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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Are closed-caption decoders and wireless phone jack extenders used by deaf people exempt from Texas sales tax?
Yes. The Comptroller ruled that a closed-caption decoder for televisions and a wireless phone jack extender used with a phone flasher are both exempt from Texas sales tax when used by a deaf person, a…
Can a buyer reduce the sales or use tax it already paid on equipment purchases when the vendor later gives back a cash or credit rebate or discount tied to those specific purchases?
Yes, in most of the scenarios described. The Comptroller ruled that volume discounts and cash rebates paid directly by a vendor to a purchaser -- including cooperative marketing funding, consigned-uni…
Does Texas sales tax apply to charges for mechanical warranty inspections that determine what caused equipment or a motor vehicle to break down, without appraising the dollar amount of damage?
No. The Comptroller ruled that charges for inspecting tangible personal property are not taxable unless the inspections are performed under a policy or policies of insurance. Because mechanical warran…
Does Texas use tax apply to repair or replacement parts (such as retreaded tires) bought out of state and installed in Texas on a common carrier's self-propelled vehicle?
No, use tax is not due on repair or replacement parts acquired outside Texas and actually affixed in Texas to a self-propelled vehicle used as a licensed and certificated common carrier -- but the car…
Is a booting fee charged to remove a boot from an illegally parked car taxable as part of a taxable motor vehicle parking service?
Yes. The Comptroller ruled the parking violation (booting) fee is taxable because it is part of a taxable parking service -- booting a car parked in an illegal space in a garage constitutes an "impoun…
How did Texas source property sales, interest, rental-broker services, and railroad-car lease receipts under the former franchise tax?
Tangible-property sales were sourced where delivery occurred; interest followed the payor's legal domicile; lease-negotiation and car-rental management receipts followed where services were performed;…
How did Texas compute tax when a lessor bought a vehicle, used a retired vehicle's value, and later re-leased the unit?
The lessor's vehicle purchase was taxable, but the lease payments were not. A lessor could reduce taxable value by a qualifying Texas-titled retired vehicle's fair market value without trading it to t…
On a combined report, are a securities dealer's sales sourced to New York based on the selling activity of an affiliate in the same combined group?
Yes. On a combined report under Article 9-A the receipts factor is computed as though the corporations in the group were one corporation, with intercorporate receipts eliminated (20 NYCRR 4-1.2, 4-4.7…
When can Nebraska tax a nonresident motor carrier employee who works in more than one state?
It cannot. A nonresident motor carrier employee (as defined by federal law) who regularly performs duties on a commercial motor vehicle in more than one state can be taxed only by their state of resid…
Which nonresident rail carrier employees are exempt from Nebraska income tax when they work in more than one state?
A nonresident rail employee who regularly works on the railroad across multiple states is taxed only by their home state. Under Revenue Ruling 22-96-1, compensation paid to rail carrier employees who …
Does Nebraska sales tax apply to Internet or on-line service connection and access charges?
Access is never taxed; the initial connection is taxed only if it comes with software. Under Revenue Ruling 1-96-1 (sales and use tax), charges to end users for the initial connection to the Internet …
Is graphic design artwork (camera-ready art) subject to Utah sales tax, and does it matter whether the designer also does the printing or bills the art separately?
Sales of artwork or printed material are taxable, including design services, whenever you're selling a final printed product or the artwork itself to a client. Who owes the tax depends on the transact…
Does Utah tax a nonresident partner's share of income from an investment partnership that itself invests in a Utah-based fund, the way New York, California, and North Carolina exempt this kind of investment-only income?
It depends on what the underlying investment is, not on where the investment partnership itself is located. Under Utah Code Ann. § 59-10-303, a nonresident partner is taxed on Utah-source distributive…
Can a charitable foundation buy construction materials tax-free and donate them toward a university research building?
Only partially, and not the way the foundation proposed. The university does NOT get a tax exemption on materials it purchases for the building (it's a higher-education entity, not part of the K-12 "p…
Is a cable company's "Technical Access Fee" taxable, and should local sales tax on cable service be based on the provider's business location or the customer's service location?
Yes, the fee is taxable. The Comptroller ruled that a cable provider's "Technical Access Fee" is part of the taxable charge for cable television service under Section 151.007(a) of the Texas Tax Code,…
What documentation does a Texas seller need to prove a sale was shipped out of state and is exempt from Texas sales tax?
Shipping documents such as a bill of lading, federal express receipt, or postal receipt, together with an invoice showing an out-of-state shipping address, are acceptable proof of an exempt out-of-sta…
Was a one-year water-truck agreement a taxable Texas motor vehicle rental or a lease?
It was a lease, not a rental. The agreement ran for one year and did not require an earlier return, while the historical rental definition covered exclusive use for 180 days or less. The customer's pa…
Who owes sales/use tax on materials, equipment, and labor when a contractor builds a highway improvement for the tax-exempt State of Utah (UDOT)?
The contractor (or subcontractor) who last owns construction materials as tangible personal property before they're converted to real property is the taxable "end user" and owes sales or use tax on th…
I run a cleaning business and never knew about New Mexico's gross receipts tax — can I get the penalty and interest refunded?
The protest was denied. Elke Foster ran a residential cleaning business as a sole proprietor and kept careful records, but didn't know New Mexico imposes a gross receipts tax on services. Her bookkeep…
How is Texas sales tax applied to charges for designing, coding, and updating a web page for a client?
Taxable as a data processing service. The Comptroller ruled that web pages are electronic data and graphics rather than computer programs, so charges for designing, programming, and updating a web pag…
Can a commercial landlord avoid sales tax on trash removal, painting, maintenance, and water-leak repair charges just by billing them to the tenant as 'additional rent'?
It depends on the specific charge -- a landlord's overtime freight elevator service, overtime heating, and overtime air conditioning tower cleaning charges are treated as untaxed real property rent be…
Does a mobile home skirting/door/window installer owe sales tax on the charge to the dealer, or on the materials, when installing skirting on mobile homes treated as real property?
It depends on how you bill. For sales tax purposes a mobile home is treated as real property, so you can use either a lump-sum contract (you pay tax on materials, and your lump-sum charge to the deale…
When a caterer or event planner rents out a facility with recreational amenities and provides food, is the facility rental charge taxable as an amusement-service admission?
Yes, in most cases. Because the taxpayer's facility included a swimming pool, volleyball court, horse riding trails, baseball fields, and fishing area, the Comptroller ruled the facility rental itself…
If an out-of-state company builds and runs a client retailer's website and collects payment on the retailer's behalf, is the website operator responsible for collecting and remitting Utah sales tax, and does it create its own Utah nexus?
The website operator must collect sales tax on behalf of any client retailer that has Utah nexus, but whether the operator itself must also report and remit the tax (versus just collecting and handing…
How did an accounting-year and S-election change affect the 1997 former Texas report, and where were export commissions sourced?
Taxable capital used the December 31, 1996 financial condition and calendar-year receipts. Earned surplus combined February 1, 1995 through December 31, 1996, including short federal periods before an…
How did changing a corporation's year-end from July 31 to January 31 affect its 1997 and 1998 former Texas franchise tax reports?
The change created no additional filing requirement. The 1997 report used December 31, 1996 for taxable capital, the August 1, 1995-July 31, 1996 period for earned surplus, and the 1998 report used th…
When a city raises its local sales tax rate mid-project, does a construction contract signed before the increase still shield materials and subcontracts from the higher rate?
Yes, if the requirements are met. The Comptroller ruled that a written construction contract signed before a city's local sales tax rate increase takes effect can exempt the general contractor's mater…
As of late 1996, did a Utah retailer have to charge state sales tax on prepaid telephone calling cards at the point of sale?
As of this 1996 ruling, prepaid telephone calling cards were NOT subject to Utah sales tax at the point of sale, continuing a position the Commission had taken the prior year while it worked on an adm…
Which office facilities-management functions — copying, mailroom, courier, data entry, reception, and more — are taxable under Utah sales tax?
It varies by function. Taxable: copy center charges, unmanned "convenience copier" rentals, forms/printing services, and any equipment sold or rented to the client. Not taxable: mailroom services, fac…
Is renting out space to others a tax-exempt real-property lease, or a taxable license to use my property?
Mixed result: the rental receipts were taxable, but the penalty was abated. Quantum Corporation remodeled buildings into bingo halls and rented them to non-profit bingo operators for short 'sessions' …
Is electricity and gas used in an electroplating and precision-grinding business exempt from Texas sales tax, or does it matter whether the work is processing new parts versus repairing/regrinding existing ones?
It depends on what the power is used for. Gas and electricity used to chrome and grind parts as a sub-processor for original part manufacturers is exempt as processing personal property for sale, and …
When is help provided by a temporary help service exempt from Texas sales tax as a 'temporary employee,' even if the assignment lasts an extended period?
There is no fixed time limit that turns a 'temporary' worker into a taxable service. The Comptroller applies a three-part test under Tax Code 151.057: the help must supplement the customer's existing …
Is a farm or ranch scale exempt from Texas sales tax, and does it matter whether the scale is free-standing or built into the ground or a building?
It depends on whether the scale stays tangible personal property or becomes part of the real property. A free-standing scale used exclusively on a farm or ranch in producing or marketing agricultural …
Does Texas sales tax apply to a floral order that a Texas florist takes over the internet from an international customer, if the flowers are delivered outside the U.S. by an unrelated florist?
Yes, taxable. The Comptroller ruled that charges for floral orders taken in Texas over a web site are subject to Texas sales tax, even when the flowers are delivered outside the state or outside the c…
If the person who created a trust was a New York domiciliary when the trust became irrevocable, but every trustee later becomes domiciled outside New York and the trust's assets and income have no New York connection, does the trust still owe New York income tax?
The trust is still technically a New York 'resident trust' under Tax Law § 605(b)(3)(C), because that status is fixed permanently by the grantor's domicile at the time the property was transferred and…
I'm buying vacant land for $550,000 and, on the same day, separately contracting with the same builder to construct a $1,000,000 custom home on that land -- together the deal is worth $1.55 million, well over the mansion tax's $1 million threshold. But the land purchase contract and the building contract are expressly written as separate, divisible agreements with no cross-default provisions, and only the vacant land (not a finished or partially-built house) will actually be conveyed to me. Do I owe the 1% mansion tax on this land purchase?
No mansion tax -- only unimproved vacant land was actually conveyed. Petitioner, Mitchel H. Engel, entered into two separate contracts with Thomas Wright Development Corp. on the same day: a $550,000 …
New York State condemned part of my land for a highway project and paid me an advance payment, with more expected after settlement or trial. Part of that money compensates me for damage to the LAND I'M KEEPING, not the part that was taken. Does that severance-damage portion count as taxable consideration under New York's Real Property Transfer Gains Tax?
No -- severance damages don't count as taxable consideration, to the extent the property owner can prove that's what the payment represents. Stefco Realty Corp. owned about 70,567 square feet of land …
If Utah exempts health insurance premiums from its own premium tax, does a foreign insurer still have to include health premium taxes imposed by its home state in Utah's retaliatory tax calculation?
Yes, it must be included. Even though Utah exempts health insurance premiums from its own direct premium tax under section 59-9-101(5), that exemption doesn't carry over to the separate retaliatory ta…
What certificate wording can apartment complexes and multifamily property managers use to claim the residential exemption on electricity purchased from utility companies?
Yes, with the right wording. The Comptroller approved two proposed certificate wordings utility companies could accept from customers: one for apartment complexes where 100% of a meter's electricity i…
Are industrial back/lumbar support belts sold as braces exempt from Texas sales tax?
Yes. The Comptroller ruled that the listed industrial back support belts/harnesses qualify for exemption as a brace under Texas Tax Code SEC. 151.313(a)(4) and Rule 3.284(a)(1) and (c)(1). Because bra…
Is Texas sales tax owed on claims processing services performed for the Texas Public Entity Excess Insurance Pool?
No. The Comptroller ruled that claims processing services performed for the Texas Public Entity Excess Insurance Pool, or for an administrator hired by the Pool, are not taxable — because the Pool its…
If I rent out a 'grip package' (electrical production equipment plus a 5-ton truck and driver) for one price, do I owe motor vehicle rental tax on the truck, and can I buy the equipment tax free for resale?
Pay motor vehicle tax when you buy the truck, and don't collect motor vehicle rental tax when you rent out the grip package, because you're renting production equipment with transportation, not rentin…
What former Texas franchise-tax reports and additional tax applied when a corporation planned to dissolve in 1996?
The corporation properly filed its 1996 annual report and a 1996 final report paying additional tax because dissolution would end its earned-surplus liability. If it did not dissolve by December 31, i…
Is a video production business's charge for taping and editing a wedding or event video subject to Utah sales tax, and how does the resale exemption work when buying blank tapes?
Yes, fully taxable when you sell a finished video. Like other photographic services, video production mixes professional services (taping, editing) with tangible personal property (the tape), but the …
Are Jobst burn-treatment garments (pressure vests, gloves, garments with leg zippers, and vest-with-gloves-and-face-mask combinations) exempt from Texas sales tax as braces?
Yes, but only as braces, not as orthopedic devices. The Comptroller reversed part of an earlier opinion and ruled that the Jobst pressure gradient vest, Jobst pressure vest, Jobst pressure gradient gl…
Is a separately stated charge for air quality monitoring during an asbestos abatement project taxable in Texas?
Not taxable. A separately stated charge for air quality monitoring performed during an asbestos abatement project is not taxable, though the monitoring and other equipment used is taxable to the servi…
Is the labor to set up a computer -- connecting the monitor, mouse, keyboard, and printer to the CPU -- taxable in Texas?
Yes. The Comptroller ruled that the initial set up of a computer -- connecting the monitor, mouse, keyboard, and printer to the CPU -- is considered assembly of tangible personal property and is subje…
Did installment-sale gain belong in a dissolving S corporation's former Texas franchise-tax final report?
Only to the extent the gain was reported on the S corporation return through dissolution. That portion entered receipts and taxable earned surplus on the final report. Installment income reported late…
Is ISDN internet equipment and connectivity used to transfer prepress printing files exempt from Texas sales tax as manufacturing equipment?
Mostly no. The Comptroller ruled that computers or equipment that directly drive digital printing presses qualify for the manufacturing exemption, but the ISDN line, routers, and other equipment used …
As a Federal Firearms Licensed Dealer handling interstate gun transfers, when do I collect Utah sales tax on the gun price, on my transfer fee, and on the federal NFA tax stamp — and does an individual owe tax on an NFA firearm even if it's for law enforcement training use?
It depends on the roles and billing details. Whether Utah sales/use tax applies to the gun's purchase price turns on nexus: if the out-of-state seller has sufficient contact with Utah, the seller (or …
Does a promotional-advertising company owe Texas sales tax on searchlights, inflatables, banners, balloon giveaways, and clowns it provides for grand openings and sales events?
It depends on the item. Imprinting balloons for giveaway and selling balloons is taxable, but searchlights, inflatables, banners, flyovers, decorating, and clowns/entertainment are nontaxable advertis…
Was interest from qualifying loans to a South Carolina business development corporation exempt from state income tax under RR 96-10?
Yes. Interest on loans made to a South Carolina business development corporation in accordance with Sections 33-37-250 and 33-37-460 was exempt from South Carolina income tax because Section 33-37-70 …
Is carpet bought for a minister's parsonage exempt from Texas sales tax, and does it matter who pays for it?
It depends on who pays. A church can buy carpet to refurbish a parsonage tax-free by giving the supplier an exemption certificate, but only if the materials are billed to and paid for by the church it…
Does a sale-and-leaseback of office equipment escape New York sales tax if it's really a disguised financing arrangement rather than a true sale?
No -- a proposed sale of office and computer equipment by a securities firm to an unrelated commercial lender, followed by a 'leaseback' with renewal/purchase/return options structured so the firm is …
How does Utah tax sale-leaseback lease payments, conditional-sale 'leases,' and secured loans on equipment, and how can a leasing company avoid taxing the same equipment twice?
It depends on how the transaction is structured. A true sale-leaseback avoids double taxation on the lease payments only if three conditions are all met: the lessee already paid sales tax on its own o…
Did a corporation independently tax two short federal periods after its stock changed owners, or combine them on its former Texas report?
It combined them. Because the stock sale changed ownership but not the corporation's legal status, the 1996 annual report used the full 1995 calendar year. The corporation added both short-return amou…
How did Texas tax a leasing company's purchase of another lessor's vehicles, loans, and lease contracts?
A financing takeover was only a lienholder change and was not taxable. Apportioned carrier units could transfer under the carrier's IMC permit. Other vehicles could be acquired for resale tax-free by …
Is a fee-based Internet dating service that maintains a database of interested persons taxable as an information service in Texas?
Yes, taxable. The Comptroller ruled that charging a fee for individuals to access a database of interested persons built for an Internet dating service constitutes an information service, and charges …
Are elevator consulting firms' inspection, evaluation, design, and expert-witness services subject to New York sales tax?
No -- a group of elevator consulting firms' inspections, performance evaluations, code-compliance reviews, modernization studies, traffic-capacity studies, design/specification work, bid analysis, pos…
How does New York sales and use tax apply to a kitchen cabinet and countertop manufacturer that sells its products both installed and uninstalled?
It depends on whether the sale is installed or uninstalled -- a kitchen cabinet and countertop manufacturer must collect sales tax when selling cabinets uninstalled, but when it installs cabinets or c…
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