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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Is a testamentary trust a New York resident trust under Tax Law section 605(b)(3)(C), and subject to New York personal income tax under Article 22, when all of its trustees live in New York but the person who created it in her will died domiciled in Florida?
No. A trust created by will is a New York resident trust only if the decedent was domiciled in New York at death. Because Genevieve G. Harper died domiciled in Florida, the Harper Family Trust is a no…
If I don't file a return or hand over my records, how does New Mexico figure out what income tax I owe?
The estimated tax bills stood. Robert and Carol Welsh, New Mexico residents who ran a coin-operated laundry, reported and paid gross receipts tax but never filed personal income tax returns for 1989–1…
I forgot to report a retirement payout and only found out years later — can I avoid the interest and penalty?
No — both the interest and the penalty stood. Frank Ruybalid received a lump-sum retirement disbursement in March 1991 with federal tax withheld but no state tax. He moved, never got the follow-up tax…
Is an elevator or wheelchair lift installed in my home exempt from Texas sales tax if my doctor prescribes it?
Yes -- an elevator or wheelchair lift installed in a home can be exempt from Texas sales tax as a therapeutic device, but only if the doctor provides a written prescription and a signed statement of m…
Can a contractor rent equipment tax-free using a resale certificate if the equipment is used to improve real property or perform a taxable service?
No. Contractors who improve new real property, repair or remodel residential real property, or provide taxable services like nonresidential repair/remodeling must pay sales tax when they purchase, ren…
Is a signed tax settlement with the state binding if it was never approved by the Attorney General?
No — a settlement that compromises assessed taxes is not binding on New Mexico unless the Attorney General approved it in writing. Johnson & Johnson settled a small ($40,000) nexus dispute over six su…
May a transportation corporation include its independent operators' revenue miles in the section 184 mileage allocation fraction?
No. Section 184.4(a) allocates a transportation corporation's gross earnings by a fraction of 'the taxpayer's mileage' within New York over the taxpayer's mileage everywhere, using actual revenue mile…
Is a natural-gas broker LLC that never takes title to the gas subject to the section 186 or 186-a gas/utility taxes?
No. A natural-gas broker that never takes title, possession, control, or risk of loss of the gas -- it only matches producers with end-users, states in its agreements that it is a broker, reports only…
Does a bank subsidiary's section 1452(d) election to stay under Article 9-A survive (1) the acquisition of its parent bank by another bank, and (2) an expansion of the subsidiary's line of business?
No. ESB (later renamed Associates) timely made the one-time section 1452(d) election to keep being taxed under Article 9-A instead of the Article 32 bank franchise tax. The 1986 acquisition of its par…
Are the corporate partners of a natural-gas storage partnership taxed under Article 9 or Article 9-A, and is the partnership subject to section 186-a on its storage and incidental gas-sale receipts?
The corporate partners are taxed under Article 9-A, and the partnership's storage receipts are not section 186-a gross operating income (but its incidental gas sales are). A gas-storage partnership th…
If I offer customers a discount for paying early (or charge a fee for paying late or not ordering electronically), how does that affect the sales tax I have to collect?
A true cash discount for paying early reduces the taxable selling price -- tax applies to the discounted amount actually paid, not the original invoice amount. A separately stated charge purely for la…
I'm a sole proprietor disputing a sales tax audit. If I ask Texas to settle my liability because paying it would make me insolvent, can the Comptroller count my spouse's wages and our community property, not just my business assets?
Yes. In this Comptroller's Decision on Rehearing (Hearing No. 29,794), the Administrative Law Judge held that when a sole proprietor asks the Comptroller to settle a tax assessment under Tex. Tax Code…
If I test or stage computer hardware/software in Texas before exporting it out of state, does that testing count as a taxable 'use' of the property in Texas, even if I hold a direct payment permit?
Yes -- testing or 'staging' tangible personal property (including computer hardware and software) in Texas before exporting it out of state is a taxable 'use' of that property in Texas. This applies r…
New York Advisory Opinion TSB-A-96(21)S: If a company buys and registers vehicles as dump trucks, uses them as dump trucks, and only later modifies them (removing the dump body, adding a fifth-wheel hookup) and re-registers them as tractors, can it get a refund of the sales tax paid at purchase under the tractor/trailer exemption?
No refund. R.J. Valente Gravel purchased vehicles, registered them with the DMV as trucks, and used them as dump trucks, paying sales tax on the purchases. It later modified some of these vehicles -- …
New York Advisory Opinion TSB-A-96(20)S: Does an industrial gas company's cryogenic converter, which turns refrigerated liquid gas into gaseous form for sale to customers, qualify for the sales tax exemption for production machinery used directly and predominantly in manufacturing/processing?
Yes, exempt. Empire Airgas manufactures and sells industrial and medical gases (oxygen, argon, helium, carbon dioxide, hydrogen, nitrogen), storing them in refrigerated liquid form in bulk tanks, but …
New York Advisory Opinion TSB-A-96(19)S: On a long-term Mercedes-Benz auto lease originated by a dealer and then assigned to a leasing company, who owes the sales tax -- the dealer or the leasing company -- and is a customer's trade-in equity credited against the lease taxable?
The dealer -- not Mercedes-Benz Credit Corporation, the leasing company the lease is later assigned to -- is the "original lessor" and the one responsible for collecting and remitting New York sales t…
New York Advisory Opinion TSB-A-96(18)S: Is a hotel's purchase of a PBX telephone-switching device -- which routes incoming outside calls to the hotel's internal phone system -- exempt from sales tax as production equipment used to provide a taxable telephone service for sale?
It depends on how the hotel bills its guests for phone calls -- the exemption is available only if certain conditions are met, not automatically. Kasden Complete Services' hotels charge guests for cal…
We (an unaffiliated seller) are transferring a commercial property to a newly formed LLC owned by a REIT and its operating partnership, in exchange for a 40% ownership stake in that LLC plus cash and mortgage-related consideration. We signed the sale agreement on December 1, 1995, but the REIT's shares were first issued in its IPO on June 2, 1995, and our closing may slip past the six-month anniversary of that IPO. Does our sale qualify for the reduced 'REIT transfer' tax rates under New York's Real Estate Transfer Tax and Real Property Transfer Gains Tax if the closing happens within a reasonable time after we signed but after the strict six-month window? And if we (the selling partnership) later distribute the sale proceeds to our individual partners, does each partner need to separately satisfy the requirement of retaining at least 40% of their share's value in the new LLC for two years?
Yes, largely favorable to the taxpayer -- signing the sale contract counts as the operative 'transfer' for timing purposes, and a later closing can still qualify for the REIT transfer's reduced tax ra…
Who qualified for the historical $5-per-work-day firefighter and EMS subsistence deduction under RR 96-5, and which days counted?
Paid, certified full-time firefighters and EMTs, EMT-intermediates, or paramedics providing ambulance-type emergency service could deduct $5 for each regular work shift longer than six hours. On-duty …
Are replacement parts for shaker screens and sand screws, and a concrete reclaimer, exempt from Texas sales tax as manufacturing equipment at a sand/gravel processing plant?
It depends on timing and equipment type. Replacement parts for sand screws (which sort, separate, grind, crush, and clean materials) are exempt from tax, and a concrete reclaimer that separates water,…
New York Advisory Opinion TSB-A-96(17)S: In a New York City Industrial Development Agency bond financing designed to keep an insurance company headquartered in the city, are the company's equipment purchases, leasehold improvements, maintenance contracts, and lease/rent payments to the Agency exempt from New York State and City sales and use tax?
Yes, exempt -- with detailed conditions attached. To keep Equitable Life Assurance Society headquartered in New York City, the company and its subsidiary (the "Lessees") will enter a bond-financed sal…
Is running (or removing) telephone/data cabling behind walls and above ceilings a taxable service to real property, or is it excludible installation of tangible personal property?
It's a taxable service to real property. Running (or removing) telephone and data cabling that is concealed behind walls and above ceilings -- not obvious and not readily accessible -- is a service to…
For a Texas tire retreader, how is sales tax applied differently to 'stock retreads' (tires/casings the retreader owns and holds for sale) versus 'customer property retreads' (casings the customer already owns), and when do machinery, electricity, and natural gas used in retreading qualify for a manufacturing exemption?
It depends on who owns the casing. Retreading a 'stock casing' that the retreader owns and sells as a retread is a sale of tangible personal property — taxable on the full charge, but the retreader is…
Was a vehicle sale-leaseback subject to Texas motor vehicle sales tax when it was really a financing arrangement?
No, if the sale-leaseback was genuinely a financing arrangement and the lessee retained the listed ownership characteristics before and after the transaction. Those facts included possession, responsi…
When did Texas require a seller-financing dealer to pay all remaining motor vehicle tax after transferring payment rights?
When the investor obtained the right to receive the retail purchaser's payments. The internal memo said that funding 60% of the financed amount and acquiring payment rights met § 152.047(g), even with…
Is an ultra pure water system and its associated piping, used to produce and distribute ultra pure water needed in semiconductor fabrication, exempt from Texas sales and use tax?
Yes. The Comptroller confirmed that the ultra pure water system and its associated equipment/piping — used to produce and distribute the ultra pure water required in the semiconductor fabrication proc…
Which chemicals, injection services, and electricity purchased by an oil and gas producer are exempt from Utah sales tax, and which are taxable?
It depends on the item. Glycol, methanol, CO2/nitrogen, and oil-soluble chemicals used in oil and gas production are generally taxable purchases because the producer consumes them in the process rathe…
Does Utah sales tax apply to charges hotels and motels bill guests for in-room pay-per-view movies and video games?
It depends on delivery method. If a hotel or motel rents videos and a hotel employee plays them on a machine it controls, broadcasting to the guest's room, the charge is taxable as a rental of tangibl…
Can Indian tribes and tribal members buy goods tax-exempt in Utah, and do vendors need to use form TC-721G to document those exempt sales?
Sales to a tribe on Indian lands (or delivered there by common carrier) are exempt from Utah sales tax without needing form TC-721G — proof of delivery is enough. Sales to individual tribal members ar…
Does a direct-sales company need to collect Utah sales tax on sales to Utah customers, and how does the tax work when independent contractors resell the company's products to their own customers?
Two different rules for two different sales channels. When the company sells directly to Utah customers for their own use, those are ordinary retail sales, and the company -- which has Utah nexus beca…
If a private corporation buys an airplane to lease it to a charter operator, is the purchase tax-free, and is the lease and the charter revenue taxable in Utah?
Two separate transactions, two separate answers. The buyer's purchase of the airplane is tax-free under the resale exemption, but only if the buyer intends to lease it out (not use it themselves) and …
Which of the specific services a paralegal/legal-assistance company provides (research, word processing, witness location, trial preparation, document organization) are taxable, and how should billing work if only some services are taxable?
Most of the services are taxable: research/record review in the public domain is a taxable information service (Rule 3.342); word processing of medical-record/deposition summaries, trial-preparation w…
Does a monitor a photographer uses to let customers preview and crop a photographic image before it's printed qualify for the Texas manufacturing sales-tax exemption?
No. The Comptroller ruled the monitors don't qualify for the manufacturing exemption because they're used primarily as a marketing tool to show customers the image before the final print — Tax Code § …
Are the risk management, claims administration, and safety/loss control services a third-party administrator provides to Texas employers subject to sales tax?
It depends on who the client is. These services count as taxable "insurance services" under Rule 3.355 when performed for an employer that carries a regular insurance policy (including one with a high…
Does a studio's equipment used to transfer raw film footage onto a video master tape qualify for the manufacturing exemption, and is the studio's transfer service or the sale of the resulting video master/duplicates subject to Texas sales tax?
Yes, the studio's computer equipment used to convert processed negative film into a video master tape qualifies for the manufacturing exemption under Texas Tax Code Sec. 151.318. The sale of the video…
A company that wants to sell a concentrated garlic-juice product to cotton farmers as an insect repellent/pesticide asked whether those sales are exempt from Texas sales tax and what it needs to do to comply.
Yes — selling the garlic-juice product to cotton farmers as a pesticide is exempt from Texas sales tax under the agricultural exemption (Rule 3.296), but the seller still needs its own sales and use t…
Are a temporary help service's charges for supplying skilled workers (e.g., plumbers) to help a construction business complete jobs taxable as sales tax, or exempt as 'services by employees' under Sec. 151.057?
Exempt from sales tax, but only if all four conditions in Sec. 151.057 are met: (1) the temporary workers supplement the client's existing workforce on a temporary basis, (2) the work they do is norma…
New York Advisory Opinion TSB-A-96(11)S: When the Javits Convention Center becomes the sole employer of display and freight-handling workers and sells their labor to contractors at trade shows, is that a taxable sale of a service, and does it matter that the contractors resell the labor's output to exhibitors?
Yes, generally taxable -- the Javits Center is acting as a "temporary service contractor," and its labor sales are taxable unless the purchasing contractor provides a timely exemption certificate. The…
How is sales tax computed and who must collect and remit it on photographs sold from coin-operated photographic booths installed in shopping malls and amusement centers?
The total charge for the pictures is taxable, and if the price already includes tax, a 'price includes sales tax' notice should be posted on the booth (tax can then be backed out of the total by divid…
When a contractor installs a polyurethane pipe liner in a brand-new pipeline being laid alongside an existing one, does it charge sales tax on materials only, or on materials and labor both?
It depends on timing: if the liner is applied to the new pipe after the pipe is attached to realty, the contractor is doing new construction of real property — labor is not taxable, but sales tax must…
Does a piece of exercise/fitness equipment sold by a manufacturer qualify for a Texas sales tax exemption as a therapeutic or orthopedic device?
Partly. The product qualifies for exemption as a therapeutic device, but only when it is sold to an individual under a doctor's prescription (Rule 3.284(a)(11) and (c)(8)). It does NOT qualify as an e…
When a grocery store customer redeems a discount coupon (either a store coupon or a manufacturer's coupon), how is sales tax calculated on the purchase?
Either way — store coupon or manufacturer's coupon — the coupon reduces the taxable sales price of the item, so sales tax is due only on the discounted price, not the original price. If the register f…
Did a government entity need an exempt license plate for its vehicle purchase or lease to qualify for Texas motor vehicle tax exemption?
Yes. The letter said a public agency's vehicle purchase or lease was exempt only when the vehicle carried the required exempt license plate. A government-owned or government-leased vehicle without an …
Does a little league baseball association have to collect sales tax on concession stand sales of food, candy, and soft drinks?
No. Associations that support athletics for children under 19 are exempt from paying and collecting sales tax on food, candy, and soft drink sales, as long as all the proceeds are used for the organiz…
Are a transmission company's microwave/satellite signal-delivery services, sold to cable TV operators and public TV stations, excluded from the section 186-e telecommunications excise tax as 'cable television service' or as a 'sale for resale'?
No -- the services are taxable. EMI uses microwave and satellite facilities to deliver TV signals to cable operators and public TV stations, which is a 'telecommunication service' and makes EMI a 'pro…
May an Article 32 banking corporation subject to IRC section 475 mark-to-market exclude from entire net income the later-year 'gains' that simply reverse prior-year unrealized losses which (because Article 32 has no NOL deduction) never reduced its bank tax?
No. Article 32 entire net income starts from federal taxable income, and section 1453(b)(3) bars any net operating loss deduction. There is no Article 32 modification for the IRC section 475 mark-to-m…
New York Advisory Opinion TSB-A-96(16)S: Is a monthly $25 administrative fee that an information-services company charges customers who choose to pay for their information units as-used (rather than a lump annual prepayment) subject to New York sales tax?
Taxable. Dun & Bradstreet sells credit and market information services subject to sales tax under Tax Law § 1105(c)(1), and is registered to collect and remit that tax. Historically customers paid a s…
New York Advisory Opinion TSB-A-96(15)S: Is the fee charged for membership in a discount club -- which entitles members to discounts at participating boating and waterfront businesses -- subject to New York sales tax?
Not taxable -- the membership fee is the sale of an intangible. Nautical Miles, Ltd. sells memberships, to people inside and outside New York, that entitle members to discounts at a list of participat…
New York Advisory Opinion TSB-A-96(14)S: Is a telephone answering service's markup for long-distance calls it makes to forward messages to out-of-area clients taxable as a resale of telephone service, or as part of the taxable answering-service charge -- and does it matter where the client is located?
Taxable as part of Petitioner's telephone answering service -- not a resale of long-distance service -- but only if the customer's business or residence is located in New York. Total Recall Message Ce…
New York Advisory Opinion TSB-A-96(13)S: Is a licensed process server's income from serving legal papers, filing court documents, and locating defendants through public records subject to New York's sales tax on detective services?
Not taxable. Thomas J. Brennan is a New York City-licensed process server (not a licensed private investigator) who receives summonses to serve on defendants in court actions, and files an "affidavit …
New York Advisory Opinion TSB-A-96(12)S: Are receipts from massage services performed by a licensed massage therapist -- whether as a sole practitioner, employee, or officer/stockholder of a corporation -- subject to New York State or New York City sales tax?
Not subject to New York State (or non-NYC local) sales tax, but IS subject to New York City's own local tax -- regardless of whether the practitioner is a sole practitioner or an employee/officer/stoc…
Is the bill-paying portion of a freight-bill auditing company's services taxable as a data processing service if that bill-paying feature is offered to all customers at no extra charge?
No — under the revised contract, the bill-payment portion of the company's freight-bill auditing service is not taxable as a data processing service, as long as customers who don't use the bill-paymen…
Can a corporate purchasing-card program's system-generated Sales Tax Report substitute for individual vendor invoices to prove Utah sales/use tax compliance?
Yes, with conditions. A taxpayer must maintain documentation showing: the transaction date, the vendor, the purchaser, the total sale and tax amounts, enough item detail to separate taxable from nonta…
A tow-and-storage contractor that sells seized and salvage motor vehicles at auction for the U.S. Marshals Service asks whether, after the January 1, 1996 law change, it must collect sales tax on those sales.
As of January 1, 1996, a salvage vehicle is no longer treated as a "motor vehicle" for tax purposes — it's treated as ordinary tangible personal property. So sellers of salvage vehicles must collect l…
When a Texas insurance company is placed into receivership, what priority does the Comptroller's claim for uncollected/unremitted sales tax and premium tax get, and does the Receiver (the Commissioner of Insurance) have to keep collecting and remitting tax going forward?
The Commissioner of Insurance acting as Receiver of an insolvent insurance company is NOT a governmental agency or otherwise exempt from tax, and sales tax owed by the receivership estate is a Class 3…
Did a contractor auctioning seized vehicles for the U.S. Marshals Service have to collect Texas motor vehicle or salvage-vehicle tax?
For ordinary motor vehicles, no: as agent for the unlicensed U.S. Marshals Service, the contractor did not collect motor vehicle sales tax but had to give buyers the title and tax-payment paperwork. F…
How does a contractor buy construction materials tax-free for a Utah public school project, and which items actually qualify?
Yes, but only for items that are actually converted to real property owned by the qualifying school. Effective January 1, 1996, a contractor or subcontractor may buy construction materials tax-free fo…
Is a commercial roofing contractor's reroofing, resaturation, regraveling, and panel-replacement work nontaxable 'scheduled and periodic maintenance,' or is it taxable repair/restoration under Rule 3.357?
It's taxable repair/restoration, not nontaxable maintenance. The Comptroller disagreed with the contractor's argument: the work described (reroofing, resaturation, regraveling, and panel replacement d…
New York Advisory Opinion TSB-A-96(9)S: Is admission to a converted concert-hall venue -- where bar sales make up 78% of total receipts even though the main draw is live music -- subject to New York's "cabaret" sales tax on admission charges?
Taxable, as a "cabaret" charge -- the opposite result from the companion case where bar sales were held merely incidental. Empire Management and Productions operates a converted 1912-era concert hall …
New York Advisory Opinion TSB-A-96(10)S: Are a corporate-communications consulting firm's charges for image/communications consulting, recommending and sourcing videos/slides, creating logos, and coordinating corporate meetings subject to New York sales tax -- and does billing structure or a client's Direct Payment Permit change the answer?
It depends entirely on whether tangible personal property is transferred and whether any related charges are separately billed. Arteffects, Inc. is a graphic design and corporate communications firm (…
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