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 club's fundraising sales exempt from Kansas sales tax because the proceeds go to youth groups like 4-H and Boy Scouts?
No. A club asked whether its fundraising sales were exempt because the bulk of the proceeds went to groups like 4-H, the Boy Scouts, and youth swim and track teams. The Department ruled that the fundr…
If you had a resale certificate but lost it, and you only get a replacement after the state's 60-day deadline, can you still deduct those receipts?
No. An architectural consultant sold his services to a firm that he believed had given him a Type 5 nontaxable transaction certificate (NTTC) showing the services were bought for resale, which would l…
Is a prescription bone growth stimulator exempt from Utah sales tax as home medical equipment?
Yes. The Utah State Tax Commission ruled that a prescription bone growth stimulator, owned by the patient (not the physician) and used only by that patient to treat a nonunion fracture, qualifies as e…
How does Kansas sales tax apply to a company's shipping/handling charges, distributor support fees, carrier damage payments, and newsletters mailed into Kansas?
A mix of results. Kansas sales tax is based on the retail selling price plus shipping, handling, or freight charged to the distributor. A carrier's payment to a retailer for damaged goods is recovery …
If an aircraft parts repair company does 90%+ of its work for licensed carriers but also repairs some pre-sale manufacturer components and used/military aircraft equipment, is the machinery and equipment it uses for ALL that repair work exempt from Texas sales and use tax?
Taxable -- the exemption requires EXCLUSIVE qualifying use, and this client doesn't have it. An aircraft parts repair company holding a Texas Direct Pay Permit does about 90% of its work repairing com…
Is an FDA-registered, prescription-only Vacuum Erection Technology (V.E.T.) system used to treat male impotence exempt from Texas sales tax when sold under a physician's prescription?
Exempt, when sold under a prescription. The V.E.T. (Vacuum Erection Technology) System is FDA-registered and sold only by prescription to treat male impotence. The Comptroller confirmed it qualifies a…
Is a maintenance contract on leased equipment taxable in Kansas, and does the repair shop charge the contract company tax?
The maintenance contract is taxable, but the repair under it is a resale. A company that leases trucks, cranes, and forklifts must buy required maintenance contracts and pay Kansas sales tax on the ma…
A contractor says a state tax employee's phone advice led it to pay its gross receipts tax late. Can that phone call get the interest excused?
No — relying on the oral advice of an unidentified Department employee does not estop New Mexico from collecting the mandatory interest on late-paid tax, so the protest was DENIED. Lauren Constructors…
Under the now-superseded RR 98-20, when was kerosene subject to South Carolina motor-fuel tax?
RR 98-20 imposed motor-fuel tax when kerosene was delivered into a highway vehicle's fuel tank or blended with undyed diesel fuel or gasoline. RR 18-3 expressly superseded and updated this ruling.
When a Texas company buys software hosted on an out-of-state server, with modification services performed partly in Texas and partly out of state, how is the license price and modification labor taxed based on where the licenses are used?
A layered answer that splits by delivery point, license location, and where labor happens. A Texas company (Company A) plans to buy software from an out-of-state vendor, installed on the vendor's serv…
Could an S corporation include capital losses, including excess losses after netting gains, in the former Texas earned-surplus calculation?
Yes. Rule 3.556(e)(9) included both capital gains and capital losses in the S corporation's federal-taxable-income and earned-surplus calculation. Gains and losses were netted, and any excess capital …
Does a nonprofit support group qualify for an exemption from Kansas sales tax?
No, not automatically. Being a nonprofit does not by itself exempt an organization from Kansas sales tax -- the exemption has to come from a specific statute. Senate Bill 493, signed by Governor Bill …
A company had refunds coming on some years' returns and an underpayment on others. Can it make the state offset the overpayments against the underpayment to cut the interest it owes?
No — New Mexico has no statutory authority to offset a tax overpayment against a past-year underpayment when calculating interest, so the protest was DENIED. CRST, Inc., an interstate trucking company…
Can a direct-sales company reduce the sales tax it collects on prepaid discount vouchers to reflect that only about 1% of the vouchers are ever actually redeemed?
No. A direct-sales/multi-level-marketing company sells 'Discount Redemption Vouchers' to independent distributors, who resell them (often at a steep discount) to purchasers who can later redeem a vouc…
Which of two related religious entities qualifies for the Kansas religious-organization sales tax exemption, and how must exempt purchases be documented?
One entity qualifies, the other does not — and exempt buys must be direct. An organization carrying out the ministry of the church met the Notice 98-05 criteria for the K.S.A. 79-3606(aaa) religious-o…
Is equipment or machinery that a contractor rents or leases to perform a realty-improvement job for a tax-exempt government or nonprofit entity itself exempt from Texas sales tax?
No -- machinery and equipment purchased, leased, or rented by a contractor is NEVER exempt, even on a job for a tax-exempt entity. A contractor was incorrectly told by another Comptroller staffer, cit…
Do a public warehouse's added services -- contract negotiation, site visits, and quality-control inspections -- change its status as a fulfillment-services provider, and do out-of-state customers get New York nexus by using it?
The added steps do not change the result. Distribution Unlimited's public-warehousing activities -- including the new contract-negotiation, site-evaluation, and periodic inventory and quality-control …
After a mail-order retailer closes its New York stores, does holding over the now-vacant leased store space until the leases can be terminated keep it taxable, or is that property de minimis under Public Law 86-272?
Exempt, with a final return required. After Egghead closed all its New York retail stores, its remaining New York activity is mail-order solicitation (catalogs and a web page, orders approved and ship…
Does a company owe Kansas sales tax for hooking up a network computer, selling parts, or servicing tangible personal property?
It depends on what the company does. Merely plugging a network computer into an electrical outlet does not obligate the company to collect Kansas sales tax. But if it sells parts to the end consumer, …
Does the Texas sales tax definition of 'licensed practitioner of the healing arts' (the professional whose prescription can trigger a medical exemption) include nurses or licensed therapists?
No -- nurses and licensed therapists are excluded. A taxpayer asked the Comptroller for a clearer definition of 'licensed practitioner of the healing arts,' the category of professional whose prescrip…
Why did a 1998 Texas short-term motor vehicle rental carry a 15% total tax rate?
The letter attributed the 15% total to a 10% state tax on rentals of 30 days or less plus a 5% tax imposed by a redacted sports or community venue authority. The ruling body does not identify the loca…
Is a gas well foamer product ('soapsticks' or 'acidsticks') purchased by a well operator and injected downhole to stimulate gas flow subject to Texas sales tax?
Taxable. A well operator purchases a gas well foamer product (also called soapsticks or acidsticks) and injects it downhole to turn water blocking a low-pressure gas well into suds/bubbles, lowering w…
Does an association of churches with an IRS 501(c)(3) letter qualify as a Kansas 'religious organization' exempt on its purchases?
Yes. An organization made up of religious organizations, holding its own IRS 501(c)(3) recognition, qualifies as a 'religious organization' under the exemption added by 1998 Senate Bill 493. Because i…
Are the oxygen, acetylene, and de-ionized water resin a tool maker uses in production exempt from Kansas sales tax?
They are exempt. A company that manufactures tools for resale asked about the oxygen and acetylene it uses to silver-solder carbide to steel and the de-ionized water regeneration resin used in its ele…
Which of a network marketing company's charges — labels, diskettes, reports, online access, clubs, leads, admissions — are taxable in Kansas?
Only the mailing labels and the sales-lead videotapes are taxable. The Department ruled that a network marketing company's sales of pre-addressed mailing labels and its separately-charged sales-lead v…
Can a print shop buy copier toner tax-free for resale copies, and are its copier maintenance agreements taxable?
Toner is exempt; the maintenance agreements are taxable. A company that runs printing presses and copiers to make copies for resale should buy its toner exempt from Kansas sales tax as an ingredient o…
Can a contractor give a resale exemption certificate to rent a personnel lift tax-free for a repair job in Kansas?
No. A welding contractor cannot use a resale exemption certificate to rent a personnel lift tax-free. Under K.A.R. 92-19-66c, contractors, subcontractors, and repairmen are the final consumers of the …
Does an American Red Cross chapter owe Kansas sales tax on books it includes in the fee for its first-aid classes?
No. The Kansas Department of Revenue has historically treated the American Red Cross and its chapters as instrumentalities of the federal government that are exempt from Kansas retailers' sales tax. T…
If a foreign bank employee is repeatedly transferred to New York for training and then assigned there open-endedly, in which years does he become a New York statutory resident?
He was not a New York statutory resident for 1993, 1994, or 1997, because although his New York City apartment became a 'permanent place of abode' once he leased it on October 1, 1997 (his assignment …
Does an open-ended, year-to-year-renewable program that temporarily transfers a multinational bank's foreign employees to its New York City branch make those employees New York State statutory residents under Tax Law § 605(b)?
It depends on the tax year. Because the transfer program has no fixed end date and the assignment's goal - enlarging an employee's knowledge of multinational banking - is a general purpose rather than…
Are sales of nutrition supplements taxable in Kansas?
Yes. Kansas sales and use tax law provides no exemption for the sale of nutrition supplements, so a company selling them must collect and remit Kansas sales/use tax on those sales under K.S.A. 79-3603…
Did a Chapter 42 child-care license by itself qualify a Texas facility's van purchase for motor vehicle sales tax exemption?
No. A Chapter 42 license alone was not enough. The facility also had to qualify to provide the specified 24-hour residential care for children, including the described groups that did not need special…
Are parts and labor for a restaurant's fire suppression unit (attached to fryers and grills) exempt from Texas sales tax as manufacturing equipment?
It depends on exactly what the fire suppression unit is attached to. A restaurant was being billed for parts and labor on a fire suppression unit -- some units needed full replacement (not up to code)…
Is a garage or covered parking space that comes bundled into an apartment lease (with no separate parking charge) taxable as a 'motor vehicle parking and storage service'?
Yes, taxable -- and the Comptroller's position is reinforced by the legislative acceptance doctrine. An apartment owner argued that garages and covered parking bundled into a unit's lease (with no sep…
Are a contractor's purchases of construction materials for a town-owned recreation facility exempt from New York sales tax, even though the contractor pays for construction and later gets a license fee to operate the facility?
Yes. Because the Town of Tonawanda will own and hold title to the recreation facility throughout construction and afterward, the contractor's purchases of materials that become an integral part of the…
If a mail-order retailer closes all its physical New York stores but keeps selling by catalog and internet, does it still need to collect New York sales tax?
No, once its physical presence ends. A mail-order retailer that closes all its New York retail stores and no longer employs in-state salespeople loses its New York sales tax nexus, even if it continue…
Is a moisture-survey company's roof inspection service subject to New York sales tax?
Generally yes. A roof moisture-inspection service is taxable as maintaining or servicing real property, but it's not taxed if it's performed solely for mandatory government code compliance, or if the …
Can a tire retailer buy tire-disposal service tax-free for resale when it charges customers a separate disposal fee for their old tires?
No. A tire retailer's charge to customers for disposing of old tires isn't itself an enumerated taxable service, so the retailer cannot treat its purchase of trash-removal service from a scrap tire pr…
Are fees for commercial security alarm monitoring, the sale/installation of the alarm system, and maintenance/repair charges subject to New York sales tax?
Yes, largely. A commercial security alarm system generally isn't a capital improvement (except separately stated wiring and cables sold to a property owner), so its sale, installation, monitoring fees…
Are fees for residential security alarm monitoring, the equipment used to provide it, and related installation/repair charges subject to New York sales tax?
Yes, largely. Fees for residential security alarm monitoring services, installation and repair of the equipment, and patrol car services are all taxable protective and detective services or installati…
Is buying and installing custom wood athletic lockers at a private golf club a capital improvement exempt from New York sales tax?
Yes. Custom wood athletic lockers built to a golf club's specific dimensions and installed like kitchen cabinets, with matching spacers, fillers, and moldings, qualify as a capital improvement because…
Are floating docks and their connecting ramps a capital improvement, so their sale and installation are exempt from New York sales tax?
No. Floating docks and their connecting ramps are not capital improvements because they aren't affixed to the shore or bottom with any real permanency -- they must move minimally with the tide, are de…
Is a bank trade-processing software license taxable as prewritten software even when the vendor must customize hundreds of settings before delivery, and are later custom modifications and support separately taxed?
Yes, mostly. The base trade-processing software license is taxable prewritten software even though the vendor must configure over 900 system settings for each customer before delivery, because the sof…
Is a telephone answering service subject to the section 186-e excise tax on telecommunication services, and is it taxed as a telephone business under sections 183 and 184?
No to both telephone-tax treatments. Viewed from the customer's perspective, an answering service is a general business -- the receptionist takes calls, distills messages, and relays them -- so it is …
Are foreign Importer Notes that PEFCO holds -- notes fully guaranteed and controlled by the Export-Import Bank -- investment capital under section 208.5, or are they loans made in the business of lending funds?
They are investment capital. Although PEFCO advances the funds, the Export-Import Bank controls the Importer Notes -- it selects the obligors, sets the interest rate by its formula, and drafts the cre…
Under RR 98-19, did South Carolina's manufacturing exemption cover computers and machines used in CAD, CAM, or integrated CAD/CAM systems?
Design-only CAD equipment was taxable because design preceded production. CAM equipment used in manufacturing goods for sale was exempt. Integrated systems were divided by function, and a dual-use mac…
For a company with both Texas and California offices sharing software licenses across state lines (via servers in either state, or a single floating license), how is each scenario taxed by Texas?
Three separate scenarios, each turning on where the software was purchased and where it's actually used. SITUATION 1 (software delivered to and purchased in Texas, later a California license added): t…
Is sales tax due on merchandise (like employee-discounted logo shirts, or safety training videos/workbooks sold to dealers) even when it's sold below the seller's actual cost?
Yes, taxable on the actual price charged, regardless of the seller's cost. A company asked two questions: (1) whether it needs to charge tax when it sells company-logo golf shirts to employees at 15% …
If a family sets up a tiered limited partnership and LLC structure, run by New York-based employees out of a New York office, purely to trade securities for the family's own account, do the nonresident family members owe New York State income tax or the New York City nonresident earnings tax on their share of the trading income?
No to both. Because the petitioner, Portfolio LP, and the Series G and Series J LLCs only buy, hold, and sell securities and financial instruments for their own account - with no broker/dealer activit…
How does an interstate trucker that switches from Article 9 (sections 183/184) to Article 9-A as a New York S corporation compute its short-period entire net income, and how does that flow through to nonresident shareholders?
The trucking company computes entire net income as if it were a New York C corporation for its full federal taxable year, then prorates that income under section 208.9(h)(1) for the six-month short pe…
How is Kansas sales tax applied to leases of tangible personal property, and when is a lease taxed as a sale instead?
It depends on the lease type. Under K.S.A. 79-3603(h), a true lease is taxed on the total of each lease payment as it comes due; Kansas has no provision letting a lessor prepay tax up front on a true …
Are admission charges to an ice skating rink taxable in Kansas, and who can buy admissions tax-free?
Admissions are generally taxable. Charges to admit organizations into an ice skating rink are subject to Kansas sales tax under K.S.A. 79-3603(e), which taxes admissions to places providing amusement,…
Could an independent sales consultant for a plumbing subcontractor deduct his fees as construction services by obtaining a late NTTC?
No — Jeffery Williams's sales consulting was taxable business activity, not a construction service, and his late NTTC could not support a deduction, so the protest was DENIED. Williams found residenti…
Were oil-and-gas lease receipts partnership receipts when a corporation transferred title by executed but unrecorded documents and kept collecting payments as agent?
Yes. Properly executed transfer documents vested ownership of the oil-and-gas leases in the partnership for franchise-tax purposes even if they were not recorded. The corporate general partner could c…
How does Kansas tax money converted from a traditional deductible IRA to a Roth IRA?
Kansas follows the federal rule. Kansas conforms to the federal treatment of converting a traditional deductible IRA to the new Roth IRA. For a conversion made in tax year 1998, the income is spread o…
Did Michael Beglau qualify as disabled for New Mexico's 1996 child day care credit while retraining for work that did not require heavy labor?
Yes — Beglau was disabled under Section 7-2-18.1(A)(4), so he and his wife were entitled to the $707 child day care credit and their protest was GRANTED. The Department argued that a person was disabl…
Is sandblasting sand (or similar raw materials like rock, gravel, dirt) taxable when purchased, and does it matter whether the sand has been sorted, washed, or crushed?
Depends on whether the material is 'processed' -- and specifically, crushing or mixing is what triggers tax, not sorting or cleaning. This is a CORRECTED letter (the Comptroller's original August 7, 1…
How does Kansas tax a residential security company's monitoring fees, equipment, add-ons, installation, and repairs?
Monitoring is not taxed; the provider is the consumer of its gear. Because security monitoring is not an enumerated service under K.S.A. 79-3603, the residential provider does not charge tax on monito…
For a commercial security company, when is a system a taxable sale versus a non-taxable monitored service, and how is each taxed?
It depends on the contract. If a commercial customer buys the system outright, that sale is taxable and the monitoring fee is not (monitoring is not an enumerated service under K.S.A. 79-3603). If the…
Are theatre membership fees subject to Kansas sales tax?
Taxable. Under K.S.A. 79-3603(n), Kansas taxes the gross receipts from dues charged by clubs, organizations, and businesses when payment entitles a member to use of facilities for recreation or entert…
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