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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Did cogeneration equipment qualify for Texas's manufacturing-equipment phase-in exemption when the company sold more than half of its electricity?
Yes. The Comptroller applied a more-than-half-for-sale test: equipment qualified when over half of the electricity produced was sold, and the exemption was not lost merely because the same equipment a…
If an out-of-state parent corporation is mistakenly listed as the record owner of New York real property that its subsidiary actually purchased, operates, and pays taxes on, does the parent become subject to New York franchise tax merely because of that clerical title error?
No. Petitioner, a Michigan corporation not authorized to do business in New York, had no involvement with New York operations -- its wholly owned New York-qualified subsidiary (PVS-NY) purchased, oper…
Under SC Revenue Ruling 91-20, when was a tax preparer's electronic-filing charge subject to sales tax?
When the same preparer prepared and electronically filed the return, the filing was incidental to the nontaxable preparation service and the combined charge was not taxable. When the preparer only tra…
Could an amusement provider and its ticket agent decide by contract which party collected and remitted Texas ticket sales tax?
Yes between themselves, but their agreement did not bind the Comptroller. The amusement provider was ordinarily responsible, while a contract could assign collection and remittance to either party. If…
How did Texas tax stand-alone business consulting, training, business evaluations, separately sold books, and books included in training?
Stand-alone consulting, separately stated training, and the described business-viability evaluation were nontaxable. Consulting tied to a taxable item became taxable. Separately sold books were taxabl…
When did Texas begin taxing human-operated telephone answering services, and what amount and local jurisdiction were taxable?
Human message-receiving and relaying became taxable October 1, 1991; electronic answering had been taxable since October 1, 1985. Providers collected 6.25% state tax plus applicable local tax based on…
Which of a telecom carrier's transmission assets qualify for New York's central-office-equipment sales-tax exemption?
Only the equipment that directly and predominantly (more than 50%) switches, initiates, or receives telephone communication at its destination qualifies. For MCI and the related carriers, assets that …
How did Texas tax septic-tank pumping and drain-line unstopping for business and residential customers?
Septic pumping alone was nontaxable for both. Business drain unstopping was taxable, and a combined pumping/unstopping charge was fully taxable unless pumping was separated. Residential labor was nont…
How did Texas tax septic pumping and drain-line unstopping for commercial and residential property?
Septic pumping alone was nontaxable. Commercial drain unstopping was taxable, and combined pumping was taxable unless separately stated. Residential labor and lump-sum materials-and-labor work were no…
Was a one-time $25 administrative fee to transfer residential HVAC repair contracts after a company's bankruptcy subject to Texas sales tax?
No. The Comptroller said the one-time $25 fee charged to transfer each repair contract to the replacement service company was not taxable on the stated facts.
Is a separately priced software maintenance agreement taxable in New York, and how did the 9/1/1991 law change the answer?
It depends on the date, and on itemization. Before September 1, 1991, custom/modified software was intangible personal property, and maintaining or servicing an intangible was not an enumerated servic…
Are honey-roasted peanuts taxable in New York, or are they exempt food?
Yes, they're taxable. Planters Honey Roasted Peanuts are dry-roasted peanuts with a light honey glaze encrusted with sugar (the principal ingredients after peanuts are sugar and honey). Under regulati…
Is an unincorporated, nonprofit residential condominium that earns income from common laundry and garage facilities subject to New York's Article 9-A franchise tax for years before 1989, when the definition of 'corporation' required actually conducting business?
Yes. This unincorporated, nonprofit residential condominium, organized under Real Property Law Article 9-B, derives revenue from common-charge assessments, reserve-fund interest, and common laundry an…
If a corporation voluntarily dissolved decades ago but keeps title to and rents out the same real property, does it still owe New York franchise tax, and can it elect New York S corporation status?
Yes, it remains taxable, and yes, it can elect S status if otherwise eligible. Judsu Realty Corp. voluntarily dissolved in 1965 but has continued ever since to hold fee title to, and operate the renta…
Does a trash compactor bought for an expanded manufacturing facility qualify for Utah's manufacturer's sales tax exemption?
No. The Utah State Tax Commission ruled that a trash compactor purchased for an expanding manufacturing facility does not qualify for the manufacturer's sales tax exemption under Utah Code § 59-12-104…
Does a federal agency keep its sales and transient room tax exemption on employee lodging when a contractor handles the billing?
Yes, but only if the government's own money actually pays the hotel — the check must be made payable to the hotel and traceable to the agency's funds, not simply channeled through a contractor's own a…
Were capital assessments charged to proprietary members of a nonprofit Texas country club subject to sales tax?
Yes. The assessments were part of the taxable sales price of private-club membership because Section 151.007(e) included dues, fees, initiation fees, and other assessments required for membership or a…
How should a seller document tax-free class-ring sales to a university bookstore, and when could it accept the bookstore's claimed university exemption?
A bookstore buying rings for resale had to provide a resale certificate, not a government exemption certificate. A properly completed university exemption certificate could protect a good-faith seller…
Could a church buy telephone service for its pastors' parsonages tax-free when the phones had some personal use?
Yes. The Comptroller said churches could purchase telephone service for parsonages tax-free by giving the telecommunications provider an exemption certificate.
How did Texas tax cathodic corrosion-protection systems installed on existing pipelines, well casings, tangible equipment, or new construction?
Installation on an existing nonresidential pipeline or well casing was taxable real-property repair or remodeling on the total charge. Installation on equipment remaining tangible personal property wa…
Were utilities at fee-simple timeshare condominiums exempt residential use when units were occupied only by owners and never rented to nonowners?
Yes. The October 29 follow-up treated owner-only occupancy as exempt residential use. The attached earlier letter applied a 30-day and per-meter predominant-use test to mixed residential and short-ter…
Are the management fee and cost reimbursements paid to a food-service contractor to run a subsidized cafeteria subject to New York sales tax?
Yes. ARA Services would run a for-profit cafeteria open to the general public in a building whose landlord pays it a management fee plus cost reimbursements. Pure management of a for-profit cafeteria …
Were Texas insurance claims adjusting or processing services taxable when performed for a surplus-lines or non-admitted insurer covering a Texas risk?
Generally yes. The provider had to presume the service was taxable when the insured person or property was in Texas. It could avoid collection when the insurer was not conducting insurance business in…
Could a change order executed during construction retroactively convert a lump-sum real-property contract into a separated contract?
Yes. A retroactive amendment changed compensation to reimbursable actual costs plus a fixed fee and required amended and future invoices itemizing incorporated materials and other expenses. That cost-…
Was artwork sold by a graphic artist to an advertising agency taxable when the agency used it only in conceptual ad-campaign development?
Yes. The artist delivered a finished product to the agency, so the sale was taxable. The agency's later use of that artwork as preliminary or conceptual material did not change the finished-art classi…
How did Texas tax underground-tank excavation, tank disposal, contaminated-soil removal, replacement installation, repair, inspection, and mixed charges?
Tank excavation was nontaxable demolition, but tank hauling and disposal were taxable. Qualifying contaminated-soil removal was exempt with a certificate. New installation followed construction rules;…
How did Texas tax underground fuel-storage-tank removal, tank disposal, contaminated-soil disposal, repair or upgrading, and installation of a new tank?
Tank excavation and removal were nontaxable demolition, but hauling and disposing of the tank were taxable waste removal. Qualifying contaminated-soil disposal was nontaxable, repair or remodeling was…
Did a company have to collect Texas sales tax for pumping, hauling away, and disposing of gasoline-contaminated water from underground fuel storage tanks?
No, if the liquid was an industrial discharge regulated by the Texas Water Commission and the provider held the required permit. The provider had to obtain and retain a completed exemption certificate…
Could a software developer buy boxes, wrapping paper, envelopes, tape, and similar supplies tax free when they were used to package computer programs?
Yes. If the corporation produced computer programs as defined by Rule 3.308, it could buy the listed wrapping and packaging supplies tax free by giving its suppliers an exemption certificate instead o…
Were bags supplied to third parties tax-exempt packaging when used for cement the company made versus cement it bought from other manufacturers?
Bags used to package the company's own manufactured cement were exempt even when an unrelated packager did the work. Bags supplied to other manufacturers for cement the company later bought and resold…
If an out-of-state trade-show promoter's only New York activity is renting a convention center for a single three-day franchise expo, does that one event make it subject to New York corporate franchise tax?
Yes. Blenheim Franchise Shows, Inc., a Florida-based producer of small franchise expos with its only office in Winter Park, Florida, produced 43 shows nationwide in 1990 -- only one of them in New Yor…
Did ABC's South Carolina quality-control and customer-complaint visits exceed Public Law 86-272 solicitation protection?
Yes. ABC's technicians and plant managers inspected rejected yarn, decided whether it was defective, proposed remedies, and advised customers how to adjust machinery or processes. The ruling held that…
Was the S.B. 324 fee charged by a local recording insurance agent for services outside the insurer-paid commission subject to Texas sales or use tax?
No. The authorized fee itself was not subject to sales or use tax. But the agent still had to pay vendors' tax on any taxable property or services acquired for the client, and that tax became part of …
Did the taxpayer's publication qualify as a magazine, and what objective criteria did Texas use to distinguish a magazine from a newsletter?
Yes. The publication qualified because it had paid subscribers, appeared monthly, contained articles by various writers, and used a second-class postal permit. Texas also considered whether a publicat…
If an out-of-state manufacturer's only New York presence is a handful of employee-days per year repairing products it sold, is that enough activity to make it subject to New York's corporate franchise tax?
Yes. The American Crane Corporation, a North Carolina crane manufacturer with all operations based in Wilmington, sent a small service department into New York for a maximum of about two weeks a year …
Could a taxpayer file monthly Texas sales-and-use-tax returns using a 13-period accounting calendar, and how were period-end dates assigned to returns?
Yes. Periods ending on days 1-10 were reported on the prior month's return due on the 20th of that month; periods ending on days 11 through month-end were reported on that month's return due the next …
Was a monthly fee for access to a computer database of found animals taxable when people reporting found pets supplied information for free?
Yes. The monthly fee paid by owners of lost pets for access to the found-animal database was taxable as an information service under Rule 3.342.
Were automobile hand controls and a vehicle modified for an orthopedically handicapped person exempt from Texas tax?
Yes under the stated conditions. Hand brakes were exempt orthopedic devices when they enabled a person with missing, damaged, or nonfunctioning organs or appendages to drive, and § 152.086 exempted a …
If a company has no office in New York but its employees occasionally spend a small amount of time there, does any of their compensation count in the numerator of the Article 9-A payroll factor?
No -- the payroll factor numerator is zero. Himont USA, Inc., a Delaware company with no office or place of business in New York and no New York-resident employees, had a small property factor (about …
Was a confidential, client-tailored medical literature search a nontaxable proprietary-information service when its source material came from public-access databases?
No. The search was a taxable information service because the client had no enforceable proprietary rights in the public-access source material. Tailoring the search, keeping results confidential, or s…
When were a property manager's repair and maintenance services exempt for permanently assigned employees, related corporations, rental property, and dollar-for-dollar reimbursements?
The employee exclusion required rental property, permanent assignment to one owner's property or properties, and dollar-for-dollar reimbursement. Common ownership alone did not merge separate corporat…
Were a nonprofit club's charges for horse-stall space and feeding taxable when stable access was a membership privilege versus being offered to members and nonmembers alike?
The charge was taxable effective October 1, 1991 if the right to stable a horse was a privilege of club membership. It was not taxable if the stable facilities were available to members and nonmembers…
Did the 1991 removal of the Section 501(c)(7) club exemption make dues and membership fees taxable for fraternities, sororities, scouts, and similar service organizations?
No. The Comptroller's clarification said dues and membership fees paid to fraternities, sororities, scouts, and similar service organizations were not subject to the newly enacted amusement-services t…
Could an amusement provider be designated as solely responsible for sales tax when a ticket agent sold admissions and a successor disputed who had to collect and remit?
No sole designation was given. The parties' contract could assign collection and remittance duties, but it did not bind the Comptroller. If the ticket tax was not reported and paid, Texas would hold b…
Were a nonprofit country club's membership dues exempt when members prepaid them before the October 1, 1991 repeal of the club exemption?
Yes. Dues actually received before October 1, 1991 were exempt with no limit on how far ahead a member could prepay. Later income recognition did not make them taxable, but the club had to keep record…
Was a charge for drug-screening urinalysis taxable, and what happened if the consultation also included licensed background or character investigations?
Urinalysis by itself was not taxable. If the same consultation included background checks, character investigations, or similar work requiring a license under the Private Investigators and Private Sec…
How did the October 1, 1991 effective date apply to a private club's initiation fees, equity component, installment payments, and operations assessment?
The member's joining date controlled. Fees assessed to members joining before October 1 were nontaxable even if paid later; fees for members joining on or after that date were taxable, including the $…
Can a customer give a contractor a capital-improvement certificate after the contract is signed and the first tax invoice is paid, and who then owes tax?
Yes, the customer can furnish the certificate later, with limits. Once Action Scale receives a properly completed Certificate of Capital Improvement, it must stop collecting sales tax on future invoic…
Which dental-lab charges did SC Revenue Ruling 91-19 treat as exempt prosthetic production, taxable products, or services?
Charges for listed stages used to manufacture exempt dentures or crowns were part of the exempt prosthetic-device sale, even when several labs billed separate stages. Surgical trays and night guards w…
Were natural gas and electricity exempt when a plant manufactured restaurant equipment partly for sale to franchisees and partly for use in company-owned restaurants?
Only the utility used to manufacture equipment sold to franchisees was exempt. Utility used to make equipment for the company's own restaurants was taxable. Because the submitted study did not separat…
Were truck-time and per-gallon charges for disposing of oil and water from a groundwater test well taxable as waste removal?
No, if the waste was an industrial discharge regulated under a Texas Water Commission permit. The provider needed a properly completed exemption certificate; without one, the service was presumed taxa…
Is a contract to care for and maintain live plants (like office interior plants) subject to Nebraska sales tax?
Yes. Under Revenue Ruling 01-91-2, when the owner of live plants that are not incorporated into real property buys an agreement providing for the continuing care or upkeep of those plants, the sale of…
Were fees for storing fire- and water-damaged property and the premium for bailee's insurance subject to Texas sales tax?
No. The Comptroller said both the storage fees for fire- and water-damaged items and the bailee's-insurance premium were nontaxable, and allowed continued reliance on the June 1989 Sales Tax Review.
Is the sale of advertising space in a free discount-shopper directory subject to New York sales tax?
No. A client that publishes a discount shoppers directory and earns income only from selling advertising space in it is providing an exempt advertising service, not a taxable information service. Tax …
Were recurring club assessments billed in late September for October taxable, and were September amusement services taxable if payment arrived after October 1, 1991?
October assessments billed in advance at the end of September were taxable. By contrast, billings for amusement services actually provided in September were nontaxable even when the club received paym…
Were concession-stand food sales exempt when a school-associated group sold them as a fundraiser and kept all net proceeds for its exclusive use?
Yes. Under the stated facts, the sales were exempt because the group was associated with a public or private elementary or secondary school, the sales were part of its sponsored fundraising drive, and…
Was regularly scheduled cleaning of kitchen vent hoods and exhaust systems nontaxable preventive maintenance or taxable building cleaning?
It was taxable building and grounds cleaning under Rule 3.356. Although the work helped prevent fires and had maintenance features, Texas found it closer to chimney or duct cleaning than to the repair…
Which for-profit country-club membership dues did historical SC Revenue Ruling 91-18 subject to admissions tax?
The ruling taxed social dues that included discounts or privileges for other club facilities for all open periods. Beginning April 1, 1992, it also taxed true social dues and the full amount of golf, …
How did Texas tax HVAC maintenance and repair contracts for tangible equipment, commercial real-property systems, and residential real-property systems?
Tangible-equipment service was taxable. Scheduled preventive maintenance on commercial realty was nontaxable, but repair charges were taxable and an unallocated lump sum became taxable when repairs ex…
Which supermarket bags and food-packaging supplies were taxable at checkout, produce, bakery, and meat departments?
Checkout and produce bags were taxable. Bakery packaging was exempt only when the store baked its own goods and supplied an exemption certificate. Meat trays, film, pads, and paper were exempt because…
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