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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Is a third-party restaurant delivery service's own delivery fee taxable, when the service isn't the seller of the food itself?
Not taxable -- because the delivery company isn't the seller of the food. This is a CORRECTED letter (the Comptroller withdrew an earlier August 11, 1998 response on the same question). A restaurant d…
Which chemicals added to natural gas — odorants, dehydrating glycol, anticorrosion chemicals — are exempt from Kansas tax?
It depends on the chemical and the buyer. Odorants (capstan or thiophane) are an integral component of natural gas and are exempt no matter who buys them. Dehydrating chemicals like triethylene glycol…
Does the $2,500 alternative-fuel income tax credit cap apply per vehicle or to all alternative-fueled motor vehicle property?
The cap applies per qualified property expenditure. It is the opinion of the Department that the $2,500 cap ($2,000 on or after January 1, 1999) under K.S.A. 79-32,201 limits the tax credit for each q…
Were Berryman Ranch's receipts for nonexclusive hunting access deductible as a sale or lease of New Mexico real property?
No — the ranch sold taxable licenses to use real property, not a profit a prendre or a lease, so the protest was DENIED on the legal issue. Berryman charged three hunters $2,000 each per year for none…
Did Texas motor vehicle rental tax apply to airport franchise fees, separately stated insurance, and collision damage waiver charges?
The assumed airport franchise fee was the rental company's expense and part of the taxable rental price. A separately stated true insurance charge was not taxed. But a collision damage waiver was not …
Does a 501(c)(3) nonprofit automatically get a Kansas sales tax exemption on its purchases?
No. Kansas does not extend a general sales tax exemption to not-for-profit organizations, so a 501(c)(3) center is exempt only if it fits one of the specific exemptions listed in K.S.A. 79-3606. The D…
Are internet charges to customers taxable in Kansas, and can an internet provider buy telephone lines for resale?
Internet charges to customers are not taxed, but the provider's telephone charges are. Because internet service is not enumerated in K.S.A. 79-3603, charges to customers for internet use are not subje…
Could Dain Rauscher obtain a retroactive extension after missing the deadline to protest New Mexico's failure to act on its tax-refund claim?
No — Section 7-1-24(B)'s extension authority applied only to protests of assessments and other peremptory notices or demands, not to protests involving a refund claim, so the late protest was DENIED. …
Are labor services to repair residential pools and spas exempt from Kansas sales tax, and what about materials or shop repairs?
The on-site repair labor is exempt; materials and shop repairs are not. Under 1998 Senate Bill 493 (effective July 1, 1998), gross receipts from repair services on residential pools and spas are exemp…
Is a mobile paper shredding and recycling service subject to Kansas sales tax?
No. A company that shreds and recycles paper at customer locations asked whether its service is taxable. The Department ruled that the service is essentially trash removal, and Kansas does not tax tra…
Is leasing hard-drive space on a computer system for storing voice and fax messages subject to Kansas sales tax?
No. A business that leases space on its computer system's hard drive — used by customers to store voice or fax messages that callers can access — asked whether the charge is taxable. The Department ru…
Does a catering business have to collect Kansas sales tax, and how is the tax sourced when food is delivered across state lines?
Yes. A catering business is a retailer that must collect Kansas retailers' sales tax on the total gross receipts from the food, meals, and drinks it caters. The tax is sourced to where the food and se…
Is a church's telephone service exempt from Kansas sales tax, and how does the church claim the exemption?
A church's telephone service used exclusively for religious purposes is exempt from Kansas retailers' sales tax under K.S.A. 79-3606(aaa), which exempts purchases by a 501(c)(3) religious organization…
Which buyers of horse feed can purchase it exempt from Kansas sales tax, and which exemption certificate applies?
It depends on the buyer. Horse feed can be bought exempt from Kansas sales tax by a feed dealer buying for resale, a horse breeder that will sell the offspring, a livestock operator feeding horses int…
Can a church buy its utilities free of Kansas sales tax, and what if the utility serves both exempt and taxable uses?
Yes, when used exclusively for religious purposes. Under K.S.A. 79-3606(aaa), a 501(c)(3) religious organization's purchases used exclusively for religious purposes — including utilities — can be boug…
Does a company owe Kansas sales tax when it only supervises subcontractors versus when its own employees perform the taxable labor?
It depends on who does the work. Where the company merely provides an employee to supervise taxable labor performed by subcontractors, it owes no Kansas sales tax on those receipts — the subcontractor…
How does a Kansas religious organization claim its sales tax exemption, and does it cover fuel or out-of-state purchases?
A religious organization claims the exemption with a certificate, not an exemption number, by giving vendors a completed exemption certificate for qualifying purchases under K.S.A. 79-3606(aaa). The e…
Is drug testing/screening (pre-employment, random, or post-accident) subject to Texas sales tax?
Depends entirely on the PURPOSE of the screening, not the type. Drug screening is NOT taxable unless it's performed for insurance-related purposes. Pre-employment and random drug screenings are NOT ta…
Did a passive Delaware corporation owe Texas franchise tax because it held a Texas certificate of authority and had a Texas mailing address?
Yes. The corporation's only asset was a limited-partnership interest, and it had no employees, operations, or tangible property. Even so, Section 171.001 taxed a corporation authorized to do business …
Does an organization qualify as a Kansas 'religious organization' exempt from sales tax if it lacks an established place of worship?
No. To qualify for the Kansas religious-organization sales tax exemption under K.S.A. 79-3606(aaa), a group must gather in common membership for worship at an established place of worship it maintains…
Could a person who was already a Texas resident and also a resident of another state claim Texas's new-resident vehicle tax?
No. Although a person could be a resident of more than one state for this tax, someone already resident in Texas was not eligible for the new-resident provision. The letter identified registering to v…
Can a tribe get a Kansas exemption for its government center construction, and how should it proceed?
The request is premature. Rather than rule on whether the tribe's government center qualifies for the K.S.A. 79-3606(cc) exemption, the Department directed the tribe to apply for a project exemption c…
Is a Texas-executed aircraft lease exempt from Texas sales tax when the lessee will fly the aircraft straight to Canada and operate it there as a commercial carrier, paying Canadian sales tax on entry?
Potentially exempt two different ways, but airworthiness/pilot paperwork alone doesn't prove it. An aircraft lease is executed in Texas; the lessee will fly the aircraft straight to Canada and operate…
Is a reclining chair with built-in massage and heating pads exempt from Texas sales tax when purchased with a doctor's prescription?
Exempt, but only with a proper prescription -- a standard recliner never qualifies. A reclining chair with built-in massage and heat pads qualifies as a therapeutic device and can be purchased tax-fre…
Are materials a contractor buys for a residential remodeling project subject to Kansas sales tax, and when is the tax due?
Yes. In Kansas a contractor is the final user of the materials it uses on a residential remodeling project, so those materials are subject to sales tax on their cost. A contractor pays the tax when it…
Are sales made by or on behalf of a PTA or PTO exempt from Kansas sales tax, and does the exemption cover services?
Goods sold by or on behalf of a parent-teacher association or organization — such as wrapping paper or candy bars sold by schoolchildren for a PTA/PTO — are exempt from Kansas sales tax under K.S.A. 7…
Are a school's fundraising sales exempt when made on behalf of a parent-teacher association, and what about services?
Goods sold on behalf of a PTA/PTO are exempt; services and the school's own sales are not. Under K.S.A. 79-3606(yy), when a school sells tangible personal property — flowers, birdhouses, concessions, …
Can a cable/telecom subcontractor buy the cable and hardware it permanently installs inside customers' buildings (schools, apartments, offices) tax-free for resale, when the cable is billed as part of a taxable telecommunications/cable service rather than sold separately?
Depends on whether care, custody, and control of the cable transfers to the actual service customer -- a fact-specific, location-by-location test. A cable/telecom subcontractor installs fiber/coax cab…
Does a 501(c)(3) endowment foundation that supports an educational institution qualify as an 'educational institution' for Kansas sales tax?
Yes. A 501(c)(3) foundation organized and operated exclusively to receive, hold, invest, and administer money and property as a permanent fund for the sole benefit of an educational institution qualif…
Does the residential remodeling labor exemption apply to the full amount a contractor bills the customer, or only to the underlying labor cost?
The exemption covers the full amount billed to the customer, not just the underlying labor cost. Under 1998 Senate Bill 493, effective July 1, 1998, labor services to install or apply property for the…
Is the retail sale of propane in 20-lb barbecue-grill tanks taxable in Kansas, and are the tank charges taxable too?
Yes. The retail sale of propane in 20-lb tanks — the kind used in outdoor barbecue grills — for residential use is subject to Kansas retailers' sales tax. The entire transaction is taxable, including …
Is labor to repair hail damage subject to Kansas sales tax, and does it matter whether the building is a residence?
It depends on the building. Hail is not among the casualties (fire, flood, tornado, lightning, explosion, earthquake) whose repair labor Kansas exempts, so labor to repair hail damage to a building or…
Does a nursing home count as a 'residence' for the Kansas sales tax exemption on residential construction and repair labor?
Yes. Under K.S.A. 79-3603(p), as amended by 1998 Senate Bill 493, installation or application labor services for the construction, reconstruction, restoration, remodeling, renovation, repair, or repla…
Does a nonprofit advocacy organization have to collect Kansas sales tax on the retail sales it makes?
Yes. A nonprofit advocacy organization that makes retail sales — here, selling items to raise awareness of the needs of children in Kansas — has no exemption from Kansas retailers' sales tax for those…
On a farmer's irrigation invoice, which well-drilling services, equipment, and materials are exempt from Kansas sales tax and which are taxable?
It depends on the item. The service of drilling a new water well is exempt, and services to assemble farm irrigation equipment are also exempt; the movable irrigation parts — pivot system, pumps, moto…
If two organizations merge to form a new entity, does the new entity inherit the predecessor's Kansas sales tax exemption?
No. The taxpayer asked whether a new entity formed by merging a national center with its local counterpart would receive the same K.S.A. 79-3606 sales tax exemption the predecessor organization held. …
Does a yoga instructor have to register and collect Kansas sales tax?
No — teaching yoga by itself is not a taxable activity. If a person's only activity is teaching yoga, they are not required to register as a Kansas retailer. But if they also sell tangible personal pr…
Is the retail sale of non-titled equipment that may be moved on highways subject to Kansas sales tax?
Yes. A retail sale of non-titled equipment — equipment that may be moved on highways but is not titled — is subject to Kansas sales or compensating (use) tax.
How does a Kansas retailer source sales tax on shipped and interstate sales, and when are backhoe services taxable?
Retail sales of stationery and greeting cards are taxable tangible personal property. For shipments, the sale is sourced to the place of delivery: delivery to a Kansas address is a Kansas sale (state …
Is installing or repairing a hot tub or spa at a residence exempt from Kansas sales tax, and what about the materials?
The labor to install or repair a hot tub or spa that is or will become a permanent fixture to real property at a residence is exempt from Kansas sales tax under the residential remodeling exemption. B…
A self-employed musician honestly didn't know he owed gross receipts tax and got the penalty waived. Does the state still have to charge him interest on the unpaid tax?
Yes — interest on unpaid gross receipts tax is mandatory and cannot be waived, even when the penalty is abated, so the protest was DENIED. Javier Padial played in a band at a Santa Fe hotel as an inde…
How did RR 98-18 distinguish South Carolina sales and use tax from the Catawba tribal tax for Reservation transactions?
Sales on the Reservation generally used a special tribal sales tax equal to the otherwise-applicable state and local rate, while off-Reservation sales generally used state and local tax. Tribal-govern…
What determined whether a service member bringing an overseas-purchased vehicle to Texas received ordinary use tax or new-resident treatment?
A service member with Texas as the home of record owed the ordinary use tax described in the letter. To receive the new-resident alternative, the title applicant had to be a new Texas resident and the…
How did a QSSS and parent S corporation report separately for the former Texas franchise tax, including parent investment and dividends?
The QSSS and parent were separate Texas taxpayers. The QSSS filed using its own income, deductions, assets, and liabilities, while Rule 3.556 computed earned surplus as if separate federal S-corporati…
Which parts of an agricultural irrigation system are exempt from Kansas sales tax as farm machinery, and which are taxable as real property?
It depends on the item. Movable irrigation equipment — the pivot system, pumps, motors, valves, column pipe, flowmeter, and similar parts — is exempt farm machinery and equipment under K.S.A. 79-3606(…
Are labor services on land improvements around a residence — driveways, fences, patios, pools — exempt from Kansas sales tax?
Yes, for land improvements that immediately surround and principally serve a residence. Under the residential remodeling exemption (K.S.A. 79-3603(p)(4), effective July 1, 1998), install/apply labor i…
Is Kansas sales tax due on tickets to performances held in Kansas, even if the tickets are sold elsewhere?
Yes, tax is due. Under K.S.A. 79-3603(e), Kansas imposes sales tax on the gross receipts from the sale of admissions to any place providing amusement, entertainment, or recreation services. Because th…
Are materials used to repair and repave private streets owned by a homeowners association (built to city specs but never dedicated to the city) subject to Texas sales tax?
Materials are taxable; labor is not. A contractor repairs streets in a gated residential community that were built to city specifications and inspected/approved by the city, but were never actually de…
Are litigation-support services -- process serving, obtaining records via deposition on written questions, courthouse research, filing motions, taking witness statements, and appearing in court on an attorney's behalf -- subject to Texas sales tax?
Not taxable. A litigation-support company described seven categories of services it provides to attorneys and others: (1) obtaining and serving subpoenas/deposition subpoenas; (2) preparing and servin…
Are direct-marketing mailing services and promotional-kit assembly taxable in Utah, and does it matter whether the customer or the vendor supplies the printed pieces or promotional items?
It depends on who supplies the tangible items being processed. When a customer supplies its own printed advertising pieces and the vendor only processes/sorts/inserts/mails them, the service is NOT ta…
Is a church's direct purchase exempt from Kansas sales tax, and how does it claim the religious-organization exemption?
Yes. The Department determined that the church is a 'religious organization' under K.S.A. 79-3606(aaa), so its direct purchases used exclusively for religious purposes are exempt from Kansas retailers…
Does a Kansas manufacturer charge sales tax on separately invoiced customized dies and artwork that stay in Kansas?
It depends on who the customer is. When a Kansas manufacturer sells to a bona fide reseller and bills the reseller for both the manufactured item and the customized items (dies, artwork, silk screens,…
Can a taxpayer recover interest when New Mexico stops sending bills or applies a payment to the wrong tax year?
Partly — Joseph R. Ruiz recovered $84.78 of interest caused by the Department's misapplication of his $249.54 payment, but he could not recover the rest of the interest that accrued while billing noti…
Is a 'Fastbreak Bar' meal-replacement snack bar exempt from Texas sales tax as a food product?
Exempt. A company's product (referred to as a Fastbreak Bar) is marketed and labeled as a meal replacement. Because of that marketing and labeling, the Comptroller confirmed the product is a nontaxabl…
Could a corporation deduct a federal net operating loss in Texas earned surplus, and how did the separate Texas business-loss carryforward work?
A federal net operating loss was not deductible because earned surplus began with federal taxable income before NOL deductions. Texas instead allowed a business loss—any negative amount after apportio…
Did Texas apply motor vehicle tax or limited sales tax to highway motorcycles, dirt bikes, and all-terrain vehicles?
A motorcycle designed for highway use was taxed under Chapter 152, with a qualifying motor vehicle trade-in reducing taxable value and dealer resale acquisition allowed tax-free. Dirt bikes and all-te…
After a midyear corporate buyout produced two federal short-period returns, did the acquired corporation file separate Texas franchise-tax reports?
No additional Texas reports were required. Assuming the acquired C corporation remained a separate legal entity doing business in Texas and continued its calendar year, both former tax components used…
If a taxpayer claims to have changed their domicile from New York to Florida, will the Department confirm that change in an Advisory Opinion, and who has to prove it happened?
The Department would not decide whether, or when, the Coopers' domicile changed from New York to Florida — that is a factual question that depends on individualized circumstances and cannot be resolve…
When a landlord buys electricity and its transportation separately and resells both to submetered tenants, is the entire charge taxable even if the components are separately stated?
Yes. A landlord who purchases electricity from one supplier and arranges transportation from the utility, then resells both to submetered tenants as electric service, must charge sales tax on the enti…
Are data-processing, remote-access, and information-storage billing services subject to New York sales tax when the resulting data isn't shared with other customers?
No. Billing and customer-care data processing, remote access, management reports, and information storage aren't taxable information services when the processed data belongs to and is reported back on…
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