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 customer buys an aircraft under an exemption certificate for use outside Texas, does having it refurbished in Texas before removal make the aircraft taxable?
No. The Comptroller confirmed that an aircraft purchased under an exemption certificate for use exclusively outside Texas does not become taxable just because the customer has it refurbished or proces…
New York Advisory Opinion TSB-A-94(1)I: Are distributions from the federal Thrift Savings Plan (TSP) that petitioner Joseph T. DiGianni receives exempt from New York State income tax; if not, is the first $20,000 tax-free whether taken as a monthly annuity or a lump sum; and if the distributions are taxable, is the portion of earnings from the TSP's 'G Fund' (invested in U.S. government bonds) tax-free as tax-exempt interest?
It depends on which federal retirement system covers the employee. For a FERS employee, TSP distributions are treated as part of the employee's pension itself, so they qualify for New York's full pens…
Are financial-information publications about bond ratings exempt from Texas sales tax as 'magazines'?
No. The Comptroller ruled that four publications providing current financial information on bond ratings did not qualify for the magazine exemption. Under Sec. 151.320(b), a 'magazine' does not includ…
How does a cooperative housing corporation value the real property it owns for purposes of the Article 9-A capital base?
At fair market value -- but the actual value is a factual question. For the Article 9-A capital base, a cooperative housing corporation (defined in IRC section 216) is taxed under section 210.1(b) at …
How does a cooperative housing corporation determine the fair market value of its real property for the Article 9-A capital base when only the assessed valuation is known?
By fair market value -- which is a factual determination, not simply the assessed value. For the Article 9-A capital base, a cooperative housing corporation (IRC section 216) is taxed under section 21…
Is the New York net operating loss deduction limited to the amount of the federal net operating loss deduction, and does that limitation require adjustments when assets are later disposed of?
Yes -- the New York net operating loss deduction is capped at the federal amount. Under section 208.9(f), the New York NOL for a loss year is computed under section 208.9(f)(1), but the deduction actu…
Can a security services contractor buy tax-free parts and materials to repair vehicles it uses solely to guard a tax-exempt nonprofit's property?
No. The Comptroller ruled that even though the nonprofit is tax-exempt and the vehicles are used exclusively for its security contract, the security services contractor — not the nonprofit — is the pu…
Is building additional rows of sky boxes, a media box, and extra stadium seating treated as new construction or as remodeling for Texas tax purposes?
New construction. The Comptroller ruled that all four stadium improvements described — a second row of sky boxes, a new media box, additional seating above the entry ramps, and an additional row of se…
Did PLR 94-1 impose South Carolina sales, use, or property tax on equipment sold for foreign resale and temporarily stored in-state?
No, on the stated facts. The sale to the foreign company was a wholesale sale for resale, and the equipment remained exempt inventory while temporarily stored in South Carolina before export.
An Industrial Development Board leased property to a company before Alabama's 1992 Tax Incentive Reform Act, but the company forgot to give the written notice needed to renew the lease. Does missing that notice make the property taxable, or does the pre-1992 tax exemption continue?
The exemption continues. Company A leased Industrial Development Board (IDB) property under a 1976 lease with a written option to renew by about November 1, 1991. It forgot to give the written renewal…
Is a foreign corporation that is a general partner in a partnership owning a Texas apartment building subject to Texas franchise tax?
Yes. The Comptroller advised that a Wisconsin corporation that owns a general-partnership interest in a Wisconsin partnership whose main asset is a Texas apartment building has franchise-tax nexus, be…
Can a wholesaler that buys a custom mold under a written agreement claim the 50% manufacturing sales tax reduction on that mold?
No — the customer, a wholesaler of auto parts, may not claim the 50% state sales tax reduction on a special mold it bought under a separate written agreement, even though the mold has a useful life ov…
Does equipment used to load a manufactured liquid product into barges, railroad tank cars, or truck tank trailers (loading arms, piping, instrumentation, pollution control equipment) qualify for the Texas manufacturing exemption or the wrapping/packaging exemption?
No. The Comptroller ruled that loading arms and piping used to move a manufactured liquid into barges, railroad tank cars, and truck tank trailers are intraplant transportation equipment, not manufact…
How are office/vending trailers taxed in Texas after the 10/1/1993 change, and what happens when an out-of-state buyer picks one up here?
Effective October 1, 1993, trailers of this type (previously taxed as motor vehicles under Tax Code Chapter 152) are taxed under the sales tax instead. They still count as motor vehicles for title, re…
Does Texas sales tax or motor vehicle tax apply to food and beverage special events trailers?
Sales tax applies, not motor vehicle tax. The Comptroller ruled that food and beverage special events trailers manufactured and sold by the taxpayer's business are subject to the limited sales and use…
Is scanning a document with an OCR scanner and saving it to a diskette a taxable service in Texas?
Yes — OCR (optical character recognition) document scanning is a taxable data processing service. Rule 3.330(a) defines data processing services to include the maintaining, entering, or retrieving of …
Is selling subscribers online access to a company's land-records database a taxable computer and data processing service in Connecticut?
Yes. A company that manually collects real-property transfer data from town records, loads it into its own daily-updated database, and sells subscribers 24-hour searchable access is rendering taxable …
Were formation-stage vehicle transfers from a parent to a subsidiary and then to a partnership subject to Texas tax?
No tax was due if the parent received only subsidiary stock and the subsidiary later received only a partnership interest, assuming the parent had paid the correct original vehicle tax. Any additional…
Did separate 30-day and 19-day contracts for the same vehicle and customer each receive Texas short-term rental treatment?
Yes. The 30-day contract and the following 19-day contract were each treated as a rental of 30 days or less and each was subject to the historical short-term rental tax. The letter's 10% rate is histo…
Is a general contractor's charge to provide and install a temporary mobile office trailer, including wiring and security system installation, taxable in Texas?
Yes — the entire change-order charge is taxable. Effective October 1, 1993, mobile offices are treated as tangible personal property (not motor vehicles), so their rental or sale is subject to sales t…
Is the preservation (administrative) fee a city's auto pound charges to release an impounded vehicle subject to Texas sales tax?
Yes. The Comptroller ruled that sales tax is due on parking and storage fees for a motor vehicle, including the preservation fee the City's Auto Pound Division charges for impounded vehicles.
When a commonly-owned partnership contributes equipment and real estate to a joint venture with a commonly-owned corporation, and profits/losses are split, does that create a taxable equipment rental, and is the profit/loss share taxable consideration for using the equipment?
No to both. The Comptroller ruled that no taxable rental of equipment occurs between the commonly owned corporation, the partnership, and the joint venture, provided sales or use tax was already paid …
Is a process-serving business's court-record research, photocopying, faxing, and delivery of legal documents subject to New York sales tax?
Process serving itself is not taxable, and neither are pickup, filing, and delivery of receipted copies or affidavits performed as part of process serving. But faxing copies of court documents to clie…
Five families own six semi-attached condominium homes and want to convert to plain fee-simple ownership instead. That means briefly passing through a moment of joint tenants-in-common title before each family gets its own home back. Does converting out of the condominium form trigger New York's Real Property Transfer Gains Tax, and do we have to add all our home values together to test the $1 million threshold?
The conversion itself was exempt -- no gains tax was owed, and no aggregation mattered, because there was no real change in who owned what. Five families owned six semi-attached condominium units in t…
Is screen writing a taxable service in Texas, and what about related services like word processing and copying?
No — writing original copy (such as screen writing) is not a taxable service. But word processing and making copies are both taxable, and tax is also due when you sell books, brochures, flyers, or oth…
When a building owner leases space to a tax-exempt governmental entity and has remodel work done on that space, who is responsible for sales tax — the building owner (lessor) or the government tenant (lessee)?
It depends on who primarily uses and benefits from the improvements. The Comptroller applied a two-prong test: the work is exempt from sales tax only if (1) the lessee qualifies for exempt status unde…
Is an investigation company's services taxable as security services under Texas sales tax, and does the company need a sales tax permit?
Yes. The Comptroller told this investigation company that its services are taxable as security services, meaning sales tax is due on the total charge billed to customers, and enclosed a sales tax perm…
Does Texas motor vehicle tax apply when a parent transfers vehicles to a newly incorporated subsidiary for stock or subject to a lien?
A stock-only transfer to a newly incorporated subsidiary caused no motor vehicle sales tax, but consideration such as assuming a vehicle lien made the transfer taxable. The letter's $10 gift-tax resul…
When an engineering/design/consulting firm also installs and sells the equipment it designs for, is its consulting fee taxable, or does bundling it with installation and equipment make the whole charge taxable?
Design, engineering, consulting, and advisory services standing alone are NOT taxable -- they aren't on the state's list of taxable services. But if a contract bundles those services together with ins…
Is a financial newsletter publisher's on-line news service subject to New York sales tax, and does its separately billed telephone consulting service escape tax as personal information?
Yes for the on-line news service -- it's a taxable information service because its content isn't personal or individual to any one subscriber, though it escapes the additional 5% telephone/telegraph s…
Does a preschool play-group and party business owe sales tax on its charges, and does it matter whether the event includes food, drink, or entertainment?
Charges for preschool play groups (classes with social and educational activities) are NOT subject to sales tax, since that kind of class isn't an enumerated taxable service -- unless it's sold togeth…
Is a wilderness travel company's all-inclusive trip package price (transportation, food, lodging, cabin fees, guide fees, air fare) subject to Texas sales tax?
It depends on where the trip happens. For trips within Texas, the bundled per-person package price itself is not taxable, but the individual taxable transactions that occur in Texas within that trip (…
Is an unincorporated condominium association that only collects common charges and bank interest, owns no property, and is not engaged in business subject to the Article 9-A franchise tax?
Yes. The 440 East 6 Condominium is an unincorporated condominium association formed under Article 9-B of the Real Property Law to manage the common elements; its income is only common charges from its…
Is Coco Lopez, a coconut-based product used for making tropical drinks and cooking, taxable or exempt as a food product in Texas?
Exempt. The Comptroller ruled that Coco Lopez — a coconut, sugar, and water-based product used to make tropical drinks like Pina Coladas and for cooking — is an exempt food product for Texas sales tax…
If a surplus lines insurer charges a separate engineering inspection fee to an applicant, is that fee subject to Texas sales tax even though the surplus lines premium (which may end up including that fee) is already subject to the 4.85% surplus lines premium tax?
Yes. The Comptroller held the engineering inspection fee is a taxable insurance service subject to the 6.25% Texas state and local sales tax, separately from the 4.85% surplus lines premium tax the St…
Is a lumbo roll and cuff weight with heel strap exempt from Texas sales tax as a therapeutic or orthopedic device?
The lumbo roll and cuff weight with heel strap qualify as therapeutic devices under Rule 3.284(a)(11) and (c)(7), so no tax is due when they are sold to an individual with a prescription from a licens…
Does the Texas manufacturing exemption cover costumes, cameras, and other equipment used directly in producing a motion picture, video, or audio recording that will be sold, licensed, distributed, broadcast, or exhibited?
Yes, as of this 1993 letter. The Comptroller said machinery, equipment, and accessories used directly in producing a motion picture, video, or audio recording — including costumes, cameras, lights, an…
Does a not-for-profit 'call before you dig' organization owe sales tax on its member dues, which fund both its damage-prevention education/seminars and its call center that locates underground utility lines?
Yes -- the call center that fields calls from contractors and relays them to utility members is itself a taxable telephone answering service, and because members can't buy the education, seminar, trai…
Is transferring tangible personal property from a corporation to a newly-formed partnership, in exchange only for a limited partner interest, a taxable sale for Texas sales tax purposes?
No. The Comptroller ruled that when a corporation contributes tangible personal property to a newly-formed limited partnership solely in exchange for a limited partner interest — with no other conside…
Is a teleconferencing service provided by a company that isn't a telephone carrier a taxable telecommunications service in Connecticut?
No. A company that provides teleconferencing by bridging multiple phone calls through a computerized 'audio bridge' — while its own coordinators introduce, monitor, and manage the calls — is NOT rende…
For a limited partnership and its partners, where is the partnership's commercial domicile, and which entities have Texas franchise-tax nexus?
The partnership itself owes no franchise tax because partnerships are not subject to it, even though it has Texas nexus (one partner services its receivables from a Texas branch). Its commercial domic…
In a proposed acquisition using tiered partnerships, which corporate partners are subject to Texas franchise tax and how is their income apportioned?
The corporate general partners are subject, but the corporate limited partners, individuals, and the partnerships themselves are not. In a proposed acquisition using tiered partnerships (ABC, ABC II, …
Are a Morgan Stanley financing affiliate's purchases, leases, and maintenance contracts for a New York City office building -- entered as the disclosed agent of the New York City Industrial Development Agency (IDA) -- exempt from sales and use tax?
Yes, generally -- purchases, leases, and maintenance/repair/service contracts entered by the financing affiliate as the IDA's disclosed agent are exempt from sales and use tax, and so are the lease pa…
After the October 1993 change to Sec. 151.311, can contractors accept exemption certificates for materials and consumable supplies used on realty-improvement jobs for exempt entities?
It depends on timing and contract type. As of October 1, 1993, Sec. 151.311 was amended to let contractors buy tax-free, with an exemption certificate, both materials incorporated into realty and cons…
Is a resident-screening company's charge to its clients for credit checks, background checks, and risk analysis taxable as a credit reporting service, or exempt as a non-taxable information service?
Taxable as a credit reporting service. The Comptroller found the essence of the transaction was 'credit reporting' under Tex. Tax Code 151.0034, so the company's total charge to its customers is taxab…
Does a public ambulance authority owe motor vehicle tax on leased ambulances, and can a for-profit ambulance company claim the House Bill 895 emergency-vehicle exemption?
A public agency (Area Metropolitan Ambulance Authority) leasing vehicles titled in its own name will not owe the 6 1/4% motor vehicle tax as long as the vehicles carry exempt tags — if it fails to get…
Did Texas treat a day-to-day open-ended vehicle contract as a rental even when the customer kept the vehicle more than 180 days?
Yes. Administrative hearings had treated day-to-day open-ended contracts as rentals regardless of how long the customer actually kept the vehicle. A purchase order specifying more than 180 days was a …
Why do some hospitals lose (or newly qualify for) their Texas sales tax exemption, and does that change anything for businesses that do work for hospitals?
A 1993 legislative change added a new criterion hospitals must meet to qualify for the sales tax exemption: they must provide a certain amount of indigent or charity health care. The Texas Health Depa…
Is a $100 'reinstatement fee' charged to customers renewing an expired computer maintenance agreement taxable, even if it's separately stated on the invoice?
Yes. The Comptroller ruled that the $100 reinstatement fee is taxable, even if separately stated, because it is part of the charge for computer program maintenance on software sold by the same service…
How did South Carolina PLR 93-8 tax a mutual fund's exempt-interest dividends, capital-gain dividends, and insured defaulted-bond interest?
Qualifying exempt-interest dividends attributable to South Carolina, U.S., or listed territorial obligations were exempt, including qualifying insured matured interest. Capital-gain dividends remained…
Does a DC-powered siren used to call or gather cattle on a farm or ranch qualify for the farm machinery and equipment sales tax exemption under Rule 3.296(a)(5)(A)?
Yes, based on the facts given. The Comptroller ruled that a siren built to call or gather cattle to be fed or worked, powered by direct current from a vehicle battery (not AC power, so it has no other…
Is an alarm/paging unit attached to an incubator used to hatch emu eggs exempt from Texas sales tax as farm equipment?
Partly. The alarm unit itself, placed in the incubator, qualifies for the farm/ranch agricultural exemption under Tax Code Section 151.316. But the paging device it triggers does not qualify if it can…
Is extracting core samples from new oil/gas well exploration sites taxable in Texas, and does the service provider owe tax on the equipment and materials used?
No, the coring service itself is not taxable. The Comptroller ruled that extracting core samples associated with exploration for new oil/gas well sites is a nontaxable service, but the service provide…
After SB 82 repealed the old 25% sales tax fraud penalty and replaced it with the General Provisions chapter's 50% fraud penalty, which rate applies to audit assessments that were already pending and billed at 25% before the changeover date but not finalized until after it?
This is an internal Comptroller Tax Policy memo, not a response to a taxpayer letter. It resolves an internal question about which fraud penalty rate to apply during the SB 82 transition: assessments …
Is producing a master film, audio, or video recording treated as manufacturing for Texas sales tax purposes, and is duplicating (dubbing) that master taxable?
Yes — producing a motion picture or audio/video recording for sale, license, distribution, broadcast, or exhibition is manufacturing, so producers, production companies, and post-production companies …
Is installing theater chairs in a new theater taxed the same as removing and replacing chairs in an existing theater?
No. Installing theater chairs for the first time in a newly constructed theater is a nontaxable improvement to realty, but removing old chairs and installing new ones in an existing theater is taxable…
Do ostriches, emus, and rheas (ratites) raised for slaughter qualify for the same Alabama tax breaks as 'poultry' — the sales/use tax exemptions, the reduced machinery rate, and the ad valorem exemption?
Yes. The Department ruled that ostriches, emus, and rheas — flightless birds called ratites, raised for slaughter for meat and by-products — are included within 'poultry' for Alabama tax purposes and …
Is labor to repair a parking lot damaged by an underground explosion taxable if the repair work was done after October 1, 1993?
Yes. The Comptroller told the taxpayer that because the parking lot repair labor was performed in November 1993 — after the October 1, 1993 effective date of new Tax Code Sec. 151.350 — that repair la…
Can a corporation deduct dividends from a mutual fund under Connecticut's dividends-received deduction when the fund's payouts are exempt-interest or capital-gain dividends?
It depends on the type of distribution. Under Connecticut's dividends-received deduction, Conn. Gen. Stat. § 12-217(a)(D), a corporation may deduct 'dividends as defined in the federal income tax law.…
Is faxing coupon advertisements to a list of recipients a nontaxable advertising service or a taxable telecommunications service in Texas?
It depends on what the customer is paying for. Assembling and distributing a collection of coupons is a nontaxable advertising service, but the fax transmission itself is a taxable telecommunications …
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