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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Which of an armored transport company's many services (ATM cash replenishment, ATM repairs, vault storage, coin wrapping) are taxable in Texas?
Mostly taxable as security services, with two notable exceptions: coin wrapping and true maintenance (as opposed to repair) of real-property ATMs are not taxable if separately billed. An armored trans…
Can a Texas retailer refuse to accept a foreign shopper's export certificate from any customs broker except the one it exclusively works with?
Yes -- Texas law does not require a retailer to accept every licensed customs broker's export certification, and does not prohibit a retailer from having an exclusive arrangement with one particular b…
Are gaming lessons, casino-themed practice time, private casino-night party rentals, and a 'High Roller Club' membership taxable in Texas?
It varies by activity: gaming lessons are not taxable, informal practice time IS taxable as an amusement service, renting the whole facility for a private casino-night party is a nontaxable real prope…
Does New York sales tax apply to a recording studio's ISDN transmission of radio commercials, studio rental time, hook-up fees, or backup dubs?
Mostly untaxed, with two exceptions: transmitting finished radio commercials by ISDN to out-of-state destinations is a nontaxable interstate service (and its hook-up fee rides along untaxed), and bare…
Are purchases made by New York City teachers under the Teacher's Choice Program exempt from sales tax?
Yes. Purchases teachers make under the New York City Board of Education's Teacher's Choice Program are exempt from sales tax because they're made on behalf of a tax-exempt government entity, as long a…
Can New York City school custodians buy supplies for the Board of Education tax-free, and what paperwork do they need?
Yes, but with the right paperwork. School custodians buying supplies on behalf of the New York City Board of Education -- a tax-exempt government entity -- can make those purchases tax-free, but only …
Is a teleconferencing company's bridging fee taxable in Texas when its bridging equipment is located entirely out of state, even though Texas participants call in?
Not taxable -- because the bridging equipment that actually links participants together is located entirely outside Texas, the company's bridging service charges are not subject to Texas sales tax, ev…
Is building, equipping, and repairing an agricultural greenhouse exempt from Texas sales tax, and does an agricultural exemption certificate cover the repair labor too?
New construction of the greenhouse itself is not taxable (labor) and its materials can be bought exempt, but once built, repair LABOR on the greenhouse is always taxable -- only the separately-billed …
If a taxpayer's spouse dies during the year while receiving a pension, can the surviving spouse claim two separate $20,000 pension and annuity subtractions on their final joint return?
No. Because Petitioner did not have her own separate qualifying pension or annuity in 1997 — she only received her deceased husband's TIAA annuities as beneficiary — the joint return is limited to a s…
Does a Canadian manufacturer owe New York sales or use tax on custom window-washing equipment sold to a contractor and permanently installed on a New York high-rise?
Yes. Selling custom window-washing and maintenance equipment to a general contractor who permanently installs it on a New York high-rise is a taxable retail sale (or a taxable use if bought out of sta…
Does New York sales tax apply to executive-education course materials, textbooks, and licensing fees charged alongside teaching services?
It depends on what's actually sold: teaching fees are never taxable, but a course textbook physically transferred to the customer is a taxable sale of tangible personal property, while a true license …
Is designing a bank's retail interior a taxable design service or an exempt advertising service?
Taxable. Designing the interior space of a commercial retail establishment like a bank branch is a taxable interior decorating and design service, even though the goal is to attract customers and prom…
Is the sale of a prepaid phone card subject to New York sales tax?
No, not at the point of sale. Selling a prepaid phone card isn't subject to New York sales tax; tax is instead imposed later, on the charge for each intrastate call the customer makes using the card.
Is an advance payment under a prepaid annual services plan taxable when received, or only when the customer actually uses a taxable service?
The advance payment itself isn't taxed when received. Under an Annual Discount Plan where a customer prepays for a bucket of services to be drawn down over the year, sales tax is triggered only when t…
Could financial hardship or an accountant's bad advice excuse interest on Connie Schaekel's late-paid New Mexico gross receipts tax?
No — interest was mandatory regardless of hardship or the reason for late payment, so the protest was DENIED. Schaekel worked part time as an independent contractor setting up sales displays in 1993 a…
Is a telephone company's Universal Service Fund (USF) surcharge passed on to customers subject to Texas sales tax?
Yes, taxable -- the USF reimbursement charge is part of the sales price of the telecom service itself and is taxed the same way the underlying service is. A telephone cooperative that owns a cellular …
Did Texas treat troops and branches of the named national youth organizations as exempt from motor vehicle tax?
Yes. The 1998 letter said all troops or branches of the Boy Scouts, Girl Scouts, Camp Fire Girls, Boys Clubs, and Girls Clubs had been determined to be federal-government instrumentalities and were ex…
Could an Alaska Native jewelry maker avoid back gross receipts tax on sales at Santa Fe's Palace of the Governors because payment would cause severe hardship?
No — Maize Elford-White's museum-portal jewelry sales occurred outside her native lands and were subject to New Mexico's nondiscriminatory gross receipts tax, while hardship did not authorize abatemen…
Did a corporation owe a payment with its 1998 annual-report extension request when its prior initial report showed zero taxable capital and zero taxable earned surplus?
No. The electronic-funds-transfer taxpayer chose the option requiring 100 percent of the tax reported for the previous year. Because its previous report was an initial report showing zero net taxable …
Could a licensed CPA sign a Texas franchise-tax extension as an authorized agent after receiving verbal authorization from a corporate officer?
Potentially, but CPA status and verbal authorization did not make the answer automatic. The letter said an authorized agent was a person legally empowered to act for the corporation, and a CPA was not…
Was a member's transfer of funds to an LLC excluded from stated capital and surplus as debt?
Only if the transfer was debt under Section 171.109: a legally enforceable obligation for a certain amount of money payable within an ascertainable period or on demand. Funds intended as contributed c…
How does a Texas bank treat interest from, and gains and losses on the sale of, U.S. government obligations for franchise tax?
Interest from federal obligations is excluded from the earned-surplus base and gross-receipts factor, but is included in the bank's taxable-capital gross receipts. For a Texas-domiciled bank, interest…
Does Texas's manufacturing exemption for water-reduction/wastewater equipment cover the connecting piping, and are lubricants used to maintain exempt manufacturing equipment also exempt?
Piping only qualifies for the water-use-reduction exemption if it's a genuine component PART of a single piece of exempt equipment (not general intraplant transport piping), and lubricants/chemicals u…
Are gross receipts from selling internet disk space (server storage) and web-page design subject to Kansas retailers' sales tax?
No. A company planning to form an LLC to resell disk space and access on a server and to design World Wide Web pages asked whether those internet services are taxable. The Department ruled that gross …
For a company selling check-processing hardware/software to Texas banks and government agencies, which specific charges (hardware, software, installation, training, maintenance, travel) are taxable?
Most charges are taxable, but a few specific ones are not: installation performed by an unrelated third party (for software that party didn't sell), on-site or out-of-state training (if separately sta…
Is a restaurant's ice machine exempt from Texas sales tax if it makes ice served directly to customers in drinks?
Yes, exempt -- but only if the ice machine is used exclusively to produce ice served to customers in their drinks; any other use (like ice for a salad bar or drink coolers) is a divergent use that tri…
Can a company leasing purifier/vaporizer/piping/storage-tank equipment to a semiconductor manufacturer buy it tax-free and lease it tax-free too?
Yes on both ends -- the equipment can be purchased tax-free with a resale certificate, and the monthly facility fee charged to the semiconductor manufacturer can also be exempt if the manufacturer pro…
How did Texas distinguish a purpose-built concrete pump from a pump attached to a conventional truck chassis, especially when supplied with an operator?
A purpose-built, movable specialized concrete-pump unit was taxed under Chapter 151. A conventional cab chassis with a pump attached was a motor vehicle under Chapter 152. Supplying that truck with a …
How did South Carolina treat a single-member LLC for income tax, corporate license fees, and deed recording fees under RR 98-11?
South Carolina followed the LLC's federal classification. A disregarded LLC was treated as its individual owner's sole proprietorship or its corporate owner's division; an LLC electing corporate treat…
For an oil-field equipment lessor and its affiliated delivery company, which of their many charges -- delivery, installation, disassembly, sewage pumping, garbage removal, water hauling -- are subject to Utah sales tax?
It splits by service. Common-carrier delivery, sewage pumping, and garbage removal are not taxable; installing and disassembling the leased equipment is taxable; hauling water is not taxable but selli…
A corporation overpaid sales tax on manufacturing equipment, then dissolved and contributed that equipment to a new partnership. Can vendors assign their right to a tax refund directly to the successor partnership using the corporation's old assignment forms?
No. To assign a refund, the vendor must have a valid exemption certificate from the actual purchaser — and the dissolved corporation, not the partnership, was the purchaser. The partnership can't issu…
Was a partnership's transfer of vehicles to a titling trust taxable when the trust paid or assumed vehicle debt?
Yes, if the trust satisfied the partnership's debt by making payments or formally assuming it. Texas treated the partnership and trust as separate entities, so that debt relief was consideration and t…
When a company has a sales office in one city and stores/ships its product from a warehouse outside that city, which location's sales tax rate applies?
The warehouse/storage location controls, not the sales office. When a sale involves more than one Utah business location, Utah Admin. Code R865-12L-5(C) sources the sale to where the goods are located…
Can a trade-in allowance reduce the taxable gross receipts on a lease, and when does the trade-in count?
It depends on who owns the trade-in. Leasing tangible personal property is taxable under K.S.A. 79-3603(h). The Department ruled that a taxpayer may not reduce reported gross receipts by a trade-in al…
When were a Texas farm trailer, its repair labor, and its repair parts exempt from motor vehicle or limited sales tax?
A trailer could qualify for the Chapter 152 farm exemption if used primarily in qualifying farm or ranch production for sale; farm plates alone did not decide. Motor vehicle repair labor was untaxed. …
A monitoring/surveillance company collected Texas sales tax from Texas customers before it was permitted to collect Texas tax, and remitted that tax in good faith to a different state instead. Since it never got permitted in Texas until later, does it still owe that collected tax to Texas?
Yes, all of it. Under Tax Code Section 111.016(a), anyone who collects a tax or money represented to be a tax holds it in trust for Texas and is liable to Texas for the full amount collected — regardl…
A chemical processing plant is buying a redundant Honeywell computerized control system that runs its manufacturing operations. Is the computerized control system, and the software that runs it, exempt from Texas sales tax as manufacturing equipment?
Yes, if bought on or after October 1, 1997. House Bill 1855 amended Texas's manufacturing exemption to specifically cover electronic control-room equipment and computerized-control units that power, s…
Did PLR 98-3 include a supermarket's purchase-based supplier allowances in taxable gross proceeds when customers used its loyalty card?
No. The supplier allowances were based on the retailer's past purchases or negotiations, not on particular customer sales, so they were outside gross proceeds. Tax applied to the discounted amount the…
An out-of-state contractor is building 12 miles of fence on the Texas side of the border under a lump-sum contract with the U.S. Section of the International Boundary and Water Commission (IBWC). Is the contractor exempt from Texas sales tax on the materials and services for this job?
Yes, for materials — because the contract is with the United States Section of the IBWC, which counts as a federal government agency under Rule 3.322(c)(1)(C), the contractor can use a Tax Code Sectio…
Is telecommunications service sold between related corporate affiliates exempt from Texas sales tax under the intercorporate services exemption?
No. Sales tax is due on telecommunications service charges even between related corporate affiliates. Texas started taxing telecommunications services in 1985, and Tax Code Section 151.346(c) specific…
A company runs credit and criminal background checks on prospective apartment tenants for property managers, faxing back the results for a fee. Is that service subject to Texas sales tax?
At least partly, yes, as of 1998. Furnishing credit information on a prospective tenant for a fee is taxable as a credit reporting service under Tax Code Section 151.0034. Whether the criminal-backgro…
What had to be present for a location to qualify as a corporate office facility for South Carolina job-credit and property-tax purposes?
The location needed managerial, professional, technical, and administrative personnel, and it had to perform the listed financial, personnel, legal, technical, support, and other business functions fo…
Could a New Mexico securities broker avoid penalty and interest because he did not know commissions were taxable, could not pass the tax to clients, and believed enforcement was unfair?
No — Gary Tixier conceded the securities commissions were taxable, and his fairness, selective-enforcement, delay, and hardship arguments did not defeat penalty or interest, so the protest was DENIED.…
How did Texas tax the Harris County/Houston Sports Authority charge, recovery fees, and airport franchise fee on a short-term rental?
The 5% Harris County/Houston Sports Authority tax was not included in the state rental-tax base. But line-item recovery of property tax, title, and registration expenses—and the 10% airport franchise …
For former earned-surplus apportionment, was a federal capital-loss carryforward used in the year applied or the year the loss actually occurred?
The actual-loss year controlled. Rule 3.557(e)(4) required excess capital losses carried back or forward for federal purposes to be used in computing receipts in the year the loss occurred, not the ye…
Did Texas tax vehicle transfers to a new subsidiary for stock and then to a new limited partnership for partnership interests?
No tax was due if the new subsidiary and partnership gave no consideration other than their stock or partnership interests. Assumed debt was consideration and would change the result. The limited part…
Does a rodent barrier used to protect stored farm machinery qualify as exempt farm machinery and equipment?
No. Kansas exempts sales of farm machinery and equipment under K.S.A. 79-3606(t), but the Department ruled that a product designed to keep mice from entering an encircled area around stored farm machi…
Must a Kansas buyer pay the compensating use tax billed by an out-of-state seller that has no Kansas warehouse, absent an exemption certificate?
Yes. An out-of-state seller registered to collect Kansas compensating (use) tax shipped equipment to a Kansas buyer and billed the tax; the buyer refused, arguing the seller had no Kansas warehouse. T…
How should Kansas county appraisers handle 'adverse influences' on agricultural land under the use-value formula so land is not adjusted twice for the same factor?
This 1998 memo from the Division of Property Valuation tells Kansas county appraisers how to handle 'adverse influences' when valuing agricultural land at use value. With detailed soil types now built…
Could Kids Love to Dance use nonprofit preschools' Type 9 NTTCs for dance lessons and costumes that it actually sold to the children's parents?
No — the Type 9 certificates did not support the deductions, and failing to read their restrictions was negligence, so the penalty-and-interest protest was DENIED. Type 9 NTTCs allowed governmental ag…
A planned Internet business will sell sports and horse-race betting selections to account holders for a fee, refunding a bonus amount if the pick loses. Can the business structure its fees so most of the charge counts as nontaxable consulting rather than a taxable information service?
No. Consultation services centered on the consultant's own expert or professional opinion are not taxable if unrelated to sales of taxable items, but consultation services that are really in the natur…
A permitted retailer is selling a used tug it had been using for its own hauling (not income-producing) to a company that plans to claim a ship/vessel sales tax exemption. Is the sale of the tug itself exempt?
No. The occasional-sale exemption (Tax Code Section 151.304, Rule 3.316) doesn't apply because the seller is a permitted retailer. And the ships-and-ship-equipment exemption for vessels in foreign or …
Was Comfort Air's president personally liable for employee withholding tax the company collected but its bookkeeper failed to send to New Mexico?
Yes — Pete Sisneros controlled wage payments and was an 'employer' under the Withholding Tax Act, so he was personally liable for $18,603.04 of Comfort Air's withheld-but-unpaid tax and the protest wa…
A seller lost its resale deduction because it didn't have the up-to-date exemption certificate in time. Can a later, more lenient law be applied backward to save the deduction?
No — the 1997 law that restored a 60-day grace period does not apply retroactively, and the seller's negligence penalty stood, so the protest was DENIED. Jobe Concrete Products, an El Paso company, so…
Did a Texas corporation's gain from selling an interest in a Texas LLC to a Delaware-formed LLC produce Texas gross receipts?
No, to the extent the gain was recognized as federal revenue. The Comptroller treated the 87.5% LLC membership interest as an intangible asset. Because the acquiring payor was legally formed in Delawa…
The FCC assesses telecommunications carriers for the Federal Universal Service Fund (USF), similar to the state's Telecommunications Infrastructure Fund (TIF) assessment. When a carrier bills this USF charge through to its customers as a reimbursement, is it subject to Texas sales tax?
Yes. The USF assessment is made against the telecommunications carrier, not directly against the customer — whether it counts as a 'tax' or 'surcharge' is a question for the FCC, not the Comptroller. …
Did a corporation have Texas nexus when its only Texas activity was employees developing software rather than soliciting business?
Yes. The corporation had no other Texas operations, but Texas employees wrote software code for products sold to real-estate-industry customers. Even though those employees did not solicit business, t…
Does Kansas use tax apply to promotional materials a printer is obligated to deliver to a Kansas address?
Yes. Kansas use tax is levied for the privilege of using, storing, or compounding tangible personal property in the state, at a rate of 4.9% of the consideration paid. The Department ruled that a comp…
A school district paid its state taxes late because of computer problems and argued a penalty just takes money from classrooms. Does it still owe the penalty?
Yes — the negligence penalty was upheld and the protest was DENIED, because a public school district is held to the same standard as any other taxpayer. Los Alamos Public Schools files and pays gross …
A company bought a tetrafluoroethane reclaimer machine to recapture refrigerant from truck air conditioners during repairs, instead of letting it vent into the atmosphere. Is the machine exempt from Texas sales and use tax because it protects the environment?
No. The purchase of the tetrafluoroethane reclaimer machine is subject to Texas sales tax. The Tax Code contains no exemption for equipment purchased to repair air conditioning systems, even though th…
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