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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Can a New Mexico couple claim full income-tax refunds by arguing wages aren't taxable, the Sixteenth Amendment wasn't ratified, and the graduated income tax violates the state constitution?
No. The refunds were denied. Wages are income — New Mexico builds its income tax on federal adjusted gross income, and 'gross income' means all income from whatever source, including compensation for …
If a Utah cabinet maker's materials end up installed as real property in another state, does Utah give credit for use tax paid to that other state, or is Utah tax simply not owed at all?
No Utah tax was due at all, on these facts -- so there was nothing to credit. Utah Code Ann. § 59-12-104(33) exempts property sold in Utah that is later shipped out of state and incorporated into real…
Could a former lessee use the previously leased vehicle as a trade-in deduction when buying a different vehicle from a dealer?
Not in the described separate transactions. If the dealer bought the old lease vehicle from the lessor and separately sold the customer another vehicle, the customer's purchase contained no trade-in. …
When did a Texas resident stationed elsewhere owe use tax on an out-of-state vehicle registered for Texas use?
At Texas titling and registration. The vehicle was registered for use in Texas, and § 152.041 prevented the county from accepting a title application unless tax was paid. The Comptroller therefore app…
When a financial institution outsources its whole computer and data processing operation, which of those services are exempt as 'outsourced' -- and what about work it used to do for its clients rather than for itself?
Only the 'own use' work is exempt. When a financial institution outsources its entire computer and data processing operation to an unrelated provider, the services the institution formerly performed f…
Is gas consumed by pollution-control equipment to treat manufacturing by-products exempt from Kansas sales tax?
Yes. K.S.A. 79-3606(n) exempts tangible personal property consumed in production or manufacturing — including the treating of by-products or wastes derived from a production process. The Department ru…
Does a worker who does piece-work engraving on the side owe New Mexico gross receipts tax on it, even though her employer already paid tax on the engraved goods, and can she treat the pay as exempt wages?
Yes, she owed the tax, and no, it wasn't exempt wages. A worker paid by the piece to engrave — using her own tool, on her own schedule — was an independent contractor, not an employee, so her engravin…
Is Texas sales tax due on software sold over the internet and downloaded from a Texas-hosted server, when the customer downloading it is located outside Texas — and what records does the vendor need to keep to support that?
No Texas tax is due when an out-of-state customer downloads software from a Texas server. The vendor must keep records showing the customer was located out of state at the time of the download — the a…
Did PLR 98-1 impose South Carolina sales or use tax on a digital imaging company's electronic work for newspaper advertising inserts?
No. On the stated facts, the imaging company produced and transferred images entirely electronically and delivered no tangible personal property in South Carolina, so its charges were not subject to s…
When a ski resort buys a complete, installed passenger tramway system in a turnkey deal, which parts of that purchase — the tramway itself, its cement foundations, the lift house — qualify for Utah's passenger tramway sales tax exemption?
It splits by component. The tramway itself — including its towers and any relocatable accessories or lift houses — is tangible personal property under Utah Admin. Rule R865-19S-58, both before and aft…
Is a university's annual campus vehicle registration fee, separate from its parking fee, subject to New York sales tax?
No -- the vehicle registration fee is not subject to sales tax, because it's a genuinely separate charge for identifying and documenting vehicles on campus (unrelated to parking privileges), not a fee…
When two construction companies form a joint venture and each contributes equipment, is that equipment subject to sales or use tax?
It depends entirely on the structure of the arrangement, not on the fact that it's a joint venture. If a partner simply contributes equipment as its capital stake in exchange for a share of the ventur…
Are an underwater/topside inspection and reporting subconsultant's services for government infrastructure projects subject to New York sales tax?
It depends on what the inspection and reporting is for. If the services support a real-property repair or maintenance project, they're taxable as maintaining real property; if they support a capital i…
If accumulated sick-leave hours were earned entirely during an out-of-state job, but the lump-sum payout check arrives after the employee has already moved to New York and become a resident, is that payment taxed as New York income?
No. Because the payment was for sick leave accumulated entirely during the taxpayer's prior Florida employment, before he became a New York resident, Tax Law § 639(b) treats it as accruing to the nonr…
If a New York domiciliary sells his last U.S. home and moves permanently onto a sailboat that sails away from the United States, can he still be treated as a New York nonresident for income tax purposes even though he never legally establishes a new domicile?
Yes. The Department found that Petitioner remained domiciled in New York because he never proved he had established a new fixed domicile elsewhere - living aboard a boat not tied to any particular new…
After bank regulators ordered an alien bank to cease all U.S. operations, do its wind-down and loan-servicing activities through an agent subsidiary still make it 'doing business' and taxable under Article 32?
It depends on the facts. The Daiwa Bank was ordered by bank regulators to cease all U.S. banking operations and surrendered its New York license. Activities its subsidiary (acting as Daiwa's agent) pe…
Is a subscriber programmed-music/audio service delivered by satellite subject to Kansas sales tax, including equipment charges?
Yes. Kansas taxes the gross receipts from cable, community antennae, and other subscriber radio and television services under K.S.A. 79-3603(k). The Department ruled that the service the company recei…
Are retail sales of hair care products subject to Kansas sales tax?
Yes. Kansas taxes the gross receipts from retail sales of tangible personal property under K.S.A. 79-3603(a), and the Department ruled that Kansas sales and use tax law provides no exemption for the h…
Are sales of multi-nutrient health foods and vitamins subject to Kansas sales tax?
Yes. Kansas taxes gross receipts from retail sales of tangible personal property under K.S.A. 79-3603(a), and the Department ruled that Kansas law provides no exemption for the sale of multi-nutrient …
Does finishing unfinished space in a previously constructed building qualify as exempt original construction in Kansas?
No, on these facts. Kansas exempts labor to install or apply property in the original construction of a building, and regulation K.A.R. 92-19-66b(f) sets a four-part test for treating the completion o…
Is transferring tangible personal property to a new corporation, partnership, or single-member LLC as part of a corporate restructuring, in exchange for stock or a membership/partnership interest, a taxable retail sale in New York?
No -- none of the three restructuring scenarios (contributing property to a new corporation for stock, to a new partnership for a partnership interest, or to a new single-member LLC for a membership i…
Are admission charges for Cirque du Soleil's theatrical acrobatic performances exempt from New York's admissions tax as live circus performances?
Yes, but only because of a brand-new exemption -- effective December 1, 1997, New York expanded its admissions tax exemption to cover live circus performances specifically, not just dramatic or musica…
What Utah taxes — property, sales/use, and corporate — will apply to a new S-corporation manufacturing business locating equipment, raw materials, and operations in a Utah county?
The Commission gave only general guidance since it lacked specific facts about the business, but covered all three tax areas asked about. Property tax: real and personal property in Utah is assessed a…
If the upper floors of a multi-story building are gutted down to the floor slab of each floor — but the building's ceilings, floors, and end walls stay standing — does rebuilding those upper floors count as untaxed new construction, the same way gutting a one-story building down to its slab would?
No. The one-story rule (demolish to the slab with no walls/framing remaining = new construction) does not simply carry over floor-by-floor in a multi-story building. Gutting upper floors down to each …
Is a forensic engineering firm's technical consulting for plaintiff attorneys — in lawsuits where the defendant's insurance coverage isn't the point of the litigation — automatically exempt from Texas sales tax as a non-insurance service, just because the client is a plaintiff's lawyer rather than an insurance company?
No blanket exemption exists just because the client is a plaintiff's attorney rather than an insurer or defense side — the sales tax law and Rule 3.355 draw no distinction based on who purchases the s…
Were utility late-payment fees finance charges excluded from South Carolina taxable gross proceeds under RR 98-4?
No. RR 98-4 treated electric, cable, and telephone late-payment fees as default charges rather than finance charges, so they entered taxable gross proceeds. RR 09-6 later superseded this ruling and ex…
If a software company accepts a customer's tax-exemption certificate that doesn't actually fit the transaction, can it avoid the negligence penalty when the deduction is later disallowed?
No. The negligence penalty was upheld. Sybase accepted a Type 9 exemption certificate — good only for sales of tangible personal property to governments or charities — on a roughly $2 million software…
A distributor buys 'zero-value' rechargeable phone cards from an out-of-state company, distributes them through take-one display racks and to churches/schools/clubs as fundraiser items, and earns a commission only when a customer later loads value onto the card by mailing a check or paying by credit card directly to the out-of-state company. How is Texas tax handled on the cards themselves and on the value customers later load onto them?
The blank cards themselves are tangible personal property subject to Texas use tax when the distributor buys them — but cards bought for resale (to the public via display racks, or to churches/schools…
Are $1 telephone debit cards sold through vending machines subject to Texas sales tax and the Telecommunications Infrastructure Fund (TIF) assessment, and how does tax get collected when the card's per-minute value is set at the time of use rather than sale?
Yes — as of this 1998 letter, $1-or-less vending-machine calling cards were treated as prepaid telecommunications services subject to Texas sales tax and the (then-existing) 1.25% TIF assessment; tax …
How is Texas sales tax figured on manufacturing and installing signs — is it always taxed as tangible personal property, or does it depend on whether the sign becomes part of the building and whether the job is new construction or remodeling?
Three questions decide it. First, does the sign stay identifiable as tangible personal property (tax on the full labor+materials charge), or become an improvement to real property? Second, if it's rea…
Is chartering a helicopter, with the pilot included, a taxable lease of the aircraft, or a nontaxable service?
It's a nontaxable service. Chartering an aircraft with a pilot included is not a taxable lease, regardless of whether the charge for the pilot and the aircraft is separately stated or billed as one su…
If a Texas partnership elects to be taxed as a corporation federally, is it subject to franchise tax, and can a corporate general partner deduct the partnership's losses?
The partnership is still not subject to franchise tax, and the corporate general partner cannot use the partnership's losses. A Texas limited partnership elected under Treasury Regulation § 301.7701-3…
When a multi-level marketing company (MLMC) sells products to its own independent distributors for their personal use (not for resale), should it collect sales tax on the wholesale price the distributor actually pays, or the retail price?
The MLMC should collect tax on the amount it actually charges the distributor for personal-use purchases — not the retail price — but only if the distributor tells the MLMC at the time of ordering tha…
If a company becomes a co-plaintiff to help a plaintiff collect a court judgment, and its compensation comes out of the judgment itself rather than a separate invoiced fee, does Texas sales tax still apply to that arrangement?
Yes. Helping collect a delinquent debt or judgment is a taxable 'debt collection service' under Tax Code § 151.0036(a) and § 151.0101(a)(8), and the tax applies to whatever the company receives for th…
Is a car wash exempt from Utah sales tax if paid for with coins, versus paid to a gas station attendant or by debit/credit card at the pump?
It depends entirely on the payment method, not on the fact that it's a car wash. Only a car wash activated by physically inserting coins into the machine is exempt from Utah sales tax under § 59-12-10…
How is the taxable base figured for a taxable installation/application contract, and can a contractor deduct overhead and profit?
The taxable base for a contract to install or apply tangible personal property is the difference between the contract price and the cost of materials, supplies, and subcontractor payments (including t…
For an audio/visual system installer doing remodeling work, are separately stated engineering charges (system design, drawings, installation supervision) taxable when the engineering covers both the equipment itself and the ceiling wiring that connects it?
Split treatment applies. Engineering charges attributable to the equipment (which stays tangible personal property, not an improvement to realty) are part of the taxable sales price of the equipment a…
When a business refurbishes and resells used or repossessed manufactured homes — sometimes for itself, sometimes as a broker for a lending institution — how is Texas sales tax handled on the sale of the home itself and on the parts/materials/tools used to refurbish it?
Only the first sale of a new manufactured home into Texas (manufacturer to dealer) is taxable — resales of a used manufactured home are not. But parts and materials used to refurbish a home you buy an…
Does an independent contractor who stocks shelves for a flat per-case fee owe New Mexico gross receipts tax, and can she avoid it as a sales commission or escape the penalty for not knowing about the tax?
Yes to the tax, and no to both defenses. An independent contractor paid a flat 25 cents per case to stock commissary shelves was 'engaging in business' and owed New Mexico gross receipts tax; her flat…
Can a New Mexico worker claim a full refund of income tax by arguing that wages aren't taxable 'income' and the federal income tax is unconstitutional?
No. The refund was denied. Wages are income — New Mexico income tax is built on federal adjusted gross income, and 'gross income' under the Internal Revenue Code means all income from whatever source,…
If a firm currently does nontaxable liquidation-related subcontracting work for Special Deputy Receivers of insolvent insurance companies, and plans to expand into marketing, reinsurance, and managerial consulting for insurance companies, will that new consulting work be subject to Texas sales tax?
Likely yes. Rule 3.355(a)(1)-(6) taxes insurance services performed pertaining to policies of insurance, and paragraphs (a)(4) and (a)(6) specifically include consultations. The Comptroller has alread…
A metal-failure-analysis forensic engineering firm that rarely works directly for insurance companies (mostly working for chemical plants/refineries, plaintiff attorneys, and defense attorneys) asks a detailed set of questions about exactly when its investigative work is taxable as an 'insurance service' — including cross-state cases where the incident, the client, or both are outside Texas.
Work performed directly for an insurance company is always taxable — collect tax automatically, no letter needed. For every other client (plaintiff attorneys, defense attorneys, direct corporate clien…
On a separated new-construction contract for an Enterprise Zone project, are a contractor's charges to the customer for its own equipment, rented equipment, equipment-with-operator, and profit markup taxable — and does the Enterprise Zone designation change any of this?
No special treatment applies just because the job is in an Enterprise Zone — the normal separated-new-construction rules apply. Charges the contractor bills the customer for its own equipment use, for…
Can a direct sales organization accept a resale certificate from one of its independent distributors, and does it matter whether that distributor works from home or runs a retail store/kiosk?
It depends on whether the distributor has a retail outlet. Home-based independent distributors are not issued Texas sales tax permits — the direct sales organization is treated as the retailer and mus…
Does a free-standing support bridge for hydrogen piping leading into a semiconductor cleanroom qualify for Texas's manufacturing equipment exemption, even though the bridge itself sits outside the cleanroom and isn't attached to the building?
Yes. The manufacturing exemption for cleanroom equipment covers piping and related equipment used in connection with manufacturing/processing/fabrication in the cleanroom, and that equipment does not …
Is the Texas Workers' Compensation Insurance Fund (successor to the Workers' Compensation Facility) exempt from sales tax on insurance services because it's a state-created entity?
No. Neither the Texas Insurance Code nor the Texas Tax Code exempts the Fund from sales tax, and Insurance Code § 12(c) actually requires the Fund to pay all taxes in the same manner as any other lice…
Which limited South Carolina contacts did RR 98-3 say would not, by themselves, create income-tax nexus?
Many isolated contacts did not create income-tax nexus by themselves, including remote product sales, an out-of-state website, South Carolina bank accounts, certain passive loans, temporary purchasing…
Do xerox-type copying machines used to sell copies as part of a commercial printing business qualify for Texas's manufacturing equipment exemption, and does it matter if the machines are acquired through a lease-purchase arrangement?
Yes to both. Copying machines used to produce copies sold as part of a commercial printing business qualify for the manufacturing exemption, and the exemption extends to leased equipment — the busines…
Is a scrap tire shredder's gate fee (charged to the hauler who brings in waste tires) taxable, and does it matter whether the shredded tire pieces end up in a landfill, get reused as landfill cover, go to a septic drain field, or get burned for energy recovery instead of a landfill?
Yes, the shredder's gate fee to accept tires from the hauler is taxable in all four scenarios — regardless of what ultimately happens to the shredded tire pieces (landfill burial, alternate daily cove…
If a business misses the 30-day deadline to protest a New Mexico tax assessment because the notice went to an old address of record, can it still challenge the assessment?
No — not through a protest. A New Mexico assessment mailed to the taxpayer's address of record is legally effective even if it is never actually received, so the 30-day protest clock ran and a protest…
If someone reports handyman income on a federal Schedule C but actually only fixed up their own home for free, do they owe New Mexico gross receipts tax on it?
No. The assessment was abated. New Mexico gross receipts tax applies only to services performed for other people for consideration, so a man who reported handyman income on his federal Schedule C but …
Could a qualified Subchapter S subsidiary and its parent S corporation file one consolidated Texas franchise-tax report?
No. The QSSS and parent S corporation each had to file a separate franchise-tax report because Section 171.001(a)(1) imposed tax on each corporation and Rule 3.544(c) prohibited consolidated reporting…
Does an out-of-state publisher have Utah sales tax nexus just because it owns a subsidiary that is already registered and collecting tax in Utah?
No, not on these facts. An out-of-state publisher whose only Utah contact is direct-mail sales does not have Utah sales tax nexus merely because it owns a subsidiary that is registered and collects ta…
What amount is the Kansas 10% tobacco products tax charged on — and can a distributor deduct discounts?
The 10% Kansas tobacco products tax is charged on the wholesale sales price — the amount shown on the manufacturer's original invoice. Under K.S.A. 79-3371 the tax is 10% of the wholesale sales price …
Did a vehicle-loan co-signer owe Texas motor vehicle sales tax when the buyer defaulted and the co-signer paid the loan and took title?
Yes, assuming the person was only a co-signer rather than a co-borrower or co-purchaser. A true co-signer merely guaranteed the financing and was not an original purchaser or initially liable on the n…
Is a city's fee for accepting used tires at its 'landfill' taxable, when those tires are actually just stored there temporarily and then hauled away by a contractor to a different disposal site rather than being buried at the landfill itself?
Yes. Even though the site is called a landfill, functionally it's acting as a transfer station for the tires — they're staged there until there's enough volume, then hauled elsewhere for actual dispos…
Did a foreign corporation have Texas nexus because it was the general partner of a partnership doing business in Texas?
Yes. Although the foreign corporation described itself as a passive pass-through entity with no direct Texas business, its business questionnaire showed that it was general partner of a partnership do…
How did an LLC that elected out of federal partnership treatment compute earned surplus when members had different asset bases and depreciation methods?
It used a pro forma Form 1065. The LLC had to make the federal elections required of an LLC treated as a partnership and compute asset basis as though it had not elected out of partnership treatment. …
Is a stand-alone traffic-directing charge (by a police officer or valet parker) taxable in Texas, separate from any charge for parking or valet parking the vehicle?
No. Traffic directing provided on a truly 'stand alone' basis — with no connected parking or valet parking charge — is not taxable. It only becomes an issue if the traffic-directing charge is bundled …
If a business pays its New Mexico CRS taxes one day late because its sole bookkeeper was sick, can it avoid the late-payment penalty and interest?
No. Both the penalty and interest were upheld. Running a one-person office with no backup for the bookkeeper — and routinely waiting until the last possible day to pay — was negligence for penalty pur…
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