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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Were structural changes to commercial buildings exempt from Texas sales tax when required by the Americans with Disabilities Act?
No. The Comptroller said Texas law contained no exemption for costs incurred to comply with federal law, so charges for the required commercial-building modifications were taxable.
Were corporate sponsorship fees for a free recycling hotline taxable when sponsors also received callers' messages?
Partly. Institutional advertising was nontaxable, but receiving and relaying callers' electronic messages was a taxable telecommunications service. Without separately stated charges, the entire fee wa…
If a bank subsidiary revokes its election to be taxed under Article 9-A (switching to Article 32) in the same year it has a big capital loss, can it still carry that loss back to earlier years when it was an Article 9-A taxpayer?
Yes, but conditions apply. FSB-Properties, a wholly owned subsidiary of Flushing Savings Bank, qualifies as a banking corporation but had elected to be taxed under Article 9-A instead of Article 32. F…
When a bank resells repossessed cars and mobile homes and buys credit reports on borrowers, which of those are subject to New York sales tax?
It depends on the item. (1) Yes — a bank that sells repossessed automobiles is a 'vendor' of motor vehicles and must collect sales tax at the time of each sale unless it receives a proper exemption do…
How could a Texas contractor structure a separated contract for work on an exempt organization's real property?
The binding contract—not the bid or draw format—had to separately state labor and materials under Rule 3.291. Incorporated materials could be bought for resale, then covered by the exempt customer's d…
Were golf-cart shed rental charges taxable at for-profit and nonprofit Texas country clubs?
Yes. The letter said for-profit club charges had been taxable since October 2, 1984, and nonprofit club charges became taxable October 1, 1991, whether or not separately stated.
Was demolition inside an existing commercial building excluded from tax when a contractor rebuilt the space for a new tenant?
No. Because the project stayed within the existing structure, it was taxable remodeling and the entire charge, including demolition, was taxable. Demolition could be excluded only if the old structure…
Did a September 1991 purchase order preserve an exemption for packaging supplies delivered after the Texas law changed?
No. Because the 1991 legislation included no prior-contract protection, packaging supplies sold on or after October 1, 1991, to nonmanufacturers and nonprocessors were taxable despite the earlier purc…
Are single-use artificial kidneys used in dialysis exempt from New York sales tax?
Yes — with the usual carve-out. Sales of artificial kidneys (the single-use dialyzers used in hemodialysis) are exempt from New York sales and use tax as medical equipment and supplies under Tax Law §…
When a service provider bills a customer for travel, hotel, meals, and other expenses, are those reimbursements part of the taxable charge?
Yes — the reimbursed expenses are taxable. When Helmel Engineering bills a customer for installing or servicing machinery and adds its employees' mileage, hotel, auto rental, and meal expenses (plus a…
Must an out-of-state supplier collect New York tax on goods it drop-ships to a New York fabricator for a customer in a third state?
Yes — collect the tax, but a refund route exists. When Teddy & Arthur Edelman (a Connecticut leather supplier) sells leather to an out-of-state customer (e.g., in California) but ships it to a New Yor…
If a payroll-tax-filing service pools client funds meant for the IRS and state/local tax authorities and invests them before the taxes are due, is the investment income taxable New York investment income or ordinary business income?
Mostly yes, it can be investment capital -- with one carve-out. Corporation A ran a payroll and tax-filing service, collecting client funds ahead of payroll-tax due dates and investing the pooled bala…
Were separately stated travel time and trip expenses for piano repair and maintenance taxable in Texas?
Yes. The Comptroller said transportation and other expenses connected with taxable repair or maintenance services were taxable, so tax had to be collected on the travel-time and expense charges.
Were charges to install and remove rented telephone wire and radio equipment at drilling rigs taxable in Texas?
Yes. Wire setup and removal were taxable labor connected with a rental, and radio installation and removal were taxable as part of the telecommunications service provided with the equipment and freque…
Was a police officer's reimbursement to a Texas city for a third badge and carrier subject to sales tax?
Yes. The city could buy all three badges and carriers tax free, but the officer's reimbursement for the third set was a taxable sale by the city to an individual.
Could a Texas seller accept a California permit number on an out-of-state distributor's resale certificate for Texas drop shipments?
Yes, in good faith, if the buyer was a bona fide out-of-state retailer buying for resale and had no Texas permit. If it was engaged in business in Texas, it instead needed a Texas permit and had to co…
Was electricity used to pump salt water into oilfield disposal wells exempt from Texas sales tax?
It depended on the water. Electricity used to pump naturally occurring salt water was exempt, while electricity used to pump man-made, artificially mixed salt water was taxable.
Was a machine shop's separately stated EPA processing fee taxable when charged with engine repair work?
The fee followed the underlying labor. It was taxable when connected with taxable repair work, but not when connected with nontaxable automotive-engine repair or maintenance.
Who could certify a Texas predominant-use study for natural gas and electricity if the signer was not a registered engineer?
The signer needed an engineering degree from an accredited engineering college and had to provide an original signature. A copy of the degree and accreditation information could document qualification…
Is a nonprofit that runs a downtown Business Improvement District a tax-exempt governmental entity under New York sales tax law?
No. The Downtown Utica Development Association — a not-for-profit corporation that administers the Downtown Utica Business Improvement District — is not an agency, instrumentality, public corporation,…
Were an insurance company's separately contracted workplace-safety and loss-prevention consulting services taxable in Texas?
Generally yes when the services pertained to insurance policies. The provider had to presume taxability unless the client supplied a valid exemption certificate, such as one documenting self-insured s…
Does a salvage broker owe sales tax on the storage and towing charges it pays to release insurance-owned vehicles headed for resale at auction?
No — with resale certificates. Salvage Management, a broker that tows and stores insurance-owned wrecked vehicles and sells them for resale at dealer wholesale auctions, does not owe sales tax on the …
Are membership dues at a public, management-controlled golf and country club taxable as social or athletic club dues?
No. Membership dues paid to Bluff Point Golf and Country Club are not subject to New York State and local sales tax, because the club is not a 'social or athletic club' under Tax Law § 1105(f)(2). Mem…
Are a company's permanently installed fabric canopies and awnings a nontaxable capital improvement, and what about illuminated awning signs?
It splits. Permanently installed custom canopies and awnings made of durable plastic fabrics (vinyl, polyester, acrylic, or modacrylic) that are welded and bolted to a building qualify as a capital im…
Is a leased CAD/CAM system exempt from New York tax when it's used partly for research and development and partly for product design and manufacturing?
It's mixed, use by use. A manufacturer's leased CAD/CAM system qualifies for exemption only where it meets the 'direct and predominant' tests. Under the research-and-development exemption (Tax Law § 1…
Was auto detailing taxable in Texas, and did separately charging for carpet cleaning change the answer?
A lump-sum auto-detailing service was not taxable, but a separately stated automobile carpet-cleaning charge was taxable and required a permit. Separately stated upholstery cleaning remained nontaxabl…
I'm the trustee of a marital trust created for my client's late husband's surviving spouse, who is the sole income and principal beneficiary. I'm planning to terminate the trust and distribute its entire corpus -- including a one-quarter undivided leasehold interest worth well over $1 million -- directly to her, with no payment involved. Does that distribution trigger New York's Real Property Transfer Gains Tax?
No gains tax -- distributing the entire trust corpus, including the real property interest, to the sole beneficiary who already owned 100% of the trust's beneficial interest is an exempt mere change o…
Was a golf club's $45,000 initiation fee exempt as a written refundable fee when the eventual refund amount was uncertain?
Only partly resolved. The Comptroller said at least the club's $6,000 transfer fee was taxable, but required the bylaws and membership contract before deciding the remaining initiation-fee balance.
Were labor and parts to clean and repair reusable ISO marine cargo tank containers exempt from Texas sales tax?
Yes, if the containers qualified under Rule 3.297(b)(2) as component parts of commercial vessels exceeding eight tons displacement and the customer supplied an exemption certificate.
Could a buyer purchasing goods only for export outside the United States obtain a Texas permit and use resale certificates?
No. The letter said export-only purchases were outside the resale definition. The buyer instead had to document export with carrier, customs, destination-country, or freight-forwarder records.
Was a customer's original purchase of exclusively created software from a contract programmer taxable in Texas?
No. The original custom-software purchase was not subject to sales or use tax because the customer obtained ownership rights. The customer then had to collect sales tax on copies sold to others.
Was transferring an Oregon corporation's operating assets to a related Texas corporation subject to Texas use tax?
Not if the transfer was a capital contribution with no consideration. Cash, stock issued where ownership was below 100%, or debt forgiveness or assumption could make it a sale; a transfer of all opera…
Was restoring a customer's dirty solvent and returning that same solvent taxable repair or manufacturing processing in Texas?
It was repair, not processing. The Comptroller corrected an earlier letter because restoring the same customer's solvent to usable condition fit Rule 3.292 and was expressly excluded from processing b…
How could a Section 501(c)(7) club recover Texas tax it mistakenly collected on pre-October 1991 member charges?
The club first had to refund members or credit their accounts with written permission. Only then could it seek state reimbursement or a return credit under Rule 3.325, within the four-year limitations…
Did an equipment lease with a purchase option equal to 10% of original cost automatically qualify as a Texas financing lease?
No automatic answer was possible. The option was nominal only if, when the contract was signed, it was estimated to be less than 10% of the equipment's fair market value when exercised, or another Rul…
Which parking-lot, street, debris-scraping, and ice-control cleaning services were taxable in Texas?
Parking-lot sweeping, power washing, and periodic cleaning were taxable from December 6, 1991. Public-road cleaning and debris scraping, plus salt or sand spread for icy driveways or sidewalks, were n…
Were public-street cleaning charges taxable, and did fixed-price contracts signed before December 6, 1991, receive transition relief?
Public-road and public-street cleaning was not taxable. Fixed-price parking-lot or sidewalk cleaning contracts signed before December 6, 1991, stayed untaxed until renewal, extension, or renegotiation…
When did Texas begin taxing parking-lot cleaning, and were older fixed-price contracts protected?
Parking-lot sweeping and cleaning became taxable December 6, 1991. Binding fixed-price contracts signed earlier stayed untaxed until renewed, extended, or renegotiated; public-road cleaning remained n…
Were repair parts installed in Texas on foreign-plated vehicles exempt when the vehicles were immediately driven back to Mexico?
No. Driving the installed parts in Texas on the trip to Mexico was Texas use, so the parts lost their export character and the seller had to collect sales tax.
Could a Section 501(c)(7) singles club recover tax collected on dues and admissions, and were its member charges taxable?
The club first had to refund tax to members and guests before claiming a state refund or credit. The letter said membership dues were not taxable, but separate dance or entertainment admission charges…
Which industrial testing, inspection, training, heat-treating, and welding-information services were taxable in Texas?
Testing, training, inspection, expediting, and AutoCAD inspection reports were nontaxable. Heat treating that restored weakened property was taxable repair, and welding-code publications were taxable …
How did Texas tax vehicle window etching with a theft guarantee and a chemical protection package with a warranty?
Window etching was taxable; a mandatory bundled guarantee made the whole charge taxable, while an optional guarantee was not. Chemical protection application and its warranty were exempt, but the deal…
When a business straddles two adjoining municipalities, which city gets the local sales tax revenue?
It goes to the city where the inventory is physically located or from which it's shipped or delivered -- not necessarily the city where the licensed business address sits. Under Utah Code § 59-12-207 …
When were the oilfield services in this Texas letter nontaxable completion work rather than taxable tubing-fishing repair?
The letter's Item 1 services were nontaxable because they accompanied completion work bringing a well to productive status. Item 2 was taxable because fishing for tubing repaired or maintained tangibl…
Is customized computer software and software maintenance taxable in New York, and how do separately stated charges affect the answer?
It depends on separately stating the charges. Under the software rules effective September 1, 1991, pre-written software that is modified or enhanced to a specific purchaser's specifications is entire…
Could an exempt oil-and-gas operator buy taxable goods and services for jointly owned properties without paying suppliers Texas tax?
Yes, using a resale certificate, but it had to allocate the purchases and collect tax from nonexempt joint owners on their billed shares. Its own share stayed exempt, subject to records and certificat…
Could parts and consumable supplies bought in Texas for African and federal offshore drilling platforms qualify for export or drilling-equipment exemptions?
Parts and consumables could qualify for an export refund if exported from the United States without Texas use or consumption. The narrower drilling-equipment exemption required detailed facts about ea…
Was a flat-day-rate horizontal drilling package with specialized equipment and technical personnel taxable in Texas?
No. The complex planning, measurement, and drilling package was a nontaxable service, and equipment was incidental. The provider paid tax on its inputs; actual standalone equipment sales or rentals re…
Were private-club locker, room, boat-slip, golf-cart, bag-storage, and minimum food-and-beverage charges taxable in Texas?
Yes. The Comptroller treated them as payments for special membership privileges, taxable whether separately stated and, for food minimums, even if the member never consumed food or beverages.
Was an incineration facility's charge to destroy hazardous medical waste collected from healthcare facilities taxable in Texas?
No. The Comptroller said the incinerator's charge to destroy the medical waste was not taxable on the stated facts.
Were dues paid by dart clubs to a Section 501(c)(7) association taxable when the association provided no dartboards or amusement facilities?
No. The association's member-club dues were nontaxable because it provided no amusement facilities. Individual clubs that did provide facilities had to tax dues collected from their own members.
Were public admission charges to automobile shows run by Section 501(c)(6) new-car trade associations taxable in Texas?
No. The Comptroller said the trade associations' public auto-show admissions were exempt under Rule 3.298(g)(1)(A).
Could a business obtain a permanent 30-day extension for filing Texas sales-tax returns because it handled a large volume of returns?
No. The Code did not allow a permanent extension. The Comptroller could grant one discretionary 45-day extension for unusual circumstances, with a written request and payment of 90% of estimated tax, …
Was a building-attendant service that checked equipment and called employees about problems taxable as Texas security service?
No. The attendant only monitored systems, turned off equipment left on, and notified employees without making repairs, and the state licensing board said the service did not require a security-agency …
Were charges to wash or sweep Texas parking lots, sidewalks, driveways, drive-throughs, and delivery areas taxable?
Yes, beginning December 6, 1991, under the Rule 3.356 amendment. Sweeping or otherwise cleaning public roads and public streets remained nontaxable.
Could a federal credit union buy beer and wine for its grand opening without paying Texas sales or use tax?
Yes. A federal credit union organized under 12 U.S.C. § 1768 was exempt on taxable items or services bought for its own use and could give the seller an exemption certificate.
How did Texas distinguish lump-sum repair and painting charges for motor vehicles from charges for equipment?
Equipment repair or painting was fully taxable. Lump-sum motor-vehicle repair or painting was nontaxable to the customer while the provider paid tax on materials; one combined vehicle-and-equipment pa…
How did Texas tax permanent truck and railroad scale installations in existing roadbeds versus new construction?
Upgrading an existing roadbed was fully taxable remodeling. New construction followed lump-sum or separated-contractor rules; qualifying railroad-track materials could be exempt, but scales not essent…
Were remodeling materials and labor exempt for a historic building owned by an exempt entity but primarily used by its for-profit subsidiary?
Materials were taxable because the for-profit subsidiary received the primary benefit. National Register listing could exempt remodeling labor, but not materials; Texas Historical Commission listing a…
How did resale certificates and sales-tax permits work through general contractors and subcontractors on separated Texas construction contracts?
Each separated new-construction contractor needed its own permit and resale certificates. Subcontractors accepted certificates from generals, and the general collected from the owner; nonresidential r…
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