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 glauconite (a naturally occurring mineral) exempt from Texas sales tax like other unprocessed natural materials such as sand, dirt, and gravel?
Yes, when sold unprocessed. Glauconite is treated the same as sand, dirt, and gravel: it's considered unprocessed — and therefore not taxable — if it has been merely sorted, sized, screened, washed, a…
Does setting up a temporary trade show booth in Utah for under two weeks create sales tax or income tax nexus for an out-of-state mail-order company?
Mostly no, with one catch. A temporary trade show booth in Utah for under two weeks doesn't create sales/use tax or income tax nexus by itself, but giving away catalogs at the booth is still a taxable…
When a car is leased with an extended warranty or service contract bundled in, is the sales tax on the warranty due up front or spread out with each monthly lease payment?
It depends on how the lease agreement structures payment for the warranty. If the extended warranty's cost is folded into the monthly lease payments with no down payment, sales tax is due monthly as e…
A business stores liquid in tanks and, before selling it to final consumers, filters out impurities using a pump-and-filter system — without this filtration, the product isn't marketable. Does that filtration equipment qualify for the manufacturing exemption?
It depends on facts the letter says weren't fully provided. If the client receives the liquid already in a MARKETABLE state and is merely filtering out impurities that accumulated from its OWN storage…
A refined sugar producer built three large 'conditioning silos' that dehumidify sugar as a final processing step before packaging. Sugar cycles through silo #1 for 24-36 hours, then may go on to silo #2 or #3 for additional, variable-length dehumidification. Do all three silos qualify for Texas's manufacturing equipment exemption?
Silo #1 qualifies for exemption (as a piece of manufacturing equipment, not counting its foundation, assuming it isn't installed under a lump-sum realty-improvement contract) because it's used for a s…
Are laboratory and analytical testing services (chemical, metallurgical, calibration) subject to Kansas sales tax?
No. The Department ruled that the testing services described — chemical analysis, analysis of mechanical properties, metallurgical testing, pressure/load/hardness/conductivity testing, and accuracy (c…
If an electronic tax payment fails through no human error and arrives late, does the taxpayer owe interest and a negligence penalty?
The taxpayer owed the interest but not the penalty. When NMSU's electronic (ACH) tax payment silently failed in transmission and arrived two days late, interest still applied — it's mandatory and stri…
A seller wants to sell one-time-use, USDA-approved polyester straps to meat packers, replacing the reusable stainless steel hooks currently used to suspend carcass beef in refrigerated rail trailers for shipping (the straps are also lighter and skip the hook-sanitizing requirement). Do these straps qualify for a sales tax exemption as packaging supplies?
Yes — the straps qualify for exemption as packaging under Rule 3.314 when sold to a meat packer that processes the meat for sale, since they function as a container/packaging supply used to ship and t…
When were foreign-source dividends excluded from former Texas taxable earned surplus and its receipts factors?
Foreign-source dividends were excluded from taxable earned surplus when included in federal taxable income under I.R.C. Section 78 or Sections 951-964, or when they met Rule 3.555(b)(3). An excluded d…
A refinery is relocating a large storage tank (exceeding 500 barrels, treated as real property) — tearing it down at its current location and rebuilding it, using the same materials in the same configuration, either elsewhere within the same facility or at a different facility. Is this relocation taxable?
The teardown, relocation, and rebuild are treated as nontaxable SERVICES, with the rebuild at the new location qualifying as new construction. In a new-construction contract, materials (but not labor)…
What registration and interstate-use conditions did Texas require for the motor vehicle tax exemption for interstate trucks, trailers, and buses?
Apportioned interstate trucks and tractors, and qualifying trailers pulled by them, could receive the § 152.089 exemption, subject to continued interstate use. STAR warns that cited rates are stale an…
An oil and gas well operator places its own compressors at well sites to boost gas pressure for working interest owners, billing them monthly under line items historically called 'compressor rental' (recently relabeled 'compressor services'). The operator's compressors were later sold to a commonly-owned affiliate, which now leases them back to the operator. Are the operator's compression services to working interest owners taxable rentals of tangible personal property, or nontaxable services — and does the billing label, or the separate affiliate lease-back arrangement, change that answer?
The compression services the operator provides to working interest owners are NONTAXABLE services, not taxable rentals — because the working interest owners never get physical possession, control, ope…
A notary public asked the Comptroller to confirm whether the document/record preparation services she performs for lawsuit participants are exempt from Texas sales tax, and whether she's now exempt from collecting sales tax altogether.
Her document/record preparation services for civil or criminal lawsuit participants ARE exempt from sales tax, under Tax Code Section 151.353's court reporting services exemption — covering documents …
A company bought a used forklift at a Texas auction intending to export it abroad, but the forklift needed major repairs first and sat at a Texas repair facility for several months before shipping. The company sought a refund of the sales tax it paid, arguing it never stored or actually used the forklift — only had it repaired. Does the export exemption apply?
No — refurbishing the forklift after the company took title to it counts as a USE of the forklift in Texas, and that use causes the loss of the export exemption on the original purchase, even though t…
If you didn't know your service work owed gross receipts tax and your tax preparer never mentioned it, can you avoid the penalty and interest?
No — the protest was denied. Interest is mandatory whenever tax is paid late, no matter the reason. And not knowing your service receipts owe gross receipts tax is still negligence in New Mexico's sel…
If you underpay New Mexico income tax by mistake and the state doesn't catch it for years, can you avoid the interest and penalty because the notice was late?
No — the protest was denied. Interest on unpaid tax is mandatory by statute, so the reason for a late payment (and the state's delay in catching it) doesn't matter. And failing to amend a New Mexico r…
A monthly publication is distributed free of charge at over 250 locations, funded by advertisers who pay for ad space. The publisher currently pays tax on its own printing materials. Does the publisher instead qualify as a 'controlled-circulation' publication — letting it buy printing materials tax-free with a resale certificate and instead collect tax from advertisers — and do the advertisers owe tax on their ad space purchases?
No, not on the facts described — this publication does not appear to meet the controlled-circulation test. Per Sharp v. Cox Texas Publications, a controlled-circulation magazine must show all five of:…
Can a chiropractor sell or dispense vitamins to patients tax-free in Texas?
Yes. A chiropractor is a licensed practitioner of the healing arts and may sell or dispense vitamins tax-free under Rule 3.284(b)(2)'s drugs and medicines exemption. To document the exempt sale, the c…
Is an out-of-state electronic health-claims clearinghouse subject to New York franchise tax when it installs equipment and trains customers here, and which of its fees and equipment are subject to sales or use tax?
On franchise tax: once the company acquires New York customers and sends employees in to install computer hardware/software and train customer staff, it is doing business and has property in New York,…
If an out-of-state seller makes taxable New Mexico sales but claims it has no in-state presence and doesn't show up to contest the assessment, does it owe gross receipts tax and the 50% willful-evasion penalty?
Yes — the protest was denied in full. A furnishings seller that claimed to be a Colorado company with no New Mexico office didn't appear at its hearing, so the presumption that the assessment is corre…
Is a service that administers employee business-expense reimbursements subject to Kansas sales tax?
No. A company that administers business-expense reimbursements to Kansas employers' employees — reimbursing employees for equipment they bought and already paid Kansas sales/use tax on — asked whether…
How were receipts from long-haul telecommunications circuits sourced when the provider supplied facilities but did not originate or terminate calls?
The provider was distinguished from the telephone companies covered by the call-originating and terminating rules because it supplied facilities but did not originate or terminate calls. Revenue attri…
A company plans to build a permanent oil-tool testing rig facility — a derrick, mast, substructure, and supporting equipment permanently mounted on a concrete foundation with embedded I-beams forming a tracking system, using TWO separate contractors (one for site planning/foundation, one for installing/hard-wiring the derrick and equipment). Does this qualify as new construction (an improvement to realty) for Texas sales tax purposes, and does splitting the work across two contracts change that?
Yes, the whole project is new construction — there's no existing test rig facility at the site, and the equipment is being permanently, irremovably attached (the derrick can't be detached from the I-b…
Does a radioactive-waste disposal company owe use tax on out-of-state-purchased containers it gives customers, and is its entire disposal charge taxable even though the waste and containers are ultimately buried or processed outside New York?
No use tax applies to the containers themselves, since they're actually transferred to the customer as part of a taxable disposal service rather than purchased at retail by the company. But the compan…
A taxpayer was audited, paid the resulting deficiency determination in full, then submitted additional documentation within 60 days that got some items amended. There are still other items the taxpayer believes are exempt but hasn't yet documented to the auditor. How much time does the taxpayer have to present that additional documentation without losing the ability to claim a refund — is it six months from the audit's final date under Tax Code Section 111.104, or does the normal four-year statute apply?
It depends on whether the specific item was already part of the audit. Tax Code Section 111.104(b) lets a taxpayer file a written refund claim within SIX MONTHS from the date the deficiency determinat…
Is a hazardous-waste broker's fee for arranging removal, transportation, and treatment/disposal of waste taxable when the waste is actually treated or disposed of outside New York State?
It depends on whether the waste is actually treated or disposed of inside or outside New York, and on whether the broker is acting as its customer's agent or as the actual service provider. Removing a…
Which telephone-company assets qualified for South Carolina's economic-impact-zone investment credit under PLR 98-2?
Qualifying communications assets included switching and terminal equipment, satellite towers, cable, and repair trucks and tools when they met the federal property, depreciation, original-use, and zon…
A company operates parking facilities in a large medical complex and sells monthly parking services to nearby tax-exempt organizations (like hospitals), which in turn let designated employees, physicians, nurses, volunteers, and directors use that parking for free while carrying out their work at the exempt organizations' facilities. The parking operator doesn't currently collect sales tax on these sales but does get exemption certificates from the exempt organizations. Is that correct?
Yes. Sales of parking services to an organization exempted under Tax Code Section 151.310(a) and Rule 3.322(f)(1) are exempt from tax when that exempt organization (or its authorized agent) pays for t…
A web developer whose services expanded into more on-line artwork asked how Texas sales tax applies to illustrations/graphics for a website, HTML/JAVA programming, multimedia programming, and professional consultation — and whether it matters if these are provided to companies outside Texas.
Creating graphics/logos with a drawing program for a client's homepage is taxable graphic art (Rule 3.312). Scanning data into a site and creating HTML documents is taxable data processing (Rule 3.330…
How do section 186, section 186-a, and the real estate transfer tax apply to LILCO's restructuring -- under threat of condemnation by LIPA -- including asset exchanges, redemption distributions, and transfers to disregarded LLCs?
Because LILCO is restructuring under threat of condemnation by the Long Island Power Authority (LIPA), the gas-and-generation asset exchange is not 'receipts from the employment of capital' and is not…
Is a competitive local phone carrier's purchase of fiber optic network access from an in-state network owner taxable, or is it exempt as a purchase for resale?
No -- the network access fees aren't subject to sales tax, because the local exchange carrier is buying the fiber optic capacity as a component of the telephone service it resells to its own end-user …
Is a driving school's road test vehicle usage fee taxable, and must it collect sales tax when it occasionally sells one of its cars to an individual?
The charge for supplying the vehicle itself for the road test is taxable as a rental, along with the special passenger car rental tax -- but if the driving school separately states and bills its nonta…
When can a rock quarry sell rock exempt from Kansas sales tax — to a trucker, a contractor, or a concrete plant?
It depends on the buyer. Kansas sales tax applies only to retail sales (sales to final users). A quarry may sell rock exempt to a trucker who gives a valid resale exemption certificate (the trucker th…
Is Kansas sales tax charged on a discount when the manufacturer offering it is not reimbursed?
No — not on that discount. Kansas taxes the gross receipts from retail sales (K.S.A. 79-3603(a)), and the taxable 'selling price' is the total cost to the consumer exclusive of discounts (K.S.A. 79-36…
Does an insurance company owe Kansas sales tax when a vehicle is totaled and the owner keeps it minus a salvage deduction?
No. Kansas sales tax applies to gross receipts from the sale of tangible personal property (K.S.A. 79-3603(a)). The Department ruled that when an automobile is determined a total loss and the owner el…
An outsourced digital pre-press/asset management company runs a Texas photography studio plus several product lines (digital photography, 2D/3D digital illustration 'Liquid Graphix,' resold data-communication solutions called 'ViNET,' and custom/modified software) delivered to customers via mail, contract carrier, or the Internet. The company asked a long list of Texas sales/use tax questions covering nearly every one of its product lines and business practices.
Yes across the board — having a Texas studio requires the company to be permitted and to collect/report Texas sales/use tax on its taxable Texas sales. Software sales are taxable tangible personal pro…
Is installing custom shutters and blinds as original equipment in a new home, before construction is finished, a tax-exempt capital improvement?
It depends on the item. Custom shutters installed as part of the original finish carpentry before construction was complete -- enclosing the window and door casings -- are excluded from tax as part of…
Does a new nonprofit LLC formed to manage a national laboratory meet the organizational test for New York's sales-tax exemption as a scientific/educational organization?
Yes -- based on the operating agreement submitted, Brookhaven Science Associates, LLC's purposes are limited to scientific research, education, and related exempt purposes, its earnings and dissolutio…
A manufacturer uses a third-party service company to handle its warranty repair claims (both original manufacturer's warranty and separate extended warranty). Is that third-party service provider required to charge the manufacturer Texas sales tax on its parts-and-labor claims — and does the answer differ for a regular manufacturer's warranty versus an extended warranty?
For the manufacturer's ORIGINAL warranty: the manufacturer may give the third-party service company an EXEMPTION certificate for the labor and material charges used to fulfill the manufacturer's warra…
Are a public broadcasting station's charges for producing and broadcasting a corporate client's private television program subject to New York sales tax?
No -- the broadcasting station's separately stated charges for producing and broadcasting the program (studio time, set-up and breakdown, employee time, and satellite transmission) are not subject to …
Are charges for leasing a private luxury suite at an arena, and separate charges for suite-related advertising, subject to New York's admissions tax?
It depends on the type of suite agreement. Under agreements granting permanent exclusive use of a suite, the rental is taxable admissions -- but only measured against the events for which the suite is…
Does a high-volume Xerox Docutech system that Kinko's uses to integrate, edit, and print customer materials qualify for New York's personal income tax investment tax credit?
Yes, but only conditionally. New York's Department of Taxation and Finance ruled that Kinko's Docutech Publishing System qualifies for the 4% investment tax credit under Tax Law § 606(a) if it is used…
Is furniture manufactured in New York and delivered directly to an out-of-state buyer in Nevada subject to New York sales or use tax?
No -- since the furniture is delivered directly to the buyer in Las Vegas and possession transfers there, not in New York, the New York manufacturer doesn't have to collect or remit New York sales or …
Are specialized roll-off containers a waste hauler buys to collect hot ash for a manufacturer's landfill-capping-material production exempt from sales tax as production equipment?
No -- the roll-off containers are subject to sales and use tax. Even though they're custom designed for hot ash and the ash is later used as raw material in another company's manufacturing process, th…
Did temporarily bringing an aircraft to Texas for repair while completing outside-signed sales, leases, and a novation create franchise-tax nexus for the parties?
No. The aircraft entered Texas temporarily for repair and renovation while Companies A through D completed a purchase, lease, later sale, and novation. Each company otherwise had no Texas business or …
Can a student training for a pilot certificate or the next level of flight rating (instrument, commercial, multi-engine, airline transport, etc.) claim a Texas sales tax exemption on aircraft rentals used for training, including solo flights?
Yes. A student enrolled in an FAA-approved program may claim exemption on aircraft rentals used for flight training, including instructor-approved solo flights (evidenced by a logbook endorsement, whi…
Were South Carolina timeshare and membership-resort accommodation exchanges subject to accommodations sales tax?
Yes. When South Carolina accommodations were furnished through a membership or timeshare exchange, the provider owed accommodations sales tax on the reasonable rental value of the exchanged stay plus …
Are a company's services helping nursing homes with the Medicaid resident-admissions process taxable in Connecticut as business management or business management consulting services?
Not taxable. A company's services helping nursing homes handle the Medicaid resident-admissions process are not taxable business management or business management consulting services under Conn. Gen. …
How did Texas treat use tax and later title transfer when a vehicle bought and taxed in another state was brought into Texas?
Historically, Texas use tax arose when the vehicle entered Texas, with credit for Michigan tax already paid. The letter's later $10 gift-tax result is superseded because 2009 law restricted which no-c…
Which purchases by a nonprofit domestic-violence shelter are exempt from Kansas sales tax — food, educational materials, or repair materials?
It depends on the item. Kansas has no exemption for the food a domestic-violence/rape shelter buys to provide meals, so those purchases are taxable. Free educational materials the shelter distributes …
Are annual membership dues charged by a newly formed private-club restaurant subject to Utah sales tax, when members vote for a board that sets the dues?
No, the dues are not taxable. Utah excludes annual membership dues to private organizations from its definition of taxable "admission or user fees," but only if the membership dues are paid by members…
Did an out-of-state company create Texas franchise-tax nexus by providing capital-lease financing without representation or financial activity in Texas?
No, on the stated facts. The company had no Texas representation and provided only capital-lease financing. The Comptroller said it was not subject to franchise tax. But Texas credit checks, gathering…
Does a public warehouse that stores and ships customers' inventory provide 'fulfillment services,' and do its out-of-state customers get New York franchise tax or sales tax nexus by using it?
Yes, and the customers get no nexus. Distribution Unlimited's public-warehousing activities -- storing manufacturers' and distributors' inventory and shipping it by common carrier on the owner's instr…
Which advertising-agency services are exempt from Kansas sales tax and which are taxable?
Some are exempt, some are taxable. Under K.S.A. 79-3606(pp), services rendered by an advertising agency are generally exempt from Kansas sales tax. But when the agency produces and sells tangible outp…
Is a commission-only encyclopedia sales representative an employee (exempt) or an independent contractor who owes New Mexico gross receipts tax on his commissions?
He owed the tax. A commission-only Encyclopaedia Britannica sales representative who set his own schedule, chose his own leads, paid his own expenses, and got a 1099 was an independent contractor, not…
For manufacturing equipment installed as real property, are replacement parts taxed differently than ordinary construction materials, and can labor/parts billed together be split by 'reasonable allocation'?
No on both points. Exempt manufacturing equipment and its replacement parts are treated as sales of tangible personal property no matter how they're installed, so parts aren't taxed under the real-pro…
Who paid Texas tax on a leased vehicle, what happened at an operating-lease buyout, and who owed local property tax?
The lessor paid motor vehicle sales tax on its purchase, while the lease contract was not taxed. If the lessee bought the vehicle at the end of a true operating lease, that was a second taxable sale b…
Does a nonprofit that is a 501(c)(7) social club — not a 501(c)(3) charity — owe New Mexico gross receipts tax on liquor sales to its members, and can it avoid the penalty for following a bookkeeper's wrong advice?
Yes, it owed the tax, and only partly avoided the penalty. New Mexico's gross receipts tax exemption requires an actual IRS grant of 501(c)(3) status; this land-grant heirs' association was a 501(c)(7…
Are coin-operated vacuum machines and tire-inflation machines at car washes and gas stations exempt from New York sales tax?
It depends on the machine and the location. Coin-operated vacuum services at a car wash facility (self-service or otherwise, as long as no employee assists) became exempt from sales tax on December 1,…
How were distributions from funds treated as series of one trust sourced for former Texas franchise-tax apportionment?
The trust's principal place of business controlled for both former tax components. Because each fund was described as a series of the trust, the Comptroller presumed the funds were not separate entiti…
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