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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Can a retailer take a credit or refund for sales tax already remitted on a financing lease that later becomes a bad debt?
Yes — a retailer may take a credit or obtain a refund of the portion of accrued sales tax already remitted to the state that later becomes a bad debt, even when the bad debt arises from a financing le…
Is labor to repair or remodel a dormitory manager's office or cafeteria taxable, and how does that compare to the residential-use rule for apartment complex utilities?
It depends on how the space is actually used. Repair/remodel labor on residential property is tax-exempt, and Rule 3.357(a)(9) treats a manager's office as residential only if it doubles as the manage…
If a building owner leases space to a 501(c)(3) organization and pays for remodeling before the exempt tenant moves in, can the contractor's labor and materials be purchased tax-free?
Yes — the Comptroller ruled that where the remodeling is for the primary use and benefit of the exempt tenant (here, because the tenant builds equity through its lease payments and holds an option to …
Does a billboard company have to collect Texas sales tax on charges for repainting existing billboards?
Yes, in most cases. Repainting billboards — whether a straight repaint, a repaint with new colors, or a repaint with a partial copy change — is presumed taxable as repair, restoration, or remodeling o…
Is a ureteral stent exempt from Texas sales tax as a prosthetic device, even though it's only implanted temporarily?
Yes — ureteral stents qualify as exempt prosthetic devices under Rule 3.284, even though they are generally implanted only on a temporary basis. The Comptroller found that neither the statute nor the …
Are shampooing, dry cleaning, and hand-weaving repair services for oriental carpets and other rugs subject to New York sales tax, whether performed at the customer's location or at a plant?
No -- shampooing, dry cleaning, and hand-weaving repair of oriental carpets and other rugs all fall within the tax law's specific dry-cleaning/weaving exclusion, so none of these services are subject …
When did RR 94-3 require paid-admissions receipts to be reported, and were restaurant-package handling fees taxable?
The ruling required reporting when a ticket was issued or promised, unless it had not yet been paid for; gift-certificate receipts were reported when redeemed for a ticket. A separately optional resta…
How did RR 94-2 tax standard and custom-fabricated building products used by their maker in construction contracts?
A true manufacturer regularly selling standard finished products owed tax on fair market value when it used those products at a South Carolina job site. A contractor fabricating unique, job-specific p…
Is labor to relocate, modify, or rebuild railroad track taxable as remodeling, or exempt as new construction, under Texas sales tax rules?
It depends on what work is done. Installing a new switch into existing track, or replacing existing jointed track with welded rail, is taxable remodeling labor. Building brand-new track, road bed, or …
How does the statute of limitations for a sales and use tax refund claim work for reporting periods that were part of a prior audit?
The standard statute of limitations for a Texas sales and use tax refund claim is four years from the date the tax was due. But if the reporting period was part of an audit that went through redetermi…
Should a vehicle rebate be subtracted before reporting the sales price on line 21(a) of Texas Form 130-U?
Yes. The Tax Administration Division said the rebate could be subtracted before entering the sales-price amount on line 21(a). Its example reported $19,000 when the initial price was $20,000 and the r…
Does a tax-exempt public benefit corporation's blanket sales-tax exemption extend to purchases made by the private contractor it hires to operate and maintain its facility?
No -- the agency's own broad tax exemption applies only when the agency itself is the actual purchaser and payor of record, not to purchases its private operating contractor makes in its own name; the…
If a company owns Industrial Development Board bonds that financed its own leased facility, can it still deduct that bond investment from its franchise-tax capital, and exclude the bond interest from income tax — even after paying big dividends to its parent and even though it borrowed the money to buy the bonds?
Yes to all. In a large Industrial Development Board (IDB) bond-financed manufacturing deal, the Taxpayer owned the IDB's bonds (bought with capital contributed — and partly borrowed — by its parent) a…
Does a Texas city owe sales tax on its sewage/wastewater charges, and how should a city handle sales tax on amusement services and related packages like 'Party Buddies'?
No — a city's charge for sewage service is not taxable, even if it is billed as 'waste water service,' because the taxable definition of garbage collection (a real property service) does not include d…
Can a NAFTA Certificate of Origin be used as proof that goods were exported, for Texas sales tax purposes?
No. The Texas Comptroller ruled that a North American Free Trade Agreement (NAFTA) Certificate of Origin is not helpful in proving that items have been exported for Texas sales tax purposes. The law r…
Is a foreign corporate limited partner in a Texas real-estate partnership subject to franchise tax, and what are the registration, penalty, and interest rules?
A foreign corporation that is only a limited partner in a Texas real-estate limited partnership is not doing business in Texas and has no franchise-tax nexus, but a general partner in the same partner…
Is an agricultural cooperative that breeds cattle and sells semen, whose earnings benefit its members, subject to New York's unrelated business income tax?
No. Select Sires is an agricultural cooperative that artificially breeds members' cattle and sells semen and supplies. New York's unrelated business income tax (Article 13, section 290) applies only t…
Are a fleet-management company's personal-mileage and vehicle-expense reports, prepared for individual corporate clients from their own data, subject to New York sales tax as an information service?
No -- because each report is built entirely from a single client's own vehicle/mileage data and covers only that client's own fleet, it counts as personal and individual information excluded from the …
Is a toxic-waste cleanup company's cleanup service taxable, and are the supplies (absorbents, drums, protective gear) it uses during a cleanup subject to sales tax?
Yes, the cleanup service itself is taxable as processing/real-property-maintenance work -- and the company's own equipment (booms, vacuums, earth movers) and protective gear (uniforms, protective item…
Is routine office cleaning that a commercial landlord bundles into a tenant's lease payment subject to New York sales tax as a maintenance/repair service?
No -- routine cleaning baked into the negotiated lease rate is incidental to the rental of the space, not a separate taxable cleaning service, so those payments aren't subject to sales tax; but any cl…
Is testing underground storage tanks for leaks to comply with environmental law a taxable service to real property or a taxable tank repair in Connecticut?
No, on both counts. Testing underground storage tanks at service stations (and the related monitoring wells and test pits) to comply with state and federal environmental laws is a service rendered for…
If an out-of-state pension fund invests in Alabama only as a limited partner — and registers as a foreign corporation just to make its contracts enforceable — is it 'doing business' so as to owe Alabama franchise and income tax?
No to both taxes. Entity A, an out-of-state public-school retirement fund (a trust with 'corporate powers,' investing ~$64.35 million as a limited partner in a tiered partnership that owns an Alabama …
Is Texas sales tax due on broadcast-quality television transmission and video conferencing services provided to networks and television stations?
Yes, if the transmission originates in Texas. The Comptroller ruled that broadcast-quality television transmission and video conferencing services are 'telecommunications services' under Tex. Tax Code…
Is a hot air balloon company's charge for flight instruction, sightseeing rides, or demonstration flights subject to Texas sales tax?
It depends on the type of flight. Pleasure/sightseeing balloon rides and demonstration flights (shown to a potential balloon buyer) are taxable amusement services. But a charge to a student for actual…
Is a cable TV company's hourly service call charge (for problems that aren't the operator's responsibility) subject to Texas sales tax?
Yes — service charges billed in connection with providing cable television service are subject to Texas sales tax. This includes the hourly-rate charge a cable operator bills for a service call that t…
When did PLR 94-2 treat a federal security contractor's purchases as exempt federal-government purchases?
The purchases were exempt when ABC bought on the federal government's behalf, did not risk its own credit, disclosed the government agency on purchase orders, vested title in the government, and paid …
Is renting equipment, set dressings, and picture cars for a television or movie production exempt from Texas sales tax?
Yes — effective October 1, 1993, a producer may claim an exemption from Texas tax on qualifying machinery or equipment rented or leased for the production of a motion picture, or a video or audio reco…
Does Texas sales tax apply to materials, equipment, and electricity used to build a product prototype?
Yes, tax applies — materials used to fabricate a prototype do NOT qualify for the Texas resale exemption. The resale exemption only covers property purchased exclusively for resale and not for use, bu…
Is sales tax owed on installing, repairing, or remodeling an underground sprinkler/irrigation system in Texas?
It depends on the work and the type of property. New installation and residential repairs are treated as improving real property — tax applies to materials, not labor, and how it's collected depends o…
If I bring goods into Texas only temporarily before shipping them out of state for use elsewhere, do I owe Texas use tax?
No use tax is owed on out-of-state purchases that are brought into Texas only temporarily for the purpose of transporting them outside the state for use solely outside the state — Tax Code Section 151…
Can a Texas insurance company claim a multistate benefit exemption on sales tax paid for actuarial services, when the resulting policies are later sold in other states?
No. Under Comptroller Rule 3.355(j), a purchaser can only claim the multistate benefit exemption on services like actuarial studies if it actually has a business location in another state and issues a…
If I buy equipment tax-free for rental/lease and later sell it as an 'occasional sale' when reorganizing my company, do I owe Texas sales tax?
Yes, partially — under Tex. Tax Code § 151.055(a), a company that buys equipment tax-free under a resale certificate to rent or lease it, then later sells that equipment in an occasional sale, still o…
When worn grinding wheels are stripped and re-coated, is that exempt manufacturing, an exempt material purchase, or taxable repair in Connecticut?
It splits into three parts. Replating a worn grinding wheel is NOT the 'manufacture of a tool' under Conn. Gen. Stat. §§ 12-412(18) and (34) — a grinding wheel goes in and a grinding wheel comes out (…
Is a matchmaking/dating service, where a customer pays for an interview and is then mailed a match's name and phone number based on comparison with other interviewees' records, subject to New York sales tax?
Yes -- collecting and analyzing interviewees' information and furnishing customers with a match's name and phone number is a taxable 'information service,' so the fee charged for this dating service i…
Is the software a manufacturer uses to run its computerized milling machines exempt from Connecticut sales tax as manufacturing machinery?
It depends on how the software is bought. A manufacturer's CAD/CAM software that drives its computerized milling machines can qualify for a manufacturing exemption, but with a key catch: (1) if the so…
If a Nebraska-domiciled executive takes a fixed 4-year New York work assignment, using a company apartment and spending more than 183 days a year in New York, is he a New York resident or a nonresident for personal income tax purposes?
He remains a nonresident. Because Petitioner Charles M. Harper's New York assignment is for a fixed and limited four-year term (or less, if performance goals are met sooner), after which he will retir…
Are insurance services performed for a self-insured or self-funded plan taxable in Texas?
No — under Rule 3.355(b), insurance services performed pursuant to a self-insured plan or for a third-party administrator (TPA) handling funds under a self-insured plan are not taxable, including serv…
Is a city's 20% construction-cost charge for installing new electric power lines taxable, when the line will serve both residential and commercial use?
Yes, it can be taxable. The Comptroller ruled that a city's charge to a customer or developer for installing power transmission lines — even though no property changes hands and the fee just offsets t…
Does a company that fabricates and installs gas distribution pipelines qualify as a 'fabricator' for the Texas manufacturing exemption?
No. The Comptroller ruled that a company that fabricates and then installs gas distribution pipelines as an improvement to real property is a contractor, not a fabricator/manufacturer — so it does not…
Is a dragline service that clears silt from a farm or ranch tail water pit subject to Texas sales tax?
Yes — a dragline service rented with an operator to remove silt from a farm or ranch tail water pit is taxable. The Comptroller treated the tail water pit as real property and the farm or ranch as com…
Is sales tax owed on the flyers and promotional items (pens, magnets, calendars) stuffed into free door-to-door advertising bags?
Yes, partially. Sales tax is due on all supplies, materials, equipment, and services used to produce the advertising flyers stuffed into the bags. The advertisers themselves owe tax on pens, magnets, …
Does a home business owe Texas sales tax on computerized calling services, like automated appointment reminders, wellness check-in calls, or community information lines?
It depends on the specific service. The Comptroller found automated wellness check-in calls (for homebound individuals) and automated calls to children not taxable, but ruled that automated patient ap…
Is a baggage protection wrapping service offered to airline passengers at the airport subject to Texas sales tax?
No — the Comptroller ruled this baggage protection service (wrapping a passenger's luggage in a specially designed plastic bag at the airport) is a non-taxable service. However, the company still owes…
Does sales tax or hotel occupancy tax apply to a timeshare condominium association's maintenance fees, bonus-time program, and repair/maintenance purchases?
The timeshare association's annual maintenance fee itself is not taxed (the association is the purchaser of the goods/services, and owners are just reimbursing it), and the "bonus time" program isn't …
How many one-day tax-free sales can a 501(c)(3), (4), (8), (10), or (19) nonprofit and its chapters hold each year in Texas?
A nonprofit organization exempt as religious, charitable, or educational (and, as of August 30, 1993, one classified by the IRS as 501(c)(3), (4), (8), (10), or (19)) may hold one one-day tax-free sal…
Which South Carolina bodies counted as legislative agencies for the temporary document-copy sales-tax exemption in RR 94-1?
RR 94-1 limited the temporary exemption to agencies under the South Carolina Legislature's direct control, such as the Senate, House, joint committees, Legislative Audit Council, Legislative Council, …
Is a service that signs homeowners up for accelerated mortgage payment drafting subject to Texas sales tax?
No — the Comptroller ruled that this mortgage payment service is not a taxable service, based on the facts presented. The taxpayer was an independent agent who signed homeowners up for a Florida compa…
Is a consultant's fee for helping clients choose electrical equipment and find suppliers subject to Texas sales tax?
It depends on what the fee covers. Selling information gathered for a client about the availability of parts, pricing, and shipping is a taxable information service under Rule 3.342, even though it wa…
Are SEC insider-trading disgorgement funds -- like the Boesky, Siegal, and Kidder Peabody funds -- subject to New York corporate franchise tax under Article 9-A or personal income tax under Article 22, and are the individual claimants or original defendants separately taxed on the funds' earnings?
No entity-level New York tax applies to the Disgorgement Funds themselves. Because the receiver merely holds court-restricted investments and distributes them under an SEC-approved plan with no discre…
Is a 'For Sale By Owners' list compiled and faxed weekly to real estate companies for a fee subject to Texas sales tax?
Yes — compiling a weekly list of 'For Sale by Owners' homes and faxing it to real estate companies for a $14.99 weekly fee is a taxable information service under Texas sales tax law. Information that …
Does a company that fetches and delivers police accident reports to insurance companies owe Texas sales tax on those charges?
It depends on the charge. No sales tax is due on the amount a company passes through to an insurance company to cover what it paid the police department for an accident report (no markup). But sales t…
Are repair and replacement parts for farm trucks and trailers exempt from Texas sales tax if the vehicles have farm license plates?
It depends on whether the vehicle is licensed for highway use. Repair and replacement parts for unlicensed vehicles used exclusively on farms or ranches are exempt from Texas sales tax. Repair and rep…
Can a farm or ranch buyer use an agricultural exemption certificate to buy an ATV in Texas without paying sales tax upfront?
Yes, starting February 1, 1994 — the Comptroller told motorcycle/ATV dealers they may accept an agricultural exemption certificate for a farm-use ATV purchase instead of collecting tax and sending the…
In 1984, a state energy authority issued pollution-control bonds for our nuclear plant, backed by our first mortgage bonds. Now we want to refinance those bonds at today's lower interest rates, which requires amending and restating our mortgage bonds and recording a new supplemental mortgage indenture. Is that refinancing exempt from mortgage recording tax, and does restating the bonds count as new debt?
Exempt, and restating the bonds isn't treated as new debt for MRT purposes. This is the origin ruling establishing mortgage recording tax exemption for Niagara Mohawk Power Corporation's financing arr…
Do a school organization's two allowed one-day tax-free sales reset each school year, or are they limited to one calendar year?
The two one-day tax-free sale exemption applies per calendar year (January 1 through December 31), not per school year. If a PTO already held a tax-free sale earlier in the same calendar year (even if…
Does a self-employed house cleaner with no employees need a Texas sales tax permit?
No — a self-employed individual with no employees who cleans only residential homes is treated as an employee of the homeowner under Texas Tax Code Sec. 151.057, so no sales tax permit is needed and n…
Does a nonprofit hospital's school of nursing owe sales tax on textbooks and uniforms sold to students who pay with financial-aid loan funds?
Yes — the textbooks and uniforms a nonprofit hospital's nursing school sells to its students are taxable, even though students pay for them using "financial aid" that is actually a loan under a Financ…
Is producing a sonogram video tape for expectant mothers subject to Texas sales tax?
Yes — the total charge for producing a sonogram video tape of expectant mothers is taxable. The business may, however, purchase the blank video cassettes tax free by issuing a resale certificate to it…
After a Texas sales tax audit becomes final, how long do I have to claim a credit for resale or exemption certificates, and does the 60-day letter cut that off?
A special six-month period to claim credits or refunds begins on the date the audit determination becomes final (Sec. 111.104(c)(3)), even for transactions where the standard four-year limitations per…
If I pick up a government record (like an accident report) for a client and bill them for the record's cost plus my own labor fee, is my labor fee taxable?
Yes, your labor/pickup fee is taxable, but the government agency's own charge for the record itself is not — as long as you separately state the two amounts on your bill. The Comptroller ruled that a …
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