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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Is Texas sales tax refundable when an auction buyer takes possession of the item in Texas before the seller ships it out of state?
No. Once the buyer takes possession of a taxable item in Texas, sales tax is due and is not refundable, even if the seller later ships the item out of state. The interstate-shipment exemption under Ta…
Can a company just start paying the county the property taxes on property that's exempt under Nebraska's LB 775 incentive agreement?
No — not voluntarily. Under Revenue Ruling 29-93-1, property tax on personal property that is exempt under the Employment and Investment Growth Act may not be paid to the county until either the taxpa…
Can the sole shareholder of a dissolved corporation claim a sales tax refund for bad debts on accounts receivable that were assigned to the shareholder as part of the dissolution?
No. The Comptroller denied the refund because the shareholder, not the original dissolved corporation, was trying to claim the bad-debt credit, and Texas law does not treat a corporate dissolution fol…
Which charges on a repossession/debt-collection company's invoice are taxable, and can the company or its creditor-clients use resale certificates for repossession-related expenses?
Most of a repossession company's miscellaneous invoice items (storage fees, long-distance calls, informant fees, key-making) are taxable as part of the taxable debt collection service, except separate…
Does transferring a division's assets to a subsidiary in a Section 351/368 reorganization trigger investment tax credit recapture or forfeit the credit carryover?
No recapture, and the carryover survives. Transferring all of a division's assets to a wholly owned subsidiary in a tax-free transaction under IRC sections 351, 368, and 381(a) -- where the property s…
Does an out-of-state company distributing satellite television programming to Utah bars, hotels, and nightclubs have Utah corporate franchise tax nexus, and are its receipts included in Utah's sales apportionment factor?
Utah has jurisdiction to tax the company (it has nexus), but that doesn't mean any revenue actually gets counted toward Utah's tax. Because the company is providing a SERVICE (delivering a satellite T…
One month after getting a ruling on our IDA condo conveyance-leaseback structure for our tenant's financing benefits, we realized the initial condominium units will actually be conveyed to the IDA in phases over time as construction is completed, and we want the ruling to also cover our affiliates, nominees, successors, and assigns. Does this refined, phased structure change the tax-exempt conclusions?
Still exempt -- the phasing doesn't change the answer. This opinion refines TSB-A-93(1)R (issued a month earlier on the same petition) to reflect that the condominium units at One New York Plaza occup…
Does a company owe Texas sales tax when it swaps in identical replacement computer equipment to relocate a customer's data center, then rents back the old equipment during the transition?
Yes. Shipping identical replacement equipment to a customer's new location under a computer 'swap' program is a taxable sale of equipment. If the customer's old equipment is taken as a trade-in, tax i…
If I permanently move out of New York but keep my old New York home and still spend 45 to 90 days a year there, has my domicile changed to my new state?
The Department did not decide. Whether Kenneth Springer changed his domicile from New York to Florida is a question of fact, and an Advisory Opinion can only apply the law to given facts, not resolve …
Can a broker operate an export certification satellite office inside Mexico instead of within the United States?
No. The Comptroller's office denied the request, explaining that an export certification business must be conducted from a location inside the United States because state regulators cannot freely perf…
If a cellular phone retailer charges a customer a 'deactivation' or 'lost commission' fee for canceling service early, is that fee taxable as part of the phone's sales price?
Yes. The Comptroller ruled that the deactivation/lost-commission fee is part of the phone's selling price, so the retailer must collect sales tax on it, just as it does on the initial discounted phone…
Does a machine used to rebuild torque converters qualify for the sales tax production exemption and the Article 9-A investment tax credit?
Yes, both. Rebuilding worn torque converters -- cutting open the old unit, replacing worn parts, and reassembling and testing a finished converter -- is the production of goods by manufacturing or pro…
If a contractor completely demolishes a sidewalk and rebuilds a new one on the same site, is that new construction or repair for Texas sales tax purposes?
New construction. The Comptroller ruled that completely demolishing an existing sidewalk and rebuilding a new one on the same site is treated as new construction labor. Only demolishing and rebuilding…
When a cable TV company hires a third party to collect past-due bills and to pick up converter boxes from delinquent accounts, are those third-party services taxable 'debt collection services'?
Yes to both. This internal Comptroller memo concludes that a third party hired by a cable TV company to collect past-due accounts is providing a taxable 'debt collection service' under Tax Code Sectio…
Can an out-of-state seller who leases equipment in Texas get credit against Texas sales/use tax for sales tax it paid to another state on that same equipment?
No. This is an internal Comptroller memo explaining that an out-of-state seller cannot apply for a refund or credit against Texas tax collected on leased equipment for tax it separately paid to anothe…
If I default on a layaway purchase and the store resells the item, do I get taxed twice when I finally pay it off?
No. Texas sales tax applies only when title or possession of the item actually transfers, so a layaway sale that falls through before pickup was never a taxable sale in the first place. When the buyer…
As an independent distributor selling tablets for a direct sales/multi-level marketing company in Texas, do I owe tax on the products I buy from the company to resell?
Yes. The Comptroller ruled that the tablets sold through this direct sales organization are taxable in Texas, and as an independent distributor you must pay tax on your purchase of the product from th…
How did RR 93-3 apply South Carolina's historical bingo-license domicile and separate-organization requirements?
A reinstated corporation's temporary dissolution did not interrupt its three-year South Carolina domicile, but an organization not yet reinstated could not qualify. Related churches or auxiliaries had…
How did RR 93-2 tax racing gasoline and other racing fuels in South Carolina?
High-octane racing gasoline was taxable under Chapter 27. Other racing fuel was taxable under Chapter 29 when used in a vehicle that could be licensed for highway use, but not when used in a racing ve…
Could Texas use tax on an out-of-state leased vehicle entering Texas be calculated on depreciated value?
No. The use-tax base was the total consideration paid in the out-of-state sale, defined as the vehicle's cost. The Tax Administration Division said a legislative change would be required to use deprec…
Does machinery used to cut, tie, and close meat casings for meat companies qualify for the Article 9-A investment tax credit?
Yes, if the use tests are met. A company that takes reel stock of cellulose or fibrous casings, cuts it to length, drills holes, and clips, ties, and closes the casings for meat companies is engaged i…
What public water supply fee applied to Kansas retail water sales beginning January 1, 1993?
Beginning January 1, 1993, Kansas imposed a public water supply fee of $0.002 per 1,000 gallons of water sold at retail. The new fee was added to the existing $0.03-per-1,000-gallon water protection f…
If we sell oil/gas equipment to overseas customers FOB our Texas plant or FOB an export packer, do we owe Texas sales tax, and when do we have to collect it?
Yes, in most cases. Because title to the equipment passes in Texas under "FOB plant" or "FOB export packer" shipping terms, the sale is a taxable Texas sale, and the seller must collect Texas sales ta…
Can a grocery store chain that prints its own newspaper inserts in its own print shop get a refund of the sales tax it paid on the newsprint and ink?
No. The Comptroller ruled that a grocery store chain printing its own newspaper inserts in its own print shop is not entitled to a refund of sales tax paid on the newsprint and ink. The Sec. 151.319(c…
Can a paging company give its phone company a resale certificate for the phone exchange numbers and trunk lines it leases and then passes on to its paging customers?
Yes. The Comptroller confirmed that a paging service provider that purchases or leases phone exchange numbers and trunk lines from the local telephone company, and then assigns those numbers to its ow…
If my business buys promotional giveaway items like calendars, matchbooks, or rain gauges to hand out for advertising, do I owe Texas sales tax on them?
Yes. The Texas Comptroller confirmed that a business buying tangible items such as rain gauges, imprinted calendars, or matchbooks to give away as promotional items must pay sales tax on those purchas…
If a cable company rebuilds and upgrades its existing cable plant (like boosting channel capacity from 36 to 54 channels), is that taxed as new construction or as remodeling of real property?
It's remodeling, not new construction. This internal Comptroller memo concludes that rebuilding or upgrading an existing cable TV plant -- including replacing wire, poles, and house drops, or increasi…
Could a buyer title a vehicle tax-free before planned disability-related modifications were completed?
Yes. The buyer could claim the historical exemption before completion by providing a written statement identifying the modification, when it would occur, and where it would be performed. The work had …
If a software dealer earns a commission on a software vendor's sale and then separately installs and maintains that software for the buyer, is the dealer's installation and maintenance work taxed as part of the software sale?
No. This internal Comptroller memo concludes that a dealer's separate agreement to install and maintain software is treated as a transaction unrelated to the software vendor's sale, and is not taxable…
Does licensing software to Texas customers to access an out-of-state database service create Texas franchise tax nexus, even with no salespeople in the state?
Yes. The Comptroller ruled that licensing software to Texas customers so they can access an out-of-state gateway/database service creates substantial nexus with Texas for franchise tax purposes, even …
How did Texas's internal memo treat vehicle transfers and refunds involving a living trust with the same owner name?
No tax was due when an individual transferred a vehicle to a living trust bearing that same person's name because the memo found no sale or ownership change. A trust could also claim the historical di…
Does the Texas Workers' Compensation Insurance Facility owe sales tax on the debt collection services it buys to recover unpaid premiums?
Yes. The Comptroller ruled on January 26, 1993 that the Facility's purchases of debt collection services used to collect delinquent premiums are taxable. The Facility's statutory exemption (Texas Insu…
Is sales tax due on cleaning products and supplies used to raise emus on a farm?
It depends on the product. The Comptroller ruled that dishwashing crystals, laundry detergent, and two multi-purpose cleaners used exclusively on the farm to sterilize drinking containers, wash beddin…
Can a customs broker's exportation certificate list extra items on the back of the form or on an attached addendum sheet, and will a cash register receipt work as export documentation?
A cash register receipt is not enough by itself — under Comptroller Rule 3.323(d)(4), export documentation must include a detailed, specific description of the items purchased so an auditor can tie it…
Is the sale and installation of custom interior window shutters a tax-exempt capital improvement to real property, or a taxable sale?
Taxable. The Department ruled that custom interior window shutters are like blinds and draperies, not a capital improvement, so their sale and installation stays subject to sales tax.
Which pieces of a salt mine's equipment — conveyors, elevators, screening, mining machinery, roof bolts, and power-distribution gear — qualify for New York's production-machinery sales tax exemption?
Conveyors, elevators, screening systems, and salt-mining machinery qualify for the § 1115(a)(12) production exemption. Roof bolts and general power-distribution equipment (substations, transformers, c…
How does New York sales tax apply to an outsourced facilities-management provider's mailroom, printing, copying, fax, filing, delivery, and related services, and to its supplies and equipment?
It varies by service. Printing, copying, imprinting, mailing-list maintenance, fax, and sales of copies or supplies are taxable; pure clerical, mailing, shipping, delivery, filing, and messenger servi…
A Texas investigation firm did a traffic-accident investigation in Mexico for a California client (and separately does investigations for maquilas in Juarez) — is Texas sales tax due on the investigation service?
No Texas tax is due on an investigation service if both the purchaser and the subject of the investigation are outside Texas, the final report is delivered outside Texas, and the firm obtains an exemp…
Can a contractor building a day-care center on an Indian reservation use the tribe's sales-tax exemption to buy construction materials tax-free?
No. The Comptroller ruled that a contractor building an on-reservation day-care center for a Texas Indian tribe cannot claim the tribe's own tax exemption when buying materials. Instead, if the constr…
Can a general contractor allocate a lump-sum contract between new construction and nonresidential remodeling based on square footage, and what records are needed to back that up?
Yes, but only for labor. A Texas general contractor may use square footage to allocate the labor portion of a contract between taxable nonresidential remodeling and (largely nontaxable) new constructi…
Is a forensic engineer's accident-investigation work for insurance companies and attorneys taxable as an 'insurance service' under Texas sales tax law, even though attorney legal fees themselves are not taxable?
Yes. Under Rule 3.355, a professional engineer's work investigating accidents to help determine whether an insurance claim should be paid is a taxable 'insurance service,' regardless of the engineer's…
Do I have to charge Texas sales tax for boarding or training dogs at my kennel?
No. The Texas Comptroller ruled that boarding dogs and training dogs are both nontaxable services, so a kennel does not charge its customers sales tax on those charges. However, the kennel owner must …
Can a seller accept a faxed or photocopied Mexican pedimento de importacion as proof of export before issuing a Texas sales tax refund?
Yes. The Comptroller confirmed that a seller may accept a legible fax or photocopy of a pedimento de importacion, rather than requiring the original, as proof that goods were exported to Mexico. A ped…
As first mortgagee, I'm set to receive a commercial building free and clear under a Chapter 11 reorganization plan, in full satisfaction of my $90 million loan. The plan also wipes out an unrelated second mortgage on the same building with no payment to that lender. Does the discharged second mortgage debt count as part of MY consideration for New York's Real Property Transfer Gains Tax, even though I'm not paying it and get no benefit from its discharge?
No -- the discharged second mortgage debt is NOT part of the first mortgagee's consideration; consideration is only the amount of the recipient's OWN debt that gets extinguished. Prudential Insurance …
Is a petroleum additives package sold with a vehicle warranty taxable in Texas, and is the warranty repair labor taxed?
Yes — the sale of the petroleum additives package is taxable as tangible personal property. Whether the warranty repair labor is later taxed depends on billing: a lump-sum labor-and-parts charge is no…
Which extra automobile-rental charges did RR 93-1 include in taxable gross proceeds?
All listed add-ons were taxable: fuel charges, collision-damage waivers, personal-accident coverage, extended liability protection, personal-effects coverage, and combined accident/effects coverage. S…
Does a Texas business have to charge sales tax for pumping out grease traps/septic tanks or clearing stoppages in sewer lines?
It depends on what exactly is done and for whom. Removing waste from a septic tank or grease trap that is part of a sewer system is a non-taxable service, but cleaning out a sewer line for a non-resid…
Can a contractor rent equipment tax-free to improve real property on a federal construction project like the Superconducting Super Collider?
No. Since October 2, 1984, when the Texas Legislature repealed the prior exemption, a contractor's rental of equipment used to improve real property on a federal government job is taxable. In this cas…
Does a Texas resume-writing and career counseling service have to charge sales tax on preparing a client's resume?
No, generally not. If you interview a client and write an original resume from that consultation, the charge for consultation and preparing the resume is not taxable, even if produced on a computer or…
Can a creditor or client who hires an automobile repossession company issue a resale certificate instead of paying sales tax on the repossession service?
No. The Comptroller ruled that a client (such as a lender) who hires a company to repossess an automobile cannot issue a resale certificate to avoid sales tax on that repossession service. The service…
Is a health maintenance organization licensed under Article 44 of the Public Health Law an insurance corporation taxable under Article 33?
No. A health maintenance organization licensed under Article 44 of the Public Health Law is not an insurance corporation for franchise tax purposes and is not taxable under Article 33. As long as the …
Our building's fee owner needs to convert floors of a Manhattan office tower into condominium units and convey the units occupied by a major tenant to the NYC Industrial Development Agency, so the tenant can get IDA financing benefits, then lease those units back. Do the conveyance to the IDA, the IDA leaseback, the eventual reversion, and a restated/consolidated lease with the tenant trigger New York's Real Estate Transfer Tax or Real Property Transfer Gains Tax?
Exempt at every step. Resnick Water St. Development Co., fee owner of One Seaport Plaza, needed to convey condominium units occupied by tenant Prudential Securities, Inc. (PSI) to the New York City In…
Is a foreign sales corporation organized in a U.S. possession subject to New York franchise tax, and is its exempt foreign trade income excluded for New York?
A foreign sales corporation (FSC) organized in a U.S. possession (here, the Northern Mariana Islands) is a foreign -- but not an alien -- corporation for Article 9-A, because a U.S. possession is not …
Is a company whose only district activity beyond solicitation is maintaining an office subject to the metropolitan transportation business tax surcharge?
Yes. A company that maintains an office in the metropolitan commuter transportation district (MCTD) is subject to the metropolitan transportation business tax surcharge under Tax Law section 209-B, ev…
Are federal military Survivor Benefit Plan payments to a service member's survivors subject to Kansas income tax?
No -- they are exempt from Kansas income tax. This 1993 internal memo addresses the federal Survivor Benefit Plan, under which a retired armed-services member can elect to take less monthly retirement…
If my advertising agency's invoice lumps taxable and nontaxable charges together, can I still use my direct payment permit to self-accrue the tax?
No. Under Rule 3.288(h), a direct payment permit holder can only issue a valid direct payment exemption certificate to a vendor that separately states its taxable and nontaxable charges. If an adverti…
In the modified opinion, are an asbestos contractor's plastic bags and poly taxable, and what changes when the removal is part of a capital improvement?
Same core result as the original opinion — disposal bags are 'actually transferred' (not taxable) and plastic poly is consumed by the contractor (taxable) — but this modified opinion adds that when th…
Is converting a plugged oil or gas well into a water well taxable as remodeling under Texas sales tax rules, and how does sales tax apply to water well drilling, equipment, and repairs?
Yes — the Comptroller ruled that converting a plugged oil well into a water well is remodeling, as is plugging an existing water well; cleaning out an existing well is a repair, not remodeling. Whethe…
Is a contractor's operation and maintenance of cogeneration plants built with industrial-development-agency financing exempt from sales tax as government activity?
Operating the plant isn't exempt government activity, and because the contractor bills one lump-sum operation-and-maintenance fee without separating taxable from nontaxable charges, it must collect ta…
When a retailer sells discounted cellphones to customers who also sign a carrier service contract, are the phones taxable 'promotional items' the retailer can't buy for resale?
The phones are purchased for resale, not promotional items. Because the retailer sells the phones (bundled with service) at a profit rather than giving them away or selling below cost, it buys them ta…
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