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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When a repair company fixes real-property equipment (like a restaurant refrigeration system) under a manufacturer's warranty, or provides a free 'goodwill' repair afterward, who owes Texas sales/use tax on the labor and parts?
It depends on who is footing the bill and why. When an out-of-state manufacturer's warranty covers the repair and the repair company bills the manufacturer (not the property owner) for labor and parts…
Are labor charges to install exempt manufacturing equipment also exempt from Utah sales tax, whether bundled into the equipment price or billed separately?
Yes, generally. A tax research consultant asked the Utah State Tax Commission to confirm that labor charges to install manufacturing machinery or equipment that already qualifies for the manufacturing…
I made an honest mistake on my return that the Department could have caught but didn't for years — do I still owe interest on the tax I underpaid?
Yes. Interest is owed on any underpayment of tax, even an honest error the Department could have caught from the face of your return but didn't. Emiel Bosman, a New Mexico resident who worked as a tra…
Can a business report sales tax on a modified accounting basis that lets it collect tax from customers but delay remitting that tax to the Comptroller past the statutory due date?
No. The Comptroller denied a company's proposed modified-accrual reporting method (treating invoices dated in one month as the following month's return data) because it would let the company collect t…
Does it matter, for Texas sales tax purposes, whether an insurance agency's risk-management fee is paid out of commissions on premiums or billed directly to the client?
No. The Comptroller ruled that whether a fee is paid from commissions on premiums or billed directly to the client does not change the sales tax result. What matters is whether the specific activity i…
New York Advisory Opinion TSB-A-95(33)S: Is a company's charge for creating and running Internet advertisements -- "Virtual Storefronts" displaying a client's products -- subject to New York sales tax?
Not taxable, as long as Petitioner isn't also selling tangible personal property. Mike Levy's company, Cyberactive, sets up "Virtual Storefronts" for client companies on the Internet, creating and run…
How did PLR 95-9 apportion trademark royalties earned by a South Carolina licensing subsidiary?
The addressed subsidiary used the historical gross-receipts formula. Its numerator included royalties from the licensee's sales delivered to customers in South Carolina, and its denominator included r…
Were ABC's purchases of parts and materials for temporary dual-vacuum extraction systems exempt when the systems cleaned soil and groundwater pollution caused by manufacturing machines?
Yes, for ABC's stated facts and only if every requirement of Regulation 117-173 was met. The systems removed water, vapor, and contaminants caused by machines manufacturing tangible personal property …
When a company sells blueprints made from customer-supplied drawings, does it owe sales tax on the sale, even if the blueprints end up being used to build a real estate improvement for a tax-exempt entity?
Yes, in most cases. The Comptroller told the seller (Company X) that it must charge sales tax when it sells blueprints to an architectural/engineering firm or to a general contractor, regardless of wh…
Is telephone or on-site technical support for software taxable in Texas, and can a contractor providing that support staff to a company accept a resale certificate instead of charging tax?
Yes, charges for telephone technical support of tangible personal property (including software) are subject to Texas sales and use tax if provided to a recipient in Texas, though the service can be pu…
Is a caregiver referral agency's fee taxable, and are the pre-employment screening services it performs (criminal history, driving records, reference checks) subject to Texas sales tax?
The referral fee itself is not taxable. But the pre-employment screening components — criminal conviction histories, driving records, and reference confirmations — may be taxable if the customer (not …
Does Connecticut sales tax apply when a store sells a prepaid long-distance phone card, and does it apply when a customer later uses the card to make calls?
Two separate answers. Selling the prepaid long-distance phone card is NOT taxable — a phone card is a 'cash equivalent' (like a gift certificate or voucher), so its sale is the sale of an intangible f…
Can Booster Clubs buy tax-free as exempt organizations or hold tax-free sale days, can a school issue an exemption certificate for cheerleader uniforms bought through the school, and can a teacher buy classroom supplies tax-free if reimbursed later?
This is an internal Comptroller staff memo (Bettie Peterson to Ron Watkins), titled 'Taxability School Related Organizations,' answering three questions: (1) a Booster Club can only make tax-free purc…
Did the Texas Comptroller waive the electronic fund transfer (EFT) filing requirements under Sec. 151.401 of the Sales Tax Law for affected taxpayers?
Yes. In this August 9, 1995 letter, the Comptroller confirmed that it had waived the requirements stipulated in Section 151.401(a)(1) and (2) of the Sales Tax Law for all affected taxpayers. The lette…
New York Advisory Opinion TSB-A-95(32)S: Are a horse spa's fees for pool use, a walk-around exercise service, horse transportation, and boarding subject to sales tax, and does it matter whether the horse owner or the facility's licensed trainer handles the horse?
It depends on who handles the horse: pool rental alone is untaxed as real property rental, but the exercise, transport, and boarding fees are exempt only when performed by a licensed trainer training …
When a customer trades in their old vehicle as part of leasing a new one, does the trade-in reduce the amount subject to New York sales tax -- even when the lease is actually financed and owned by a separate leasing company rather than the dealer?
It depends on whether the dealer taking the trade-in has actually been appointed as the leasing company's agent for accepting trade-ins (not merely for paperwork). If the dealer only has authority to …
Does Texas local sales and use tax apply to conference calling charges when the conference call center or 800 number is located outside Texas but some participants call in from Texas?
It depends on where each leg of the call originates, not on where the conference call center is located. For a 'Dial Out' call, the client owes state (but not local) sales tax on its own call to the o…
Are charges to install and adapt canned computer software to a company's needs exempt from Utah sales tax if separately stated on the invoice?
Not automatically. Rule R865-19S-92 D exempts separately-stated charges to modify or adapt prewritten ('canned') software, but the Commission held that the adaptation must actually CHANGE THE SOFTWARE…
Are a product warranty, a separately-sold travel-expense contract, and an extended service contract each taxable when sold with a scientific instrument, and do repair parts later brought into Utah trigger use tax?
All three are taxable at the time of sale -- the built-in one-year warranty (bundled into the instrument's price), the separately-billed Travel Extension Agreement covering post-90-day travel expenses…
For a Texas advertising agency, are charges to write copy and produce, edit, or create a master (audio, video, or film) for a commercial taxable, and how does that differ from charges for copies (dubs)?
No — charges to create a master (including the copywriting used to create it) and charges to edit an existing commercial into a new master are not taxable, and studio time and video stock charged by a…
How does a non-bank credit card processor taxed under Article 9-A source its credit card processing revenues for the receipts factor -- by where the services are performed, or by the Article 32 credit-card rules (merchant location, etc.)?
By where the services are performed. Peach Tree is a non-bank credit card processor taxed under Article 9-A, not the Article 32 bank tax. Its processing revenues (discount, authorization, transaction,…
Is a charge for disassembling a communications tower — including mileage, travel, per diem, loading, hauling, and unloading of the tower materials — subject to Texas sales tax?
No, not when those charges are separate and apart from any taxable work. The Comptroller told this taxpayer that charges for disassembling a ROHN tower — including mileage, travel, per diem, loading, …
New York Advisory Opinion TSB-A-95(6)I: Issue raised by Petitioner, Heath Shuler, is whether, for purposes of Article 22 of the Tax Law, he can calculate his 1994 New York source income by allocating his pre-season and regular season football wages separately, basing each on the ratio of games played in New York to games played everywhere.
No. New York first confirms that nonresident professional team athletes allocate their income from playing games using a games-played-in-New-York over games-played-everywhere fraction, not the standar…
Is a federal section 468B 'qualified settlement fund' that holds cash and Treasury Bills subject to New York State franchise tax (Article 9-A) or New York State/City personal income tax (Article 22/30)?
Neither. The Steinhardt-Caxton Consolidated Settlement Fund is a federal section 468B qualified settlement fund holding only cash and U.S. Treasury Bills. It is not subject to Article 9-A franchise ta…
Is a flat monthly fee charged to customers for Internet access service subject to Utah sales tax, given that all transmissions leave the state and usage isn't billed by the hour?
No. Charges for access to on-line services such as the Internet are not subject to Utah sales tax, and charges for interstate telephone communications are also exempt. Based on the contract details pr…
What physical, licensing, and employee requirements made each video-game room a separate place under RR 95-13?
RR 95-13 required each video-game premises in a shared structure to have qualifying walls, a separate electric meter, its own employee present during all business hours, and separate local business an…
Which pieces of an automated material handling system -- racking, forklifts, conveyors, computer controls, dust collection -- qualify for Utah's manufacturing sales tax exemption, and where does the 'continuous production cycle' end?
It depends item-by-item on whether each piece of equipment operates before or after the product reaches its finished, marketable form. Over a series of 1995 letters, a tax consultant helping a Utah vi…
Can a company's electronic 'CPC Sales Tax Reporting' system, generated through a corporate procurement card, replace paper vendor invoices as acceptable documentation for Texas sales and use tax compliance?
Yes, with a major condition. The Comptroller ruled that the described procurement card sales tax reporting system will meet the office's data reporting requirements, but only if the vendor actually en…
Is a natural gas broker that never takes title, possession, control or risk of the gas subject to the section 186/186-a utility taxes, or to the Article 9-A franchise tax?
Article 9-A. The corporation brokers natural gas between producers and end-users but never takes title to, possession of, control of, or risk of loss on the gas; its agreements identify it as a broker…
Is a computerized communications monitoring service for elderly, shut-in people taxable as a 'security service' in Texas if the provider must be licensed as an Alarm Systems Company under the Private Security Act?
Yes. The Comptroller checked with the State Board of Private Investigators and found that the taxpayer's computerized communications service for elderly people required licensure under the Private Sec…
When a distributor for a direct sales/multi-level marketing company buys items for their own personal or business use (not for resale) and gets overcharged sales tax on the retail price instead of the company's wholesale price, how do they get a refund?
The direct sales organization normally collects tax from distributors based on the retail sales price. But for items a distributor buys for their own use (not resale), tax should instead be based on t…
Does a nonprofit organized under IRC section 501(c)(4) qualify for Utah's religious-or-charitable sales tax exemption, even if a convention bureau told the organization it would be exempt and the organization relied on that in choosing to hold its event in Utah?
No. Utah's sales tax exemption for religious or charitable organizations under Rule R865-19S-43 is limited to organizations recognized by the IRS as exempt under IRC section 501(c)(3). A 501(c)(4) org…
For a marketing company whose execution work is done by subcontractors, are receipts for services performed in New York (including by subcontractors) New York receipts, and how is a lump-sum fee covering work in and out of New York allocated?
Yes, and by relative value or time. Receipts from services performed in New York are 100% New York receipts whether the services are performed by the taxpayer's employees, agents or subcontractors. So…
Does Utah's manufacturing sales tax exemption cover new equipment for a contractor's growing panel-manufacturing and insulation-lamination business, including equipment that also gets used in its construction activities?
Mostly yes, with several qualifications. A longtime drywall/plastering contractor that also manufactures prefabricated exterior panels and, separately, laminates insulation asked the Utah State Tax Co…
Are feeding tube systems (gastrostomy, jejunostomy, and related enteral/parenteral supplies) and closed tracheal suction system products (TRACH CARE) exempt from Texas sales and use tax as prosthetic devices?
Yes, generally. The Comptroller ruled that nasal gastric and gastrointestinal (enteral and parenteral) feeding-tube devices and related supplies, as well as closed tracheal suction system products (TR…
Is a mail-based reminder service (reminding clients of special dates or events) subject to Texas sales tax, and what about gift baskets sent to Texas recipients as part of that service?
No, charges for reminder services are not taxable when the reminders are sent through the mail rather than by telephone. However, if the service also involves selling and delivering gift baskets to po…
Is the labor to clean a non-residential septic tank or sewer holding tank taxable in Texas?
It depends on whether the cleaning is scheduled. If a non-residential septic tank or sewer holding tank is cleaned on a scheduled, periodic basis, the labor is nontaxable maintenance labor. If it's cl…
When did South Carolina's historical casual excise tax or use tax apply to vehicles, boats, airplanes, motors, and trailers under RR 95-12?
RR 95-12 imposed casual excise tax at titling after a nonretailer sale of a motor vehicle, motorcycle, boat, motor, or airplane, while use tax applied to covered property bought from an out-of-state r…
Are the data processing services a provider performs after taking over a bank's in-house 'item processing' operations exempt from Connecticut sales tax under the outsourcing exemption?
Yes. When a service provider takes over ALL of the data processing functions a customer formerly performed for itself at a specific location of the customer's business premises, those services are exe…
Can an environmental engineering and consulting firm buy supplies, equipment, and services tax-free for a project performed for a tax-exempt government agency, by acting as the agency's purchasing agent?
Yes, if the government agency (a New York State or federal government body) confers agency status on the firm through contract language and the firm's purchase orders show it's buying as the agency's …
Is the sale of a 'seat option' — the right to later buy a season ticket for a specific seat in a stadium being built — subject to Texas sales tax?
No. The Comptroller held that a seat option is not tangible personal property and does not itself provide admission to any amusement service — it only gives the holder the right to later buy a season …
Does an out-of-state supplier owe New York sales tax on materials it sells to New York dental laboratories that use them to make dentures and crowns?
It depends on what the material becomes. Items that end up as a physical part of the finished denture or crown (teeth, porcelain, certain acrylics, certain metals) can be sold tax-free as a resale, as…
Is the labor to repair and maintain manufacturing machinery and equipment, like owned printing presses or leased photocopy machines, exempt from Texas sales and use tax?
Yes, but only once the equipment itself qualifies for the manufacturing exemption. As of January 1, 1995, when the phased-in manufacturing equipment exemption became fully effective, maintenance on qu…
Are security labels/tags that retailers attach to merchandise to prevent theft taxable, and did the resale/exemption certificates retailers had on file for these labels remain valid after the October 1, 1991 law change?
As of October 1, 1991, security labels sold to retailers for attaching to products at the retail location are taxable (they fall under the wrapping, packing, and packaging materials rule change), and …
Is electricity used to run coolers and cooling rooms that flower shops use to extend the life of cut flowers an exempt manufacturing/processing use, or a taxable use?
Mostly taxable. Electricity used to lower cut flowers to their target (precooling) temperature counts as processing, but that only takes 30 minutes to an hour. Once flowers reach the target temperatur…
Is installing a new private cable television system for an apartment/condo complex an exempt capital improvement, or a taxable installation of tangible personal property?
Both, split by component. Burying the trunk cable, wiring buildings from the wall outlet to the cable pedestal, building the cable pedestal, and splicing/activating the cable lines are capital improve…
Is a graphic-arts firm's charge for a custom 'multi media' computer disk (a client-specific graphical presentation) an exempt sale of custom software, or a taxable sale of tangible personal property?
Taxable. Even though the firm is developing custom software written to each client's specifications, the firm isn't selling the software itself -- it's selling a physical disk containing data, along w…
Is a rate-regulated carrier of handicapped passengers in wheelchair vans classed as a 'taxicab' or an 'omnibus' for sections 183 and 184, and is it therefore taxed under Article 9-A?
It is an omnibus, and is taxed under Article 9-A. We Care carries handicapped passengers in wheelchair vans under a DOT certificate of public convenience and necessity, at rates set with the Departmen…
Is a company's charge for custom or noncustom training materials on compact disc, or for other training materials like books and video tapes, taxable under Texas sales tax, and can a separately stated training fee avoid tax?
Yes, the charge for the training materials themselves is taxable. The Comptroller ruled that the total charge for each custom or noncustom training project documented on compact disc is taxable, as is…
How does Utah sales tax apply when a cellular carrier or agent sells a phone below cost, gives it away for free with a service contract, or bundles the phone's price into a service contract?
Equipment sold to an agent purely for resale is tax-exempt, but equipment an agent keeps for its own use is taxable to the agent at its cost. When an agent or provider sells a phone to a customer, it …
When are motor vehicle sales between family members exempt from Kansas sales tax?
Beginning July 1, 1995, sales of motor vehicles between immediate family members are exempt from Kansas sales tax. 'Immediate family members' are lineal ascendants and descendants and their spouses --…
Were fencing, watering tubs, feed troughs, and hay feeders exempt for commercially raised poultry and livestock under RR 95-11?
Yes. RR 95-11 exempted fencing and fencing supplies used to enclose poultry or livestock raised or maintained for commercial purposes, whether inside a barn or around a dedicated field. Watering tubs,…
An industrial development agency's tax-exempt construction mortgage on our shopping mall is being converted to permanent financing -- we're terminating our installment sale agreement, taking title ourselves, having the lenders assigned to new permanent lenders, and consolidating and amending the mortgage. Does converting from construction to permanent financing this way stay exempt from mortgage recording tax?
Exempt, as a tax-free supplemental mortgage. The Westchester County Industrial Development Agency financed construction of a White Plains regional shopping mall (Fashion Mall Partners) with a $160 mil…
Is labor to repair, remodel, restore, or renovate a building that is a Recorded Texas Historic Landmark, but not listed in the National Register of Historic Places, exempt from Texas sales tax?
No. Rule 3.357(e)(4) only exempts labor to remodel, restore, or repair buildings that are listed in the National Register of Historic Places. Being a Recorded Texas Historic Landmark (a state designat…
Does a business owe sales tax on what it pays a service like Telecredit for guaranteeing the funds on its customers' checks?
It depends on exactly what's being purchased. A pure check-guarantee service (the guarantor replaces funds on a bad check) is NOT a taxable service and isn't subject to sales tax. But if the service a…
Is a New York corporation licensed only as an independent insurance adjuster (not as a private investigator) subject to sales tax on its trial-preparation work for insurers -- interviewing witnesses, taking statements, photographing accident scenes, serving subpoenas, and evaluating and negotiating claims?
No. Because the client is licensed exclusively as an independent insurance adjuster and does not perform private investigation services, its charges for investigating and adjusting insurance claims (i…
A firm is licensed as both a private investigator and an independent insurance adjuster -- are its fees for insurance-adjusting work taxed as 'detective services,' the same as its private-investigator fees?
No. Fees for activities that require an independent-adjuster license under Insurance Law Article 21 are NOT subject to the detective/protective-services sales tax, even though some of the underlying w…
Are camera-ready mechanical drawings sold to garment and textile manufacturers -- used to make the silkscreens that print designs onto fabric -- exempt production equipment, or taxable tangible personal property?
Exempt production equipment, as long as the customer buying them uses the mechanical drawings directly and predominantly (over 50% of the time) to produce printed fabric or other tangible goods for sa…
How did South Carolina RR 95-10 count player stations and licenses on multiplayer video-gaming devices?
RR 95-10 counted each player station on a multiplayer video-gaming device as a separate machine. A location could not allow more than five people to play the device at once under the five-machine limi…
What South Carolina income, sales, and deed-tax consequences did RR 95-9 assign to a partnership's conversion into an LLC?
For a conversion with the same owners, ownership shares, and business, RR 95-9 treated the LLC as a continuation of the partnership. The partnership did not terminate or close its tax year, no new tax…
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