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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If a family moves their domicile out of New York mid-year and empties out their only New York home, are they still taxed as full-year statutory residents just because they spent more than 183 days in New York that year?
No. Even though they spent more than 183 days in New York during 1996, the Kukulkas moved all their household furnishings, clothing, and personal effects out of their New York home by August 17, 1996 …
I had (or later got) nontaxable transaction certificates for my construction jobs, but didn't show them until after the audit — can I still keep the deductions?
No. To keep a New Mexico gross receipts tax deduction that needs a nontaxable transaction certificate (NTTC), you must both hold a valid NTTC at the required time and prove you held it within 60 days …
Is a $30 donation to a school booster club, given in exchange for having a name stamped on a commemorative brick placed at the school, subject to Texas sales tax?
No. A $30 donation to a high school fine arts booster club, given in exchange for having a brick stamped with the name of a student, alumnus, or other requested name and placed at the school, is not s…
When a strip-mining company is legally required to reclaim mined land by planting it with grass for future livestock grazing, does the grass seed -- and the fertilizer and heavy equipment used in reclamation -- qualify for the Texas agricultural exemption?
Partly. Grass seed used to revegetate strip-mined land as part of the legally required reclamation process DOES qualify for the agricultural exemption under Tax Code § 151.316, which exempts seeds and…
Which parts of a print-and-mail company's letter-printing and mailing service are taxable printing versus exempt mailing, and does the tax rate depend on where the letters are mailed to?
A company that prints and mails specialized notices and letters must charge sales tax on its printing of letters, envelopes and address labels (taxable under the printing/imprinting rules), but not on…
How does New York sales tax apply to the many different services and equipment rentals an executive office suite provider bills to its tenants -- phone answering, copying, word processing, mail handling, catering, and pass-through charges?
An executive office suite operator's tenant services are taxed item-by-item depending on their end result: telephone answering and equipment-based copying/faxing are taxable, word processing is not, e…
If my company performs services (like research) entirely in another state but delivers the finished product — a report — to a customer in New Mexico, does New Mexico get to tax those receipts?
The protest was sustained in part and denied in part. Lockheed Missiles & Space Company performed research and development on four missile-defense contracts largely at its California facilities, then …
When is a multimedia presentation on CD-ROM or diskette taxable as a computer program in Texas, versus a non-taxable production service?
It depends on whether the production contains "source code." This follow-up letter clarifies an earlier ruling: "source code" means any series of instructions -- whether originally written by the prog…
Is a pager company's self-insured product replacement program (monthly charge plus deductible) exempt from Utah sales tax the same way ordinary insurance is?
It depends on whether the customer bought or leased the pager. For a purchased pager, the separately stated PRIP (pager replacement insurance program) charge is nontaxable, since Utah's tangible perso…
Could a used-car dealer buy a customer's vehicle tax-free and finance its resale to that same customer?
Yes, the licensed dealer could buy the vehicle tax-free if it was held strictly for resale. But reselling it to the same customer for $700 was taxable. The dealer needed a seller-financing permit and …
Is a flood zone determination service -- checking FEMA flood hazard maps and certifying whether property is in a flood zone for mortgage lenders -- taxable in Texas as an information or insurance service?
No, it's not taxable. A service company that consults flood hazard boundary maps (FHBMs) and certifies on a FEMA form whether property is in a flood zone -- helping mortgage lenders meet a federal not…
If Utah's sales tax rate changes between when a fixed-price construction contract is signed and when the work is delivered, which rate applies?
The rate in effect when the sale is actually completed — when title to the goods passes, ordinarily at delivery — controls, not the rate in effect when the fixed-price contract was signed. A rate incr…
Did installing an emergency-vehicle alerting device for a deaf or hard-of-hearing driver qualify the vehicle for Texas's disability exemption?
No. The motor vehicle tax statute described in the letter exempted vehicles modified for people with orthopedic disabilities, defined by limited movement of body extremities. A hearing deficiency did …
Are manufactured buildings and their construction materials exempt from Utah sales tax when sold to agricultural producers for farming use, even though the building becomes part of real estate?
Yes, exempt -- if the building is used primarily and directly in commercial farming operations. Utah Code § 59-12-104(21) exempts tangible personal property used or consumed primarily and directly in …
As a contractor installing commercial kitchen fixtures and equipment, who pays Utah sales tax — me or my customer — and does it matter whether the item becomes part of the building?
It depends on whether the item becomes part of the real property. When a contractor installs construction materials or real property fixtures (built-in ovens, built-in appliances, sinks) that get conv…
Were commissions earned in Texas and shoe sales delivered in California Texas receipts under the former franchise tax?
The commissions were Texas receipts for both former franchise-tax components because the taxpayer performed the customer service in Texas. The shoe-sale receipts were not Texas receipts because delive…
Did Public Law 86-272 protect a Texas-authorized corporation from both former franchise-tax components?
No. The certificate of authority made the corporation subject to the former taxable-capital component even if its only Texas activity was protected solicitation. If the stated activities qualified und…
What initial and later former Texas franchise-tax reports followed a merger into a newly formed surviving corporation?
The surviving corporation's initial report was due May 7, 1997 and covered the privilege period from February 8, 1996 through December 31, 1997. Its December 31, 1996 year-end supplied both initial co…
Do a TV broadcaster's transmitters, related repair labor/parts, and the electricity used to run them qualify for Texas's manufacturing sales tax exemption?
No. Transmitters, their associated repair labor and parts, and the electricity used to broadcast are NOT exempt from Texas sales tax, even though broadcasters can qualify as manufacturers for their pr…
Could a corporation use federal net operating losses from before 1991 to reduce later former Texas earned surplus?
No. Former Texas earned surplus began with federal taxable income before federal net operating loss deductions. Texas instead allowed its own apportioned business-loss carryforward for up to five year…
When an unredeemed towed vehicle is sold at a New York City Marshal's auction, are the towing charges paid to the towing company out of the auction proceeds subject to sales tax?
No -- towing charges that a New York City Marshal pays to a towing company out of the proceeds of an unredeemed vehicle sold at a Marshal's auction are not subject to sales tax, because the Marshal pu…
Did forming a Texas corporation create former franchise-tax liability even before considering its business activity?
Yes. Section 171.001 subjected a Texas-chartered corporation to the former franchise tax. The corporation calculated taxable capital and earned surplus, apportioned each, and paid the greater amount a…
Does equipment like routers, servers, and hubs used by an Internet service provider to deliver service qualify for Texas's manufacturing sales tax exemption?
No. Equipment such as routers, servers, and hubs used by an Internet service provider (ISP) to provide its service is taxable at the time of purchase. The Comptroller explained the equipment can't qua…
Is a check-guarantee service's per-check fee, which merchants pay to have a customer's check backed against non-payment, subject to New York sales tax?
No -- a check guarantee service's fees, including its per-check charge and its minimum monthly account fee for low-volume merchants, are not subject to New York State or New York City sales tax, becau…
Who has to collect New York sales tax on towing charges and vehicle auction sales when a New York City Marshal tows away cars for unpaid parking tickets -- the Marshal or the independent towing company?
The New York City Marshal, not the independent towing company, must collect and remit sales tax on towing charges paid by a vehicle owner reclaiming a car towed under the Parking Violations Bureau pro…
Our client, a publicly traded corporation that owns New York real estate, is being acquired by another publicly traded company through a reverse triangular merger structured as a tax-free reorganization -- our client's shareholders will exchange their stock for less than 50% of the acquirer's voting power and value. Since our client itself is a real-estate-owning entity being acquired via its shareholders exchanging stock, is our client (the acquired company) primarily and jointly liable, along with its own shareholders, for New York's Real Estate Transfer Tax on this controlling-interest transfer -- or is that liability solely the acquiring company's?
Yes -- the acquired company and its shareholders are jointly liable as grantor, with the acquirer secondarily liable as grantee. Company X, a widely held, publicly traded C corporation owning New York…
Is the Ceprate Stem Cell Concentration System, used to prepare a patient's stem cells before high-dose chemotherapy, exempt from Texas sales tax as a health care supply?
No. The Ceprate Stem Cell Concentration System does not qualify for Texas's health care supplies exemption under Tax Code Section 151.313. The product is used in a process called immunoadsorption to r…
When is an oil drilling workover rig exempt from Kansas vehicle registration, and how do you claim it?
Only single-purpose rigs that meet specific design tests, and only from registration -- not from property tax. This 1997 Division of Vehicles memo says an oil drilling workover rig is exempt from vehi…
Could a buyer reduce a new vehicle's Texas tax base when the old vehicle went to someone other than the seller?
No. The old vehicle's value was excluded from total consideration only when the seller of the new vehicle took it as consideration. If someone else received the old vehicle, the letter said there was …
Did a minority beneficial interest in a trust doing business in Texas create franchise-tax nexus for a foreign corporation?
No. The foreign corporation held less than a majority beneficial interest, did not effectively control the trust or trustee, and had no other Texas activity. On those facts, Texas said the corporation…
Was the ultimate parent limited to a U.S. corporation for the former earned-surplus officer-compensation add-back?
No. Neither Section 171.110(c) nor Rule 3.558(h) limited the parent to a U.S. corporation. Texas interpreted the ultimate parent as any corporation exercising ultimate control over the subsidiary, inc…
Is a monthly standby retainer fee paid to a security firm (to be available if needed, billed separately for hours actually worked) subject to Texas sales tax?
Generally no. A monthly retainer fee paid to a security firm just to be on standby -- separate from hourly billing for services actually performed -- is treated as the sale of an intangible and is not…
Do compressors used in oil and gas processing qualify for Texas's manufacturing exemption, and how does a company refund sales tax collected in error on exempt equipment?
It depends on what the compressor does. Effective January 1, 1995, a manufacturer or processor can claim exemption on machinery and equipment necessary and essential to manufacturing, processing, or f…
Under the superseded RR 97-1, when did firefighting equipment share a fire truck's $300 maximum sales or use tax?
Equipment shared the truck's $300 cap only when necessary for it to be a fire truck, sold by the same vendor, and mounted or stowed before the buyer took title or possession. Otherwise the equipment w…
If I start a new company and take over a tax-delinquent business's location, staff, and customers without any formal sale, can the state make me pay its back taxes?
The protest was denied. Salvo Beachwear, Inc. (doing business as New Mexico Carpets) owed the Department about $1.1 million in taxes and was being forced to close. Its president formed a new corporati…
Accidents and computer failures made me pay my gross receipts tax late — can New Mexico's negligence penalty be waived for hardship?
The protest was denied. Rio Rancho Pharmacy fell behind on the gross receipts and other CRS-1 taxes for December 1992 through February 1993 after a run of misfortunes — its owner and its bookkeeper we…
Do the foundations and support structures for rock-crushing-plant equipment (a crusher, screens, a logwasher) qualify for Texas's manufacturing exemption?
No. Support foundations for manufacturing equipment -- reinforced concrete slabs, sometimes with concrete piers and anchor bolts to fasten equipment in place -- are considered real property, not machi…
What happened when a Texas corporation failed to file its initial franchise-tax and public-information reports?
The corporation's Texas privileges had already been forfeited under Section 171.251. If it did not file its overdue initial franchise-tax report and Public Information Report, its charter would be for…
Is the labor to build a new mezzanine floor inside an existing building taxable real property repair/remodeling, or non-taxable new construction, under Texas law?
It's non-taxable new construction. Building a new mezzanine floor -- adding usable floor space where only non-usable empty space existed before -- inside an existing building qualifies as "new constru…
Is admission to a sports card and memorabilia show, the vendor table fees, and autograph sales all subject to New York sales tax?
Admission to a sports card and memorabilia show and the fee charged to vendors for table space are not subject to New York sales tax, but a promoter must collect sales tax on autographed products it s…
Is artwork a fabric manufacturer buys and scans to design a computer-generated weaving blueprint for upholstery fabric exempt from New York sales tax as production equipment?
Yes -- artwork a textile manufacturer purchases and scans into a computer to design a weaving blueprint for upholstery fabric qualifies for New York's Statewide production machinery and equipment exem…
Is an integrated CAD/CAM/CAE computer system used both to develop generic product designs and to configure specific customer orders exempt from New York sales tax as research and development or production equipment?
A fully integrated CAD/CAM/CAE hardware, software and maintenance system qualifies for the research and development exemption when used to create documented, generic marketable product designs, and se…
How is a New York corporation and its shareholders taxed when the shareholders of a federal S corporation make a section 338(h)(10) election on a sale of the company's stock?
The target corporation (X) is subject to Article 9-A whether or not it is a New York S corporation, and the section 338(h)(10) deemed asset sale is reflected in its franchise tax. X files two short-pe…
Which periods did a December 11, 1996 corporation use on its initial former Texas franchise-tax report?
The initial report was due March 10, 1998 and covered the privilege period from December 11, 1996 through December 31, 1998. Because December 31, 1997 met both timing tests, taxable capital, earned su…
Did a Texas certificate of authority create franchise-tax liability when a corporation had no physical presence and took only customer-initiated phone orders?
Yes for taxable capital. The certificate of authority made the corporation subject to the former franchise tax even though it reported no Texas property, payroll, employees, or physical presence and t…
Did a used-car dealer owe Texas motor vehicle tax after operating a new vehicle on a metal dealer tag?
Yes. The dealer did not hold the new vehicle exclusively for resale and was not eligible to operate it on a metal dealer tag, so taxable use occurred. The dealer had to pay tax when applying for title…
Which of a health-care management company's many services -- managed care advice, credentialing, quality assurance, claims processing, member services, contract, pre-certification, and utilization review -- are taxable in Connecticut, and under which service category?
It's service-by-service. DRS classified each service a health-care management company sells against Conn. Gen. Stat. § 12-407(2)(i)(J). Because the customers' core business is providing health care, s…
Does a rubber-tired, electrically-powered 'people mover' passenger transportation system, guided by a steel guidebeam rather than running on rails, qualify for Texas's rolling stock sales tax exemption?
No. A rubber-tired, electrically-powered "people mover" passenger transportation system -- guided and powered by a steel guidebeam/rail system rather than running on rails -- does not qualify as tax-e…
I reported my pay as business income on my federal Schedule C, but I think I was really an employee — do I owe New Mexico gross receipts tax on it?
The protest was denied. Ruth Dilts worked as a live-in nurse-companion and, after 1982, was paid on a Form 1099 as 'nonemployee compensation' — about $100,849 in 1988. She reported that money as busin…
Is a drugstore's free monthly newsletter for senior customers exempt from sales tax as a periodical or shopping paper, or is its cost a taxable purchase by the store?
No -- a drugstore's free monthly newsletter for senior customers is not exempt from sales tax, because giving a publication away free for promotional purposes is a taxable retail purchase by the store…
Are dues paid to a private beach club association that's limited to residents of a specific housing development exempt from sales tax as a homeowners association?
Yes -- dues and initiation fees paid to a private beach club association whose membership is limited to residents of a defined housing development, and which operates recreational facilities (a pool, …
Is electricity used in the common areas of a residential condominium complex (sprinkler systems, pools, clubhouses, exterior lighting) exempt from Texas sales tax as residential use?
Yes, if the complex is genuinely residential. Electricity used in common areas (sprinkler systems, swimming pools, clubhouses, exterior lighting) of a residential condominium complex -- one where unit…
Must a forensic engineering firm charge sales tax on fees for investigating the cause of a fire or explosion for a law firm or insurance company pursuing subrogation, as a taxable insurance service?
Yes, these are taxable insurance services. A forensic engineering firm retained by law firms and/or insurance companies to determine the cause of a fire or explosion -- and to provide expert testimony…
Which city's local sales tax applies when an itinerant janitorial service vendor (no fixed place of business) performs services at a homebuilder's job site?
Local tax is due based on the job site. A janitorial service provider that has no place of business where it receives orders -- and instead receives its orders for services at the job site itself -- m…
Is electricity used to pump treated municipal effluent to a pond, and then pump that pond water to irrigate a golf course, exempt from Texas sales tax?
No, it's not exempt. A private country club used one electric meter exclusively to pump effluent from a municipality to a pond, and a second meter exclusively to pump water out of that pond to irrigat…
Are purchases made by federal employees using a government I.M.P.A.C. (GSA SmartPay) Visa credit card exempt from Texas sales and use tax?
Yes, if three conditions are met. Purchases made by federal government employees using a Government Visa credit card (I.M.P.A.C.) are exempt from Texas state and local sales and use tax when: (1) the …
Did a Texas certificate of authority subject a corporation to both former franchise-tax components despite no Texas activity or employees?
Yes. The corporation reported no Texas business activity, employees, or other nexus for the period, but its certificate of authority meant it was authorized to do business in Texas. Section 171.001 th…
Is a long-established out-of-state manufacturer a new business eligible for the refundable EDZ investment tax credit when it acquires a New York Article 9-A taxpayer it was not previously affiliated with?
Yes. A corporation is a new business under Tax Law section 210.12(j) -- and so eligible for the refundable economic development zone investment tax credit -- unless it is over-50% owned by an existing…
New Mexico took over a year to refund my approved manufacturing investment credit — does the state owe me interest for the delay?
The protests were granted. General Mills held an approved $3.5 million manufacturing investment credit and filed claims to have parts of it refunded, measured by gross receipts tax it paid vendors and…
My insurance brokerage sometimes charges clients a fee instead of taking a sales commission, and we serve both Texas and out-of-state clients -- when is that fee taxable as an 'insurance service,' and what happens with multi-state customers?
Insurance placement and servicing work is not a taxable insurance service when your only compensation is the commission you'd normally earn on the policy (or a fee charged purely in place of that comm…
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