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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A retailer of new and used manufactured homes repairs/renovates used units before resale, moves and installs units for customers, and a real estate lessor repairs and adds on to rental property — how does Texas sales tax apply to the labor and materials in each of these situations?
It depends on the scenario. Repair/renovation labor on a used manufactured home (treated as residential real property) is not taxable, but the materials generally are. Labor to move and install a manu…
Are public relations services subject to New York sales or use tax?
No. Public relations services are not on New York's list of taxable enumerated services under Tax Law § 1105(c), so a PR firm's charges are not subject to sales or use tax — as long as no tangible per…
Is a custom telephone-survey marketing research report a taxable information service, or is it exempt as personal or individual to the client?
It is exempt. Collecting, compiling, and analyzing information and furnishing reports is normally a taxable information service under Tax Law § 1105(c)(1). But this marketing research qualifies for th…
Are a golf and country club's dues taxable when members have no proprietary interest or control and membership is limited only by facility size, and what about locker and food charges?
The dues are not taxable. Because members have no proprietary interest, no control over the club's activities or management, and membership is limited only by the size of the facilities (not by exclus…
How is use tax computed on custom cabinets a manufacturer builds and installs, and does its production machinery qualify for the manufacturer's exemption?
Because the cabinets are custom-built to each job's specifications, they are not 'items of the same kind' as any catalog or inventory product, so the maker's use tax on cabinets it installs is compute…
Are payments by a corporation to independent sales corporations excluded from both the numerator and denominator of its Article 9-A payroll factor?
Yes -- payments to genuinely independent sales corporations are left out of the payroll factor entirely. Generra, an out-of-state apparel company with New York nexus, markets through three independent…
Is sales tax due when a corporation completely liquidates and distributes its vehicles to shareholders in exchange for their stock?
Yes, taxable here. When a corporation completely liquidates under IRC § 331 and distributes its vehicles to shareholders in exchange for their stock, that's a taxable "sale" for Utah sales tax purpose…
If a retailer gives away merchandise for free as a promotion — like a shirt to the first ten customers, or a prize in a drawing — or sells items on a 'buy one get one free' basis, how is Texas sales tax handled?
It depends on whether the customer pays anything. On a 'buy one get one free' deal (or two-for-one pricing), the retailer only owes tax on the amount actually charged to the customer — not on the cost…
Are marketing consultation services subject to New York sales or use tax?
No. Marketing consultation — advising a company on its marketing efforts, writing a marketing plan, drafting questionnaires and scripts, and reviewing sales literature — is not one of New York's taxab…
A company repairs and restores motor vehicles/trucks that it owns and holds for rental, using gas and electricity in the process. Is that gas and electricity exempt from tax the way it would be for a manufacturer, or is it taxable because it's being used on the company's own rental property rather than in manufacturing property for sale?
Yes, with a line drawn at what counts as "repair." A company that owns property it holds for rental can claim the manufacturing-type exemption for gas and electricity used directly in repairing or res…
Is mobile radio data two-way (packet radio) transmission service taxable the same way as traditional cellular telephone service in Texas?
Yes. Both mobile radio data two-way transmission service (packet radio) and traditional cellular telephone service are taxable as telecommunications services if the communication originates in Texas a…
Our organization is exempt from federal income tax under Section 401(a) of the Internal Revenue Code (a qualified pension/employee benefit trust). Does that also make us an exempt organization for Texas sales and use tax purposes?
No. Being exempt from federal taxation under IRC Section 401(a) does not make an organization exempt from Texas sales and use tax. Texas Tax Code 151.310(a)(2) only exempts organizations that qualify …
Is a 'marking service' — attaching price tickets to merchandise — a taxable enumerated service, and is it exempt as work on goods held for sale?
It is taxable. A 'marking service' — attaching price-ticket labels to garments and other merchandise — is one of the enumerated services taxed under Tax Law § 1105(c). And it can't be purchased for re…
A company leases a private telephone line to connect to its remote construction sites. The line is billed on a per-call basis, and only 12% of the calls originate in Texas (the rest originate in California, New Mexico, and New Jersey). Is any portion of the private line charge subject to Texas sales tax?
Yes, but only the Texas-connected portion. Long-distance telecommunications that originate in Texas and are billed to a Texas telephone number or billing/service address are subject to Texas sales tax…
A leasing company leases computer hardware to a client and collects tax on the lease payments. Because its lease agreement doesn't allow resale of software, the leasing company instead gives the client funds to buy the software directly from a vendor, and never takes title or possession of the software. Is that software funding a taxable financing lease, and can the software and hardware be scheduled together?
No — the funds provided for the software are a loan, not a financing lease, so the leasing company doesn't have to add tax to the client's repayment of principal and interest on it. The software loan …
Can a business use measured kilowatt (KW) demand — the peak-usage figure a utility uses for billing — as the determining factor for the predominant-use sales tax exemption on electricity, instead of the method set out in the Comptroller's rules?
No. Kilowatt demand only measures the electricity used during peak billing periods, not total usage, and is merely a utility billing cost factor. It is not a determining factor for predominant use und…
Gordon Tresch, a retired New York public employee, receives yearly distributions from a deferred compensation plan he contributed to while working as a town clerk. Part of his 1984 contribution was already taxed by New York up front, under a rule since repealed, even though it wasn't taxed federally that year. When that same money comes back to him as a distribution, must he pay New York tax on it again?
No, not on the part already taxed. Because Tresch's $7,500 contribution was already included in his New York adjusted gross income back in 1984 under the now-repealed Tax Law section 612(b)(26), he ma…
As a licensed household-goods mover, can I haul the packing debris and cardboard boxes left over from a move to the dump without needing a Truck Mileage Tax permit?
Yes, conditionally. Tax Law § 504.5 exempts vehicles used exclusively to transport household goods from the truck mileage and fuel use taxes. A certificated household goods carrier that, immediately f…
Is a shareholder personally required to file the corporation's franchise tax report, or personally liable for the corporation's unpaid franchise tax and penalties?
No on both counts. The franchise tax report obligation under section 211.1 falls on the corporation (the 'taxpayer' defined in section 208.2), not on its individual shareholders. So a shareholder is n…
Is dredging (removing mud, sand, or silt) from a river, channel, pond, or boat slip subject to Texas sales tax?
It depends on whether the dredging changes the waterway. Dredging done at a new construction site, or done to remove sand/silt from a naturally occurring river, lake, or channel without changing its c…
Are the House Bill 11 franchise-tax surcharges that utility companies show as a separate line item on customer bills included in the sales tax base?
Yes. This internal Comptroller Audit HQ memo instructs auditors that the H.B. 11 franchise-tax surcharge a utility shows on a customer's bill is a reimbursement to the utility for its own added franch…
Can a contractor accept a direct payment exemption certificate for underground storage tank, fence, and concrete replacement work, and how does the answer depend on whether the work is new construction or remodeling?
Split answer depending on the work: (1) a new underground storage tank is new construction, taxable as a lump-sum contract unless material charges are separately ticketed to the customer; (2) totally …
Are charges by contractors who trace telephone circuits and lines (as part of a telephone bill auditing service) subject to Texas sales tax?
No. The Comptroller ruled that tracing circuits is not a taxable service, so charges by contractors who trace telephone circuits and lines from the telephone company demarcation point to the equipment…
When a contractor's work will be occupied by the tax-exempt US Postal Service, does the contractor's sales tax obligation depend on whether the contract is with the landlord or directly with the Postal Service, and on whether the work is remodeling or new construction?
Split answer that turns on who signs the contract, not who occupies the space. Work under a contract with the nonexempt landlord is taxable even though the US Postal Service (a tax-exempt entity) will…
Does wearing an item of tangible personal property (like a watch) in Texas before it is exported disqualify it from the sales tax export exemption, and does a particular bill of lading form satisfy the proof-of-export rule?
Yes -- wearing tangible personal property in Texas before it is exported (the letter's example is wearing a watch) constitutes a taxable 'use' in the state, so the item does not qualify for a sales ta…
Is a voice mail service sold nationwide, with all calls terminating in Texas but toll charges billed to out-of-state customers, subject to Texas sales tax?
Split by origin, not termination: long-distance telecommunications charges are taxable only if the call originates in Texas and is billed to a Texas telephone number, billing address, or service addre…
Does a builder owe sales tax on factory manufactured homes it buys, and does it matter who hires and pays the crane crew that sets the home on the foundation?
It depends on who arranged the installation. An uninstalled factory manufactured home is taxable tangible personal property, but a home sold with installation as a component of the sale (a capital imp…
If a securities-trading partnership has its main office, staff, and trading operations in New York, but trades only for its own account rather than as a dealer, is a nonresident general partner taxed by New York on the guaranteed payments and distributive share the partnership pays him - even when those payments pass through a second, tiered partnership first?
No. Because the partnership traded solely for its own account - it wasn't a dealer, had no customers, and didn't make a market - it fell within the Tax Law § 631(d) trading-for-own-account safe harbor…
Is a not-for-profit cooperative that provides electronic messaging (store-and-forward and host computer polling) services only to its members exempt from Texas sales tax collection duties, and are those messaging services taxable telecommunications services?
No -- being a not-for-profit cooperative, and running what the member called a 'private network,' does not exempt the Entity from collecting and remitting Texas sales tax. Both store-and-forward messa…
Do magazine subscriptions distributed by first-class mail qualify for Texas's sales tax exemption on newspapers and magazines?
No. Magazine subscriptions distributed by first-class mail do not qualify for Texas's sales tax exemption on newspapers and magazines. Rule 3.299(b)(2) specifically requires that exempt magazine sales…
Are telephone and telegraph services in Kansas subject to sales tax, and starting when?
Yes, as of June 1, 1992. The 1992 Kansas Legislature enacted House Bill 2892 (the "School Finance Bill"), which for the first time taxes the sale of telephone and telegraph services that originate and…
Is developing and maintaining a database of a client's own membership data a nontaxable information service, or a taxable sale of tangible personal property?
It is a taxable sale of tangible personal property. Building and maintaining a computer database from a client's own membership data and returning it on floppy disks or computer reports merely convert…
Does a dissolvable corneal collagen shield used after eye surgery qualify for New York's sales-tax exemption for medical supplies?
Yes, as a medical supply. A corneal collagen shield — placed in the eye after surgery and absorbed within about a day — is not a drug or medicine but qualifies as an exempt medical supply under Tax La…
Are writing and editorial services to produce an annual membership directory taxable, or is the directory manuscript intangible and exempt?
The writing and editorial charges are not taxable. An original manuscript — here, the annual membership directory ('Service Guide') a firm writes and edits — is intangible personal property, not tangi…
Which restaurant purchases did South Carolina Revenue Ruling 92-3 treat as tax-free resale or packaging items, and which as taxable supplies?
Food, beverage ingredients, and containers or wrapping used to sell and deliver them were generally tax-free. Napkins, straws, utensils, cleaning items, furniture, office supplies, and other operating…
May a scaffolding rental company buy or rent scaffolding tax-free for resale, and is the labor to erect the scaffolding taxable?
Split ruling: COMPANY A may buy or rent scaffolding tax-free by giving its supplier a resale certificate, since it is reselling (renting) the scaffolding onward to its customer. But the labor to erect…
Are genealogy research, book sales, teaching, and notarial services provided by a genealogy business subject to Texas sales tax?
Split ruling. Sales of genealogy and family-history books are taxable on the full sales price (not just the markup), and preparing a genealogical report by pulling from the company's own maintained da…
Does a nonprofit private fishing club have to collect sales tax on boat stall and locker rentals, and on membership dues, charged to its members?
No. The Comptroller ruled that a nonprofit (IRC Sec. 501(c)(7)) private fishing club does not have to collect sales tax on boat stall and locker rentals or on membership dues and fees. Although nonpro…
Is a computer-using accountant's preparation of financial reports, payroll tax filings, and income tax returns for clients subject to Texas sales tax as data processing?
Split ruling. Using a computer to prepare financial reports (check register, payroll register, general ledger, financial statements) is not taxable, and a computer 'data processing fee' passed on for …
Can a company holding a Texas Direct Payment Permit use it (instead of a resale certificate) to buy equipment it will resell to a customer, and is welding/repair labor on that equipment taxable?
Split into three answers. A Texas Direct Payment Permit may only be used to buy taxable items tax-free for the permit holder's own use (with tax later accrued on first use), not for items being purcha…
Is a computer company's lease of software, sale/installation/support of third-party software, contract programming, and scanning-to-computer-file service taxable under Texas sales tax?
Mixed ruling across five situations. Leasing software you created (you keep legal rights) is taxable on the full lease/support charge because that's not true contract programming; selling or installin…
Is the sale of a security-monitoring customer contract from one alarm company to another subject to Texas sales tax?
No. The Comptroller ruled that when one security company sells its customer monitoring contracts to another company (who then takes over billing and monitoring), the transaction is the sale of an inta…
Are membership dues paid to a private hunting and fishing club subject to Texas sales tax as an amusement service?
No -- membership dues and annual fees for a private hunting club are not subject to Texas sales tax, because hunting itself is not a taxable amusement service, and this holds true even though the club…
Are urological catheters, catheter trays, supplies, and replacement parts exempt from Texas sales tax as prosthetic devices?
Yes. Urological catheters, catheter trays, supplies, and replacement parts are exempt from Texas sales tax as prosthetic devices under Tex. Tax Code § 151.313(a)(4). No prescription is required to buy…
Is the sale of ostriches, emus, and rheas exempt from Texas sales tax when raised for meat, feathers, hides, and oil?
Yes -- the Comptroller ruled that sales of ostriches, emus, and rheas (collectively called ratites) are exempt from Texas sales tax under Rule 3.296, which exempts animal life whose products ordinaril…
Are culverts sold to farmers, ranchers, homeowners, or contractors exempt from Texas sales tax, and is sand, gravel, or crushed rock taxable?
Culverts are taxable -- they do not qualify as exempt farm equipment or machinery, so no farm-use exemption certificate can be accepted on their sale, even to farmers or ranchers. Culverts sold to hom…
For a company that books trips and tours, what share of its service receipts is allocated to New York for the Article 9-A receipts factor when the booking agents are in New York but the back office is elsewhere?
All of it -- 100% of the service receipts are allocated to New York. For a company that 'books' trips and tours, the receipts come from services, and under 20 NYCRR 4-4.3 service receipts are allocate…
Was an oilfield company's charge for pressure testing well rods and tubing taxable under Texas Letter Ruling 9205L1171B14?
No. The company used a load-and-test truck to pressure the rods and tubing solely to find parted rods or holes, then notified the owner if repair was needed. Because the company performed testing and …
Can laundry and dry cleaning businesses buy the electricity and natural gas they use to process rental linens/shirts tax-free as a noncommercial or resale use?
No. The Utah State Tax Commission ruled that laundry and dry cleaning establishments — including linen/shirt rental companies — are commercial establishments, not manufacturing, mining, or agricultura…
Are forming lumber, paper cups, rental equipment repairs, and fuel for rented equipment taxable or exempt under Texas sales and use tax?
Mixed ruling on seven separate questions. Forming lumber used at a job site to build concrete formations is taxable as a consumable if discarded, but is treated as equipment (not necessarily taxable t…
What Texas sales, use, hotel occupancy, and fuel taxes apply to (and can be exempted or refunded for) a motion picture production company filming in Texas?
A film producer is treated as a manufacturer for Texas sales tax purposes, so goods and short-lived equipment (useful life under six months) used directly in producing a film -- props, costumes, set m…
Is pressure/power washing a residence or other building before painting (or to remove graffiti) subject to Texas sales tax?
Yes, pressure washing a building is a taxable real property service, but the tax treatment depends on who is buying it. If the washing company also does the painting itself, its own pressure washing i…
Does an out-of-state company that uses a Texas-based commissioned sales agent become 'engaged in business' in Texas and responsible for collecting Texas use tax on its sales into the state?
Yes. Using a commissioned agent or salesperson located in Texas -- even one who is an independent contractor rather than an employee -- makes the out-of-state seller 'engaged in business' in Texas und…
Is an original painted portrait subject to Texas sales tax, and if so, who -- the out-of-state company arranging the commission or the artist -- must collect it?
Yes -- original painted portraits are taxable tangible personal property in Texas, not an exempt professional service. Who must collect the tax depends on the arranger's role: if the out-of-state corp…
Is road grading/reworking exempt 'maintenance,' and what documentation lets a subcontractor buy highway-contract materials tax-free?
Two separate rulings in one letter. First, reworking a private road 'as needed' is not exempt maintenance -- it is a taxable repair or restoration service, and the taxpayer lacked enough documentation…
Is a charge for running personal errands, like grocery shopping, picking up dry cleaning, or dropping off shoes for repair, subject to Texas sales tax?
No -- a charge for running errands, such as grocery shopping, picking up dry cleaning, taking shoes to a repair shop, or picking up event tickets, is not taxable. However, sales tax still applies to t…
Is feed for breeding horses and llamas, and the sale of the animals themselves, exempt from Texas sales tax when the offspring are raised for sale?
Split ruling: feed for horses, llamas, and their offspring raised for sale is tax exempt under Rule 3.296, and medications/vaccines/supplements for horses are also exempt. Sales of horses are exempt f…
Does a supplier still have to remit tax on sales it makes to mobile vendors, now that many mobile vendors operate independently rather than exclusively under one supplier?
Split answer based on the vendor's relationship to the supplier. If the mobile vendor still operates under the company and is connected to it through leased vehicles, Comptroller Rule 3.293 still appl…
Are personalized behavioral-analysis reports on an individual a taxable information service, or are they exempt as personal or individual in nature?
They are exempt. Preparing reports on a particular individual's behavioral tendencies from a questionnaire the customer completes is an information service that qualifies for the 'personal or individu…
Is admission to a 'Haunted Hayride' exempt from sales tax as a dramatic performance, or taxable as admission to a place of amusement?
It's taxable. Admission to a 'Haunted Hayride' — a haywagon tour past twenty or more short, one-to-two-minute costumed horror scenes — is a taxable admission charge to a place of amusement under Tax L…
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