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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Did a foreign corporation create Texas franchise-tax nexus by serving as general partner of Texas limited partnerships?
Yes. Assuming the three limited partnerships did business in Texas, the California corporation's role as their general partner created Texas nexus under the former franchise tax. It had to file an ini…
How did Texas tax a concrete pump bought with a truck, bought separately, or leased with the truck?
A one-vendor purchase of a truck with the pump attached was fully subject to motor vehicle tax. If the chassis and pump came from separate vendors, the chassis was subject to motor vehicle tax and the…
Can a waste-transfer-station operator buy a competitor's trash-hauling service tax-free for resale when that competitor also uses the same transfer station for its own customers' trash?
No -- the charge Paper Fibres pays Browning Ferris Industries (B.F.I.) to haul all the consolidated waste from Paper Fibres' own transfer station to a Pennsylvania landfill is a separate taxable trash…
Can a foreign diplomatic mission use its U.S. State Department tax exemption card to book a hotel room tax-free in New York if payment is made by the mission's check, the mission's credit card, or a credit card in the name of the mission's home government?
Yes -- a foreign mission holding a valid U.S. Department of State Mission Tax Exemption Card covering hotel room taxes can rent hotel rooms exempt from New York sales tax when payment is made by the m…
Are the flat monthly fees an internet service provider charges customers for internet access subject to New York state and local sales tax?
Starting February 1, 1997, flat monthly fees an internet service provider charges for internet access are not subject to New York state and local sales tax, including bundled amenities like navigation…
If Texas adopted the 1996 Internal Revenue Code definition, would 1997 federal changes count when determining S-corporation status?
Conditionally, yes. The Comptroller said that if pending legislation changed Texas's statutory IRC definition to the Code in effect for 1996, provisions specified in that Code but effective in 1997 wo…
Can a New York City Industrial Development Agency sale-leaseback structure let PaineWebber buy and lease office build-out improvements and equipment sales-tax-free by having its agents purchase everything on the IDA's behalf?
Yes, with conditions -- the New York City Industrial Development Agency's proposed sale-leaseback structure for PaineWebber's office build-out ("Tenant Improvements") and equipment/software ("Project …
We're a not-for-profit educational organization leasing 23% of a Manhattan office building. To help us qualify for a real property tax exemption on our space -- which requires the space's OWNER (not just its user) to be tax-exempt -- our landlord has agreed to convey us bare legal title to just the air envelope enclosing our leased space, as a fee simple determinable that automatically reverts to the landlord when our lease ends. The landlord keeps every economic benefit: all our rent, all mortgage financing rights and proceeds, condemnation proceeds, and tax ownership treatment; we get no rights to encumber the space, no condemnation claim, and no relief from our lease obligations. No money changes hands. Does this 'raw title' transfer trigger New York's Real Estate Transfer Tax?
Exempt -- the landlord keeps every economic incident of ownership, so there's no real change in beneficial ownership. American Management Association ('Petitioner'), a not-for-profit educational entit…
Does sales tax apply to a convention center's charges for additional electrical, telephone, and plumbing hookups ordered by trade show exhibitors and managers on top of its basic license fee?
No -- the Javits Convention Center's charges for additional electrical, telephone, and plumbing services ordered by show managers and exhibitors on top of its basic utilities aren't subject to sales t…
What crude oil severance tax exemption levels applied in Kansas from May 1997 through April 1998?
For the fiscal period May 1, 1997 through April 30, 1998, the Kansas crude oil severance tax exemption levels were set using a determined average oil price of $21.98 per barrel. Because that price is …
If a lessor leases a building along with tangible personal property inside it (like computer equipment) for one combined rent with no separate charge for the equipment, is any part of the rent subject to Texas sales tax?
No. Under Comptroller's Rule 3.294(k)(1), when a lease of real property (a building) also includes the lease of tangible personal property located in that space -- here, computer hardware and software…
Did out-of-state contractor licensing or ownership of Texas partnerships create nexus for a holding company and its subsidiaries?
The holding company and two subsidiaries were not doing business in Texas so long as partnership employees did not act as their agents in Texas and no other Texas connections existed. Two different su…
How did Texas treat a Nevada loan-participation subsidiary and dividends paid to its Texas bank parent?
Texas found the Nevada subsidiary had nexus because the Texas bank and other Texas servicers performed services for it. Dividends formally declared from earnings were respected. The Texas-domiciled ba…
How did the former Texas franchise tax apply to an S corporation?
Texas generally taxed an S corporation like any other corporation doing or authorized to do business in the state. Under the 1997 system it computed taxable-capital and earned-surplus components, appo…
How were receipts from a software support, maintenance, and enhancement plan apportioned under the former Texas franchise tax?
Texas treated the plan as licensing a computer program because nearly all costs related to upgrades, extensions, and enhancements rather than telephone support. Renewal charges were therefore apportio…
Is a court-ordered liquidation fund taxed like a qualified settlement fund subject to New York franchise tax, State income tax, or New York City income tax?
No. A court-ordered liquidation fund that only holds proceeds, pays creditors, distributes to beneficiaries, and makes short-term investments is not conducting a business, so it is not a corporation u…
Does a non-bank Article 9-A taxpayer keep its Article 9-A status when it contributes its assets to a partnership, and how do tiered-partnership items flow to it?
It keeps its Article 9-A status. Because the SBIC was never a banking corporation under section 1452(a)(9), it is simply an Article 9-A taxpayer and the section 1452(d) grandfather election does not e…
If the state's own employees repeatedly told me I didn't owe gross receipts tax, can it later come back and make me pay it plus interest?
The protest was denied. Arthur Pino, a rural contract mail carrier near Magdalena, tried to register and pay New Mexico gross receipts tax, but Department employees repeatedly told him — wrongly — tha…
Can the state file a tax lien while I'm paying under an installment plan, and can I still challenge the original assessments years later?
The protest was denied. Raymond Gabaldon, who owns Movie Land Video, fell behind on gross receipts taxes after a manager he hired during his National Guard active duty failed to file and pay. He paid …
When a customer pays for an equipment maintenance contract in monthly or quarterly installments instead of all at once, does the seller collect sales tax on each installment or on the full contract price up front?
The full sales tax is due on the entire contract price at the time the maintenance agreement is signed, regardless of whether the customer is allowed to pay in installments over the contract term, bec…
Could a federal S corporation opt out of S-corporation treatment for the former Texas franchise tax?
No. Texas had no separate state election to accept or reject S-corporation status for franchise-tax purposes. Most treatment matched other corporations, but an S corporation could elect the federal in…
Are services to run temporary electrical drops and power temporary trailers at a new construction job site taxable in Texas?
No. Services to run temporary electrical drops (so subcontractors can plug in power tools) and to connect electrical power to temporary trailers at a new construction job site are not taxable. The com…
When was the initial former Texas franchise-tax report due after a company with nexus obtained a certificate of authority?
The Comptroller restated a prior determination that the company had Texas nexus and was subject to franchise tax, but this letter did not repeat the underlying nexus facts. After receiving authority t…
Does a coffee manufacturer's own grinding machine, placed in a grocery store for the store's customers to use on already-shipped coffee beans, qualify for the Texas manufacturing exemption?
No -- this letter corrects an earlier (January 10, 1997) ruling from the same office. A coffee storage/grinding machine that a coffee manufacturer places inside grocery stores, for the stores' own cus…
Where were royalty receipts from trademarks, franchises, and licenses sourced under the former Texas franchise tax?
Texas sourced the intellectual-property owner's royalty revenue to the payor's location for both former franchise-tax components. Rule 3.549 expressly used that rule for taxable capital. Although the …
When used refinery equipment bought in Texas is dismantled, inspected, refurbished, and shipped out of the country over several months, does the export exemption still apply, and are the dismantling/inspection/refurbishing services themselves taxable?
The purchase of used refinery equipment for export is exempt from Texas sales tax, and local tax on the sale is refundable to the buyer once proof of export is provided under Rule 3.323. Rule 3.323(c)…
Is a company's charge for driving a client's employee crews around Utah in vans subject to Utah sales tax, and has the law on transportation taxation changed recently?
Yes, taxable for the period in question, but the law changed several times in just a few years and became permanently favorable after July 1, 1997. Intrastate (within-Utah) passenger transportation be…
When a city agrees with a municipal utility/management district to impose city sales tax and hotel occupancy tax in its extraterritorial jurisdiction (ETJ), when does the new city sales tax actually take effect?
Even though the City of Galveston and Galveston County Municipal District Number One had already held public hearings and signed an agreement to impose both the Galveston municipal hotel occupancy tax…
Is a subscription publication made up mostly of attorney-written trial reports exempt from Texas sales tax as a magazine, even though it looks and is delivered like one?
No. Even though the publication has every physical characteristic of a magazine -- paperback, illustrated, published at regular intervals, containing stories/articles/essays and ads, sold by subscript…
Must a qualified retirement plan or an IRA file a New York return or pay New York tax under Article 13 on unrelated business taxable income?
As originally issued: a qualified section 401(a) retirement plan covered by ERISA owed no New York Article 13 tax on unrelated business taxable income because the tax was preempted by ERISA under Morg…
An electrical contractor's customer used a sales tax recovery firm to seek a refund of tax paid on several jobs, claiming a manufacturing exemption -- which of the contractor's charges (moving equipment, repairing manufacturing equipment, upgrading a building's electrical system, partial demolition) actually qualify?
It depends on the specific work, and the Comptroller broke it down by job type. (1) Simply moving equipment between plants, setting it in place, and hooking it up to the existing electrical system is …
Did a publicly traded company have to send its Public Information Report to a director paid for board service?
No. The Comptroller said the publicly traded company did not need to send a copy to a director who was paid for board services. Section 171.203 targeted people who might be listed after their relation…
Does a farmer-owned cooperative building a new feed mill get a sales tax exemption on the construction materials and manufacturing equipment it buys?
Mostly no on the agricultural exemption, but yes on parts of the manufacturing exemption. The agricultural exemption under § 59-12-104 only covers property used directly in farming production itself —…
Does an out-of-state manufacturer with no offices, warehouses, or sales staff in Utah have to collect Utah sales/use tax on sales shipped to Utah dealers, and are its shipping charges taxable?
Without an office, warehouse, sales agents, or service/repair presence in Utah (directly or through a third party acting on its behalf), the manufacturer generally lacks Utah nexus and doesn't have to…
If I couldn't use a capital loss in the year I had it and want to carry it back to cut an earlier year's New Mexico tax, how long do I have to file the refund claim — and does an earlier amended return on a different issue keep that year open?
The protest was denied. Amoco carried a 1992 capital loss back to its 1989 New Mexico corporate income tax year to claim a $64,588 refund, but filed the amended 1989 return in January 1995 — more than…
Is a waste management company's flat monthly fee for supplying and servicing portable toilets (port-a-potties) at a manufacturing plant taxable, and if so, which local tax applies?
Yes, taxable. A waste management company's flat monthly fee to supply portable toilets at a manufacturing plant and clean them out twice a week is taxable as the rental of tangible personal property -…
Were Texas rental receipts exempt when a vehicle was modified for a renter with an orthopedic disability?
No. The purchase exemption for a specially modified vehicle bought by an eligible individual did not extend to gross rental receipts. The rental business had to collect and remit rental tax, although …
If a business charges customers to play a no-stakes black jack table (chips have no monetary value, dealt by a live dealer), does it owe Texas sales tax on the charge?
Yes. Charging customers to play black jack -- even a for-fun table where the chips have no monetary value and a live dealer runs the game -- is taxable as an amusement service. The business must get a…
A firm charges insurance adjusters for accident-scene photos, travel time, mileage, diagrams, measurements, traffic-signal timing, witness canvassing, and obtaining police reports -- which of these itemized charges are subject to Texas sales tax?
All of it is taxable -- confirming that the firm was "correctly charging tax on the total amount charged," though under three different legal categories. (1) Photo charges are taxable as the sale of a…
I drive my own truck for one company that pays me on a 1099 with no taxes withheld — am I an independent contractor who owes gross receipts tax, or an employee whose pay is exempt?
The protest was granted. Stan Wheeler drove his own dump truck hauling asphalt for Western Mobile, was paid on a Form 1099 as 'nonemployee compensation' with no taxes withheld, and the Department asse…
Is a ranch's two-way radio repeater system and handheld radios, used to keep in contact with employees working the ranch, exempt from Texas sales tax as farm/ranch equipment?
No. A ranch's two-way radio repeater tower system and handheld radios -- used to keep in contact with employees working various areas of the ranch -- are not exempt from Texas sales tax. Although usef…
What guidance did this Texas Comptroller letter give about dissolving a limited partnership?
The letter did not decide a franchise-tax issue or explain a dissolution procedure. It directed the requester to Title 105 of Vernon's Texas Civil Statutes and specifically to Section 2.03 of former A…
Under RR 97-5, how much South Carolina sales tax did a nonresident owe when buying a travel trailer?
With the required notarized form, tax was the lesser of the buyer's home-state tax or South Carolina's then-applicable amount: 5% of price after trade-in or $300. No South Carolina tax was due if the …
Are anti-theft sensor labels sold to manufacturers and retailers exempt from New York sales tax as sales for resale or as packaging material?
It depends who buys them -- loss-prevention labels sold to manufacturers, who place them inside a product's packaging and resell the labeled product, qualify for the resale exemption with a resale cer…
Is a kitchen and bathroom renovation company that controls the whole job but has its customers separately sign contracts with the installing tradespeople a retailer of the cabinets it sells, or a contractor performing a capital improvement?
The renovation firm is a contractor, not a retailer -- because it controls every aspect of the renovation (design, pricing, and which tradespeople the customer must use), it must pay sales tax itself …
Can a lawn care company buy the mixer drums, pumps, pulleys, chains and engine parts it uses to blend its own fertilizer tax-free as production machinery and equipment?
No -- a lawn care company's mixer drums, pumps, pulleys, chains and vehicle engine parts used to blend fertilizer are subject to sales and use tax (and so are repairs to them), because the fertilizer …
How does New York sales tax apply to a company that thermally treats and recycles contaminated soil -- on the processing charge, on transportation, on the treatment equipment and fuel, and on any reclaimed soil it later sells?
A company that thermally treats and recycles contaminated soil is performing a taxable processing service under Tax Law § 1105(c)(2) (not exempt waste removal), taxed on the full contract price includ…
Is the concrete foundation for a ski lift's towers and terminals covered by Utah's passenger-tramway sales tax exemption?
The tramway sale itself (chair lift, J-bar, T-bar, platter pull, rope tow, or aerial tramway) is exempt from Utah sales tax, and the Commission confirmed the concrete foundations securing the towers a…
Did a Texas-resident servicemember owe Texas vehicle tax when registering an out-of-state purchase in Texas?
Yes. A Texas-resident servicemember registering the vehicle in Texas owed motor vehicle tax, with credit for sales tax paid to another state. The letter's separate $15 new-resident amount is obsolete …
Does a health club need to charge sales tax on membership fees, aerobics classes, punch cards, massage, physical therapy, personal training, and tanning?
It depends on what's actually being charged for. Membership fees and any charge for use of the facility/equipment are taxable, calculated on each payment as it's made (including monthly installment pa…
Is a line drawing sold to a t-shirt manufacturer, for use in its manufacturing process, taxable as graphic artwork, or can the seller accept an exemption certificate instead?
Graphic artwork -- including a line drawing -- is generally taxable under Rule 3.312. But because this line drawing is being sold to a shirt manufacturer that will use it in its manufacturing process,…
We're the state agency redeveloping Times Square/West 42nd Street. Private developers are leasing sites from us and financing construction through commercial lenders, with us named as mortgagee or co-mortgagee even though we have no beneficial interest in the loan. Is recording those mortgages -- and later assignments or modifications of them -- exempt from mortgage recording tax?
Exempt, while UDC remains the named mortgagee or co-mortgagee. The New York State Urban Development Corporation (UDC, doing business as Empire State Development Corporation) has been redeveloping the …
If my business only serves the federal government on a military base and I never knew I owed New Mexico gross receipts tax, can I be excused from the tax, penalty, and interest — especially when the state never gave me a straight answer?
The protest was denied. M & R Janitorial Services cleaned base housing exclusively for the federal government at Kirtland Air Force Base and, from 1986 on, simply didn't know it owed New Mexico gross …
If my supplier passes gross receipts tax on to me in the price of materials, can I subtract those material costs from my own gross receipts — and isn't taxing both 'double taxation'?
The protest was denied. Novick's Painting, a house-painting contractor, was assessed gross receipts tax for 1993 after it stopped being able to buy paint tax-free and started deducting the cost of its…
Are membership dues taxable as club dues when a golf and country club sells memberships to the general public on a first-come, first-served basis with no proprietary rights or membership control?
No -- dues paid by members of a golf and country club are not subject to New York sales tax as club dues, because nonequity members hold no proprietary interest in the club, have no vote or control ov…
Is a company's telephone verification of a mortgage applicant's job, income and landlord references a taxable investigation service under New York sales tax?
No -- a company's mortgage loan verification service, which consists of telephone interviews confirming a specific applicant's employment, income and other facts at the time of the loan application, i…
When do statutory mergers, partnership contributions, debt assumptions, and lease transfers trigger Texas motor vehicle tax?
Statutory mergers of previously Texas-titled vehicles and genuine no-consideration capital contributions generally caused no motor vehicle sales tax, while debt assumed or forgiven in exchange for a v…
Which accounting periods applied to taxable capital and earned surplus on an initial former Texas franchise-tax report?
The corporation's normal December 31 year-end did not satisfy the taxable-capital timing test, so taxable capital used the month-end nearest the first anniversary of doing business in Texas. Earned su…
Does Utah's manufacturing sales tax exemption cover a walk-in freezer bought by a frozen cookie dough manufacturer, and does it matter whether the freezer replaced an old one or expanded capacity?
It depends on whether the freezer replaced old equipment or expanded capacity -- the Commission changed its answer once the taxpayer clarified the facts. If the freezer is a normal operating replaceme…
Does a nonprofit business league that is tax-exempt under IRC section 501(c)(6) owe Utah corporate income or franchise tax?
Generally no. Organizations exempt under IRC section 501 -- including a 501(c)(6) business league -- are generally exempt from Utah corporate income and franchise tax under § 59-7-102. The one excepti…
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