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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Does a foreign life insurer with no New York certificate of authority owe New York tax if it makes mortgage loans on New York commercial real property?
It is doing business under Article 33 but, in practice, owes no tax. A life insurer that makes mortgage loans on New York commercial real property (sending employees in to find borrowers, do due dilig…
If a Utah telecom company bundles internet access, paging, and calling minutes into one monthly price, does the whole bundle owe sales tax?
It depends on how the bill is written. Intrastate telephone service, paging, and related charges are taxable in Utah, while internet/online access isn't -- but if a company bundles taxable and non-tax…
Is a 16-ounce packaged jar of hot sauce subject to Texas sales tax?
No. A 16-ounce jar of hot sauce is presumed to be sold for home consumption rather than immediate consumption because of its packaging and size, so no Texas sales tax is due on the sale.
Could a company use an intended later restructuring or another entity's apportionment factor to reduce former Texas taxable capital?
No. Texas required the taxpayer's taxable-capital component to reflect its actual financial condition at the relevant period end and its own apportionment activity. The Comptroller rejected using anot…
Can an employee get a refund of all New Mexico income tax withheld by filing a return that reports zero income on tax-protester theories that wages aren't taxable?
No — the refund was denied. Wages are income under both federal and New Mexico law, so an employee who filed a 'zero income' return to reclaim all the tax withheld from his $49,000 salary was not enti…
If a subcontractor never gets a resale certificate from the general contractor on a separated construction contract, who owes sales tax on the materials -- even though the ultimate customer holds a direct-pay permit?
The subcontractor (Company B) must bill and collect sales tax on the materials under the separated contract, because it never received a valid resale certificate from the general contractor (Company A…
Do heavy trailers used only for on-site storage still qualify for Connecticut's commercial-truck sales-and-use-tax exemption if they weigh over 26,000 pounds?
Yes, they qualify. Trailers with a gross vehicle weight rating over 26,000 pounds can be bought or leased exempt under Connecticut's commercial-truck exemption (Conn. Gen. Stat. § 12-412(70)) even whe…
We're a nonprofit local development corporation that helps finance small-business construction projects through the SBA 504 loan program, using sale/leaseback, installment sale, or lease/leaseback structures where we briefly hold title or a leasehold interest. Are our purchases (or the contractor's purchases as our agent) exempt from sales tax, and is a mortgage where we're named as mortgagee exempt from mortgage recording tax?
Both exemptions are available, but with conditions. Greater Syracuse Business Development Corporation, a Not-For-Profit Local Development Corporation reincorporated under N-PCL § 1411, helps finance s…
Are a medical cost-containment company's case management, utilization review, bill audit, and other services subject to New York sales tax?
Mostly not taxable -- Petitioner's client's field/telephonic case management, first-report filing, utilization management, independent medical exams, peer reviews, hospital bill audits, and Social Sec…
Are a family-run sailboat charter operator's day-cruise fees (including a boxed lunch) subject to New York sales tax?
No -- Petitioner's day-charter sailing excursions on Lake Champlain (including the boxed lunch) are a nontaxable transportation service, not a taxable boat rental, because Petitioner personally retain…
Are a product-testing lab's testing fees, sales of test-swatches, and lab equipment purchases subject to New York sales tax?
It's split by category -- Petitioner's product-testing fees and confidential result reports aren't subject to sales tax at all, but its sales of dust-sebum swatches, soiled fabric, and testing soils t…
Is bottled water subject to Utah sales tax at retail and at wholesale, and what does an out-of-state bottler need to do to register and collect Utah sales tax?
Retail sales of bottled water — still or carbonated — are subject to Utah sales and use tax, because water in bottles, tanks, or other containers is expressly included in the statutory definition of t…
How does a refinery or chemical plant prove that turnaround maintenance work qualifies as tax-favorable "scheduled periodic" maintenance rather than taxable repair, especially before a repeat pattern has been established?
To support the "scheduled periodic" element under Rule 3.357(a)(4) even without an established repeat pattern, either the same work must be performed at each turnaround, or the turnaround contract its…
Does a defense contractor owe New Mexico gross receipts tax on federal R&D work performed for a New Mexico lab, when the reports were delivered in New Mexico even though the project ultimately failed?
Yes — the protest was denied. A Massachusetts defense contractor doing 'Star Wars' R&D support for a lab at Kirtland Air Force Base owed New Mexico gross receipts tax. Delivering its monthly reports t…
Did a Texas vehicle with a newly installed left accelerator qualify for the orthopedic-disability tax exemption?
No, on the facts presented. A left accelerator was qualifying adaptive equipment, but the vehicle already had more than 3,700 miles before the modification. The Comptroller treated that mileage as sho…
Is compensation an employer pays employees for using their own personal tools on the job subject to Texas sales tax as a taxable lease or rental?
Not automatically. The Comptroller's longstanding position is that additional compensation or reimbursement paid to employees for using their own personal tools is NOT taxable, as long as the employee…
Does owning an interest in — or being a partner in — a partnership that does business in Texas make a corporation 'doing business' in Texas for franchise tax?
It depends on the type of partner: a general partner is doing business in Texas if the partnership is, but a limited partner is not — if its only Texas connection is the partnership interest. The Comp…
If a bulletin-board-service (early internet) provider mistakenly paid sales tax for years on dedicated phone lines it actually bought tax-free for resale, how does it get that overpaid tax refunded?
The dedicated telephone lines were purchasable tax-free for resale under Tax Code § 151.006(1), since the provider was reselling the taxable telecommunications service to its bulletin-board clients. H…
Can a private developer get a refund of sales tax paid on materials used to build an office building that it then leases to the State of Texas under a lease-with-option-to-purchase?
No refund here. Section 151.311 exempts materials incorporated into realty improvements built for the primary use and benefit of an entity exempt under § 151.309 (governmental) or § 151.310, but on pr…
Is acid used to clean out a farm/ranch irrigation well, or the well-bailing service itself, exempt from Texas sales tax as agricultural machinery repair?
Yes, both are exempt. Bailing sand out of a farm/ranch irrigation well is nontaxable as the repair of agricultural machinery or equipment, and the acid sold to clean out the well for that purpose is l…
Does a funeral home need to collect sales tax on additional prayer cards, crucifixes, flowers, or motor escorts that get added to and separately invoiced under an existing itemized funeral service contract?
No, the funeral home does not have to collect and report sales tax on those additional items, because they are furnished under the original itemized funeral service contract (as required by state and …
Is a company's business of standardizing and structuring MRO (maintenance, repair, and operating) materials descriptions for clients a taxable data processing service in Texas, even for the parts of the work not actually done on a computer?
Yes. Providing customized materials cataloging is a taxable data processing service under Tax Code § 151.0035 and Rule 3.330(a), which cover information compilation and computerized data manipulation …
Is a chartered ocean-liner business conference held in international waters subject to New York sales tax?
No -- because Richmond Events' entire business-conference program (meetings, meals, accommodations, and use of the ship's facilities) takes place after the chartered ocean liner has left New York Stat…
Could a Texas rental company separately charge customers for title, registration, property-tax, and toll-road costs?
Yes. The 1997 letter allowed a rental company to separately charge customers for title fees, registration fees, and prior-year fleet property taxes, but the invoice had to label the charge as a reimbu…
On a New York combined report, are a securities dealer's sales sourced to New York if they are made through a New York office of an affiliate in the same combined group?
Yes. On a combined report the receipts factor is computed as though the combined group were one corporation, with intercorporate receipts eliminated (20 NYCRR 4-4.7, 4-1.2). So a securities dealer's (…
If New Mexico wrongly denies my investment credit and grants it years later, does the state owe me interest for the delay?
The claim for interest was denied. Tortilla, Inc. — which runs Garduno's of New Mexico and Yesterdaves' Grill — had paid compensating tax on out-of-state food-preparation equipment and applied for a $…
Is a gas compression service taxable, and does it matter whether the compressor is instead leased or rented out to the customer?
Gas compression services performed under a contract where the provider never transfers possession or control of the compressor to the customer are NOT taxable -- it's a service, not a rental or lease,…
Is the sale of a house that a house-moving business removes from one lot and relocates to another taxable, and does it matter how the contract itemizes the house price, moving cost, and foundation work?
A house attached to realty is generally not taxable to sell, but once it's detached from realty and sold WITHOUT installation, it becomes a sale of tangible personal property, and sales tax is due on …
Could a seller claim a Texas motor vehicle sales tax refund or deduction for bad debt?
No. The Comptroller said motor vehicle sales were taxed under Tax Code Chapter 152 and that Chapter 152 contained no bad-debt provision. The letter did not decide the separate treatment of items taxed…
Does Farm Credit Bank of Texas have to charge and collect Texas sales tax on the payroll, appraisal, marketing, and other administrative support services it provides to farm credit associations across the state?
No -- the Comptroller cannot require Farm Credit Bank of Texas to charge and collect Texas sales and use tax, because it and its chartered associations are instrumentalities of the United States Gover…
Is a long-standing workforce-provision contract for a chemical plant's operational staff nontaxable as staff leasing, even though the contractor directs supervision, assumes liability, and can subcontract work?
No -- based on the contract terms described, this arrangement is an independent-contractor services agreement, not staff leasing, so Rule 3.364(c)'s staff-leasing exclusion doesn't apply. Tasks perfor…
If a New York real estate partnership contributes each of its properties to its own single-member LLC, does the partnership still file one combined NY partnership return, or must each LLC file its own return and pay the LLC filing fee?
One combined return. Because none of the LLCs elect corporate ('association') tax status, each single-member LLC is disregarded as an entity separate from the Partnership under the federal check-the-b…
If a divorce separation agreement directs part of a partner's accrued partnership income to be paid directly to his ex-wife, does he still have to report that amount as his own income for New York tax purposes?
Yes. Because the payments to the ex-wife represented income the taxpayer himself earned as a partner (not a transfer of property), the assignment-of-income doctrine applies and he must include the ful…
Is a 21-unit residential condominium whose only revenues are common charges and interest subject to the Article 9-A franchise tax for tax years 1991 through 1995?
Yes. A residential condominium -- even a small one with only common-charge and interest income and no commercial or recreational facilities -- is generally an association taxable as a corporation unde…
Is a residential condominium association that files federal Form 1120-H subject to the New York Article 9-A franchise tax for tax years 1991 through 1995?
Yes. A residential condominium association is generally classified as an association taxable as a corporation under IRC section 7701(a)(3), so it meets the New York definition of corporation in Tax La…
Are companies that provide enhanced fax services (formatting, merging, and broadcasting documents) taxed as telephone/transmission companies, telecommunications providers, or utilities, or under Article 9-A?
They are taxed under Article 9-A, not as a telephone or transmission business. Enhanced fax services -- merging and formatting a customer's data, broadcasting it to many recipients at once, and report…
If a company calls its charges 'membership dues,' does that keep them out of Utah sales tax even though members are really paying for software access and an online database?
It's split. The Utah Tax Commission looked past the 'membership fee' label: the part of the fee that pays for using the company's canned computer software is taxable tangible personal property, but th…
Can a retailer use a single, electronically generated multi-purpose exemption statement at the point of sale instead of Utah's exemption-specific paper forms (TC-721)?
Eventually, yes, for a defined set of transactions. Utah initially resisted a single all-purpose exemption statement in place of its exemption-specific TC-721 forms, worried that a generic form skips …
If my bank wires a New Mexico tax payment one day late or to the wrong account, can the state still charge a penalty and a full month's interest?
The protest was denied. Southwestern Public Service Company — a utility that must pay its combined New Mexico taxes by wire under the special-payment rules — had its bank misdirect an October 25, 1995…
If a club's mandatory 18% gratuity is split between direct employee payments and employee benefits, does retaining part of it for benefits make the whole gratuity taxable -- and can "total direct compensation" include those benefits to satisfy the full-disbursement test?
A club charged an 18% mandatory gratuity on food and beverage sales, paying 15% directly to service employees and crediting the remaining 3% toward employee benefits (health/life insurance, holiday ti…
Can sales tax, freight, and installation charges be included in the 'retail cost when new' used to value commercial and industrial personal property in Kansas?
Sales tax is never part of it, and separately stated freight and installation can be excluded. This 1997 Division of Property Valuation memo explains the Kansas Supreme Court's decision (Board of Coun…
Were city or county cable-franchise fees included in taxable gross proceeds when passed through to South Carolina cable customers?
Yes. RR 97-10 said a city or county cable-franchise fee calculated as a percentage of the cable system's gross receipts was included in taxable gross proceeds, whether the customer bill stated the fee…
Can a company avoid a New Mexico negligence penalty for claiming gross receipts deductions on the wrong non-taxable transaction certificates if it says it acted in good faith?
The protest was denied and the negligence penalty stood. Newman Outdoor Advertising — a North Dakota billboard company with offices in Roswell and Las Cruces — had claimed gross receipts tax deduction…
Does the NATO Status of Forces Agreement exempt foreign (e.g., UK) military personnel stationed in Texas from Texas sales tax on their personal purchases?
No. The Comptroller's legal staff reviewed Article X of the NATO Status of Forces Agreement (Treaty) and determined it does NOT exempt foreign military personnel covered by it -- including a UK citize…
Is a voice-activated environmental control system, prescribed by a doctor for a quadriplegic individual to independently operate a telephone, TV, lights, and electric hospital bed, exempt from Texas sales tax?
Yes. The Comptroller treated the voice-activated environmental control system -- which lets a quadriplegic individual with no use of his upper or lower extremities independently control his telephone,…
Is a legal-support business that obtains records from non-parties via subpoena and deposition-by-written-questions (issued through a notary public) exempt from Texas sales tax, and are its various fees and shipping charges taxable?
The entire service is exempt. Section 151.353 exempts court reporting services related to preparing a document/record in a civil or criminal suit by a notary public or licensed court reporter, as long…
Is the sale of flat-rate Internet access subscription services to New York customers subject to New York sales and use tax or the section 186-e telecommunications excise tax?
No. Under the Department's Internet policy effective February 1, 1997, Internet access charges are an unenumerated service that is not subject to New York State and local sales and use taxes (Articles…
Are a patent draftsman's formal drawings sold to patent attorneys subject to New York sales tax?
Yes -- Peter Cotsis's formal patent drawings, sold to patent attorneys for submission with patent applications, are tangible personal property subject to sales tax, because his drafting service isn't …
Is a special assessment that a country club charges members to build a safety tunnel subject to New York's club dues tax?
Yes -- even though the tunnel Mount Kisco Country Club built under a state highway is a genuine capital improvement built for members' safety, the special assessment the club charged members to fund i…
Which items a plumbing supplier sells to contractors working for tax-exempt organizations are exempt from New York sales tax as building materials, and which stay taxable as contractor supplies?
It splits item by item -- materials that physically become part of the exempt organization's building, like flux, solder, pipe joint compounds, Teflon tape, PVC cement and primer, oakum, and lead used…
Is custom bank-interface software still taxable as "prewritten" if the developer reuses some prewritten subroutines, like a standard print routine, inside an otherwise custom program?
It depends on how the prewritten pieces are used: if the developer's prewritten subroutines (like a standard print routine) are merely incidental to writing an otherwise custom, start-to-finish progra…
Does New York sales tax apply to a public relations firm's satellite media tour coordination fees, its purchases of studio time and crew, and its website maintenance service?
Mostly not taxable, but it splits by item: coordinating satellite media tours and speaking tours, consulting, scripting, and website maintenance are all nontaxable services, but studio and camera rent…
Are a Web design agency's web-site development, media placement/advertising, ad-network, and site-tracking consulting services subject to New York sales tax?
No -- an "Interactive Advertising Agency"'s from-scratch web-site development (design plus programming), traditional advertising and web-site-network media placement services (as long as no tangible p…
Are a business-cycle forecasting firm's monthly research publications exempt from New York sales tax as periodicals, and is its related consulting service taxable?
Yes -- the firm's two monthly newsletters qualify as exempt periodicals because they're published at regular intervals, don't amount to a book, are open to public subscription, and carry ongoing artic…
Is designing customized web pages and placing them on the Internet subject to New York sales tax?
No -- designing customized web pages and placing them on the Internet isn't one of New York's enumerated taxable services, so the charge is untaxed as long as no tangible personal property is sold alo…
Is a can/bottle recycler's pickup service taxable as real-property maintenance, and do its can-sorting machines and electrical transformer qualify for the production-equipment sales tax exemption?
All three ways: the recycler's container-pickup and recycling service isn't taxable real-property maintenance, its can-sorting machines qualify for the production-equipment exemption because they hand…
For an internet service provider selling email, web hosting, CGI access, secure server access, and disk space, which charges are taxable Texas data processing/telecommunications services, and is an out-of-state customer's billing address enough to avoid Texas tax?
It splits by service type. EMAIL is a telecommunications service, and telecommunications services that originate outside Texas are not subject to Texas sales tax. WEB HOSTING, CGI access, secure serve…
Could reinstated or related nonprofit organizations immediately qualify for separate South Carolina bingo licenses under RR 97-9?
Not automatically. A reinstated organization's South Carolina domicile could remain uninterrupted, but it still had to be active and operated for qualifying nonprofit purposes for the three years imme…
Did RR 97-7 require a South Carolina resident partner to report personal-service income earned by the partnership in other states?
Yes. A South Carolina resident partner had to report the full distributive share of personal-service income from all states, not only the South Carolina-apportioned amount, with a credit for qualifyin…
Under the superseded RR 97-6, what material-handling equipment and investments qualified for South Carolina's sales-tax exemption?
The exemption covered systems, equipment, racks, and repair parts used in distribution or manufacturing facilities when the taxpayer gave advance notice and invested at least $35 million in South Caro…
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