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 direct payment permit holder accrue local or MTA use tax based on where an item is first used, instead of where it was first stored?
**No.** Under Rule 3.377(c)(5), a direct payment holder cannot accrue local (city, county, MTA/CTD) tax based on the location of first use — the tax is due based on the location where items are first …
Is a charge for licensing a copyrighted photograph or image for publication subject to Texas sales tax?
**No — a charge for licensing photographic images for publication is not subject to Texas sales tax.** However, charges for developing film are subject to sales tax, unless the photographer gives the …
Is seismic surveying for oil and gas exploration (placing explosive charges and geophone receivers) a taxable surveying service in Texas?
**No — the Comptroller ruled this seismic surveying service is not taxable surveying.** The letter explains that laying out source points (explosive charge locations) and receiver points (geophone loc…
Is a breathing monitor that can be used independently of a ventilator exempt from Texas sales tax as a prosthetic device?
No — **the breathing monitors (Monitor LS-75 and VM-90) are taxable when sold to hospitals, clinics, doctors, etc.** The Comptroller ruled that the monitors do not meet the definition of a prosthetic …
Does a general-purpose farm building, like a hog barn, qualify for the Texas agricultural sales tax exemption?
**No — a general-purpose farm or ranch building does not qualify for the agricultural exemption unless it is specifically designed to function as a piece of farm machinery or equipment.** The letter e…
Are materials and labor exempt when contracting to improve real property for a tax-exempt organization, and is disaster-repair labor still exempt after October 1, 1993?
**Materials used in a contract to improve realty for an organization exempt under Tax Code Sections 151.309 or 151.310 are exempt, but only tangible personal property that is necessary and essential t…
Are tracheal ('endo-trach') tubes purchased by hospitals exempt from Texas sales tax as prosthetic devices?
**Yes — tracheal tubes qualify as an exempt prosthetic device, so a hospital, other health care provider, or individual may purchase them tax free under Rule 3.284(c)(1), and no prescription is requir…
Are diagnostic reagents that veterinarians use on blood samples to test dogs and cats for disease exempt from Texas sales tax as drugs and medicines?
**No — the diagnostic reagents are not exempt as drugs and medicines.** The Comptroller explains that to qualify for the drug/medicine exemption, a substance must possess curative or remedial properti…
Are mobile offices/office trailers taxable as tangible personal property in Texas, and can I buy them tax-free for rental to customers?
**Yes — effective October 1, 1993, mobile offices became subject to limited sales and use tax as items of tangible personal property under Chapter 151.** A business that buys mobile offices in order t…
Did the 1993 change to the sales tax law on disaster-area real property repairs affect labor to repair residential property, and when does tax apply to non-residential repair labor for damage that occurred before the law changed?
**No — residential property repair labor remains untaxed; the 1993 law change only affects non-residential property repairs.** The Comptroller confirms the change in the sales tax law regarding real p…
Are environmental site-assessment and safety-consulting services performed by a professionally certified consultant subject to Texas sales tax?
No — the Comptroller ruled these services are **not subject to sales tax**. The consultant's site assessments, spill prevention control and counter-measure (SPCC) plans, Texas Workers' Compensation Ex…
Does air-control machinery in a manufacturer's clean room qualify for Connecticut's manufacturing-machinery sales and use tax exemption?
Yes. A company that makes hypodermic needles was building a 'clean room' — an enclosed, environmentally controlled space — and installing machinery to regulate the air's temperature, pressure, humidit…
In a bond-financed Industrial Development Authority (IDA) manufacturing project, which Alabama taxes get abated or exempted — deed recording tax, mortgage tax, sales and use tax, ad valorem tax, income tax on rent and bond interest, and the IDA's lease tax?
It depends on the tax and the document. In this IDA (Industrial Development Authority) bond-financed manufacturing project under the Tax Incentive Reform Act of 1992 (§ 40-9B-1 et seq.), the Departmen…
If a cellular phone company gives away a free phone as part of a promotion tied to a customer's donation to a charity, does the company owe use tax on the phone?
**Yes.** The Comptroller ruled that if a cellular phone seller gives a person a cellular phone because that person made a donation to a charity, the seller must pay tax on the acquisition cost of the …
Is a CPA's 'write-up' work of entering, maintaining, and retrieving payroll-check data taxable as data processing in Texas?
**Yes — entering, maintaining, and retrieving information from payroll checks is taxable data processing service in Texas**, even though the client (not the CPA) actually computes and writes the payro…
Does Texas sales tax apply to fees a government agency charges for copies of public records?
**No sales tax is due on the fee for the first copy of a public record that a governmental body is required to furnish under the Open Records Act — but sales tax is due on any additional copies of the…
Does a dental clinic owe sales tax on the electricity it uses for X-rays, making crowns/bridges/appliances, dental lights, and air conditioning for patients?
**Yes — the dental clinic must pay sales tax on its electricity and natural gas.** The Comptroller ruled that a dentist using electricity to take and develop X-rays, manufacture crowns, bridges, and d…
If a cellular phone company gives away a free phone to a customer who donates to charity, does the company owe sales or use tax on that phone?
It depends on who is giving the phone away. **If a cellular phone service provider gives a subscriber a free phone as part of the cellular service because the subscriber donated to a charity, the comp…
Is a non-stock cooperative housing corporation that has taxable income exempt from Connecticut's corporation business tax?
No — not if it has taxable income. A non-stock cooperative housing corporation CAN qualify as a 'cooperative housing corporation' under Conn. Gen. Stat. § 12-214(a)(5) and Conn. Agencies Regs. § 12-21…
Does a company that processes Medicare claims under a federal government contract owe sales tax on the claim forms, checks, and supplies it uses to do that work?
Yes — **the claim forms, checks, and other supplies the company uses to process Medicare claims are taxable to the company**, because those items are not sold or transferred to the federal government.…
Is the exchange of 'trade dollars' between a taxpayer and its vendors subject to Texas sales tax?
**Yes — both sides of the exchange are taxable sales.** The Comptroller ruled that issuing and redeeming 'trade dollars' (five-dollar face-value credits given to vendors in exchange for goods/services…
Metro-North Commuter Railroad Company asked whether two categories of employees who work in both New York and Connecticut - (1) employees paid collectively-bargained travel time to reach a temporary out-of-state work assignment, and (2) employees who work a set schedule of days in New York and are 'on call' at home in Connecticut - qualify for the federal Amtrak Reauthorization and Improvement Act's exemption from New York income tax on compensation paid to interstate rail employees who perform 'regularly assigned duties' in more than one state.
It depends on the category. Employees paid travel time to reach a single, temporary out-of-state assignment (like a conductor sent to flag a specific New York construction site) are NOT exempt - they …
Is a heart/lung machine used during surgery exempt from Texas sales tax as a prosthetic device?
**Yes — the heart/lung machine qualifies as an exempt prosthetic device under Texas Tax Code Section 151.313(a)(4)** because it performs the function of a vital organ (both heart and lung), whether us…
When separate vendors each do part of an oil and gas well workover, is each vendor's job taxed on its own, or based on the overall well-servicing job?
**Taxability is determined within the context of the overall service, not vendor-by-vendor.** The Comptroller confirmed it will not follow Comptroller's Hearing No. 28,608 (which had looked at each ve…
Are a golf course's membership initiation fees, annual dues, and driving-range fees subject to New York's tax on social or athletic club dues, even though it markets memberships and calls itself a 'country club'?
No -- because members have no proprietary interest, no control over activities or management, membership is open to the general public on a first-come, first-served basis limited only by the facility'…
Must a customer that resells purchased business forms only to tax-exempt New York municipalities still register as a sales tax vendor and give its supplier a resale certificate?
Yes -- a manufacturer selling business forms to a customer must collect sales tax on those sales unless the customer furnishes a properly completed Form ST-120, Resale Certificate. The fact that the c…
How is income from servicing extended warranty contracts allocated to New York for the Article 9-A receipts factor?
Receipts from servicing extended warranty contracts are 'other business receipts' under 20 NYCRR 4-4.1(b)(5), and they are allocated to New York when they are earned in New York -- that is, where the …
Are sales to a New York customer, drop-shipped to the customer's out-of-state buyers, New York receipts for the business allocation percentage?
It depends on where the goods are shipped, not who the customer is. For the receipts factor of the Article 9-A business allocation percentage, receipts from sales of tangible personal property are all…
If a manufacturer is located outside a taxing city's limits but inside a taxing county, does it owe city use tax based on the vendor's location?
It depends on what the certificate covered and how the item was actually used. **The letter gives two possible answers, not one rule:** if the manufacturer's resale or exemption certificate validly co…
Is a video production company a 'manufacturer' for Texas sales tax purposes, and can it rent or lease production equipment tax-free?
**Yes — effective October 1, 1993, producing a motion picture, video, or audio recording (a copy of which is sold, offered for sale, licensed, distributed, broadcast, or otherwise exhibited) counts as…
Are materials used to build new railroad track — rails, ballast, bridges, cross ties, culverts — exempt from Texas sales tax, and how do contractors and material suppliers document that exemption?
**Yes — materials to build railroad road bed, railroad track, and cross ties are exempt from Texas sales tax under Tax Code Section 151.331**, and this exemption applies regardless of whether the cont…
When a corporation transfers its assets to a new company in exchange for less than 100% of that new company's stock, is the transfer taxable in Texas?
**Yes — when multiple companies each contribute assets to a newly formed corporation and no single contributing company receives 100% of the new corporation's stock, the transfers of tangible personal…
Is a fee for acting as an umpire between two arbitrators subject to Texas sales tax?
It depends on the context: **the Comptroller's October 8, 1993 letter says a general charge to act as an umpire between two arbitrators, plus an associated mileage charge, is not subject to tax** — bu…
Did a seller-financing dealer owe tax on unpaid installments when title filing was delayed only by the buyer's missing insurance proof?
No. If missing buyer liability-insurance proof was the only reason the county would not accept the title application, the permitted dealer could keep remitting tax as payments were received rather tha…
If a taxpayer already received a refund for one issue in an audited tax period, can they later claim a refund for a different issue in that same period?
**Yes.** The Comptroller's internal policy memo states that a final refund determination on one issue (one set of transactions) does not bar — under res judicata or otherwise — a later refund claim fo…
Are barricade services and plastic pavement marker tabs used by highway contractors subject to Texas sales tax?
**Yes for barricade service (taxed as equipment rental), but plastic marker tabs can be bought tax-free as consumable supplies.** The letter states that charges for barricade service are treated as a …
Is a microbe air scrubber system (and the microbes used in it) exempt from Texas sales tax, and is monitoring/maintenance of the system taxable?
**The microbe air scrubber system qualifies for the manufacturers' phased-in exemption under Tax Code Section 151.318, and microbes sold together with the system as part of that sale are also covered …
Can a janitorial services company buy its cleaning equipment and supplies tax-free under a resale certificate?
**Generally no for equipment and supplies used up on the job, but yes for items left behind with the customer.** The Comptroller ruled that separately pricing janitorial equipment on a price-per-squar…
Is a New York corporation owned by tribal members and operating entirely on an Indian reservation exempt from Article 9-A franchise tax?
No. A New York domestic corporation that runs a bingo operation entirely on the St. Regis Mohawk Reservation and is owned entirely by tribal members is still subject to the Article 9-A franchise tax. …
If a company buys or builds equipment mainly to control air and water pollution — vapor recovery systems, leak detectors, cathodic protection, double-wall tanks, cleanup gear — is that equipment exempt from Alabama sales, use, and property tax, and deductible for franchise and income tax?
Mostly yes. Company A, an Alabama petroleum business, planned to buy or self-construct five kinds of environmental equipment (vapor recovery systems, in-line leak detectors, cathodic protection, doubl…
Is electronic mail (e-mail) service taxable under Texas sales tax?
**Yes — electronic mail is a taxable telecommunications service in Texas.** The Comptroller's letter states that electronic mail has been subject to sales tax as a telecommunications service since 198…
Does a company owe Texas sales tax on fees charged to songwriters for demo placement and to music publishers for catalog/system access?
**Yes.** The Comptroller ruled that sales of the company's song catalog and system access are subject to Texas sales tax when sold to Texas residents — the company must collect 7.25 percent state sale…
Is an independent contractor who fills in as a temporary secretary/word processor for law firms exempt from sales tax as a 'temporary help service'?
It depends on the facts, not the label. The Comptroller explains that, absent a written contract defining the relationship, Texas has historically applied common-law employer/employee tests — now codi…
Is unprocessed dirt, sand, or gravel taxable, and is digging/backfilling flow line ditches a taxable service in Texas?
**Digging and backfilling flow line ditches is not a taxable service, and the sale or delivery of unprocessed dirt, sand, gravel, or similar materials (merely sorted, sized, screened, washed, and/or d…
Is tangible personal property incorporated into an underground drainage system on a farm exempt from Texas sales tax the same way underground irrigation system components are?
**No.** The Comptroller's letter states that Senate Bill 82 exempts components installed as part of an underground irrigation system on a farm or ranch used to produce agricultural products sold in th…
Does a mailing service or a broker who collects payment for a 900-number telecommunications service have to collect Texas sales tax on those transactions?
**No — in both situations described, the letter holds the taxpayer is not responsible for collecting tax on the underlying sale.** For the mail-order referral business, a mailing service (stuffing/add…
Is customizing a customer's car with performance and body enhancements taxable in Connecticut as a repair, or as fabrication of the customer's property?
It's taxable, but as fabrication — not as a repair. A company added engine and body 'enhancements' (customization) to customers' vehicles, boosting their performance and value. DRS held this is NOT ta…
Are vitamin and mineral supplements for horses exempt from Texas sales tax?
**Yes — vitamin and mineral supplements for horses are exempt from Texas sales tax**, according to this Comptroller letter, unless the item is not clearly for horses only, in which case the seller sho…
Is a toxic-waste cleanup company's service taxable, and are the equipment and supplies it uses during a cleanup subject to sales tax?
Yes -- the cleanup service itself is taxable as processing and real-property-maintenance work, and the company's own cleanup equipment (booms, vacuums, earth-moving machinery) and protective gear/disp…
Does a condominium's common-area electricity qualify for New York's reduced residential energy sales tax rate, including electricity used for the pool, laundry room, and a rooftop antenna lease?
Partly. Hall lights, stairway lights, heaters, and outside lighting tied to the residential building are common-area uses that DO qualify for the reduced residential energy rate. But electricity for t…
How did Texas calculate use tax on a vehicle leased outside the state and later brought into Texas?
Texas used the vehicle's original purchase price without a deduction for depreciation or prior out-of-state use. The applicable rate was the rate in effect when the vehicle entered Texas, and similar …
Is the license and service fee a company pays to access training materials (books, videotapes, videodiscs, software) subject to Texas sales tax?
**Yes — the license and service fee for accessing the training materials is taxable, but a separately stated charge for the training itself is not.** When the company (ABC CO.) uses the training mater…
When a building owner hires an independent managing agent to hire, pay, and supervise building maintenance staff, are those workers' wages exempt from New York sales tax as employee wages, or taxable as the managing agent's service charge?
It depends on who really controls the workers. Where the building owner -- not the managing agent -- sets staffing levels, work hours, shifts, and pay rates, funds the payroll (even though the agent p…
Are receipts from selling custom industrial-control software, and from ongoing modification/updating services on that software, subject to New York sales and use tax?
No -- software designed and developed to a specific purchaser's own specifications ('custom' software) stays exempt from sales and use tax after the September 1, 1991 law change, and so do charges to …
Is a research firm's government-funded pilot plant, built to test a new pollution-control process at a power station, exempt from sales and use tax as research equipment, government property, production machinery, or a capital improvement?
Partly. Tangible personal property bought for use directly and predominantly in the experimental/laboratory research is exempt. Property that becomes part of a permanent capital improvement (the shelt…
Is electricity used to manufacture signs exempt from Texas sales tax when the company also installs most of the signs it makes?
**It depends on whether the finished sign is sold as tangible personal property or as an improvement to realty.** Electricity used directly in manufacturing a sign qualifies for the sales tax exemptio…
Did modifying a travel trailer qualify it for Texas's historical disability-related motor vehicle tax exemption?
No. The historical exemption covered vehicles modified for operation by or transportation of a person with an orthopedic disability. Because a travel trailer was not designed to transport people, modi…
Is the charge for tattooing a person, including applying a temporary tattoo, subject to Texas sales tax?
**No — the charge for tattooing people, including applying a temporary tattoo, is not taxable**, because it is a service rather than a sale of tangible personal property. The person who applies the ta…
Is a cartoonist or caricature artist's charge for drawings at a catered party taxable under Texas sales tax law?
**Yes — a charge for a cartoonist (caricature artist) is taxable as the sale of graphic art, not as a nontaxable entertainment charge**, and the cartoonist must collect and remit sales tax on charges …
When a leased vehicle is sold (for example, the lessee buys it at the end of the lease), who collects the Kansas sales or use tax?
It depends on whether the seller is a licensed Kansas vehicle dealer. A lessor that holds a valid Kansas Vehicle Dealers License (under K.S.A. 8-2403) collects the Kansas sales tax on the purchase pri…
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