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 Texas limited partnership merges into a newly formed LLC and its titled motor vehicles pass to the LLC by operation of law, does Texas motor vehicle tax apply to that transfer?
No motor vehicle tax is due if the restructuring is accomplished through a legal statutory merger (filing merger documents with the Texas Secretary of State), because the vehicles pass to the survivin…
Is a refundable deposit fee charged to towel rental customers part of the taxable sales price?
No, not the initial deposit -- a refundable up-front deposit collected before towels are ever delivered is not part of the taxable sales price. However, a separate 'automatic replacement deposit,' cha…
Is a charge for cleaning railroad cars subject to Texas sales tax?
No. The Comptroller ruled that charges for cleaning railroad cars are not taxable, because Tax Code Section 151.3111(a) exempts services performed on tangible personal property that is itself exempt d…
If a customer buys goods for export but the shipper doesn't pick them up from the seller's warehouse within 30 days, does the seller lose the export tax exemption?
No, not automatically. The Comptroller held that the export exemption is not lost just because the 30-day time limit is exceeded, when the item(s) sold are warehoused by the seller solely because the …
Is a fee charged for preparing the paperwork and claim forms needed to obtain a rebate from the Texas Natural Resources Conservation Commission (TNRCC) subject to Texas sales tax?
No. The Comptroller ruled that a company's service of gathering invoices, calculating payment percentages, filling out TNRCC forms, and otherwise documenting a customer's claim for a rebate from the T…
Is a golf cart converted into a farm utility vehicle (with pickup bed, tractor tires, and lighting) exempt from Texas sales tax when sold to a farmer or rancher?
It can be, but only conditionally. The Comptroller ruled that a farmer or rancher is not automatically exempt from sales tax, so the converted golf cart is eligible for the agricultural exemption only…
Is a service that negotiates with creditors on behalf of a debtor business to settle past-due accounts payable a taxable debt collection service in Texas?
Yes. The Comptroller held that any activity performed for consideration to collect or settle a delinquent debt is a taxable debt collection service, regardless of which side of the debt hires the serv…
We're a 1771-chartered not-for-profit hospital. We formed a separate not-for-profit affiliate solely to acquire, hold, and manage real property for our benefit -- all of the affiliate's members are, by its bylaws, automatically our own Governors, and our bylaws ensure we control the affiliate's business and affairs. We're proposing to transfer one of our psychiatric care facilities to this affiliate, which will then lease it back to us for 99 years at nominal rent so we keep operating exactly as before, subject to an existing $154 million mortgage. Does this transfer-and-leaseback to our own controlled not-for-profit affiliate trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt from both taxes -- The Society of the New York Hospital ('Petitioner'), a not-for-profit membership corporation originally chartered by King George III in 1771, proposed transferring a psychiat…
For a new manufacturing plant, are dust-control enclosures built around conveyors exempt from Texas sales tax as pollution control equipment, and how does a separated vs. lump-sum construction contract affect tax on materials?
Yes. The Comptroller held that enclosures built around conveyors solely to keep wood dust from discharging into the atmosphere qualify as exempt pollution control equipment used in manufacturing. By c…
Is a new telephone-service provider a first- or second-class utility under section 186-a, and is it taxed under Article 9 (sections 183/184) or Article 9-A?
It starts under Article 9-A and may shift to Article 9. RCN of New York, a new provider of local and long-distance telephone service over leased cable lines, is subject to Article 9-A franchise tax fr…
Does a company owe Texas sales tax when it buys custom-printed book covers that it plans to donate to a school district?
No. The Comptroller ruled that a donor's purchase of custom-printed book covers is not subject to sales tax when the book covers are subsequently donated to school districts. The printer therefore sho…
If a local transit sales tax rate drops during the term of a fixed-term equipment lease, does the lease switch to the lower rate or keep the rate that applied when it was signed?
A fixed-term operating lease (rental) of tangible personal property that was executed before a local MTA tax rate decrease stays taxable at the old, higher rate until the fixed term expires -- it does…
Is electricity used to run cooling equipment and circulating fans that keep bananas cold and slow their ripening during transit exempt from Texas sales/use tax as manufacturing/processing?
No. The Comptroller held that cooling bananas and running circulating fans to deter or delay ripening during shipment is considered storage, not processing, so the electricity used for that cooling an…
Did a dealer owe additional Texas vehicle tax when a dealer-plated vehicle was used personally or provided in exchange for services?
No additional tax was due for personal use after the dealer had properly paid the dealer-plate tax. The letter relied on Attorney General Opinion H-381's narrow definition of prohibited commercial use…
Does a wholesaler/merchandiser owe Texas sales tax on boxes, dry ice, and other packaging materials used to ship products to customers, including offshore customers?
Yes. Under 34 Tex. Admin. Code § 3.314(c), a wholesaler or retailer (as opposed to a manufacturer or processor) must pay sales tax on wrapping and packaging supplies like boxes and dry ice used to shi…
Does a doctor's prescription for cellular phone service exempt the telecommunications charges from Texas sales tax?
No. The Comptroller ruled that telecommunications services, including cellular phone service, do not qualify for exemption merely because a doctor prescribed them. The letter is brief and does not cit…
When a gun dealer sells a handgun at a gunshow but transfers it through a local dealer to complete the Brady Law background check and waiting period, which dealer collects sales tax, and is the local dealer's transfer/handling fee taxable?
The selling dealer (Dealer 'A', who received payment from the customer at the gunshow) is the one who must collect and remit Texas sales tax on the handgun -- not the local dealer ('B') who merely han…
Are marketing consulting and consumer test-market workshops taxable 'business public relations services' in Connecticut?
No. A company that assesses a client's product marketing, advises on better marketing strategies, and runs 'workshops' using members of the public to test those strategies is NOT providing taxable 'bu…
Is a four-wheel ATV bought for use on a farm or ranch exempt from Texas sales tax?
Yes, but only if the ATV is used exclusively on the farm or ranch to produce agricultural products held for sale in the regular course of business. A farmer or rancher can give the dealer a properly c…
What eye-care supplies (lens cleaners, contact solutions, cases, chains/straps, spectacles) are exempt from Texas sales tax when dispensed by an optometrist or ophthalmologist?
Under Tex. Tax Code § 151.313(6), a range of corrective-lens-related supplies are exempt from Texas sales and use tax when sold or dispensed by an optometrist or ophthalmologist -- including complete …
Which of a scrap-metal recycler's machines, materials, fuel, and power qualify for Connecticut's manufacturing and fabrication tax exemptions?
It splits by machine. A scrap-metal recycler's SHREDDER (with its shaker table and magnetic separators) — which pulverizes whole cars and appliances into separated 'frag' and other outputs — IS exempt…
Is a service that picks up and removes dead or dying cattle/livestock from a ranch taxable as a Texas 'waste removal service'?
No. The Comptroller ruled that a service that picks up and removes dead or dying livestock is not taxable as a waste removal service. The ruling is short and fact-specific, based only on the facts the…
When a company buys equipment under a resale certificate and leases it to a customer, is sales tax owed on the rental payments or on the outstanding balance when the equipment is returned to the vendor?
Tax is owed on the rental stream — either accrued on the rental payments or remitted as each payment is received — not on any outstanding balance owed to the vendor when the equipment is returned at l…
Can a motorcycle/ATV dealer accept a farmer's or rancher's sales-tax exemption certificate for an all-terrain vehicle without first getting Comptroller approval?
ALERT: as of 01/01/2012, H.B. 268 (82nd Legislature, 2011) requires anyone claiming this agricultural/timber sales-tax exemption to first obtain an ag/timber registration number from the Comptroller a…
Does a cellular-phone retailer owe sales tax on phones it buys for resale, even when it later gives those phones away free or at a reduced price to customers who sign up for phone service?
No -- the retailer's original purchase of the phones stays a tax-free resale purchase even when it later sells or gives the phones to customers at no charge or a reduced price bundled with a phone-ser…
Are a yacht club's charges for boat mooring and sailing-instruction tuition subject to sales tax, and does it matter whether the person paying is a club member or a member of the public?
It depends who's paying -- mooring fees and sailing tuition charged to non-members are not taxable (mooring charges and sport/educational tuition are both exempt on their own terms), but the SAME char…
Is the Kendall A-V Impulse System, a sequential compression device (SCD) that promotes blood circulation, exempt from Texas sales and use tax?
Yes. The Comptroller ruled that the Kendall A-V Impulse System, a sequential compression device that provides assisted circulation to ambulatory patients by creating pressure to force blood through th…
Can a newsletter publisher buy the envelopes it uses to mail newsletters to subscribers tax-free with a resale certificate?
No. The Comptroller ruled that mailing envelopes are taxable wrapping and packaging supplies under Tax Code Section 151.302(c), so the publisher must pay tax on them even though it can issue a resale …
Must a public benefit corporation (or its private parking-management agent) collect and remit sales tax on parking fees it charges the public at an airport it owns, even though the authority itself is generally tax-exempt?
Yes -- even though the transportation authority is exempt from paying sales tax as a purchaser, once it acts as a vendor selling parking services of a kind ordinarily sold by private businesses, it (o…
Do a cheese plant's motor control centers, motor starters, and frequency inverters qualify for the manufacturing-equipment sales tax exemption?
Yes -- because these components are wired specifically to individual pieces of production equipment and directly control functions like dicing-blade speed that determine whether the cheese meets custo…
Are fees for zebra mussel monitoring services -- sampling a customer's water system and providing a written analysis report -- subject to New York sales tax, even though the reports are personal to each customer and not shared with others?
Yes -- even though the monitoring reports are personal and individual to each customer (which would normally exempt a pure information service), the monitoring itself is treated as a taxable diagnosti…
Did RR 94-8 allow beer-price promotions that required participating sellers to pass savings to customers?
Yes. A brewery or wholesaler could condition a price reduction on passing savings to the next tier, but participation had to be voluntary and the discount had to be price-only, recorded, broadly avail…
Is a telemessaging company's purchase of voice mail equipment, used to interface with the telephone network and provide voice recording/storage to its customers, exempt from sales tax as telephone central office equipment?
Yes -- because the company's voice mail service is itself subject to sales tax, the equipment it buys to interface with the telephone switching network and provide that voice-record and storage servic…
Are fees charged to advertisers for typesetting, printing, packing, and hanging their door-to-door flyers subject to sales tax as an information service, or excluded as an advertising service?
The fees charged to clients are excluded from tax as an advertising service, not a taxable sale of tangible personal property or information service -- but because the business is providing a service …
Is a computer-generated wake-up call service sold to private duty nurses subject to Texas sales tax as a telecommunications service?
Yes. The Comptroller ruled that a service placing computer-generated, recorded wake-up calls to private duty nurses (who confirm receipt by pressing a key) is a taxable telecommunications service. The…
Can a cable television company claim the manufacturing exemption on the electricity it uses to produce and deliver its cable signal?
No. The Comptroller ruled that CATV providers cannot claim the Tax Code § 151.317 manufacturing exemption on electricity used to produce their signal, because cable television service is specifically …
Does a private dining and athletic club have to collect sales tax on dues and food charged to the federal or a state government?
No. The Comptroller ruled that a company providing private dining and athletic club services is not required to collect sales tax on membership dues, food, or services when a federal, federal-related,…
Does building a completely new parking lot or street, or enlarging an existing one, count as tax-favorable new construction rather than taxable repair?
It depends on what you actually do, not on the paving process used. Building a completely new street/parking lot, adding length or width to enlarge an existing one, or fully removing and replacing an …
Does selling an airplane back to the original leasing company and leasing it back under a financing lease or operating lease trigger Texas sales tax?
It depends on the type of lease and the facts. For a financing lease, if the corporation originally paid tax on the plane, the new lease is also a financing lease, and there is evidence the corporatio…
Are drafting charges from a third party taxable when building or remodeling a natural gas pipeline in Texas?
It depends on who creates the design. If a third party is simply handed schematic drawings and specifications and produces drafting work (drawings/blueprints) from them, that firm is a taxable 'drafts…
Does the manufacturing phase-in exemption cover a power shear and the mobile power unit that runs it at a metal recycling yard?
Yes, the shear itself qualifies for the manufacturing phase-in exemption, and the mobile power unit that powers it qualifies too, but only if the power unit is used predominantly to power the shear du…
How does a Texas roll-off box / solid waste collection company source local sales tax — where the box is placed, or where the office takes orders?
Local tax on a roll-off box/waste collection service is based on where the box is placed, not where the company takes the order. The Comptroller told this taxpayer to collect tax at the rate in effect…
My brother and I are partners in a family realty partnership that, on paper, owns two unrelated New York properties -- but our partnership agreement has always allocated Property A entirely to me and Property B entirely to him (separate income, separate capital accounts, separate distribution on dissolution), even though title to both properties has always been recorded in our individual names as tenants-in-common (not the partnership's name), for accounting/administrative reasons. We're proposing to liquidate the partnership and simultaneously correct the recorded title so each of us becomes sole owner of 'our' respective property. Does liquidating the partnership and correcting title this way trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt -- each partner already beneficially owned 'his' property under the partnership agreement, so liquidation didn't change anything real. Heinrich Realty Company was a two-partner realty partnersh…
Is on-site computer network administration (backups, file cleanup, running reports, data manipulation) taxable as a data processing service in Texas?
Partly yes. The Comptroller held that backing up files, cleaning up old files/messages, and using existing tools to produce reports or manipulate data are taxable data processing services under Tax Co…
Is the rental of a mobile office/office trailer subject to Texas sales tax, and is a separately stated property tax charge taxable?
Yes. Effective October 1, 1993, mobile offices are no longer classified as motor vehicles but as tangible personal property, so their sale, lease, or rental is subject to state and local sales/use tax…
Does a maid/housekeeping business have to collect Texas sales tax on residential cleaning services?
It depends on the working arrangement. The Comptroller explained that Texas exempts cleaning services performed by an individual employee who cleans the same home for wages, but if the business owner …
Is a new computer/drafting consulting company's revenue — drafting, technical graphics, consulting, hardware/software sales, and sub-contracted work — subject to Texas sales tax?
It depends on the service. The Comptroller ruled that drafting and CAD services (billed by customer specifications), technical graphics/charts/posters, and hardware/software sales are all taxable. Sta…
Does renewing or extending a fixed-term operating lease lock in the original tax rate, or does a new rate apply?
A new rate applies. The Comptroller ruled that while a fixed-term operating lease is taxed at the rate in effect when it was executed for its initial term, each renewal or extension is treated as a se…
Does a Texas company owe use tax when it transfers goods between its own divisions, including goods shipped from a Mexico City headquarters or from an out-of-state office?
Yes, generally. The Comptroller ruled that a Houston division owes Texas use tax, based on the original purchase price, when it receives goods (no money changing hands) from a company division in Mexi…
Is cutting or closing an opening in a fence to let trucks through a taxable real property service in Texas?
Yes, for a nonresidential fence. The Comptroller ruled that cutting an opening in a fence is taxable remodeling of an improvement to realty, and closing that opening back up is taxable repair, restora…
Can a customs broker with the purchaser's power of attorney collect a sales tax export refund on the purchaser's behalf?
Yes. The Comptroller ruled that a licensed customs broker may bring export documentation to a retailer and obtain a sales tax refund on the purchaser's behalf, as long as the broker holds the purchase…
Does a personal shopper have to collect Texas sales tax on commission and consulting fees charged to clients?
Yes, when the fees relate to a sale of clothes. The Comptroller ruled that a personal shopper who buys clothes for clients is a seller of that clothing, so commissions and consulting fees added to the…
Is prepared coffee sold by a non-restaurant for on-premises consumption taxable in Texas?
Yes. The Comptroller ruled that a charge for prepared coffee sold by a non-restaurant business for consumption on the seller's premises is taxable. This coffee answer is one item in a longer multi-top…
Did PLR 94-3 tax gravel, crushed rock, and asphalt that a road contractor produced for its own projects?
Not on the stated facts. Removing gravel and rock from ABC's own land was not a retail sale, and its rare asphalt sales did not make it an asphalt manufacturer. If regular sales later made ABC a manuf…
Does a Sequential Compression Device (SCD) qualify for exemption from Texas sales or use tax?
Yes. The Comptroller ruled that Sequential Compression Devices (SCD) qualify for exemption from sales or use tax, and that this exemption covers both the SCD sleeves and the machines themselves. The l…
Is the Berman Airway, a mouthpiece that keeps the mouth open and tongue down, exempt from Texas sales tax?
Yes. The Comptroller ruled that the Berman Airway, a mouthpiece that keeps the mouth open and the tongue down, is exempt from Texas sales tax when used to keep the airway open or to keep the mouth ope…
Is a New York resident trust exempt from New York State and New York City personal income tax when its sole trustee, its corpus, and all of its income are all located outside New York?
Yes. Even though the Charles B. Moss Trust is a New York 'resident trust' under Tax Law § 605(b)(3)(C) because its grantor was domiciled in New York when the trust became irrevocable, Reg. § 105.23(c)…
If a Utah company fabricates massive equipment (400-ton autoclave vessels) that gets shipped out of state and permanently bolted to a foundation there, does Utah sales or use tax apply to the fabrication and installation?
No tax was owed, but not for the reason the taxpayer argued. The Commission held that 400-ton autoclave vessels fabricated in Utah and permanently bolted to a Nevada foundation remained tangible perso…
Can an aircraft previously purchased under the certificated carrier exemption be used as a tax-free trade-in toward a new aircraft that will not be used as a licensed carrier?
Yes. The Comptroller ruled that an aircraft purchased more than five years earlier under the certificated carrier exemption could still be used as a valid trade-in to reduce the sales tax owed on a se…
Are purchases made by federal employees using a Government Visa (I.M.P.A.C.) credit card exempt from Texas sales tax?
Yes. The Comptroller ruled that purchases made with the Government Visa I.M.P.A.C. credit card are exempt from Texas sales tax when cardholders are authorized only to make purchases for official gover…
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