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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Was a lessor-paid lease-facilitator fee taxable when the facilitator was neither the vehicle seller nor the seller's agent?
No. The fee was not part of taxable consideration because the purchaser paid it to a facilitator that was neither the seller nor the seller's agent. The result applied whether the worksheet folded the…
Could a lessee-owned vehicle reduce the taxable value of a lessor's vehicle purchase without the dealer physically possessing the trade-in?
Yes, physical possession by the dealer was not required if the trade-in otherwise formed part of the lessor's purchase consideration and the seller's records showed acceptance, credit, and resale to t…
Are charges for assembling or erecting an above-ground swimming pool taxable in Texas, and does it matter whether a third-party installer does the work?
It depends on what the work actually is. Charges for a true third-party 'installation' — placing tangible personal property in position without changing its form — are not taxable (though separately s…
When a contractor makes an improvement that increases production capacity at a Texas refinery or chemical plant, does sales tax apply to the material, the labor, or both?
It depends on how the contract is written. Under the law effective October 1, 1995, labor to improve production capacity at a refinery or chemical plant is a non-taxable improvement to realty either w…
Is cleaning/washing a trailer tank after hauling liquid chemicals a taxable service in Texas, and can the cleaning chemicals and required safety gear be bought tax free?
No, the cleaning itself isn't taxable — the Comptroller said washing out a trailer tank between loads is nontaxable maintenance to a motor vehicle. But the client still can't buy the cleaning chemical…
Is electricity used in a corporate apartment that a company leases to house out-of-town clients and associates (at no charge, for stays typically under a week) subject to Texas sales tax?
Yes, it's taxable. The Comptroller ruled that electricity used in a corporate apartment maintained to house visiting clients and associates is 'commercial use' under Texas Tax Code § 151.317(a), not e…
When a business reorganizes — transferring assets to a new subsidiary, contributing assets between related corporations, or trading stock between commonly-owned subsidiaries — which of those transfers are subject to Texas sales tax, and how are stock-sale receipts allocated for franchise tax?
It depends on the transaction. A transfer of substantially all the assets of an identifiable business segment can still qualify for the occasional sale exemption even if a shared-use asset (like a com…
Does an apartment complex have to perform its own predominant use study before claiming a sales tax exemption on electricity from a master meter that serves only common-area/residential uses?
Not necessarily. The Comptroller's Tax Policy Division told this association that apartment complexes whose master meters serve only onsite management offices and residential common areas (club rooms,…
The Department says I never paid, but I'm sure I mailed my return and a check — can I win with just my word?
No — uncorroborated testimony that you paid isn't enough to beat an assessment. Peter Grivas, a New Mexico resident, was assessed $2,158.27 in personal income tax plus interest and penalty for 1991 af…
Do fashion stylists owe Texas sales tax on rentals and services they provide for still-photography shoots versus for motion picture, video, or audio production?
It depends on the type of production. For still photography, taxability has not changed from a 1990 response and generally still applies. But beginning October 1, 1993, producing a motion picture, vid…
When is having tires retreaded (or an alternator, generator, radiator, or transmission repaired) treated as taxable 'repair' of tangible personal property, rather than an exempt repair of a motor vehicle component, under Texas sales tax rules?
If you have more casings retreaded than the number of tires the vehicle is designed to use, the Comptroller presumes you are having taxable tangible personal property repaired, not an exempt motor veh…
Is having tires retreaded, or having alternators, generators, radiators, or transmissions worked on, taxed as a repair of your motor vehicle in Texas?
Usually yes, taxable as repair — but it can be rebutted. The Comptroller's office says that if you have casings retreaded in a number exceeding the tires a vehicle is designed to use, the presumption …
Does a customer owe Texas sales tax on tire retreading (or similarly, on repair of alternators, generators, radiators, and transmissions) when the repaired part goes back on the same vehicle versus into inventory?
It depends on what happens to the part. If a customer's tire casings (or similar motor vehicle components like alternators, generators, radiators, or transmissions) are repaired and go right back onto…
Is a satellite trucking dispatch messaging service, and the equipment that goes with it, subject to Utah sales tax?
The messaging/dispatch service itself is not subject to Utah sales and use tax. But the sale or lease of the equipment installed in the trucks and dispatch centers to use that service IS subject to Ut…
Can a company that overhauls and repairs jet turbine engines buy consumables like cleaning solvents and plasma tax-free, and does the machinery/equipment exemption apply even if some customers aren't certificated airlines?
Yes to both. The Comptroller told this engine-overhaul company that consumables such as cleaning solvents and plasma that are used up or transferred to the customer during overhauling, retrofitting, o…
Is toner sold to a commercial printing or copy company exempt from Utah sales tax as a component part of the copies they resell, and is the labor to refill a toner cartridge taxable?
Toner can be exempt, but only conditionally -- it depends entirely on who's buying it and why. If you sell toner to a commercial printer or copy service that uses it to produce copies or printed mater…
Does a retailer have to collect sales tax on the service charge (bad-check fee) paid by the writer of a dishonored check?
It depends on who collects the fee. If the retailer itself collects the processing fee directly from the person who wrote the bad check, no tax is due on that fee. But if the retailer hires a debt col…
Can a New York resident estate that owns 100% of an out-of-state S corporation claim New York's resident tax credit for the income tax it pays to that other state on the S corporation's pass-through gain?
Potentially, yes. Tax Law § 620(a) and (d) let a resident estate claim New York's resident credit for tax it pays to another state on an S corporation's income, computed as if the estate were an indiv…
New York Advisory Opinion TSB-A-95(44)S: Does a boat-slip condominium association's common charges become subject to the sales tax on social/athletic club dues because the condominium includes tennis courts and a swimming pool, and must the association form a separate corporation to run those facilities?
Partly taxable -- only the portion of common charges reasonably allocable to the tennis and pool facilities counts as club dues, and no separate corporation is required. Anchorage Yacht Club Condomini…
When an out-of-state seller ships tangible personal property to a New York customer by common carrier, when are the receipts allocated to New York for the Article 9-A receipts factor across eight shipping/risk/payment scenarios?
It depends on the seller's connection to the shipment. Receipts from sales of tangible personal property are allocated to New York where the goods are shipped to points in New York. In Scenario 1 -- w…
Does Utah's Income Tax Act grant every taxpayer who misses the filing deadline an automatic extension, or does an extension require prepaying most of the tax due first?
No, a Utah income tax filing extension is not automatic just because a taxpayer misses the deadline -- it requires a prepayment. A taxpayer argued that Utah's Income Tax Act grants every late-filing t…
Do a foreign commodity trader's New York activities -- soliciting orders plus maintaining coffee-bean inventory in a New York public warehouse for sale to customers -- subject it to Article 9-A tax, or are they protected as minimal property/Public Law 86-272?
Yes, it is taxable. International Coffee solicits orders in New York and, when it takes delivery on coffee-bean futures, holds the physical beans in a New York public warehouse for sale to its custome…
Did a late South Carolina withholding-tax deposit trigger interest before the quarterly return due date under RR 95-17?
Not by itself. RR 95-17 said interest began only when withholding tax remained unpaid after the quarterly return due date. The Department could still impose a discretionary $10-to-$1,000 penalty for a…
Is a soil/groundwater remediation system (like an Air Sparge/Soil Vapor Extraction System) required by the Texas Natural Resource Conservation Commission exempt from Texas sales and use tax as pollution-control equipment?
No. The Comptroller ruled there is no sales tax exemption for the construction and installation of a Remediation System used to clean up contaminated soil and groundwater around an underground storage…
If a company pulls the rods, tubing, and other downhole equipment from a well to prepare it for plugging, but a different company plugs the well on a later day, is the equipment-pulling service taxable?
No. The Comptroller ruled that Rule 3.324 does not tax labor or services directly related to plugging and abandoning a well, and pulling the downhole equipment beforehand counts as directly related ev…
Is a cancellation fee charged when a customer ends a service agreement early subject to Texas sales tax?
It depends on the underlying service. If the service being cancelled is a taxable service, the cancellation fee is part of the taxable 'sales price' of that service under Tex. Tax Code § 151.007(a)(2)…
Can a Texas home builder or developer buy landscaping, lawn care, pest control, surveying, building and grounds cleaning, or waste removal services tax-free during construction of a new home, and does that exclusion cover model homes?
Mostly yes for new construction, but no for model homes. Under changes to Tax Code Section 151.0048 effective October 1, 1995, home builders and developers can buy landscaping, lawn care, pest control…
How did RR 95-16 direct admissions-tax revenue from major South Carolina tourism or recreation facilities?
RR 95-16 applied to qualifying tourism or recreation facilities with at least $20 million invested within five years. One-fourth of admissions tax went to the county or municipality and one-fourth to …
Does a Texas Internet service provider owe sales tax on domain name registration fees or on a handling fee charged for helping a customer obtain a domain name?
No. The Comptroller told this Internet services provider that the domain name registration fee itself is imposed on the customer (not the provider), so a separately stated fee for that licensing is no…
Is Resolut Regenerative Material, a product used to treat periodontal disease and bone defects in the oral cavity, exempt from Texas sales tax?
Yes. The Comptroller's office ruled that Resolut Regenerative Material — a product placed in the oral cavity to help regenerate the supporting structures of teeth lost to periodontal disease, which st…
After the U.S. Supreme Court barred a state fuel tax that legally fell on tribal retailers, does Utah's motor fuel tax exemption apply the same way?
The Chickasaw Nation decision has little impact in Utah because Utah's motor fuel tax is legally imposed on the distributor, not the retailer -- the U.S. Supreme Court's ruling struck down a tax whose…
Are kidney dialysis machines and the accessory equipment used alongside them (recliner, scale, blood pressure device, calibration equipment, water treatment system, reuse machine) exempt from Texas sales tax?
Only some of it. The Comptroller said kidney dialysis machines and related supplies are exempt from Texas sales tax when specifically designed and used during dialysis treatment, and that a water trea…
New York Advisory Opinion TSB-A-95(41)S: Is the monthly fee a video-playback facility charges a new cable channel for accepting, playing back, and feeding its programming to a satellite uplink -- to distribute the channel nationwide -- subject to New York sales and use tax?
Not taxable. MRG Production Associates is exploring an agreement to provide videotape playback facilities and support staff for a new cable television channel's ("Corporation A") 24-hour on-air needs,…
Can a sport-fishing boat that holds a license to catch and sell some of its fish get a refund of New York's motor fuel, petroleum business, and sales taxes on its fuel as a commercial fishing vessel?
It depends on the facts — and the Department says that factual question can't be answered in an Advisory Opinion. Relief from the Article 12-A motor fuel tax, the Article 13-A petroleum business tax, …
My real estate broker has agreed to pay New York's Real Property Transfer Gains Tax out of its own pocket (not passed on to the buyer) so a contingent multi-parcel closing can go through. Does the broker's payment of my tax count as additional taxable consideration for the sale?
No, it's not additional consideration -- as long as the broker's payment isn't really the buyer's obligation in disguise. Robert Schwagerl was selling vacant land in Suffolk County for $1,250,000 as p…
Under Texas Tax Code Section 151.0048, can a contractor or homebuilder buy landscaping and other real property services tax free when building a new home, and does that exemption also cover model homes or subdivision common areas?
Yes for new residential construction, but no for model homes or subdivision common areas. A contractor building a new residential structure can buy landscaping (and other real property services covere…
When a catering/event company provides entertainment (mariachis, armadillo races, hay rides) at a party, does it owe Texas sales tax on the entertainment charges?
It depends on whether the company is acting as a provider of a taxable 'amusement service.' A straight performance fee paid to musicians (like the mariachis in this letter) isn't a taxable admission. …
Under this internal Texas Comptroller staff memo, is buying, installing, repairing, or renting Christmas decorations for a customer taxable?
Mostly yes, with one key distinction: when the seller buys the Christmas decorations and sells/installs them for the customer (whether billed as one price, itemized, or with a separate 'reimbursement'…
If an apartment resident operates a store or business out of their unit, is the electricity or gas used there still exempt as a residential utility in Texas?
Not automatically. The Comptroller told the requester that a Texas Apartment Association publication was wrong to say residential utilities are simply exempt. If a unit has a separate meter and the re…
Is sales tax due on food, meals, soft drinks, and candy sold to inmates in federal prisons in Texas?
Yes, as of October 1, 1995. The Comptroller told this requester that House Bill 462 added Subsection (g) to Tax Code Section 151.314, making sales of food products, meals, soft drinks, and candy to in…
Could a South Carolina taxpayer amend a return to change the historical retirement-income deduction election under RR 95-15?
Sometimes. RR 95-15 treated the election to defer deductions until the applicable retirement age for a later $10,000 annual deduction as irrevocable. A taxpayer who chose the $3,000 annual deduction c…
If a seller accepts a customer's exemption certificate in good faith and it later turns out the customer isn't actually exempt, is the seller liable for the uncollected sales tax?
No -- a seller who accepts an exemption certificate in good faith is not liable to collect the sales tax, even if the buyer's exempt status is later called into question. A Park City-area vendor had s…
Does selling an entire hospital campus to a related parent company, and that parent's later resale of the same hospital to an unrelated third party, both qualify for Utah's isolated-or-occasional-sale sales tax exemption?
Yes to both transactions. A Utah hospital company agreed to sell its acute-care hospital campus (land, buildings, and personal property) to its parent corporation, which in turn planned to resell the …
When a retailer sells a $200-500 cellular phone for a penny or a dollar in exchange for the buyer activating cellular service (earning the retailer an activation commission), does Utah sales/use tax apply to the phone's nominal sale price, its cost, or something else?
Sales/use tax applies, but not on the nominal one-cent-to-one-dollar sale price. A cellular phone retailer bought phones costing $200-500 and resold them to the public for as little as one cent, condi…
Do Air Force personnel and other authorized purchasers who buy amusement or entertainment park tickets through a Department of Defense Nonappropriated Fund Instrumentality's 'Ticket and Tour' operation owe Texas sales tax on those tickets?
No. The Comptroller's office confirmed that sellers of amusement and entertainment park tickets are not required to collect tax on sales to Department of Defense Nonappropriated Funds Instrumentalitie…
Are court reporting services — transcripts, videotapes, or audiotapes of depositions and testimony — taxable when sold to participants in a lawsuit in Texas?
No. The Comptroller's office told this court reporter that selling a court reporting service (transcripts, computer-readable formats, audio tapes, video tapes, or films of a deposition, testimony, dis…
How did the 1995 federal restraining order affect Kansas motor fuel tax on sales to certain tribes?
On October 5, 1995, Federal District Judge Dale Saffels issued an order temporarily restraining the Kansas Department of Revenue from collecting tax from distributors who sell motor fuel to the Iowa, …
New York Advisory Opinion TSB-A-95(39)S: Is a food service contractor's charges to a substance-abuse treatment facility -- for meals, on-site labor, supplies, nutritional analysis, and management services -- exempt as a sale for resale, or at least partly exempt as a professional fee?
No exemption either way -- the entire charge is taxable as a sale of food and drink, with no carve-out for the labor/management/nutritional-analysis portion. Ambassador Food Services Corporation suppl…
New York Advisory Opinion TSB-A-95(38)S: When a prime contractor buys trash removal from a subcontractor and then re-bills the exact cost to a federally tax-exempt customer, is the subcontractor's charge to the prime contractor taxable, and is the prime contractor's pass-through charge to the exempt customer taxable?
The subcontractor's charge to the prime contractor is taxable; the prime contractor's pass-through re-billing to the tax-exempt customer is not. Pasquale & Bowers described a repair project (not a cap…
Can a company that sells crowd-management/security services to a sporting-event or concert promoter buy those security services tax-free under the sale-for-resale exemption, on the theory that security is an integral part of the promoter's taxable amusement service?
No. The Comptroller ruled that crowd-management/security services for concerts and sporting events are not an 'integral part' of a taxable amusement service, because people can still attend and watch …
For New York's truck mileage tax (gross weight method), do miles count as "laden" when my truck is only carrying my own tools and equipment, or hauling waste with no economic value, or has equipment permanently bolted on?
It depends on what's being carried. For New York's Highway Use Tax truck mileage tax computed by the gross weight method, miles are "laden" (loaded) unless what's on the truck is part of its "unloaded…
If a restaurant charges customers a mandatory $1 'donation' to get a discounted meal and then passes that dollar to a charity, does the restaurant owe sales tax on it?
Yes, generally. The Comptroller's office said that when a 'donation' is mandatory and the value of what the customer receives (the meal) is worth more than the donation, the dollar is consideration fo…
Does an out-of-state 501(c)(3) religious children's ministry that employs one Utah missionary and mail-orders teaching materials to Utah churches owe Utah income tax withholding or sales/use tax on those activities?
It depends on the activity. The Utah-based missionary's wages are subject to Utah income tax withholding just like any other Utah employee. But the mail-order books, uniforms, and game materials the m…
The Department took months to finish my audit — can I get the interest that piled up during the delay knocked off?
No — interest keeps running on unpaid tax even while an audit drags on, and there is no provision to abate it for the delay. S & J Enterprises, Inc., a New Mexico commercial-construction corporation, …
Does a photographer owe Texas sales tax on a fee charged for licensing the use of a copyrighted photograph, versus on photographs delivered to a Texas advertising agency for an ad?
It depends on what is being sold. A fee charged for licensing or for the right to use a copyrighted photographic image, illustration, or transparency for publication is not subject to Texas sales tax.…
Is selling advertising space on an Internet on-line service (purely electronic media, no tangible property involved) subject to Utah sales tax, and does that change if the seller also provides ad design services?
No, on both counts. Selling advertising space in an on-line Internet service is not a taxable transaction for Utah sales and use tax purposes — neither an initial charge nor ongoing monthly fees for t…
Do inmates have to pay Texas sales tax on food, candy, and soft drinks bought at a jail or prison commissary?
Yes, as of October 1, 1995. The Comptroller told this correctional-facility commissary that sales tax became due on food ready for immediate consumption, soft drinks, and candy sold to inmates, ending…
Our New York property secures both our own $222 million note AND a guaranty of $277 million in sister companies' out-of-state mortgage notes, capped at a combined $335.5 million -- we already paid tax on that cap. As those out-of-state notes get partly prepaid and our whole $500 million multi-state loan gets refinanced and restated, does our New York mortgage modification trigger additional mortgage recording tax?
No additional tax, as long as the properly tracked outstanding balance doesn't exceed what was already taxed. Fifth Win, Inc. owned New York City property securing (1) its own $222,436,500 mortgage no…
My ex-spouse and I divorced years ago and split the future sale proceeds of our marital co-op, but only my ex-spouse kept living in it after our divorce. I moved out and never lived there again. When we finally sell, is my share of the gain exempt from New York's Real Property Transfer Gains Tax as a personal residence, the same as my ex-spouse's share?
Split result -- exempt for the spouse who stayed, taxable for the one who left. Robert Liberman bought a co-op apartment in 1976 that he and his wife Katherine Gill lived in as their marital home. A 1…
Our partnership owns seven Manhattan properties. We're proposing to exchange them for land under a building owned by a related corporate subsidiary, 1133 Building Corp. Both entities are ultimately owned (through different family trusts) by the same thirteen family members ('the Second Generation Children'), but the ownership chains aren't perfectly identical -- our partnership is 99.9% owned by them equally through one set of trusts plus a 0.1% sliver owned by a corporation that only four of the thirteen family members own, while 1133 Corp. is 100% owned by them equally through a different set of trusts. Since the same family effectively owns both sides before and after this exchange, is it exempt from the Real Estate Transfer Tax and Real Property Transfer Gains Tax as a 'mere change of form,' or does the slight difference in cross-ownership percentages make part of it taxable?
Mostly exempt, with a tiny taxable sliver -- the mirror image of a companion ruling covering the other side of the same exchange. Eastern Pork Products Company ('Petitioner'), a New York general partn…
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