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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Texas Letter Ruling 9211L1205B03: Statute Of Limitations — Tax Refund On Federal Contracts — Federal Law Vs. State Law
This is an internal 1992 Comptroller staff memo, not a taxpayer ruling. It states the agency's position that Texas's own four-year statute of limitations governs sales and use tax refund claims from f…
Is the labor to repair a residential central air conditioner taxable in Texas, and what about the Freon used in the repair?
Only the charge for the Freon (refrigerant) itself is taxable. On a residential central air conditioning repair, the labor-related fees -- reclaimer fee, pump and torch fee, and leak detector fee -- a…
When a bookstore gives customers 'book credits' for traded-in books (minus a 10% handling charge), is tax due when the credit is used on a future purchase, or only at the original trade?
Tax is due on the full purchase price of the future book purchase, not reduced by the credit. A trade-in only avoids tax when the trade-in property is exchanged as consideration in the SAME sale under…
Texas Letter Ruling 9211L1204G13: Auctioneer — Sales Made On Behalf Of Federal Government
It depends on who is legally the seller. If a U.S. government agency consigns items to an auctioneer and the auctioneer collects payment and issues the bill of sale, the auctioneer is the seller and m…
Texas Letter Ruling 9211L1204G11: Is stainless steel polish bought by a janitorial service to clean customers' metal restroom dispensers exempt from tax under a resale certificate?
No. The Comptroller ruled that stainless steel polish bought by a janitorial company to clean customers' metal restroom dispensers is taxable at purchase, because the polish is consumed by rubbing and…
Is lawn mowing and landscaping work on a public highway right-of-way taxable when a private developer, not the government, pays for it?
It depends on who required the work, not who paid for it. Under Texas sales tax rule 3.356(a)(5), lawn maintenance and landscaping on land belonging to a governmental entity is exempt only if the gove…
Texas Letter Ruling 9211579L: Draperies/Curtains — Installation In New Houses/Residences Vs. Existing Houses/Residences
It depends on your role. Draperies are tangible personal property, so selling and installing them is normally taxable in full. But if an interior designer is acting as the contractor on a residential …
Texas Letter Ruling 9211L1205F07: Woodworking — Building Bird Houses And Feeders For Sale
Yes, you need a (free) Texas sales tax permit to sell bird houses and feeders, and you must collect state sales tax plus the applicable local rate based on where the sale is made. You can buy your mat…
Texas Letter Ruling 9211L1211C01: Does an on-line service that lets buyers and sellers trade consulting services, software, and information electronically owe Texas sales tax, and has it created nexus in Texas?
Yes to both. Attending Texas trade shows, conventions, and users group meetings gave the out-of-state on-line service nexus in Texas. Once nexus exists, the service must collect Texas sales tax on pre…
Texas Letter Ruling 9211L1206C09: Engineering Services — Designs/Blueprints/Specifications Preparations/Reports/Working Drawings — Nontaxable Services
No. A Texas Comptroller letter ruling holds that an engineering firm's study and report on bringing a building into compliance with building codes is a nontaxable consultation service, and including w…
For a maid service, are apartment cleaning, laundry, laundry-cost reimbursement, and travel charges each subject to New York sales tax?
Apartment cleaning is taxable real-property maintenance; separate laundry charges and laundry-cost reimbursements are not taxable; but travel charges are fully taxable because they can't be split betw…
Are homeowners association dues subject to sales tax when the HOA has recreational facilities, no facilities, or spins the facilities into a separate corporation?
If the HOA owns recreational facilities, its whole mandatory assessment is taxable club dues — you can't carve out the small recreation share. An HOA with no recreational facilities isn't taxed. Split…
Does a tennis club collect sales tax on a required purchase of the landholding company's stock, and can members get that tax refunded when the stock is redeemed?
Taxable. A share purchase required as a condition of membership is both taxable dues and an initiation fee under § 1105(f)(2), so the club collects tax on it. Redeeming the stock later gives no refund…
Does a grocery's larger 'Advantage Shelf Tag' adequately disclose a manufacturer's coupon reimbursement in an electronic (paperless) coupon system?
Yes. The larger, differently-colored 'Advantage Shelf Tag' substantially as described meets the manufacturer-reimbursement disclosure requirement, even in a paperless coupon system — but a plain shelf…
Texas Letter Ruling 9211590L: Utility Study — New Study Required If Change Of Ownership
Yes. When a manufacturing business changes ownership, the new owner must have its own predominant use study performed and kept on file to claim the sales tax exemption on electricity purchases, even i…
Could Texas use the proposed account-credit procedure to refund vehicle tax after a manufacturer repurchased the vehicle?
No. Comptroller John Sharp said motor vehicle tax was paid to county tax assessor-collectors at title and registration, not remitted by the manufacturer or seller to a Comptroller taxpayer account. Wi…
We closed a commercial mortgage loan where our borrower is a tax-exempt nonprofit. Our commitment letter said the borrower would reimburse us for all closing costs, including mortgage recording tax. We paid the special additional mortgage recording tax at closing -- can we now collect it back from the borrower under that contract clause, given the borrower's exempt status?
No -- the statute's allocation of who pays overrides any private reimbursement agreement. A mortgage lender's client made a commercial mortgage loan to a tax-exempt nonprofit borrower (exempt under IR…
Texas Letter Ruling 9211L1204G09: Out-of-State Client — Investigation Performed Out-of-State by Texas Firm
No Texas sales tax is due when a Texas-based private investigator conducts an investigation by phone from Texas for an out-of-state client and out-of-state subject, as long as the results are delivere…
Is a bio-absorbable dental tissue-regeneration device sold to dentists exempt from New York sales tax as a prosthetic aid or a medical supply?
It's a medical supply under § 1115(a)(3), not a prosthetic aid. That means it's taxable when bought by a dentist for use in providing dental services for compensation, but exempt when sold to a § 1116…
Does an elevator company owe use tax on materials it uses in taxable maintenance and repair jobs, and can it recover that tax?
Elevator maintenance and repair is taxable on the full invoice price (unless it's a capital improvement). The company can claim a refund or credit for tax paid on materials that become part of the ser…
My clients, a married couple both now in bankruptcy and heading toward divorce, jointly own a 37-acre residential property. My client moved out several months ago due to marital discord, but her husband still lives there. If their bankruptcy trustees sell the property (including to a tax-exempt buyer) for $1.5 million, does the personal residence exemption from New York's Real Property Transfer Gains Tax still apply, given my client's recent absence?
The residence exemption still applies -- a spouse's few-month absence due to marital discord, with the other spouse continuing to live there, doesn't break the exemption, and neither does the property…
I want to transfer my three New York properties -- including my personal residence -- into a revocable living trust to avoid probate, keeping full control and the right to revoke at any time. Will funding the trust trigger Real Estate Transfer Tax or Real Property Transfer Gains Tax? And will my residence be exempt from gains tax when the trustee eventually sells it after I die?
Both exempt. Hilles Timpson planned to transfer her Southampton personal residence, a New York City residence used by relatives rent-free, and a New York City rental property (each worth over $1 milli…
Does placing print advertisements in Texas newspapers (including national inserts and free-standing inserts) create nexus requiring a mail order company to collect Texas sales tax?
No. The Comptroller ruled that placing one-page ads in Texas newspapers, in national publications distributed via Texas newspapers, in shared advertising booklets inserted in Texas newspapers, or as f…
Texas Letter Ruling 9211L1203A01: Thirteen Period Accounting Calendar Year
Yes. The Comptroller granted permission for a group of affiliated corporations to keep filing Texas sales tax returns based on their 13-period fiscal accounting calendar instead of standard calendar m…
Texas Letter Ruling 9211L1202G12: Layaway Sales — Tax Increase Or Tax Rate Change Before Customer Obtains Possession Of Tpp
The tax rate in effect when the layaway contract was executed applies to the whole layaway sale, even if a local tax rate increase takes effect before the customer pays off the balance and takes posse…
Texas Letter Ruling 9211L1202G11: Does a carpet installer collect sales tax on materials under a separated contract?
Yes. Under a separated contract for selling and installing carpet in a residence, the dealer is the seller of the incorporated materials, must give a resale certificate to its supplier, and must colle…
Does a Texas carpet dealer collect sales tax on materials only, or on the whole job, when installing carpet in a residence?
It depends on how the invoice is written. Under a separated contract (materials and labor billed separately), the dealer collects tax only on the stated materials charge and gives suppliers a resale c…
Texas Letter Ruling 9211563L: Does a company owe sales tax on temporary security guards hired to supplement its existing security force?
It depends on whether the guards are licensed security personnel or true temporary help. If the guards are licensed by the Board of Private Investigators and Private Security Agencies, the charge is a…
Does an aircraft-rental company pay sales tax on fuel it pumps into planes for 'wet' rentals, and can it recover that tax?
The lessor must pay sales tax on fuel at the pump even though it's bought for resale, but can then claim a credit (on the FF schedule, Form ST-100.10) against the tax it collects on the wet rental. Fu…
Are a country club's membership fees and dues taxable when membership is by invitation only and restricted to a defined group?
Yes. Because the club restricts membership by invitation only — an attempt at exclusivity beyond mere facility size — it's a taxable 'social or athletic club,' so its fees and dues are subject to sale…
For a multi-tier chain of controlled foreign corporations, does a company's share of a lower-tier CFC's Subpart F income keep the character (subsidiary capital vs. investment income) of the company's OWNERSHIP IN THAT LOWER-TIER CFC, or does it instead take on the character of the company's ownership in the FIRST-TIER CFC through which the income is deemed distributed?
The company's pro-rata share of Subpart F income from ANY tier of controlled foreign corporation -- first-tier or lower -- is deemed a dividend paid up the chain and takes on the character of the taxp…
Texas Letter Ruling 9211L1199G12: Hotel — Trunk Lines Purchased For Own Use And For Resale To Guests — Resale Certificate Guidelines
No. A hotel that buys a trunk line for telecommunication service and resells part of that service to guests cannot give its telecom provider a resale certificate for the basic local exchange service. …
Does a Texas pallet manufacturer have to collect sales tax when transportation companies buy replacement pallets, even though the old pallets are returned to distributors?
Yes. The Texas Comptroller ruled that the pallet manufacturer must collect sales tax from the transportation companies buying the replacement pallets. The fact that the removed pallets may later be re…
Do carry-out pizza and wholesale-bakery retailers that prepare food for consumption elsewhere qualify for the noncommercial-use sales tax exemption on the fuel and electricity they use, the same way manufacturers do?
No. Even though a carry-out pizza shop or a bakery preparing food for later consumption uses gas and electricity to "produce or compound" a resold product -- similar to a manufacturer -- Utah Code sec…
Does Utah sales tax apply to the federal excise tax portion of cigarette prices sold from vending machines?
No — separately stated federal excise tax is not subject to Utah sales tax, as long as accounting records consistently reflect the sale price separately from the federal excise tax. A physical sign on…
Does a computer-integrated manufacturing (CIM) system that also handles some administrative functions qualify for Utah's new-and-expanding manufacturing equipment exemption?
This record shows a dispute, not a clean final answer. An initial Auditing Division response denied the exemption under § 59-12-104(15), reasoning that a computer-integrated manufacturing (CIM) system…
Texas Letter Ruling 9210L1200F09: Caterer — Definition — Treated As Restaurant
Yes. The Comptroller ruled that a caterer is treated the same as a restaurant for Texas sales tax purposes, so it owes tax on tangible personal property it rents to put on catered events (tables, chai…
Texas Letter Ruling 9210L1200F03: Recycling Plant — Manufacturing Process Begins With Shredding — Also Machinery/Equipment Used
Yes. The Texas Comptroller ruled that a company shredding old tires into three-inch squares for eventual processing into rubber crumb (to be resold in products like mats and mud-flaps) is engaged in m…
Under South Carolina Revenue Ruling 92-12, how did the historical 5% tax and $300 maximum apply when boats, motors, and boat trailers were sold alone or together?
The historical $300 maximum applied to a boat sold alone and to a boat sold with a permanently attached motor; otherwise the ordinary 5% rate applied. A motor sold alone and an ordinary boat trailer s…
Is renting out pedal boats, bumper boats, and aqua cycles on a waterway taxable as a rental of tangible personal property in Texas?
Yes. The Texas Comptroller ruled that renting bumper boats, pedal boats, and aqua cycles on public or private waterways is a taxable rental of tangible personal property, both before and after October…
Texas Letter Ruling 9210L1198D01: Caricature Artists/Cartoonists Charges For Drawings At Party/Parties
Yes. Caricature drawing is a sale of taxable tangible personal property (graphic art), so the artist must collect sales tax on the total charge. But if the artist is hired by an amusement-service prov…
Texas Letter Ruling 9210L1205A08: Storage Tank — Above Ground With 500 Barrels Less Or More Capacity — Tpp Vs. Improvement To Realty
Yes, taxable. Each tank in the battery held only 400 barrels, under the 500-barrel line that keeps a tank classified as tangible personal property in Texas. Because it stayed TPP rather than becoming …
Texas Letter Ruling 9210L1200G07: Navigation District — Loading Dock Facility Construction — Lump — Sum And Separated Contract Guidelines
It depends on the contract type. Building a loading dock for a navigation district (a political subdivision) is an improvement to realty. Under a lump-sum contract, the contractor pays tax on all inco…
Can a trash-removal company buy portable compactors tax-free for resale when it supplies them to customers as part of its trash-removal service?
No. Because the hauler and its customer both use the compactors as part of one bundled trash-removal service, the compactors aren't purchased for resale — so the hauler owes sales tax on buying them, …
Are golf country club membership dues and initiation fees taxable when members have no control, no proprietary interest, and membership is limited only by the size of the facility?
No. Because members won't control the club, won't hold a proprietary interest, and membership is limited only by the physical size of the facility (not exclusivity), the club isn't a taxable 'social o…
A nonresident who was a longtime key employee of a family-owned New York publishing business received a $1.2 million payment for agreeing not to compete, made as part of the family's sale of the business to an outside buyer. Is that non-compete payment New York-source income subject to New York State personal income tax, and if so, how much of it is taxable?
Yes, at least in part. The Department ruled that a payment for an agreement not to compete, made in connection with the sale of a business, is New York-source income to the extent it derives its value…
Is a subcontractor's charge to erect tubular scaffolding or pipe framing for a building renovation subject to New York sales tax?
Yes. A subcontractor's charge to erect tubular scaffolding or pipe framing is subject to New York State and local sales tax. Scaffolding is not a tax-exempt 'temporary facility' — and it's taxable whe…
Are a company's labor and material charges to close its portion of a town-owned landfill subject to New York sales and use tax?
No. Closing the landfill is a capital improvement, so the labor charges aren't taxable; and because the materials become an integral part of the exempt Town of Wilna's land, the materials aren't taxab…
Texas Letter Ruling 9210L1198A13: Jail/Prison — Inmates Staying In Facility In Excess Of 30 Days Do Not Meet Definition Of Tenants — Gas And Electricity Is Not Residential Use
No. The Texas Comptroller ruled that a prison is not a building 'occupied as a home or residence,' so natural gas and electricity purchased for use in a prison do not qualify for the residential-use s…
Texas Letter Ruling 9210L1197E07: Walls — New Exterior Wall Built Around Remodeled Building — No Usable Space Created — Is Remodeling
It depends on whether the new wall creates usable space. Following an ALJ hearings decision, the Comptroller revised its earlier guidance: pouring a new footer and adding a brick wall outside an exist…
Texas Letter Ruling 9210504L: Satellite Dish — Home/Residential Or Commercial Use — Sale And Installation Vs. Improvement To Realty
Generally no. The Comptroller ruled that satellite systems are tangible personal property, not permanent improvements to realty, so the full charge for both labor and materials to sell and install the…
Texas Letter Ruling 9210L1200G11: Medical Air Services — Membership/Initiation Fee For Emergency Medical Flights, Organ Delivery, Mortal Remains Return
No. The Texas Comptroller ruled that annual dues and a one-time initiation fee paid to a medical emergency association are not taxable, because membership in a medical emergency association is not an …
Texas Letter Ruling 9210L1197G12: Fair Exhibitors — Parking Passes Provided Together With Admission Fee
No, not automatically. If an exhibitor's admission pass includes complimentary parking with no separately identifiable parking charge, none of the admission price is taxable as motor vehicle parking. …
Does Salt Lake County's 1% restaurant tax apply to banquet extras like flowers, equipment rental, music, bartender labor, ice carvings, corkage, and gratuities -- or only to the food and beverages themselves?
It depends on the item. Salt Lake County's 1% restaurant tax applies to charges directly incidental to serving food and beverages -- like a drink setup/corkage fee -- and to required gratuities (unles…
Texas Letter Ruling 9210L1204F12: Lock Or Locking Cylinder Exchange Service For Storage Facilities — Fee Charged
Yes. The Texas Comptroller ruled that a flat fee charged for organizing and coordinating the exchange of locking cylinders between storage facilities is the taxable sales price of the different lockin…
Texas Letter Ruling 9210L1209F06: Right — Of — Way/Other Infrastructure — Installation Or Repairs Of Tpp Or Improvements To Realty Must Be Dedicated And Accepted To Get Exemption
Yes. The Comptroller confirmed that the same rules used for developers donating streets to exempt entities also apply to donations of other types of real property improvements to exempt entities.
When nonresident shareholders liquidate a New York S corporation whose only asset is a partnership interest in New York rental real estate, what are the New York personal income tax consequences under Article 22 of the Tax Law - and can a loss on the deemed sale of their S-corporation stock offset the gain on the deemed sale of the corporation's underlying asset?
No, the loss cannot offset the gain for New York purposes, and the result is asymmetric. Because the New York S corporation allocated 100% of its income to New York for franchise tax purposes, the non…
Are municipal put bonds investment capital, and how does the put date affect their classification under Article 9-A?
A municipal put bond's put date counts as a 'date of maturity' under 20 NYCRR 3-4.2. So the bond is generally classified as investment capital, except that it must be classified as cash (not investmen…
Is a dissolved corporation that merely holds record title to New York real property as nominee for others, while otherwise inactive, subject to Article 9-A franchise tax?
It depends on whether the corporation was still incorporated. Midstate Research was a New York corporation that owned four acres of vacant land but stopped all activity in 1971 and was dissolved by pr…
Texas Letter Ruling 9210L1199F14: Local Tax — City Ordinance — Enacting Tax On Telecommunications/Gas And Electricity — Whether Will Expire If City Changes Providers
No. The Comptroller's Tax Administration division concluded that a city's ordinances taxing telecommunications, gas, and electric services do not expire or stop applying if the city later switches to …
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