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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Does a motor vehicle dealer's fleet of leased vehicles that move between offices and states qualify for a property tax exemption, or does registering them under the International Registration Plan avoid Utah's uniform fee?
A county assessor's own analysis in this record concluded that a motor vehicle dealer's leased fleet vehicles ('B inventory,' as distinct from true dealer sales inventory) are NOT exempt from Utah's u…
Are a tire shop's recycling fees -- both what it charges customers and what it pays haulers -- subject to sales tax?
It depends on the transaction. When a customer buys or has tires installed and the shop keeps the old tires, the $1.50 recycling fee is a charge for servicing tangible personal property and is taxable…
Is a corporation dissolved by proclamation in 1981, holding only real property as nominee for others, subject to Article 9-A franchise tax?
Two periods, two answers. For the taxable years while the corporation was incorporated (here, the years ended February 28, 1978 through September 30, 1981), it owes the Article 9-A franchise tax under…
Can a company treat the sale of one piece of equipment to a third party as a trade-in credit against its purchase of different equipment from the same seller, when the paperwork for the two deals was written up separately?
No. This internal Comptroller memo concludes that crediting the proceeds from the sale of one piece of equipment (an IBM 3890-AD4 machine sold to a third-party buyer) against the price of a different …
Did Texas include a vehicle's unit property-tax value in the motor vehicle sales-tax base under Senate Bill 878?
No. Comptroller John Sharp said he would interpret Senate Bill 878 according to the stated legislative intent and would not require a vehicle's unit property-tax value to be included in its sales pric…
Does Texas sales tax apply when a cellular phone dealer sells discounted phones bundled with a service contract, or gives away free-service coupons obtained at no cost from carriers?
It depends on price and cost. **If a dealer sells a cellular phone for 25% or more of its acquisition cost, the transfer is a taxable sale; if sold for less than 25% of acquisition cost bundled with a…
Is a veterinarian's purchase of canine heart worm diagnostic test kits subject to Texas sales tax?
Yes. The distributor was correct to start charging tax on the diagnostic test kits (Assure/CH canine heart worm test kits). The letter states this is not a change in policy — the kits were not previou…
Is restoration of a building's deteriorated balconies and catwalks a tax-exempt capital improvement or a taxable repair?
It is a taxable repair, not a capital improvement. A co-op hired a contractor to inspect, test, clean, patch, and coat the deteriorated concrete of its balconies and catwalks -- removing cracked and s…
Can an oilfield well-servicing company issue a resale certificate for the liquid micro-organisms (bacteria) it pumps downhole to remove paraffin and scale build-up, or uses in oil-spill clean-up?
No, in both cases the company must pay sales tax on the micro-organisms itself. **Micro-organisms pumped into a well bore to remove paraffin, scale build-up, and corrosion do not become a part of the …
Is labor to fabricate and remodel scaffolding used to repair, remodel, and maintain licensed and certificated aircraft taxable in Texas?
No, it's exempt. **Charges to fabricate and remodel scaffolding used to repair, remodel, and maintain aircraft that are licensed and certificated carriers are exempt under Tax Code Section 151.328(d).…
Can a service provider (like a caterer or wedding consultant) rent tangible personal property tax-free using a resale certificate, and what happens if a customer wrongly issues one to avoid tax?
No — a person who provides a service, rather than making a rental, must pay sales tax on the tangible personal property they rent to perform that service; they cannot buy or rent it tax-free with a re…
How did South Carolina Revenue Ruling 93-9 apply sales and use tax to meals furnished or sold by colleges, hospitals, and their food-service companies?
Institutional meals were taxable at different transaction points: food inputs used for board-plan or patient meals were retail purchases, while separate cash food sales were taxable retail sales by th…
Is Texas sales tax due on fees for recovering or removing freon/refrigerant gas from air conditioners, refrigerators, and vehicles?
No, in the situations described. **The Comptroller ruled that a $5 fee for removing refrigerant gas from a dropped-off appliance is not taxable, and none of the described refrigerant recovery labor ch…
Does a company's new regional distribution center — one that wholesales motor vehicle parts and supplies to the company's own retail stores — qualify as 'private use industrial property' so it can get an Alabama tax abatement under the 1992 Tax Incentive Reform Act?
Yes. Company A, a Virginia corporation, planned an ~$8,000,000 regional distribution center in Gadsden — owned by a public authority and leased to the company — to wholesale motor vehicle supplies, ac…
Is a charge for the use of a transportable miniature golf course taxable as an amusement service, or as a rental of equipment?
It's taxable, but as a rental, not as an amusement service. **The total charge for a transportable miniature golf course is subject to sales tax under Rule 3.294(b) as the lease or rental of tangible …
In a bond-financed sale-leaseback structure with a city industrial development agency (IDA), are a corporate tenant's affiliate's purchases, leases, and maintenance contracts -- made as the IDA's disclosed agent -- exempt from state and local sales and use tax?
Yes, generally -- purchases, leases, and maintenance/repair/service contracts entered as the IDA's disclosed agent are exempt from sales and use tax as long as the IDA is the true owner/lessor/lessee …
What motor vehicle tax changes did Texas announce in 1993 for seller-financed sales, EMS vehicles, and mobile offices?
The notice required self-financing dealers to obtain permits and collect tax as payments arrived beginning October 1, 1993; expanded the EMS-vehicle exemption beginning September 1; and moved office, …
Under South Carolina PLR 93-5, were sales of Lupron exempt when dispensed by a pharmacist or sold by the manufacturer to a physician for administration?
A licensed pharmacist's sale of Lupron under a medical professional's prescription was exempt. LOP's sale to a physician who would administer the drug was taxable because the doctor was the consumer a…
Can a business that charges sales tax on gift-wrapping issue a resale certificate to buy its gift-wrap paper, ribbons, and boxes tax-free?
No. **Sales tax is due on the purchase price of gift-wrapping supplies (paper, ribbons, boxes) bought by a business that provides gift-wrapping services, even though that business separately collects …
Is a company's on-line and archival data storage service a taxable computer and data processing service in Connecticut?
Partly. A division of a large out-of-state corporation stored Connecticut customers' data at out-of-state facilities, both on-line (customers access it from their own computers) and archival (data cop…
We're a securities broker-dealer buying two office buildings for our headquarters. To avoid putting $500 million of real estate and debt on our own balance sheet -- which would reduce our regulatory net capital under broker-dealer rules -- the seller will transfer title directly to a financing trust instead of to us. The trust will fund the purchase with senior notes, junior notes, and investor certificates, then lease the buildings back to us with a purchase option we can exercise anytime. We'll pay all taxes, insurance, and maintenance, keep all appreciation, bear all depreciation risk, and be treated as the owner for income tax purposes (though not on our own books). None of the financing mortgages will be recorded unless our parent company's credit rating drops. Does this financing structure trigger New York's Real Estate Transfer Tax, Real Property Transfer Gains Tax, or Mortgage Recording Tax at any step?
Exempt at every step described -- Smith Barney, Harris Upham & Co. structured an off-balance-sheet financing purchase of two Manhattan office buildings (388 and 390 Greenwich Street) so that beneficia…
Is removing or replacing an underground storage tank (UST) taxable in Texas, and how are the related excavation, hauling, disposal, and installation charges taxed?
It depends on which service is being performed. Excavating and removing a UST (to dispose of it or replace it) is nontaxable demolition of an improvement to real property, but hauling away and disposi…
When are Texas motor vehicle rentals to public agencies or government employees exempt, and what state-employee rule was later clarified?
Direct rentals to a public agency were exempt. STAR later replaced the letter's blanket denial for state employees: an employee on official business may use an exemption certificate for a rental under…
How does the change to Sec. 151.311, Tex. Tax Code, affect materials and supplies purchased under construction contracts entered into before and after October 1, 1993?
It depends on when the contract was signed and when the item was purchased. **The Comptroller approved the taxpayer's revised contract language referencing Sec. 151.311, Tex. Tax Code, for contracts e…
Does a bill of lading alone count as proof that goods were exported for a Texas sales tax export exemption?
No, not by itself. **A bill of lading that lacks sufficient detail does not prove the goods were exported, and the Comptroller will not accept a sworn statement made after the fact as a substitute.** …
Is cleaning acoustical tile ceilings a taxable service in Texas, and does the cleaning company owe tax on the cleaner it buys?
Yes to both. **Cleaning acoustical tile ceilings is a taxable building cleaning service, and the company is correct to charge its customers sales tax on the service.** The letter also confirms the com…
Is electricity used to dig a flood-drainage tunnel and haul the dirt and rock to the surface exempt from Texas sales/use tax under the gas-and-electricity extraction exemption?
No. The Comptroller's Taxability Response Committee ruled that a contractor building a flood-drainage tunnel is not entitled to the Sec. 151.317(c)(2)(A)(ii) gas-and-electricity exemption on the elect…
Alvin Nathel, a shareholder of an S corporation that never made New York's separate S-corporation election, failed for years to claim the offsetting subtraction that would have kept his corporation's income from being taxed twice - once at the corporate level and again on his personal return. By the time he discovered the error, the ordinary refund deadline had passed for the earlier years. Can the Department use its discretionary special refund authority under Tax Law § 697(d) to refund those time-barred years anyway?
No. The Department ruled that Nathel's error was a mistake of law, not a mistake of fact, because he understood all the relevant facts (that Wishnatzki was a federal S corporation, that its income pas…
Can Robert J. and Barbara Hanrahan get a 1988 New York income tax refund for tax they mistakenly paid on pension income that should have been excluded, when they only asked for it in 1993, after the ordinary refund deadline had passed?
No. New York denied the refund for two independent reasons: (1) the ordinary three-year refund deadline under Tax Law § 687(a) for the 1988 tax year had already expired by the time the Hanrahans reque…
How does the October 1, 1993 change to Tax Code Section 151.311 affect sales tax on contracts for construction of public roads and highways?
Effective October 1, 1993, contractors on public road and highway construction contracts go back to being taxed the way they were before October 1, 1991, regardless of whether the contract separately …
Are transportation or mileage charges billed in connection with repairing a motor vehicle, its components, or accessories subject to Texas sales tax?
It depends on what's being repaired or sold. **Transportation charges tied to repairing a motor vehicle (including its components or accessories) are not taxable, and towing is not taxable, regardless…
Can a monthly 'recurring credit' on a taxable service contract be subtracted from the amount subject to sales tax?
No. A travel agency's contract for American Airlines' SABRE system gave it a fixed monthly 'recurring credit' of $610 tied to hitting a booking target. The Department found this was not a true discoun…
Is the membership fee for an auto club roadside assistance plan (towing, out of gas, flat tire, lockout, travel expense reimbursement) subject to Texas sales tax?
No. **The Comptroller responded that the membership fees for this auto club's roadside assistance plan are not taxable.** The letter told the auto club that if it had been collecting tax from members …
Does a for-profit art college's photography, film, and computer equipment qualify for the Article 9-A investment tax credit?
No. A for-profit college of visual arts cannot claim the Article 9-A investment tax credit on its photography, film, video, and computer-graphics equipment. The credit under Tax Law section 210.12 is …
Is a crane or hydraulic excavator mounted on a truck chassis exempt from Connecticut sales tax as a 'commercial truck'?
Only if it mainly hauls freight. A company sold and leased cranes and hydraulic excavators mounted on truck chassis, each rated over 26,000 pounds and highway-capable. DRS held such a vehicle is exemp…
If a direct pay permit holder buys items and has them shipped straight through a central receiving point to plants in other cities without storing them, which city's local use tax is due?
City use tax is due to the city where the items are actually used or consumed after transportation, not the city where they passed through a central receiving point. **If items are purchased and recei…
Are purchases made with WIC benefits or food stamps, including for candy or sodas, subject to Texas sales tax — and how does a manufacturer's coupon used alongside them affect the tax?
No tax is due on the WIC- or food-stamp-paid portion of a purchase. Purchases made through the WIC program or with food stamps are not taxable — this includes candy, sodas, or other otherwise-taxable …
Are charges by caricature artists for drawings made at parties or events subject to Texas sales tax?
Yes. **Caricature artists create and sell tangible personal property, the same as other artists or photographers, so their charges are taxable** — even if the charge is figured on an hourly rate or so…
Is the removal and disposal of drilling mud by a vacuum truck company taxable in Texas?
It depends on why the drilling mud was generated. If the drilling mud is a waste product resulting from the exploration, development, or production of oil, gas, or geothermal resources, the vacuum tru…
Does a temporary staffing agency that places lawyers, paralegals, legal secretaries, file clerks, and data processors with law firms need a sales tax permit?
It depends on what the temporary workers do. The letter explains that charges for lawyers and paralegals are not taxable, and legal secretaries and file clerks performing general clerical or secretari…
Which charges by a moving company for relocating household goods (transportation, packing, boxes, storage, disassembly/reassembly) are taxable in Texas, and which are not?
It depends on the specific charge. Interstate transportation charges are exempt, and intrastate transportation charges are nontaxable. Carrier-supplied boxes/containers are taxable tangible personal p…
Are business management services a Connecticut company sells to out-of-state clients taxable when the clients do no business in Connecticut?
No. A Connecticut-headquartered parent corporation's only business was providing 'business analysis, management, management consulting and public relations services' (Conn. Gen. Stat. § 12-407(2)(i)(J…
Is a marketing/information service that gathers leads from public sources and sells them to a specific client exempt as proprietary information?
No, it is taxable. **Marketing leads or research prepared for and sold to a specific client are a taxable information service, even if the provider agrees to sell only to that one client.** The letter…
When a kit or package combines taxable and exempt medical items, how is sales tax figured on the kit as a whole?
It depends on which items cost more. **When a kit or package of medical items is sold, the composite cost of the kit's items determines the taxability of the whole kit: if the cost of the taxable item…
Is a dockside grain processing terminal project exempt from Texas sales and use tax?
Partly. The Comptroller ruled that materials used to build the dock extension and warehouse are exempt under Sec. 151.311, Tex. Tax Code (once the property becomes the ports' property, after October 1…
Does a Texas restaurant owe sales tax on a one-dollar fee charged to customers who bring in their own food?
No. **A restaurant does not owe Texas sales tax on a flat fee charged to customers who bring their own food, because no sale of tangible personal property occurs with regard to that fee.** The letter …
Must a manufacturer collect sales tax on orthopedic braces and splints that normally qualify as exempt medical equipment?
Sometimes yes. Orthopedic devices such as braces, splints, cervical collars, and supports qualify as exempt medical equipment under Tax Law section 1115(a)(3). But that exemption does not apply to med…
We're a nonprofit local development corporation that makes business loans secured by mortgages, and we record those mortgages ourselves. Is that exempt from New York's mortgage recording tax, whether we're the one giving the mortgage or the one receiving it?
Exempt, both directions -- mortgages given TO the corporation and mortgages given BY it. This is a foundational, general-purpose ruling establishing that Not-For-Profit Local Development Corporations …
Is a charge to inspect used oil-well casing pipe (checking threads and drift) taxable if it isn't tied to a sale of the pipe?
No, it's not taxable. **A charge for inspecting tangible personal property — like used casing pipe for a new oil well — is not taxable as long as the inspection is not related to the sale of that prop…
Is the labor to cut and bevel the production casing on a newly completed oil well taxable under Texas sales and use tax?
No. Cutting off the extra casing and later beveling it while completing a new oil well is treated as new construction, so the welder's labor is not taxable. Because the welder billed a single lump-sum…
Did Kansas bingo licensees collect sales tax or bingo enforcement tax on instant bingo tickets?
Kansas bingo licensees selling instant bingo tickets, or pull tabs, had to collect Kansas state and local retailers' sales tax on those sales. The instant tickets were not subject to the separate 3% b…
Does a 'Material Reimbursement Charge' (also called a 'Texas Price Adjustment' charge) that a well-services provider adds to its invoices to recover sales tax it paid on materials used in a nontaxable service violate Rule 3.324(b)(3)(4)?
No. The Comptroller confirmed that the taxpayer's 'Material Reimbursement Charge' — a separate line-item charge used to recover additional product costs incurred because the taxpayer paid sales tax on…
When a sign company designs, manufactures, and installs signs, when is the job treated as an improvement to realty versus a sale of tangible personal property, and how does that affect sales tax?
It depends on the type of sign and how it is attached. Most signs (since May 1988) are treated as real property, so if the sign company acts as a lump-sum contractor it pays tax on materials and does …
We're modifying a mortgage so that accrued-but-unpaid interest gets deferred and paid as a fixed lump sum at maturity, without bearing its own interest and without being added to the principal balance. Does that modification trigger additional mortgage recording tax?
No additional tax -- but the details of HOW interest is deferred matter enormously, and this ruling draws a precise line. Ticor Title Guarantee Company asked whether modifying a mortgage to defer accr…
If a contractor performs lead-paint abatement (a taxable repair to real property) and also does air monitoring for the same job, is the air monitoring taxable too, and what about the disposal of contaminated materials?
The repair/remodeling work (paint removal, repainting, and related repairs) is a taxable service, but air monitoring is not taxable when it is a stand-alone service involving direct scientific observa…
Did South Carolina PLR 93-4 exempt a commercial fisherman's retail oyster sales as farm products?
Yes, but only for oysters the fisherman cultivated and harvested in his own shellfish-culture permit area and sold in their original state of production or preparation. Oysters harvested from state-ma…
If a motor vehicle repair shop separately states a charge for shop supplies on a customer's bill, is the shop the 'seller' of those supplies and required to collect sales tax on them?
Yes. This internal Comptroller memo confirms that, effective October 1, 1991, a motor vehicle repair person who separately states a charge for shop supplies (tangible personal property) is a seller of…
If I provide nontaxable mailing/packaging services (boxing, padding, and shipping items for customers) and pay tax on my own packaging supplies, do I have to charge my customers sales tax on the box, packing materials, labor, and shipping charges?
No. Because mailing services are a nontaxable service, the provider (not the customer) owes sales tax on packaging supplies purchased from suppliers under Rule 3.314(c). In both examples given -- one …
A partnership owes $30 million on a nonrecourse mortgage loan, secured by real property worth $10 million plus a $50,000 cash account the bank also has a security interest in. The partners personally guaranteed part of the debt. If the partnership transfers everything to the bank in lieu of foreclosure -- or the bank forecloses and is the winning bidder -- in exchange for cancelling the debt and the guarantees, what's the 'consideration' for New York's Real Property Transfer Gains Tax, and does it matter whether the loan was recourse or nonrecourse?
For a transfer occurring before April 15, 1993, the consideration was the amount of debt cancelled, apportioned to reflect only the real property's share of value -- and the answer was the same whethe…
Is beaver trapping and dam removal on timberland taxable as a structural pest control service?
No. The Comptroller ruled that beaver trapping and removal services performed to stop beaver dams from flooding East Texas timberland are not taxable as structural pest control services. Structural pe…
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