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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If a motor vehicle repair shop charges one lump-sum price for an oil and filter change (with no separate charge for the oil and filter), does it owe sales tax on that charge to the customer?
No. Labor to repair or maintain a motor vehicle is not taxable, and a shop that charges a single lump-sum price for an oil and oil filter change (with no separately stated materials charge) is a lump-…
Is a qualifying cogeneration facility exempt from the section 189 gas-importer tax on the natural gas it imports to make electricity and steam for its thermal energy host?
Yes, in part. Buffalo Power Corporation -- a wholly owned subsidiary of, and located on the same premises as, its thermal energy host Buffalo Paperboard -- would be a qualifying cogeneration facility …
Are a New York shortline railroad's gross earnings from hauling freight wholly within New York, as a connecting carrier on a trip that begins or ends outside the state, included in section 184 gross earnings?
No. A New York shortline railroad that carries freight only within New York as a connecting carrier -- but on a through trip that originates or terminates outside New York via another railroad -- earn…
Is an electronic bulletin-board service that lets banks and warehouse lenders transmit loan data and files to each other's private mailboxes taxed as telephony/telegraphy, and are its interstate messages exempt?
Yes, the whole service -- licensing fees plus usage/file-transfer charges -- is taxable as a telephony/telegraphy service, since it functions as a message-switching network transmitting signals betwee…
If my spouse rents a New York City apartment in her own name, pays for it herself, and I never use it or have a key to it, does that apartment make me a New York City statutory resident even though I also work in NYC and spend more than 183 days a year there?
No. New York City statutory residency under NYC Administrative Code § 11-1705(b)(1)(B) requires that the individual himself maintain a permanent place of abode in NYC. Where the wife alone rents the a…
What did the 1995 internal Comptroller memo say about whether inventory counting services are taxable data processing services?
This is NOT a taxpayer-specific letter ruling — it's an internal February 23, 1995 audit memo from Ledford Kelly (via Harold Lee, Audit Headquarters) telling all managers, supervisors, and auditors th…
Can an aircraft engine and components/accessories overhaul company claim the sales tax electricity exemption for processors, or is what it does considered repair instead?
No — the company cannot claim the electricity exemption, because the Comptroller determined it is a repairer, not a processor. The company restores existing turbine engines and components to as close …
Is a lump-sum charge to repair a motor vehicle tire, such as fixing a flat or retreading a customer's own tire casing, subject to Texas sales tax?
No. A lump-sum charge to repair a motor vehicle — including a flat tire repair or retreading a customer's own tire casing — is not taxable; the repair person instead owes tax on the materials and supp…
Is translating documents (assembly instructions, labels, tags, price lists, and legal documents) from English to Spanish a taxable service in Texas?
No. The Comptroller's Tax Policy Division ruled that translation services — translating assembly instructions, labels, tags, price lists, and legal documents from English to Spanish — are not taxable,…
If a nonresident donates valuable objects and volunteers uncompensated time to help build and equip a charitable museum located in New York, can those donations and activities be used as evidence that he is domiciled in New York?
No. Tax Law § 605(c), enacted in 1994, provides that charitable contributions, gifts, donations, loans, or uncompensated volunteer time given to a tax-exempt § 501(c)(3) organization cannot be used in…
For an interior designer/decorator in the Houston area, what local sales tax rate applies, and how is tax collected on wallpaper, drapery/blinds, carpet, delivery charges, and painting labor depending on whether the work is new construction, residential repair/remodeling, or nonresidential repair/remodeling, and whether the invoice is lump-sum or separately stated?
The Comptroller confirmed the local tax rates for Houston (8.25%), Katy (8.25%), and Sugar Land (7.75%), explained that interstate deliveries are exempt from Texas tax, and then walked through eight s…
Is a company taxable on its services when it acts as an intermediary reviewing medical bills and charges submitted by health care providers to insurance companies?
Yes, it is taxable. The Comptroller confirmed that when a company is contacted by insurance companies or health plan administrators to act as an intermediary reviewing and clarifying charges and codin…
Is 'guniting' an existing in-ground concrete swimming pool -- coating it with marble dust to extend its life 10-15 years -- an exempt capital improvement, or a taxable repair?
Taxable repair, not a capital improvement -- even though the coating substantially prolongs the pool's useful life, it's treated the same as a similar protective coating applied to storage tanks in a …
Across six different electronic-forms-business transactions -- paper-to-digital conversion, resold software, a licensed forms-development system, maintenance contracts, management contracts, and consulting -- which charges does a business forms company owe New York sales tax on?
Conversion services (scanning a form to a disc, or designing one) are taxable as tangible personal property when the company supplies the disc, but a taxable fabrication SERVICE instead when the custo…
Can a software manufacturer use resale/exemption certificates for manual production costs, software localization, and licensed fonts/tools/clip art, and do programmers' computers count as manufacturing equipment?
Mostly yes, with one question left open. The Comptroller ruled that a software manufacturer's charges for typesetting, desktop publishing, artwork, translation/localization, and packaging graphics qua…
Are non-dairy milk-substitute drinks (soy and rice beverages) taxable or exempt under Texas sales tax?
They are nontaxable. The Comptroller reviewed labels for nine specific non-dairy soy and rice beverage products marketed as milk substitutes and found all nine nontaxable, because they qualify as, and…
During a scheduled refinery turnaround, is replacing machinery and equipment that was still working taxable 'restoration,' or nontaxable 'maintenance'?
It counts as nontaxable maintenance. The Comptroller ruled that, during a scheduled and periodic refinery turnaround only, replacing functioning and operable machinery or equipment that is attached as…
Is a real-estate document-archiving firm's fee for retrieving, scanning, cataloging, storing, and reproducing building-permit and related documents subject to sales tax, and are its computers exempt production equipment?
Reproduced documents (scanning, maintenance fees, and reproductions delivered back to the subscriber) are taxable as a sale of tangible personal property -- it's data CONVERSION (paper to digital), no…
Is proof coil chain used to lower and dip raw materials into cleansing and galvanizing vats exempt from Texas sales/use tax as manufacturing equipment, or is it taxable intraplant transportation equipment?
It is taxable. The Comptroller ruled that proof coil chain used to lower and dip raw material into chemical cleansing and galvanizing vats is excluded from the manufacturing exemption as intraplant tr…
Is electricity used to power a telephone on a farm or ranch exempt from Texas sales tax under the farm/ranch exemption?
No. The Texas Comptroller ruled that while Tax Code Section 151.316 exempts a variety of items used on a farm or ranch from sales tax, telecommunications services do not qualify for that exemption, so…
Is renting a large locked wire-mesh storage cage in a condo basement a taxable 'locker rental,' or a nontaxable rental of space, in Connecticut?
It's a nontaxable rental of space, not a taxable locker rental. Connecticut taxes 'locker rental' (except cold storage) as a miscellaneous personal service under Conn. Gen. Stat. § 12-407(2)(i)(FF). B…
How does a mortgage lender apportion the proceeds from selling mortgage loans, and where are its loan-servicing receipts sourced, for Texas franchise tax?
If the mortgage loans are the corporation's inventory, the gross proceeds from selling them are gross receipts (not just the net gain), and because loan sales are sales of intangibles they are sourced…
Is Texas sales tax due on satellite telecommunications services — including rental of outbound/inbound frequencies, hub monitoring services, and hardware/software maintenance — and if so, how is local sales tax apportioned across remote locations?
Yes, but the rules differ by component. Texas sales tax applies to the 5 outbound satellite frequencies, with local tax apportioned by time (or, if unavailable, by count) of Texas remote locations ver…
Is a fee for copying and providing a government agency's audio or video tape recording under the Texas Open Records Act subject to sales tax?
No. The Comptroller ruled that charges for audio or video tapes provided by a government agency under the Open Records Act, where the fee just covers the cost of duplicating the tape, are sales of gov…
For Utah's manufacturing equipment exemption, does it matter whether the electrician or plumber installing equipment connections identifies as a 'real property contractor,' or does it matter how they actually treat the transaction?
It's not the contractor's general self-identification (real property contractor vs. personal property contractor) that matters — it's how the contractor actually treats a specific job. If the installe…
Is a Texas company's computer trading system for natural gas subscribers — including the software license, monthly access fee, advertising-space charge, and sales commissions — taxable under Texas sales and use tax?
It depends on the charge. The software license is taxable when sold and delivered to Texas subscribers (but not to out-of-state subscribers); the monthly access fee and the advertising-space charge ar…
Does a cottonseed delinting operation qualify for the Texas manufacturing exemption, and can it accept resale/exemption certificates for the bags, fungicide, and insecticide it charges producers for?
Yes. The Comptroller ruled that machinery and equipment used directly in processing (delinting) the cottonseed qualifies for the Texas manufacturing exemption, and the delinter may accept a resale or …
When exporting goods to Mexico, can a customer combine multiple purchases onto one Licensed Customs Broker's Export Certification ('shipper'), and when can a customs broker issue that certification?
Multiple invoices can go on a single export certification ('shipper') only if all the listed items were exported at the same place, date, and time; purchases made on different dates each need their ow…
Are charges for title searches, title plant information, and related wiring/fax fees taxable under Texas sales tax?
Yes, generally. The Comptroller told the firm that charges for title information sold to attorneys and others are taxable information services, whether the information comes from the firm's own title …
If a 'sale and leaseback' is really a secured loan — the customer keeps title and possession and the lender just holds a security interest — are the 'lease' payments subject to Connecticut sales tax?
No. When a 'sale and leaseback' is really a disguised financing — the customer's 'Bill of Sale' expressly grants only a security interest, the customer keeps legal title and possession, and the 'lease…
When a company sells online access to the Connecticut DMV computer plus the software to use it, which parts are taxable — the online access, the software fee, the support, and the revenue-share payments?
It splits four ways. (1) The online service giving customers direct access to the DMV computer — to file registrations and make inquiries — IS taxable computer and data processing service under Conn. …
Is demolishing part of a building's interior and removing its roof, trusses, and elevator taxable remodeling, and does it matter whether the demolition contractor is the same firm doing the reconstruction or a separate third party?
Yes, it is taxable remodeling either way. The Comptroller held that charges for interior demolition and removal of the roof, trusses, and elevator are taxable real property remodeling under Tax Code S…
Was a nonresident investment partnership's intangible income South Carolina-source income to its nonresident limited partners under PLR 95-2?
No, on the stated facts. The nonresident partnership pooled investments and bought and sold stocks, securities, intangibles, and partnership interests solely for its own account. It gave no financial …
After a corporation withdraws from Texas, does it still have franchise-tax nexus?
No. The Comptroller advised that after the date of its withdrawal from Texas, the corporation would no longer have nexus in Texas and therefore would not be subject to either component of the Texas fr…
Is the $10-a-year membership fee for a private anti-crime organization subject to Texas sales tax, and what about the tangible items it gives out?
No, the membership dues are not taxable. The Comptroller ruled that a private anti-crime organization's $10 annual membership fee is not subject to sales tax, but the organization must still collect a…
Is a paper recycler that grades, separates, fluffs, bales, and packs scrap paper for the repulping industry a manufacturer or processor whose equipment qualifies for the Article 9-A investment tax credit?
Yes. Empire Recycling's paper division grades, separates, fluffs, bales, and packs scrap paper into fifteen graded products meeting exacting mill specifications for the repulping industry. That proces…
Is erosion control work on a creek bank near a pipeline — including bulkheading, concrete mats, and rock or dirt fill — taxed as landscaping, new construction, or repair/remodeling of real property?
It depends on what is added. Simply adding dirt or rock to an eroded creek bank is landscaping, but because it is not done for aesthetic purposes it is not taxable landscaping. However, adding dirt or…
Is an optical scanning device called 'An Open Book,' sold exclusively to visually impaired individuals to scan and read aloud printed items like bills and recipes, exempt from sales tax as a prosthetic aid?
Yes -- it's exempt as a prosthetic aid, since it's functionally similar to an already-recognized exempt device (an Optical Tactile Converter) and, per the seller's own supplier contract, is sold only …
Can a retailer pay a sales-tax export refund to a customs broker instead of directly to the purchaser who paid the tax?
Yes, on an interim basis. The Comptroller reviewed a customs broker's proposal in which a purchaser who exports goods assigns their right to a sales-tax refund to the broker, and concluded that — even…
Is the North American Development Bank (NADBank), created under NAFTA, exempt from Texas sales, excise, use, and hotel occupancy tax?
Yes. The Comptroller confirmed that NADBank qualifies for exemption from Texas limited sales, excise, and use tax and from hotel occupancy tax as an entity exempted from tax by federal law. No exempti…
Is propane used to heat a homeowner's pool -- prescribed by her doctor as medically necessary water therapy after knee surgery -- exempt from sales tax as a medical supply, and if not, is there any other exemption available?
The medical-supplies exemption doesn't apply, since it only reaches items taxed under a different section of the Tax Law than the one that covers propane gas service. But the propane still escapes Sta…
Can a Utah holding company exclude a dividend from its premium-tax-exempt insurance subsidiary from its Utah corporate franchise tax income, either by filing a combined return or under the § 59-7-117 double-tax relief provision?
No. A Utah holding company (P) owned about 80% of a Utah insurance subsidiary (S) that was exempt from Utah franchise and income tax because it already paid premium tax under Title 59, Chapter 9. When…
When a customer breaches a taxable data-processing services contract and settles a lawsuit for damages plus past-due charges, is the entire settlement amount subject to Texas sales tax?
No. Only the portion of a lawsuit settlement that covers the price of taxable services already rendered is subject to Texas sales tax. Amounts covering attorney's fees and amounts covering damages for…
Is Texas sales tax due on liquor pool dues and other minimum-spending charges billed by a private club to its members?
It depends. Liquor pool dues and similar minimum-spending fees charged by a private club (including a Sec. 501(c)(7) nonprofit club that provides amusements) are generally taxable as fees for a specia…
Is a phone-based auto-parts locating service — where employees use a computerized directory but do the finding by telephone — a taxable computer and data processing service in Connecticut?
No. A telephone auto-parts locating service is NOT a taxable computer and data processing service under Conn. Gen. Stat. § 12-407(2)(i)(A). Applying the 'true object' test, DRS found the computer here…
I'm a New Mexico resident but I work out of state most of the year — can I pay New Mexico income tax on only the fraction of the year I'm actually here?
No. A New Mexico resident is taxed on 100% of their income no matter how little time they spend in the state — there is no time-based apportionment for residents. Darrell Bowers was an offshore drilli…
If a company factors an exhibit-booth invoice and passes on a factoring fee (interest) to the client because the client can't pay the manufacturer up front, is that factoring fee subject to Texas sales tax?
Yes. The factoring fee (interest charge) is part of the taxable sales price of the custom-made exhibit booth, because Sec. 151.007 of the Texas Tax Code defines 'sales price' without any deduction for…
Is Texas sales tax due on the gross receipts from coin-operated air machines (tire inflators)?
No. The Comptroller ruled that gross receipts from coin-operated air machines (tire inflators) are not subject to Texas sales tax.
Is Texas sales tax due when a city bills a telephone company to reimburse it for repairing water lines that the telephone company's employees accidentally damaged?
No. The Comptroller concluded the reimbursement charge for repairing the damaged water lines is not taxable.
Does a trade show promoter owe Texas sales tax on booth space rentals, booth furniture rentals, electricity charges, or telephone service provided to exhibitors?
No sales tax is due on booth space or booth furniture rental, because renting a booth (real property) along with furniture like tables and chairs is treated the same as renting a furnished apartment. …
Does a title insurance company owe Texas sales tax on the premium-split payments it makes to attorneys or other title companies for title examinations, title evidence, and real estate closing services?
No. The Comptroller concluded that title examinations, title evidence, and real estate closing services purchased by a title insurance company from attorneys or other title companies — and paid for ou…
Is Texas sales tax due on foot reflexology services provided at a reflexology shop?
No, not if the shop is licensed as a physical therapist or massage therapist — the Comptroller advised that licensed physical or massage therapists are not required to collect tax on reflexology servi…
Is a marketing consulting firm's fee -- covering sales-data analysis, purchased-data analysis, written marketing plans, and specific written recommendations for a client -- subject to New York sales tax?
No. The written reports are exempt personal/individual information since each report relates specifically to one client and isn't derived from a shared database or reused in other clients' reports, an…
Does a medical case management / disability management consultant have to collect Texas sales tax on its services to insurance companies?
It depends on what the consultant actually does. Texas taxes "insurance services" — including insurance claims adjustment/claims processing and insurance investigation (evaluating eligibility for cove…
Are massage service charges subject to Utah sales tax, and what about tangible products like lotion sold alongside the massage?
Massage services themselves are not taxable in Utah. But if you also sell tangible personal property to the client — like a bottle of lotion for home use — that portion of the charge IS taxable, and y…
Is Texas sales tax due on towing charges for repossessed vehicles?
It depends on who has possession of the vehicle. If a repossession company is hired by a financial institution to repossess a vehicle the institution doesn't yet have access to or possession of, all o…
Is a vehicle-leasing company's separately-stated, optional fleet-management service (cost analysis, registration/inspection/maintenance oversight, vehicle-acquisition consulting) subject to New York sales tax?
No. Fleet management isn't one of the specific services the Tax Law taxes, so as long as it's purchased independently of vehicle leasing and billed as a separate line item, the charge escapes sales an…
If an out-of-state law firm partner signs a fixed 4-year agreement to serve as managing partner of the firm's New York office, keeps offices in both locations, spends over 183 days a year in New York, and uses a firm-paid New York City apartment, is he a New York resident for tax purposes during those four years?
No. Mr. A. remains domiciled in State X throughout the assignment, and because his four-year New York managing-partner role has a fixed and limited term after which he returns to State X to practice l…
Can an individual paying with personal funds still buy items tax-exempt for a school district, and can a school district use an identification card instead of an exemption certificate for its purchasers?
An identification card can help identify authorized purchasers, but it cannot replace a written purchase order or exemption certificate — the school district must still give the vendor one of those. I…
If someone domiciled and living in Florida for 15 years buys a New York City co-op that they personally use only from June through September and leave vacant the rest of the year, will they become subject to New York State personal income tax?
It depends on the year, and the opinion doesn't decide it either way. Once purchased, the co-op will count as a 'permanent place of abode' in New York under 20 NYCRR § 105.20(e) even though it sits va…
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