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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In a New York City Industrial Development Agency (IDA) sale-leaseback financing arrangement, are a company's affiliated 'Group Agents' purchases, lease payments, and buyout payments to the IDA exempt from sales and use tax, no matter which affiliate actually pays the vendor or how bond proceeds are routed?
Yes, generally -- purchases and leases made by any affiliated Group Agent acting as the IDA's disclosed agent, and inter-affiliate cost allocations and reimbursements, are exempt from sales and use ta…
Metro-North Commuter Railroad asked whether four categories of employees who perform duties in both New York and Connecticut are 'regularly assigned' to more than one state under section 7 of the Amtrak Reauthorization and Improvement Act of 1990, so that their nonresident compensation is exempt from New York income tax and withholding.
Two of the four categories are exempt and two are not. Employees whose job descriptions systematically require work in both New York and Connecticut as part of a set territory or line segment (Categor…
How did South Carolina Revenue Ruling 93-8 tax basic horse and stock trailers compared with trailers containing a camper package?
Basic trailers, tack- or dressing-room trailers, and goosenecks without camper packages were taxed at the full 5% historical rate. A trailer with a camper package paid the lesser of 5% or $300.
Does a subcontractor owe Texas sales tax on labor charges for cutting, sawing, coring, or drilling concrete?
It depends on the job. Cutting, sawing, coring, or drilling concrete tangible personal property not yet installed, or existing nonresidential real property, is a taxable service, so the subcontractor …
Is renting out a topsoil-screening machine subject to sales tax, or exempt as production equipment?
It can be exempt, but only in specific circumstances. Renting a 'power screen' topsoil-screening machine is normally a taxable retail sale under Tax Law sections 1101(b)(4), 1101(b)(5), and 1105(a). H…
Does a Texas city owe sales tax on chairs, tents, and other equipment it provides for cemetery funeral services or convention center room rentals?
No. The Comptroller ruled that a city does not have to collect sales tax on equipment (chairs, tents, artificial grass) it provides for graveside funeral services at a city cemetery, because that's tr…
Does a company have to collect Texas sales tax on charges for setting up and supervising a contest?
No. The Comptroller ruled that charges for setting up and supervising a contest are not taxable services, but the company must still collect tax on any materials and prizes it sells to its client.
Does a bareboat rental (no crew) get taxed differently than a boat charter that comes with a captain?
Yes. Renting a 'bareboat' (just the boat, no crew) is a taxable rental subject to limited sales tax, while chartering a boat WITH a captain is normally a nontaxable transportation service (e.g., a fis…
Can a company that buys and sells a chemical used to clean up oil spills issue or accept a resale/exemption certificate on that chemical, and is the oil-spill clean-up service itself taxable?
A retailer that buys the chemical only to resell it as-is may issue a resale certificate to its supplier. But a company that uses the chemical to perform a clean-up service must pay tax on it, unless …
Does a bank have to include 'credit amounts' used to reduce its service charges in its gross receipts for Texas franchise tax purposes?
No. The Comptroller ruled that 'credit amounts' used to calculate bank service charges are not receipts to the bank for Texas franchise tax purposes, because they merely reduce a service-charge expens…
When a heating contractor rents mobile boilers to supply temporary heat to an exempt organization's building while installing a permanent system, does the contractor owe sales or use tax on the boiler rental?
Yes. Although the contractor's service of providing temporary heat to the exempt organization is not taxable, the contractor owes sales or use tax on the mobile boilers it rents, because rented equipm…
When a social club collects membership dues and activity fees and forwards part of them to another club it shares facilities with, which club must report and remit the sales tax?
The club that bills its members must collect and remit the sales tax itself. A social club owes tax on its dues and on activity fees it charges members, cannot shift that tax onto the club it shares f…
Is a company's information service — a listing of area events sent to newspapers, radio stations, and TV stations — subject to New York sales tax?
No, when sold to news media. Information services are normally taxable in New York, but the law expressly excludes information services used by newspapers, radio, and TV broadcasters in collecting and…
Is labor to build and attach a metering station to an existing pipeline taxable as remodeling, or exempt as new construction?
Taxable as remodeling. The Comptroller ruled that attaching a metering station to an already-existing pipeline is a modification/upgrade of that pipeline, not new construction, so the labor to build a…
A grave-opening/closing service provider for funeral directors asked the Comptroller several questions: is backhoe/truck/driver grave-opening and closing labor taxable, is it a taxable equipment 'rental' if billed separately, how is selling and installing a concrete burial vault taxed, and is setting up a tent and chairs at graveside a taxable rental?
No to all of them, with a billing caveat. Grave opening/closing labor is a nontaxable service, but if you separately state a charge for the backhoe, truck, and trailer (even with a driver), the Comptr…
Is a Texas company's 1-800 toll-free telephone service subject to Texas state sales tax on calls that originate outside Texas but are billed to a Texas address?
No. Under this 1993 Texas Comptroller letter, only 1-800 calls that originate within Texas and are billed to a Texas billing address are subject to Texas state sales tax. Calls that originate outside …
Does a beauty salon or aesthetician owe Texas sales tax on shampoo, tonics, and conditioners it buys and uses on customers?
Yes, in part. A beauty salon or aesthetician owes Texas use tax on supplies (like shampoo, tonics, and conditioners) it uses to perform nontaxable services such as facials, and must also collect and r…
Does a property management company owe sales tax on an 'overtime air conditioning' fee it charges tenants?
No. The Comptroller ruled the overtime air conditioning charge is not taxable, because the property management company already paid sales tax to the electric or gas utility and is using the utility se…
Does Texas sales tax apply to food purchased for a guard dog?
No. Texas sales tax does not apply to food for guard dogs, as long as the dog has been professionally trained for guard duty by someone in the business of training guard dogs and is not kept as a pet.
Is electricity used to show a vacant model home or house exempt from Texas sales tax as residential utility use?
No. Electricity a real estate agency buys for a vacant home used to show or demonstrate the property to prospective buyers is taxable as commercial use, not exempt residential use — the same is true f…
Was the United States Postal Service exempt from Texas motor vehicle tax, and did its vehicles need exempt license plates?
Yes, the United States Postal Service was exempt as an instrumentality of the federal government. Vehicles owned by the United States or its instrumentalities were not required to display exempt licen…
Are Kool-Aid Kool-Pumps, popsicles, snow cones, and individually sold ice cream novelties subject to Texas sales tax?
Yes. The Comptroller ruled that Kool-Aid Kool-Pumps are not a food product and are taxable whether sold individually or in a box of six, and that popsicles, snow cones, and individually sold ice cream…
Could a South Carolina fee-in-lieu project under the historical Section 4-29-67 consist only of manufacturing machinery and equipment?
Yes. The project could consist solely of machinery and equipment; land and buildings were not required, provided all other statutory fee-in-lieu requirements were met.
Under South Carolina Revenue Ruling 93-6, when were charges for extended warranties subject to sales or use tax?
A warranty sold with tangible personal property was taxable in full, even if optional and separately stated. A separate warranty bought after the property sale was not subject to sales or use tax.
Do admission charges for amusement events at a venue listed in the National Register of Historic Places owe Texas sales tax, and can collected tax on those tickets be refunded?
No sales tax is due on admission to amusement services held exclusively at a place listed in the National Register of Historic Places, but any tax already collected from patrons on ambiguously-worded …
Is an Ottawa yard tractor (a yard-spotting tractor used to move trailers around a yard) a taxable motor vehicle or is it subject to Texas limited sales and use tax?
An Ottawa yard tractor is subject to Texas limited sales and use tax, not motor vehicle sales tax, because it is not a motor vehicle and not rolling stock. The Comptroller confirmed that yard tractors…
Are a telephone company's receipts from private line circuits taxable as intrastate telephone service, or excluded from sales tax as interstate telephone service?
It depends on geography. Private line circuits that begin and end within New York are taxable intrastate telephone service; circuits that cross the state line are exempt interstate service. Where a Ne…
Are Japanese specialty sweets made from beans, flour, rice powder, and sweeteners exempt 'food' in New York, or taxable candy and confectionery?
Exempt. The Department ruled these traditional Japanese sweets — cakes, pastries, powders, and gelatins made from azuki beans, flour, rice powder, and sweeteners — are exempt food and food products un…
Which fees in a computerized securities-trading information network — directory listings, oral transmissions, delivery-instruction processing, broker referral premiums, and corporate-release fees — are subject to New York sales tax?
It splits by function. Fees to receive compiled trading information (including bundled directory listings and oral or Alert transmissions) are taxable information services; pure advertising listings a…
Are multi-part 'bill of lading' shipping forms, sold to a manufacturer's client, exempt from Texas sales/use tax as packaging supplies?
Corrected answer (April 12, 1993): a manufacturer-client may issue an exemption certificate for the bill-of-lading forms, but must then self-assess use tax on the cost of any part(s) of the form that …
How did Texas handle vehicle tax when a lemon-law vehicle was refunded, upgraded, downgraded, replaced, or leased?
An actual trade-in toward an upgraded replacement was taxed on the price difference; otherwise the new vehicle was taxed in full and a refund claim filed for the returned vehicle. A trade-down created…
Does a trucking company owe Texas sales tax on satellite-tracking data fees, fuel-card billing fees, or a work-injury medical services retainer, and how should it apportion its Interstate Motor Carrier (IMC) tax?
It depends on the charge. A California company's satellite-tracking/messaging fees are not subject to Texas sales tax if the transmissions don't originate in Texas (they are taxable if the transmittin…
Were asphalt pump-kettle units subject to Texas motor vehicle tax or limited sales tax?
Limited sales tax applied. Although local officials viewed the units as trailers, the Tax Administration Division found they were not designed and built to transport people or property on highways, so…
At the end of a Nebraska incentive project, can a company sign a new agreement for the same activities and keep using its old credits?
Yes. Under Revenue Ruling 29-93-3, when a project's entitlement period ends, a taxpayer may enter a subsequent Employment and Investment Growth Act agreement covering the same activities as the previo…
Do I have to charge Texas sales tax on drafting or CAD design services, like drawings and blueprints made from a client's specs?
Yes. Texas sales tax is due on drafting delineations and blueprints, including CAD drafting, when the draftsman works from specifications the customer supplies, and on any additional copies of the fin…
If I rent my Texas condo out short-term part of the year and use it as my residence the rest of the year, is repair and remodeling work on it taxable?
Yes. The Comptroller told this condo owner that because the unit was rented on a daily or weekly basis part of the year (taxable under the Hotel Occupancy Tax) and used residentially the rest of the y…
Is a scale used to weigh cattle at a farm or ranch exempt from Texas sales tax as agricultural equipment?
It depends on installation: a free-standing scale used exclusively on a farm or ranch to weigh livestock can qualify for the Texas agricultural exemption as farm equipment, but a scale that becomes pa…
Does a repairman owe Texas sales/use tax on warranty forms and cards bought from an out-of-state retailer, or can the repairman use an exemption certificate instead?
Yes, tax is owed. A repairman must pay sales or use tax on warranty forms and cards because they are consumable supplies used to perform the repair, not parts transferred to the customer, and a repair…
Is a jewelry appraisal taxable in Texas?
It depends on why the appraisal is done. Under Rule 3.355(a)(2), an appraisal is a taxable 'insurance inspection' if it's done to get an insurance floater for replacement value or to support payment o…
Did South Carolina PLR 93-2 impose the historical accommodations tax on reserved recreational-vehicle parking at a raceway?
No. The separately sold RV spaces, which had electrical hookups but no water or sewer hookups, were not taxable accommodations because the raceway was not a campground.
Did South Carolina PLR 93-1 exempt printing inputs used to produce a free advertising shopper that was not a newspaper?
Mostly no. Because the shopper was distributed free and was not a newspaper, newsprint, ink, composing supplies, press plates, photo negatives, production electricity, and local telephone service were…
Are an out-of-state software company's analysis, adaptation, training, and license fees taxable in Connecticut?
It splits. An out-of-state company sold a tool for developing custom software -- analyzing each customer's needs, adapting the program, licensing it, and offering maintenance and training. DRS held th…
Is the gas a rental-equipment company uses for heating its repair area and for steam-cleaning returned machinery exempt from Texas sales tax as a processing/manufacturing use?
Partly. Gas used to heat the specific area where repairs on rental equipment are performed can be exempt as processing, but only for the time that area is actually used for repairs, and it must be all…
Does a technician who installs, services, or repairs gas station pumps, tanks, and related equipment have to charge sales tax on the job?
It depends on whether the equipment is going into a brand-new station or an existing one. New construction: tax the materials/equipment only, not the labor. Work on existing stations (installation, re…
Does Texas sales tax apply to the sale of a prescription drug discount card?
No. The Comptroller ruled that selling a 20% prescription discount card is the sale of an intangible and is not taxable in Texas. The seller instead owes Texas sales or use tax on its own cost of the …
A nonresident alien partner in a New York law firm works entirely from the firm's London office and receives fixed annual 'guaranteed payments' under IRC section 707(c), on top of his distributive share of partnership income. Are those guaranteed payments taxable as New York source income, even though he performs no services in the United States?
It depends on federal tax treatment, and the Department did not decide that federal question. The Department held that if a guaranteed payment to a nonresident alien partner is not includible in the p…
Can a bakery that sells some food for immediate consumption and some for later consumption still give a gas/utility exemption certificate based on a utility study?
Yes, if the combination of the two uses still shows an overall exempt use. Multiply the percentage of gas used for production by the percentage of goods NOT sold for immediate consumption; if that res…
Does Texas sales tax apply to charges for inspecting and testing a commercial fire alarm system?
No, not if the inspection/testing charge is separately stated. The Comptroller ruled that a commercial fire alarm system is an improvement to realty, so separately stated charges for inspecting and te…
Is an advertising agency's charge for a video tape produced for advertising taxable, or is it an exempt advertising service?
It depends on the structure. Pure advertising concept work is an exempt service, but selling the video tape itself is a taxable sale of tangible personal property. If the client cannot buy the video s…
Is a company's lease of mobile MRI tractor-trailer units exempt from New York sales tax under the heavy tractor-trailer exemption, or taxable because of the MRI machine inside?
Taxable. The tractor and trailer alone would qualify for the heavy-vehicle exemption, but the MRI machine is taxable medical equipment used to perform medical services for compensation — and because t…
Are supervised physical-therapy and fitness services taxable as New York City gymnasium/health-salon services, or exempt because a licensed physiotherapist is involved?
Taxable in NYC unless the service is actually performed by a licensed professional. The facility's supervised training is a taxable New York City gymnasium/health-salon service; only services actually…
An out-of-state retailer ships goods into Texas that the purchaser will later export and use only outside Texas. Is Texas tax due on that shipment?
Use tax (not sales tax) is normally due when an out-of-state retailer ships an item into Texas, but the purchaser can give the retailer an exemption certificate claiming a temporary-storage exclusion …
Can a freight forwarder's bill of lading and receipt serve as proof of export for a Texas sales tax exemption, even if the buyer's name isn't on the bill of lading?
Yes. A copy of the bill of lading together with the freight forwarder's receipt showing the purchaser delivered the items is sufficient proof of export under Rule 3.323(c)(1)(D), and the consignee's n…
ABC CO. imports equipment from out-of-state vendors to its Austin facility, tests or modifies it (sometimes loading software), and then re-exports it within 30 days to a foreign subsidiary — does that testing or modification count as a taxable 'use' in Texas that defeats the export exemption?
Yes. The Comptroller ruled that testing and/or modifying the equipment in Texas before export — even briefly, even within 30 days, and even where title later passes to a resale subsidiary before expor…
COMPANY B bought testing equipment from COMPANY A in Oregon, shipped it to Austin, and tested it for 4-5 days before exporting it to Singapore. Was that Texas testing a taxable 'use' even though the equipment was headed out of state?
Yes. The Comptroller ruled that COMPANY B's purchase from COMPANY A was taxable, because testing the equipment in Austin for 4-5 days to confirm it worked before exporting it to Singapore counted as a…
If a stereo or radio installed in a vehicle exported to Mexico gets a sales-tax refund, is the tax on the installation charge refundable too?
Yes. Because installation charges are only taxable when the underlying item is taxable, once you have proof the stereo or radio was exported and its sales tax refunded, you may refund the sales tax co…
Does an out-of-state manufacturer owe Texas use tax on free sample tobacco products delivered to Texas distributors?
It depends on whether the manufacturer is 'engaged in business' in Texas under Rule 3.286. If so, use tax is due on the manufacturer's cost of the taxable components (not labor) that go into the free …
Are a financial data company's broker referral premiums and its charges to participate in a computerized research directory subject to New York sales tax?
Referral premiums brokers pay for customer leads are not taxable, because customer referral is not an enumerated service. Listing research for providers is exempt advertising, but the fees receivers p…
Are a company's charges for supplying temporary environmental field technicians to prime contractors subject to New York sales tax?
It depends on the work. A temp-staffing company must collect tax on personnel who perform taxable services, but the charges are exempt when the prime contractor buys the services for resale or for a c…
Are a company's data-processing services (statements, claims, billing reports) and its microfiche-conversion service subject to New York sales tax?
It splits. Processing that produces personalized statements, claims, and account reports is an exempt personal-or-individual information service; but merely converting data to written form or printing…
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