing address alone. A company planned to resell satellite phone service -- purchased from a Netherlands-based provider using ground stations in Venezuel…
Are purchases of medical supplies and equipment by a nonprofit nursing home exempt from Kansas sales tax?
Partly exempt. Under Senate Bill 309 (1987), all sales of medical supplies and equipment purchased directly by a nonprofit skilled nursing home or nonprofit intermediate nursing care home -- as define…
Does an out-of-state manufacturer that sells into Utah through independent sales reps have sales tax nexus and need to register, even if it believes its sales are tax-exempt?
Yes. The Commission ruled that an Indiana manufacturer selling into Utah through independent manufacturers' representatives (not merely advertising or direct-mail solicitation) had sales tax nexus wit…
Does a part-time Park City homeowner who mainly lives and works in Chicago qualify for Utah's primary residential property tax exemption, and does a landscaper or the homeowner pay sales tax on a tree that's planted at a client's home?
On residency: an individual who mainly lives and works in Chicago, using a Utah home only 1-2 months a year, is not domiciled in Utah on those facts and does not qualify for the primary residential pr…
Must a church collect Kansas sales tax on a months-long consignment fundraiser selling greeting cards for UNICEF?
The church must collect tax on the card sales. Kansas's new exemption for religious institutions extends to their purchases, not their sales, and because of the duration of the event no exemption reac…
How does Kansas tax an out-of-state dealer that builds fabric-covered steel farm shelters in Kansas?
The builder is a contractor-consumer and owes Kansas use tax on its materials. Fabric-covered steel-arch farm shelters are 'buildings,' so the dealer that builds them is a contractor and the consumer …
Are hauling and transporting services subject to Kansas sales tax?
Not taxable, with a catch on your own purchases. Kansas taxes only enumerated services, and transporting (hauling) services are not currently among them -- so long as you are not engaged in the sale o…
Must an alarm company charge Kansas sales tax on security monitoring fees, and how is a bundled monitoring-plus-equipment charge taxed?
Don't tax the monitoring fee; the provider pays tax on the equipment. Security monitoring is not an enumerated taxable service under K.S.A. 79-3603, so monitoring fees are not subject to Kansas sales …
A company bought a business division without getting a tax clearance, and years later the state demanded it pay gross receipts tax the seller was later audited and assessed. Is the buyer on the hook — and can it even challenge a tax bill that was issued to the seller?
The buyer was liable as a 'successor in business,' but — because it never got notice of the seller's assessment — it was allowed to challenge that assessment, and part of the audit math was thrown out…
Was a Texas motor vehicle rental exempt when the federal government or a federal employee traveling on official business rented the car?
Yes. The federal government and federal employees traveling on official business were exempt from Texas motor vehicle rental tax. The rental company was to have the renter complete a motor vehicle ren…
Did a homeowners' association qualify for the former Texas franchise-tax exemption when the development included commercial ranching property?
No. Section 171.082 required the development or project to be legally restricted to residential use. Because the development included commercial-use ranching property, the corporation did not qualify …
Can a money-losing, tax-subsidized public swimming pool program get a sales tax exemption on its admission and equipment rental fees just because charging tax feels like double taxation?
No. However sympathetic the district's situation, the Utah Tax Commission has no power to create a sales tax exemption on its own -- it can only administer exemptions the Legislature has already enact…
Is an aircraft delivered in Kansas through a chain of simultaneous transfers to a foreign buyer exempt from Kansas sales tax?
Exempt, if two conditions are met. The Department agreed that the simultaneous sale and delivery of the aircraft in Kansas is exempt from Kansas retailers' sales tax if (1) each entity in the chain of…
Are an interexchange carrier's gross receipts from 800-number calls exempt from Kansas sales tax?
It depends on whether the 800 service is WATS. Under K.S.A. 79-3603(b), only interstate wide area telephone service or wide area transmission ('WATS') service, as described in the statute, qualifies f…
Can a county assessor deviate from Utah's standard personal property depreciation schedules -- or use an income-approach impairment charge for real property -- when a taxpayer presents evidence of reduced value?
It's fact-dependent, not a blanket yes or no. A county assessor generally must use Utah's standard personal property depreciation schedules, but Rule R884-24P-33(B.3) allows deviation for a specific i…
Of the federal excise tax, state fuel taxes, and the state environmental assurance fee that appear on a petroleum invoice, which ones count toward the Utah sales and use tax base?
Only one of the five charges counts. The federal excise tax on petroleum products is excluded from the Utah sales tax base if separately stated, and Utah's own motor gasoline, aviation fuel, and speci…
Were foreign military personnel attached to NATO exempt from Texas motor vehicle sales tax, and what proof supported a refund?
Yes. Foreign military personnel attached to NATO were exempt, and tax already paid was refundable. The requester had to provide the county title-application and tax receipt, identification showing NAT…
Does Connecticut's controlling interest transfer tax apply when a parent merges one wholly-owned subsidiary that owns Connecticut real estate into another wholly-owned subsidiary of the same parent?
No tax. Merging one wholly-owned subsidiary of a parent into another wholly-owned subsidiary of the same parent does not transfer a controlling interest to anyone new -- the parent controls the real-p…
Two owners of closely held companies were paid by their own corporations but reported the pay as 1099 nonemployee compensation, not wages. Can they still claim the employee wage exemption from gross receipts tax?
No — they are bound by how they reported the pay to the IRS, so the wage exemption did not apply and the protest was DENIED. Louis and Carolyn Bortot managed two closely held family corporations that …
Are sales of discount cards and prepaid telephone cards subject to Kansas sales tax, and what use tax applies to promotional magazines?
Discount-card sales are not taxed as admissions; use tax reaches the magazines. The Department found K.S.A. 79-3603(e) does not tax the retail sale of discount cards that give holders access to discou…
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