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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As fee owner of our Manhattan office tower, we need to convey the condo 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 from the IDA and sublease to the tenant -- with the IDA's title later reverting to us, possibly repeatedly as the deal is restructured. Does any of this trigger Real Estate Transfer Tax, Real Property Transfer Gains Tax, or Mortgage Recording Tax?
Exempt across the board. The Chase Manhattan Bank, N.A., fee owner of One New York Plaza, needed to convey condominium units occupied by tenant Prudential Securities Incorporated (PSI) to the New York…
In this January 1993 Texas ruling, an Arkansas printer bought manufacturing equipment in Louisiana tax-free and later brought it into Texas — did Texas use tax apply?
It depends on how long the equipment was used outside Texas first. If the equipment was used in Arkansas for one year or more before being moved to Texas, no Texas use tax is due. If it was used outsi…
Must a private homeowner collect sales tax on the rent when a guest pays to stay in the home during a special event like the 1993 World University Games?
No. A private home not regularly used for lodging guests isn't a 'hotel,' so short-term paid stays during the event aren't subject to New York's hotel occupancy sales tax.
In an outsourced copy-service arrangement, who owes sales tax on the copies, on the toner and paper, on outsourced repairs, and on copier lease payments?
Charging by the copy is a taxable sale of tangible personal property. The provider buys toner and paper for resale (ST-120), and can pass through outsourced repairs tax-free only if separately stated;…
Are a county fire district officers association's purchases of goods and services exempt from New York sales and use tax as a state instrumentality?
Exempt. The Department held the association is an instrumentality of New York State under Tax Law § 1116(a)(1), so its purchases of tangible personal property and services are exempt from state and lo…
Are a fire district officers association's purchases of goods and services exempt from New York sales and use tax as a state instrumentality?
Exempt. The Department held the association is an instrumentality of New York State under Tax Law § 1116(a)(1), so its purchases of tangible personal property and services are exempt from state and lo…
May a New York parent file a combined Article 9-A report with its wholly owned foreign sales corporation subsidiary organized in a U.S. possession?
Possibly -- it is up to the Commissioner. A foreign sales corporation organized in the U.S. Virgin Islands is a foreign but not an alien corporation, because a U.S. possession is not a foreign country…
Are wheelchair lifts, stairway lifts, pool lifts, and disability-operated power door openers exempt from New York sales tax as artificial devices, and is their installation taxable?
Exempt. Wheelchair lifts, stairway lifts, pool lifts, and power door openers operated only by disability controls are artificial devices exempt under § 1115(a)(4), and their installation and repair ar…
Is a custom-designed communication board (like a FACTS board) for someone who cannot speak exempt from Texas sales tax?
No. The Comptroller found no statutory exemption for a communication board (a FACTS board) designed for someone who cannot communicate verbally. Texas law exempts certain items used by the deaf and le…
Is the labor to dig out and haul away contaminated soil taxable in Texas?
It depends on whether the soil leaves the property. Labor to excavate (dig out) contaminated soil is not taxable if the service provider leaves the soil on the customer's premises. But if that provide…
Does a Texas business have to charge sales tax on data recovery services, like retrieving deleted computer files?
Yes. The Texas Comptroller ruled that charges for labor or services performed to recover or retrieve deleted computer data are taxable as data processing services under Rule 3.330. The provider must c…
Were ABC's Advantage Card and Business Card warehouse-club membership fees subject to South Carolina sales tax under PLR 92-11?
Yes. The paid membership fees were part of the consideration for buying merchandise because Advantage Card and Business Card members paid the posted wholesale price, while 90-day free members paid tha…
Did SC PLR 92-10 impose sales or use tax when exempt manufacturing machines were sold to a lessor and leased back to the manufacturer?
No. The sale to the lessor, the lease back to ABC, and ABC's continued use of the machines were exempt because the equipment was used to manufacture tangible personal property for sale. The ruling sai…
Does Texas charge sales or use tax when a company licenses its programming-language source code and specifications to other developers?
No, not automatically. Texas taxes the sale or license of a 'completed computer program,' but licensing raw source code and specifications so a licensee can build its own derived program is not taxabl…
A partnership is transferring 100% of its partnership interests to a bank, in exchange for the bank cancelling debt and releasing guarantees -- but the partnership's underlying real estate is worth $10 million while the debt being cancelled is $15 million. For New York's Real Property Transfer Gains Tax, is the taxable 'consideration' the $15 million in cancelled debt, or the $10 million fair market value of the real estate?
The taxable consideration is the $10 million fair market value of the underlying real estate -- NOT the $15 million in debt actually cancelled to acquire the ownership interest. A partnership held a l…
Does a licensed customhouse broker corporation with several offices need to file a separate Texas Customs Broker's Export License application for each office?
No. A licensed customhouse broker corporation with multiple offices should file a single Texas Customs Broker's Export License application listing each location, rather than a separate application per…
In a limited partnership, is the corporate general partner subject to franchise tax, is a corporate limited partner subject, and how is an affiliate's administrative fee added back to earned surplus?
The corporate general partner is subject to the franchise tax, because the limited partnership is doing business in Texas. A corporation whose only Texas connection is being a limited partner is not s…
If a customer gives a seller a resale certificate on a rental, but never actually re-rents the item, is the seller liable for the uncollected tax?
Not necessarily. In this December 1992 letter, the Comptroller's Tax Administration Director tells a trade association that on audit, the agency will review a seller's documentation on a case-by-case …
Does an airline owe Texas sales or use tax on peanuts, donuts, and disposable cups, stir sticks, and napkins given to passengers?
No tax is owed on the peanuts and donuts because the airline buys them in bulk, and bulk food purchases aren't taxable. The disposable cups, stir sticks, and napkins used for non-complimentary (paid) …
If a customer's credit card payment turns out to be unauthorized or fraudulent and the credit card company charges the sale back to the business, can the business claim a bad debt deduction for sales/use tax purposes?
Yes. This internal Comptroller memo concludes that a charge-back for an unauthorized or fraudulent credit card payment is treated the same as a bad debt from a bad check, and it qualifies for a bad de…
Is a risk retention group made up of governmental housing authorities exempt from the Article 33 franchise taxes on insurance corporations as a state instrumentality?
Yes. A risk retention group whose members are governmental housing authorities is an 'instrumentality' of government and is exempt from the Article 33 franchise taxes on insurance corporations under T…
Is a bank holding company subsidiary a banking corporation taxable under Article 32, or is it taxed under Article 9-A?
Not necessarily a banking corporation. A corporation 65 percent or more owned or controlled by a bank holding company is a 'banking corporation' subject to Article 32 only if it is also principally en…
Is the Agent Orange Settlement Fund subject to New York franchise tax under Article 9-A or personal income tax under Article 22?
No. The Agent Orange Settlement Fund is not subject to New York franchise tax under Article 9-A or personal income tax under Article 22. The IRS ruled that the Fund -- established before the effective…
Gerard Dowling, a NYC Transit Police sergeant, received full salary while out on sick leave in 1990 for two service-connected injuries. Can that sick pay be excluded from his federal and New York taxable income as "workmen's compensation" under IRC section 104(a)(1), given that his union's collective bargaining agreement (not a formal statute) is what actually spells out the sick-pay entitlement?
Yes, but only from a specific cutoff date. Because Public Authorities Law § 1204-c incorporates the Sergeants' Benevolent Association's collective bargaining agreement by reference and makes the resul…
If I dig up caliche and haul it to a customer's job site, do I have to charge Texas sales tax on the hauling/delivery charge?
It depends on whether the caliche is processed. If you simply dig caliche out of the ground and haul it to the customer's site, neither the caliche nor the transportation charge is taxable. But if the…
Can a retailer use SKU codes on cash register tapes (instead of a written item description) to support a Texas sales tax export refund claim?
Yes. The Comptroller's office confirmed that a cash register tape showing only a SKU code, with no separate written description of the merchandise, does not by itself prevent a retailer from getting a…
Does a Texas business that repairs and maintains aircraft for licensed/certificated carriers have to charge sales tax on parts, labor, or the equipment it buys to do the work?
No. In this December 11, 1992 letter, the Comptroller told the requester that repair and maintenance services on aircraft belonging to licensed and certificated carriers are not taxable — no tax on pa…
If I sell equipment to a leasing company and lease it back under an operating lease, is that a nontaxable financing arrangement or a taxable sale?
It depends on whether the leaseback is a true financing lease or an operating lease. In this December 1992 ruling, the Comptroller held that a sale-leaseback where the equipment reverted to the lessor…
Can a Texas motor vehicle rental company show property tax, title fees, and registration fees as separate reimbursement line items on customer invoices?
Yes, but only as a cost reimbursement, not as a collected tax. The Comptroller told a motor vehicle rental company that it cannot collect county property tax directly from customers as a tax (only cou…
Is a scholarship-matching or financial-aid database search service taxable in Texas?
Yes. A service that matches students to scholarships using a database is a taxable information service under Texas Rule 3.342. The provider owes tax on materials, supplies, and equipment used to deliv…
If a fraternity or sorority charges students one combined fee for room and meals, does it owe sales tax on the meal portion even though meals aren't billed separately?
Yes. Even if a fraternity or sorority bills students one lump-sum charge for room and board without breaking out the cost of meals, Texas sales tax must still be collected and reported on the portion …
Did South Carolina Revenue Ruling 92-15 treat state agencies, counties, municipalities, and other political subdivisions as generally subject to sales and use tax?
Yes. The historical definition of 'person' included the state, agencies, authorities, political subdivisions, and municipalities. Their retail sales were subject to sales tax, and their retail purchas…
Why did South Carolina Revenue Ruling 92-16 permit 'Two Anyway Bingo' but reject 'Almost Two Anyway Bingo' under the historical Bingo Act?
'Two Anyway Bingo' was permissible because the caller could preannounce several geometric configurations and require players to complete any two of them using called numbers. 'Almost Two Anyway Bingo'…
Is an electric mobility cart (three-wheel scooter) used in place of a wheelchair exempt from Texas sales tax?
Yes. The Texas Comptroller ruled that electric powered carts (three-wheel scooters) used in lieu of a wheelchair qualify for exemption from sales tax, and no prescription is required. Repair parts and…
Does Texas tax a corporation's contribution of operating assets and vehicles to a newly formed partnership for a partnership interest?
A vehicle contribution to a newly formed partnership caused no motor vehicle tax when the partnership paid no consideration beyond the ownership interest, while consideration such as an assumed lien w…
Is the electricity my sand-mining client uses to dredge, wash, sort, and convey sand exempt from Texas sales tax?
It depends on what the electricity powers. Electricity used to convey or pump sand to, through, and away from the plant is exempt as transporting a material extracted from the earth, regardless of whe…
If the Comptroller's office told us a resale certificate was OK on a mid-lease sublease, but that policy later changed, do we still owe sales tax on the sublease we already signed?
Yes, but only for the sublease already in place. The Comptroller's office honored a resale certificate a lessee issued to its lessor for a mid-lease-term sublease because the lessee had relied on verb…
Is waste and garbage collection service provided to an ocean-going vessel operating under a foreign flag exempt from Texas sales tax?
No. The Comptroller ruled that waste collection and disposal services performed for ocean-going vessels in Texas are not exempt from sales tax. The Tax Code's exemptions for a vessel's component parts…
Is infrared inspection of industrial furnace linings taxable, and is refractory brick sold to repair a kiln exempt from Texas sales tax?
The Comptroller ruled that infrared inspection service to check the condition of refractory (heat-resistant) linings inside boilers, furnaces, and kilns is a nontaxable service. Separately, refractory…
If a vending-machine or amusement-device company gets a monthly credit memo from its distributor for old machines it turns in, and that credit is applied against its account and later offset against new machine purchases, does that count as a tax-free trade-in?
No. This internal Comptroller memo concludes that turning in a used cigarette or video game machine to a distributor for an account credit, later offset against a separate purchase, does not qualify a…
Does a rehabilitation, drug/alcohol treatment, or psychiatric center qualify for Texas's residential exemption on natural gas and electricity sales tax?
No. The Comptroller held that a rehabilitation center (Rio Vista Rehabilitation Center) is not "residential" for purposes of the Texas natural gas and electricity sales tax exemption, because it is a …
How did South Carolina Revenue Ruling 92-13 treat corporate dividends received from foreign subsidiaries after the U.S. Supreme Court's Kraft decision?
The historical ruling treated foreign dividends like domestic dividends to avoid unconstitutional discrimination under the Foreign Commerce Clause. A corporation could reduce federal taxable income by…
If we perform real property services at a bank building the bank partly uses itself and partly rents out, are we a 'property management company' under Texas Rule 3.356?
Not for that property. Under Rule 3.356(a)(6), a person performing taxable services at a property held by the owner for a purpose other than rental — such as a bank using its own building for its own …
If I rent out roll-off garbage containers and charge a $50 setup fee, is the whole charge taxable, and which city's local sales tax applies?
Yes, the entire charge is taxable, including the $50 setup fee to place the roll-off container. If the container comes with garbage collection service, local sales tax is based on where the garbage is…
How did Texas determine the rental-tax rate for fixed-term, open-ended, and renewed vehicle contracts?
A single contract specifying more than 30 days received the historical longer-term rate. A 1-to-30-day contract received the short-term rate. If the contract stated no term, it was treated as day-to-d…
Texas Letter Ruling 9212L1211A13: Contact Lens Care Products
Prescription contact lenses are exempt from Texas sales tax and need no exemption certificate. Lens solutions and carrying cases are taxable, except that a disinfective solution sold as part of a soft…
Texas Letter Ruling 9212685L: Unjust Enrichment/Error Tax — Collected From Customer — Cannot Be Retained By Or Refunded To Retailer/Contractor — Must Be Remitted To State Or Refunded To Customers
If a lump-sum contractor marks a contract 'Inc' in the tax block, the Comptroller treats that as proof tax was collected from the customer, so the contractor cannot keep that money or use it to offset…
Texas Letter Ruling 9211L1211C11: Electronic Bulletin Boards Service — Access To Technical/Shareware Library And Ability To Leave/Retrieve Messages/Chat 'Live'/Trade Goods
Yes. The Texas Comptroller ruled that membership fees charged for access to a computer bulletin board service (BBS) -- letting users chat live, access databases, and download software -- are taxable a…
Texas Letter Ruling 9211L1211B11: Energy Management/Control System — Installed To Existing Heating And Air Conditioning Systems
Taxable. The Comptroller ruled that selling and installing a computerized energy management/control system as a replacement and upgrade to a supermarket's existing HVAC controls is remodeling of nonre…
State Tax Ruling
Yes. Texas allows a taxpayer to file sales tax returns based on a thirteen-period fiscal accounting calendar instead of the standard calendar month, but returns are still due the 20th, two of the fisc…
Were a trailer manufacturer's annual leases treated as rentals, and did Texas tax contracts for out-of-state use?
The annual leases were rentals because the owner was the trailers' manufacturer, regardless of contract length. Texas rental tax applied when the customer took possession in Texas, even if the trailer…
Is removing an old lighting system and installing a new hardwired energy-efficient one a capital improvement, so the contractor doesn't charge the customer sales tax?
Yes. Installing a new, permanently hardwired energy-efficient lighting system is a capital improvement, so the contractor doesn't charge the customer sales tax (with Form ST-124) — but the contractor …
Texas Letter Ruling 9212L1208G14: Towing Charges — Second Tows Or Transfer Fees In Connection With Repossession Services And Separately Billed Are Part Of Debt Collection Services
It depends on who is towing. Plain towing charges are not taxable unless the towing company is also the repossessor, and towing hired directly by a financial institution to repossess a vehicle is not …
Texas Letter Ruling 9211L1209A08: Towing/Transport Charges — Part Of Debt Collection/Repossession Services
Yes, if the repossession company itself does the towing. A repossession company's towing charges are taxable as part of its taxable debt collection/repossession service to the financial institution, e…
Texas Letter Ruling 9211L1209A07: Are towing charges taxable when a vehicle is repossessed?
It depends on who hires the tow truck. If a repossession company hires a towing company to move a vehicle it just repossessed, the towing company's charge to the repossession company is not taxable, a…
Does a cable TV company owe Texas sales tax when it pre-wires a home for cable TV outlets?
It depends on the contract type: on a lump-sum contract the cable company owes tax on the cost of the wire itself and doesn't collect tax from the customer; on a separated contract the cable company m…
Texas Letter Ruling 9211L1209A14: Disposable/Nonreusable Items (Placemats, Plates, Cups, Tray Liners, Toothpicks) — Food Service Operators' Purchases Under Resale Or Exemption Certificate
Yes. A restaurant chain may issue a resale certificate to a supplier of paper placemats instead of paying tax, because Rule 3.293(f)(4) lets eating establishments buy nonreusable items furnished to cu…
Texas Letter Ruling 9211869L: Lowering Of Temperature/Flash Freezing Product During Processing Vs. Keeping Product At Targeted Temperature — Electricity Used
Exempt. Texas Comptroller Letter Ruling 9211869L holds that electricity used to lower the temperature of food products (like chilling avocados, chickens, and meat, or flash-freezing vegetables) down t…
Texas Letter Ruling 9211L1209G06: Homeowners/Property Owners Association — Taxable Services (Cable Television, Landscaping, Garbage/Trash Pick — Up) And Nontaxable Services Provided To Members — Billings
A Texas property owners association that buys taxable and nontaxable services (like cable TV) for its members and bills a lump-sum periodic fee is treated as the consumer, paying sales tax to its vend…
Texas Letter Ruling 9211L1205F09: How is the location of a cellular telephone call determined for city, county, and MTA (Metropolitan Transit Authority) tax purposes?
The location of a cellular call is set by the cell site that receives the incoming transmission. If that originating cell site can't be determined, local sales tax (city, county, and MTA) is instead b…
How these rulings are useful
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