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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Do cotton gins in Texas need to have a utility study performed before they can buy gas and electricity tax-exempt for processing?
No. The Comptroller reviewed utility studies of large and small cotton gins showing that gas usage was 98 percent exempt (processing) and electricity usage was over 91 percent exempt, even counting of…
If a direct pay permit holder buys equipment or software, stores it in Texas, and then ships it out of state before using it for anything other than storage, does Texas use tax apply?
No. The Comptroller confirmed that a direct pay permit holder does not owe Texas use tax on tangible personal property that is purchased (whether from a Texas or an out-of-state seller), stored in Tex…
Does a bone growth stimulator device, prescribed by a physician but applied and owned by the physician in the physician's own office rather than by the patient at home, qualify for Utah's home medical equipment sales tax exemption?
No. Utah's home medical equipment exemption requires (among other things) that the device be purchased or leased by or on behalf of a home patient for that patient's own personal and exclusive use. Al…
When a business buys copywriting and graphic design for employee newsletters, sales brochures, and community economic-impact statements, is that a taxable service in Connecticut — and can the fee for the design's reproduction/ownership rights be carved out?
Yes, they're taxable — the only question is which category and where. Copywriting and graphic-design services a business buys to influence a group are taxable Connecticut services: work for employee/i…
Are the poles that an electric utility uses to support step-down transformers (and the transmission lines running along them) exempt from Texas sales and use tax as equipment necessary to the manufacturing of electricity?
No. The Comptroller concluded the poles are not exempt. Even though step-down transformers themselves are treated as part of the manufacturing process, the poles supporting them also carry transmissio…
Did transferring seller-financed vehicle receivables through a corporate reorganization and then to a limited partnership accelerate unpaid Texas tax?
The first transfer from the dealer corporation to a newly formed corporation did not trigger § 152.047(g). The later transfer of seller-financed receivables from that corporation to a limited partners…
Is a company that operates school buses under contract with a school district providing a taxable rental of the buses, or an exempt transportation service?
An exempt transportation service. Even though the school district's contract dictates the bus routes, stops, timing, equipment specs, and even the pool of drivers to hire from, the bus company itself …
Are in-room hotel pay-per-view movie charges taxed in Connecticut as sales tax, as room occupancy tax, or both — and who owes what?
Both taxes apply, at two different links in the chain. The pay-per-view movie service a company provides to a hotel is a taxable 'community antenna television service' under Conn. Gen. Stat. § 12-407(…
I sold two parcels of land on the same road to the same buyer on the same day, but they're separated by a third parcel owned by a completely unrelated party. Do I have to add the two sale prices together to test New York's $1 million Real Property Transfer Gains Tax threshold, since they're roughly in the same area?
No aggregation required. Gick Road Development Corp. owned two parcels on the same side of Old Gick Road in Suffolk County: a narrow 1.24-acre former railroad-bed strip used for a mobile home park, an…
Is the fee a firm pays a third-party mainframe host to store and let it access its own previously-purchased databases -- with no hardware transferred -- a taxable information service or a taxable computer-timeshare rental?
Neither -- the flat monthly fee is untaxed. There's no transfer of possession of the host's computer (so it's not a taxable rental), and since the host is just storing and serving back the customer's …
Does a factory-manufactured home dealer owe sales tax on homes it buys and resells already-installed, and is the installation work of a related but separately-owned installation company subject to sales tax?
Homes sold and installed as permanent capital improvements (not mobile homes, not display models) escape sales tax on both the dealer's purchase and its resale, with the manufacturer owing the use tax…
When an out-of-state gas marketer sells gas delivered through a utility's pipeline to a New York consumer, who owes sections 186, 186-a and 189 -- the utility or the marketer -- and how is the situs of the sale determined?
Split by role. The utility (Niagara Mohawk) never owns the gas; it only transports it, so its contract-carriage delivery fee is its section 186 gross earnings and section 186-a gross income (as a firs…
Does a retailer that imports petroleum products from out of state and sells them in its Connecticut stores owe Connecticut's petroleum products gross earnings tax — and is it measured on its sales or on what it paid?
Yes, and it's measured on the sale, not the purchase. A company that brings petroleum products into Connecticut and sells them here makes the 'first sale within this state,' so it owes the petroleum p…
Is a custom-fitted canvas awning, installed at a homeowner's residence to block sun from entering the living and dining rooms, an exempt capital improvement, or taxable?
Taxable. Canvas awnings are categorically NOT treated as a capital improvement under the Department's own published guidance and prior precedent, regardless of how custom-fitted or substantial the ins…
Is a newspaper's charge for a caller voice mailbox — where people can call in and respond to a classified/advertisement — subject to Texas sales tax?
Yes. The Comptroller held that the charge for the caller mail box is taxable as a telecommunications service under 34 Tex. Admin. Code Rule 3.344. Because the newspaper charges advertisers a single co…
After further review, does a mandatory condominium association's entire assessment count as taxable club dues, or only the portion actually funding the pool and tennis courts?
Only a reasonable portion is taxable -- this modified opinion corrects the Department's own earlier answer (TSB-A-94(6)S) on the identical facts: rather than taxing the association's ENTIRE mandatory …
Were customer-brewed beer operations legal, permitted, and taxable in South Carolina under RR 95-3?
Yes, the described brew-on-premises business was legal, but the operator had to obtain and maintain a brewery permit. The customer who rented the equipment and bought ingredients was liable for beer t…
I sell towable rock-crushing and screening plants for road work — do those sales qualify for New Mexico's 50% gross receipts deduction for unregistered vehicles?
Yes — the seller won. Builder's Equipment Co. of Albuquerque sells large portable rock-crushing ('spokane') plants and gravel-screening plants used in road construction. They are not self-propelled bu…
Could South Carolina coin-operated-device and owner/operator licenses be transferred to a machine's buyer under RR 95-2?
No. RR 95-2 concluded that neither a license attached to a coin-operated device nor the seller's owner/operator license could be sold or transferred. When a licensed machine changed hands, the old dev…
Is a hair-replacement system for male pattern baldness -- a custom mesh grid woven with human hair, fused into the client's existing hairline and serviced every 6-8 weeks -- exempt from sales tax as a prosthetic device?
Only if it's shown to be used for a genuine medical problem, not cosmetic purposes -- and even then, fitting/fusing the hairpiece into the client's own hair is itself a taxable installation service. T…
Is the electricity a company uses to chrome-plate aircraft engine parts exempt as 'processing,' or taxable because it's really 'repair and remodeling' of the engines back to their original specifications?
Taxable, on these facts. Even assuming some of the chrome-plating applications reprocessed the engines (by adding new specification options not originally on the parts), the Comptroller's Assistant Di…
When a bakery sells some food for immediate consumption (taxable) and some food not for immediate consumption (exempt), how does the Texas Comptroller decide whether a utility (electricity) exemption certificate based on a utility study can be accepted?
An exemption certificate based on a utility study can be accepted if it comes with a statement showing the quantity of goods sold for immediate consumption versus not sold for immediate consumption, a…
I buy diesel fuel only for off-road equipment (hi-lift tractors and a crane) that never touches a public highway. Is that fuel exempt from New York's diesel motor fuel excise taxes?
No exemption at purchase, but a refund is available. New York's diesel motor fuel excise taxes (Tax Law §§ 282-a, 282-b, 282-c) apply to all diesel fuel sold or used in the state unless the buyer is a…
When a fleet company's damaged tires are adjusted and replaced under a manufacturer's or dealer's warranty, and the tires were originally sold on open account, how is Texas sales tax figured on the replacement or credit?
It depends on timing. Under Tax Code Section 151.007(c)(5), the sales price subject to tax does not include the separately identified value of property taken by the seller in trade as part of the cons…
In a reorganization forming a Texas real-estate limited partnership, which entities are subject to Texas franchise tax?
None of the three entities asked about were subject. In a planned reorganization, a Delaware parent would form two Delaware subsidiaries: one holding a 99% limited-partnership interest in a new Texas …
We're trustees of two charitable lead annuity trusts, created under the same family trust instrument with currently identical beneficiaries, that co-own New York real property as tenants-in-common. We're proposing to combine them into one 'Surviving Trust' because declining income no longer covers required annual charitable payments. To protect the separate remainder beneficiaries' interests, we're setting up a detailed 'Pro Forma Account' formula (tracking what each set of beneficiaries would have received had the trusts stayed separate, adjusted annually for investment gains/losses and a liquidity test comparing available assets against the discounted present value of future charitable obligations). Will combining the trusts trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- this is the first (earliest) of three related advisory opinions the Department issued to the same trustees about the same proposed trust combination, as the underlying facts evolved. Lew R. …
Will the reorganization of a mutual savings bank into a stock savings bank held by a mutual holding company, tax-free federally under IRC sections 368(a)(1)(F) and 351, also be tax-free for Article 32 (bank) and Article 22 (personal income) purposes?
Yes. Oswego City Savings Bank plans to reorganize from a mutual savings bank into a stock savings bank controlled by a mutual holding company, in a transaction intended to be tax-free federally under …
For sections 186 and 186-a, are a utility's taxable gross earnings/gross income the reduced amounts actually billed to customers under a PSC-approved rate-reduction plan, or the higher pre-reduction figures shown in its accounting true-up entries?
The amounts actually billed. Under a RICO-settlement Rate Reduction Plan, LILCO reduced customer bills via PSC-approved tariffs. For sections 186 and 186-a, the 'receipts' includable in gross earnings…
Does a New York sales office that only signs up new clients generate receipts from services performed in New York for the Article 9-A receipts factor, when all the investment consulting is performed elsewhere?
No, if it only signs up clients. Insight Management's income comes from performing its investment consulting (and related financial transactions), not from the mere signing up of clients. So if its Ne…
When a redevelopment agency (RDA) finally starts taking its tax increment years after being created, does the resulting rise in other taxing entities' certified tax rates count as an illegal 'tax increase' under Utah's truth-in-taxation law?
No. Utah's truth-in-taxation law (§ 59-2-924(2)(a)) guarantees each taxing entity the SAME total property tax REVENUE as the prior year, not the same RATE — so when a redevelopment agency (RDA) finall…
Is a company's charge for maintaining and calibrating the tools it uses to repair aircraft owned by a certificated or licensed carrier subject to Texas sales tax?
No. Charges to maintain, calibrate, and repair tools used exclusively to repair, remodel, or maintain aircraft, aircraft engines, or aircraft component parts for a certificated or licensed carrier of …
Which construction consumables, supplies, and equipment used by a road construction contractor are taxable versus exempt — LP gas, slings and cables, safety stickers, safety chains, safety flags, rope and twine, marking paint, caulk and putty, sponges, tape, razor blades, snap ties, and various safety wear?
It depends on the item: LP gas used off-road is exempt from sales tax, and several consumable-type supplies (marking paint, caulk and putty, sponges/rubbing bricks used once, duct and electrical tape,…
Is removing waste from a restaurant's grease trap taxable, and what about cleaning the sewer line it's connected to?
Removing wastes from a grease trap that is part of a sewer system is a non-taxable service, but cleaning out the sewer line itself is taxable when done for a non-residential customer such as a restaur…
Is machinery and equipment that a grower buys to dry, sort, grade and pack its own fruit and vegetables exempt from Texas sales tax as agricultural processing equipment?
Yes. Because Company A owns the fruit and vegetables being processed and is the original producer (grower) of those products, the machinery and equipment it buys to dry, sort, grade and pack them qual…
Are Juice Plus+ nutritional energy/protein bars subject to Texas sales tax, or are they treated as an exempt food product?
They are exempt from Texas sales tax. The Comptroller's Tax Administration staff reviewed samples and the label/brochure for the Juice Plus+ Bars and concluded the bars are a food product, and food pr…
Can Texas require the federal government (such as the U.S. Department of Defense running retail surplus stores) to pay Texas sales tax?
No. The Comptroller explains that Texas sales tax is legally imposed on the vendor's gross receipts, not on the buyer, so requiring the federal government to pay it as a purchaser would amount to Texa…
Could an S corporation earn South Carolina's historical job tax credit and use the carryforward after converting to a C corporation under PLR 95-3?
Yes, for the addressed taxpayer if all statutory requirements were met. The Department treated the S corporation as 'subject to' corporate tax even when it had no ordinary corporate-level liability. I…
Are Juice Plus capsules — made only of dried fruit and vegetable juices — exempt from Texas sales tax as food products, and what about the related Juice Plus Bars?
Yes, the Juice Plus capsules are exempt food products because they contain only dried fruit and vegetable juices and are not advertised as anything else; that exemption applies to this distributor fro…
Are flash-dried fruit and vegetable juice capsules exempt from Texas sales tax as food products?
Yes. The Texas Comptroller confirmed the capsules — which contain only dried fruit and vegetable juices and nothing more — are exempt from sales tax as food products, consistent with a prior ruling is…
If a passive-investment limited liability company keeps its office, books and records, and securities depository in New York, is the interest income it distributes to nonresident members subject to New York personal income tax?
No, for a nonresident member with no other New York-source income. Under Tax Law § 601(f), the LLC (taxed as a partnership) isn't itself subject to Article 22 tax - only its members are, in their indi…
How should a direct sales (multi-level marketing) organization collect and remit Texas sales and use tax on sales its independent distributors make in Texas?
The direct sales organization itself — not each individual distributor — is responsible for collecting and remitting Texas state and local sales and use tax on the taxable sales its distributors make …
Is caring for indoor plants a taxable service in Texas, and do I owe sales tax on the supplies (stakes, fertilizer, leaf cleaner, containers) I use to provide that service?
Yes, indoor plant maintenance is a taxable service in Texas, and whether you owe tax on your supplies depends on whether they're transferred to the customer: items like plant stakes that stay with the…
Is the lease of aerial-application tracking equipment to a crop duster exempt from Texas sales tax when the equipment is used for aerial spraying of insecticide and fertilizer on farms and ranches?
Yes, the lease can be exempt from sales tax if the aircraft is FAA-licensed for aerial application of fertilizers and insecticides and is used exclusively for aerial spraying on farms and ranches to p…
Can a manufacturer issue an exemption certificate for the part of its garbage collection service that removes waste from its manufacturing process, and how is 'industrial solid waste' defined?
Yes, but only for the manufacturing-related portion. The Comptroller told a poly bag manufacturer that it could give its waste removal service provider an exemption certificate for the part of the ser…
Is a remote computer data backup service, where a client's data is copied over phone lines by modem and temporarily stored (not manipulated), subject to Texas sales tax?
Yes. The Comptroller ruled that a remote backup service — where a client's computer data is copied daily over phone lines by modem and temporarily stored for security purposes — is a taxable data proc…
Is an indoor plant care and maintenance business subject to Texas sales tax, and does taxing an existing service contract violate the Constitution's ban on impairing contracts?
Yes, the service is taxable. The Comptroller told an indoor plant care provider that maintaining tangible property (like indoor plants) has been taxable since the Legislature imposed the tax in 1984, …
We're a public authority helping relocate a major commodities exchange to our development site. Depending on how the construction loan is structured, we might be the named mortgagee, or we might sublease the property back from the tenant and co-sign the mortgage as co-mortgagor on just our leasehold interest. Is recording that mortgage -- however it's structured -- exempt from mortgage recording tax?
Exempt either way. This is the origin ruling establishing the Battery Park City Authority's now-familiar 'sublease-back' mortgage recording tax exemption mechanic, arising from the New York Mercantile…
Does Utah sales/use tax apply to imported manufacturing machinery sold to a Utah manufacturer, and to replacement parts for that machinery?
Machinery can qualify for exemption, but replacement parts cannot. A sales office representing foreign machinery manufacturers asked the Utah State Tax Commission whether it needed to collect sales ta…
Is a business that programs customers' own cellular phones by selecting preset options built in by the manufacturer required to collect Texas sales tax on that service?
No. The Comptroller's Tax Policy Division held that this cellular phone programming service is not subject to Texas sales tax, because the business does not sell or repair any tangible personal proper…
Is the radioactive wafer used in nondestructive X-ray testing a taxable purchase of tangible personal property, even though what the tester actually wants is the radioactivity it emits?
Yes. The Comptroller ruled that the wafer containing radium 192 is the sale of tangible personal property, so sales or use tax is owed on its purchase even though the buyer's real interest is in the r…
Is converting a purchased warehouse into a manufacturing facility — by adding electrical wiring, HVAC, interior structure, processing piping, floor specs, and reinforcements — taxable remodeling or non-taxable new construction under Texas sales tax rules?
It is taxable remodeling, not new construction. The Comptroller told the taxpayer that even though the warehouse-to-manufacturing conversion was extensive — adding electrical wiring, heating and air c…
Can an operator buy coin-operated amusement devices like pinball machines tax-free under the resale exemption?
No. Purchasing a coin-operated or other amusement device (pinball machines, music machines, mechanical/electronic games) to generate admission or use-fee revenue is a taxable retail purchase, not a pu…
Is the film used to create a template for burning circuit boards exempt from Texas sales tax, and are fees paid to programmers for custom software taxable?
Both are tax-favorable for the taxpayer: the film qualifies for the manufacturing exemption under Tax Code Section 151.318 because it is used by a third-party custom manufacturer to produce circuit bo…
Is selling pooled telephone survey data taxable in Texas, and does modifying that data for a specific client change the answer?
Yes, it's taxable either way. The Comptroller ruled that selling pooled telephone survey information to a specific client without modification is a taxable transaction, that modifying the pooled infor…
When a company reorganizes its subsidiaries and transfers assets between them, does the timing of the transfer (during business hours vs. after hours) affect whether the occasional sale exemption applies?
Yes — the timing matters. The Comptroller advised that if the assets of subsidiaries A and B are transferred to new subsidiaries D and E during business hours, when the transferred segment has both in…
Is cement — Portland or Masonry, including white cement — exempt from Texas sales tax, and what about concrete made from it?
Cement, whether Portland or Masonry (including white cement), is exempt from Texas sales tax under the specific exemption in Texas Tax Code Sec. 151.308(a)(4), so no sales tax should be collected on s…
Does an inactive corporation that was dissolved by proclamation, but still holds bare legal title to New York real property as a nominee, owe Article 9-A franchise tax?
It depends on the period. W.R.H.R.E. Corp. was formed in 1973 only to hold bare legal title to a Port Washington property so a lender could take a mortgage; it never did business, kept no books, had n…
Does Utah sales tax apply to oil and gas well fracturing, acidizing, and stimulation services, even if the vendor separately states the chemical materials and tax on its billing?
No sales tax applies to oil and gas well fracturing, acidizing, and stimulation services, following a controlling Utah Supreme Court decision holding that the essence of these services is a service, n…
Can an out-of-state retailer that ships goods into Texas only to have them forwarded out of the country claim a use tax exemption for temporary storage?
Yes. The Comptroller told the taxpayer that the Mexican Navy may issue an exemption certificate to CORP A claiming the temporary storage exclusion under Texas Tax Code Section 151.011(f), because the …
Does a company owe sales tax when it just removes software from one computer and installs it on another, and does exempt-program modification also cover editing that computer's autoexec.bat and config.sys files?
No tax is owed. The Comptroller's Tax Policy Division advised that simply removing software from one computer and installing it on another does not constitute remodeling of tangible personal property,…
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