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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Could an exempt university buy telephone lines for fire-safety hookups in university-owned fraternity houses without paying sales tax?
Yes. Texas said the exempt university could give the telephone company an exemption certificate instead of paying tax on the fire-safety telephone lines.
Were recurring Texas rental charges for returnable gas cylinders taxable when the cylinders were supplied with gas?
No. The later cylinder-rental charges were not taxable, but the gas charge was taxable unless the customer bought the contents for resale.
Were private telecommunications circuits used to control petroleum pipeline pumping stations exempt from Texas sales tax?
No. Texas said pipeline-control telecommunications were taxable, except that long-distance communications originating outside Texas were exempt.
Could a commercial tenant claim a Texas electricity exemption or refund when its landlord bought the utility and billed reimbursement under the lease?
No. Texas treated the landlord as using the utility commercially in leasing property, not reselling electricity to the tenant.
Was physician-prescribed or physician-dispensed methadone exempt, and how were dispensing bottles and prior tax payments treated?
Methadone was exempt when prescribed or dispensed by a physician. Prescription containers sold with it were exempt, while bottles used for drugs not sold were taxable.
Were mini Dopplers exempt therapeutic appliances, or taxable diagnostic devices?
They were taxable diagnostic devices. Texas expressly corrected its December 1990 letter, which had wrongly treated mini Dopplers as exempt therapeutic appliances.
Was a checkout surcharge used to recover junk-automobile waste-handling costs subject to Texas sales tax?
The surcharge followed the item sold: it was taxable on a taxable sale, but not taxable when the underlying sale was exempt as a resale.
Does the sales tax exemption for manufacturing equipment used in new or expanding operations cover high-speed duplicating/photocopy machines at a printing company's satellite locations that have no printing press?
No — not automatically. The Commission applies the manufacturing equipment exemption on a per-location ('establishment') basis. A printing company's central plant, which houses actual offset printing …
Did a high-volume diskette duplicating machine used to copy computer programs qualify for Texas's 1991 manufacturing-equipment refund?
Yes. Because the machine manufactured computer programs sold as tangible personal property, it qualified for the 25% refund available for tax paid on the 1990 purchase.
Were remote-terminal services taxable data processing when the provider's main computer processed client data but output printed at the client's site?
Yes. Both arrangements were taxable data processing, and the Comptroller said their total charges were taxable even though reports printed at the client's site.
Did using 45 titled trailers as collateral for a loan trigger Texas motor vehicle tax?
No. The company borrowed about $125,000 on a three-year payment plan and pledged 45 trailers, but title remained in the company's name. Because the vehicles merely secured a loan and title did not cha…
Did paint and coatings used against corrosion qualify for Texas's manufacturing refund or phase-in exemption?
They qualified on processing machinery or as legally required pollution control, but not on nonqualifying piping or equipment; application labor did not qualify.
Were historical books exempt when a nonprofit society distributed books published by others, and how did Texas tax work on registered historic buildings?
The books were taxable because the society had not both published and distributed them; specified historic-building labor was exempt, but materials were taxable.
How did Texas tax lump-sum vehicle repairs, separated repairs, vehicle remodeling, and work on movable specialized equipment?
Lump-sum vehicle repairs were not taxed to the customer, separated repairs taxed incorporated parts, and all vehicle-remodeling or specialized-equipment charges were taxable.
Are materials and rented tools a tenant's contractors use to build out leased space at 7 World Trade Center exempt from New York sales and use tax?
Partly. Insurance Services Office, Inc. leased space at 7 World Trade Center and asked whether its contractors' purchases were exempt. Because legal title to the building's construction, improvements …
When performers set and collect their own cover charges at a tavern's door, must the tavern collect sales tax on those cover charges?
The cover charges are taxable, but on these facts the performers — not the tavern — must collect the tax. 89 Cragg Road Inc. (DBA Island Cottage) runs a Rochester tavern and lets performers entertain …
Is on-site labor to relocate and install production machinery at a Connecticut customer's plant subject to sales tax?
No, if the installation labor is separately stated on the customer's bill. The trucking, hauling, crane, and rigging company removed and relocated floor lags, installed production machines on them, an…
Could Kansas sales of all-terrain vehicles or dirt bikes qualify for the farm-machinery exemption?
No. Kansas specifically excluded all-terrain vehicles from farm machinery and equipment, and the Department applied the same result to dirt bikes. A purchaser could not issue, and a retailer could not…
Did a doctor's prescription make a computer exempt from Texas sales tax as medical equipment?
No. The computer did not qualify as exempt medical equipment even with a doctor's prescription; the Comptroller did not decide the software issue.
Did paving machines qualify for Texas's 25% sales-tax refund for manufacturing equipment when customers used them on roads and parking lots?
No. The machines were contractor equipment used to improve or repair real property, not qualifying manufacturing equipment, so the 25% refund was unavailable.
How did Texas tax a prison construction contract for the Federal Bureau of Prisons on city-owned land leased to the federal government?
Texas treated it as a federal contract: no tax was charged on materials incorporated into the realty, but the contractor owed tax on equipment used to build it.
Were payments taxable when an equipment-financing arrangement was labeled a lease for accounting purposes but operated as a loan?
No. Because the financing party never received or conveyed title or possession, the Comptroller treated the arrangement as a loan, not a taxable lease.
Were charges for an interstate private-line data system subject to Texas state and local sales tax when no channel terminated in Texas?
State sales tax applied, but local city, county, and transit taxes did not apply because the circuit qualified as interstate long-distance service.
When did tenant finish-out work count as new construction rather than taxable remodeling of Texas real property?
Initial finish-out of a true shell was new construction, but changing space after flooring, walls, or a ceiling had been installed was taxable remodeling.
How did Texas sales tax apply to long-distance service, separately stated 911 surcharges, federal excise tax, and municipal franchise fees?
Tax applied to specified long-distance service and municipal franchise fees, but not to separately stated 911 surcharges or federal excise tax.
Was a Texas fee for providing managers who trained and directed a facility's own housekeeping and laundry employees taxable?
No. The management fee was not taxable, but the management company owed sales or use tax on taxable items it used to provide the service.
Were accelerated monitoring-service charges taxable when a burglar-alarm customer terminated the contract early?
Yes. The customer had agreed to pay for the taxable monitoring term even after ending service, and tax timing followed the provider's accounting method.
Were monthly subscriptions and per-lead charges for faxed trade-lead information subject to Texas state and local sales tax?
Yes for Texas customers: both charges were taxable. No Texas tax was collected when the information was faxed to customers outside Texas.
Does an out-of-state corporation that holds a passive limited-partnership interest in a New York cogeneration project owe New York franchise tax, and if so, is it taxed under the general Article 9-A rate or the utility-specific Article 9/section 186 rate?
Yes to nexus, and it may be Article 9 instead of Article 9-A. PEC Fort Drum, Inc., a Florida corporation with no independent New York presence, held an indirect 10% foreign-corporate-limited-partner i…
Which of a printer-mailer's services — personalized mailings, label printing, electronic data processing, and packaged or custom software — are subject to New York sales tax?
Mostly taxable, with specific exemptions. Computerized Transactions Inc. asked about five printing/mailing and software services. (1) Personalizing letterheads/envelopes and giving the client the data…
Were guided educational river trips in Texas taxable even when they taught customers about river geology and botany?
Yes. Guided river trips were taxable amusement services; the rule's specific guide-service exemption covered hunting and fishing, not river trips.
Which charges at an indoor fitness and play center were taxable amusement services, and was a tumbling-style class exempt?
Passes, club cards, group trips, parties, games, food, and merchandise were taxable; the creative-movement class was exempt sport instruction.
Is a company that leases furnished New York City apartments to tenants for a month or more a taxable 'hotel,' and which of its extra charges are taxable?
Not a hotel — the rent is exempt, but several add-on charges are taxable. KPMG Peat Marwick asked whether 'XYZ,' which leases furnished New York City apartments to residents for terms of one month to …
Does the 5% special tax on passenger-car rentals apply when a taxi company leases cabs to drivers by the shift?
Yes. BEJ Taxi Corp. leases cabs to drivers in Albany County on a shift basis (6-12 hours) and pays the registration, insurance and other nontaxable charges. The Department held the 5% special tax on p…
How did SC Revenue Ruling 91-3 tax hotel-guest valet laundry charges, the cleaner's charge to the hotel, and cleaning of hotel-owned linens?
The independent cleaner's charge to a hotel for cleaning a guest's clothing was a nontaxable wholesale sale for resale. The hotel's valet-service charge to the guest was a taxable additional guest cha…
Did using personal computers and diskettes change whether an advertising agency's preliminary and finished artwork was taxable?
No. The work and client approval controlled: preliminary art was nontaxable, finished art was taxable, and the transfer medium did not decide the result.
Did renting a licensed trailer with an empty water tank trigger Texas motor vehicle rental tax?
Yes, if the contract lasted 180 days or less. The owner had to collect the historical 6% motor vehicle rental tax and obtain a rental tax account. A single contract lasting more than 180 days was trea…
Is rent for leasing an entire parking garage taxable, and can a building owner who leases the garage to serve tenants treat that rent as a nontaxable purchase for resale?
Taxable, with only a partial resale credit. A building owner wanted to lease an entire adjoining parking garage — with the garage owner continuing to operate and maintain it — to provide parking for i…
Was hazardous-waste cleanup performed under a state environmental mandate considered 'voluntary' and excluded from Connecticut sales tax?
No under this historical ruling. The exclusion in Conn. Gen. Stat. § 12-407(2)(i)(I) applied only when a company acted solely on its own initiative. Cleanup following a federal or state agency mandate…
How could a computer lessor recover Texas sales tax paid to the prior owner of a supplier business on computers bought for leasing?
The purchaser could seek a refund or an assignment of the seller's refund right, or claim a return credit; local-tax credits required matching jurisdictions.
Did the 1991 federal luxury tax enter the taxable sales price for Texas motor vehicle tax?
No, when the federal luxury tax was separately stated and identified on the invoice. In that circumstance, the 1991 letter said it did not become part of the vehicle's taxable sales price and was not …
Was an extended service contract sold with a motor vehicle taxable in Texas?
The contract itself was not subject to motor vehicle tax or limited sales and use tax. Repair and replacement parts used under it remained taxable: separately billed parts were taxed to the customer, …
Were refrigeration units bought separately and attached to trailers after the vehicle sale subject to motor-vehicle tax or limited sales and use tax?
They were subject to limited sales and use tax, not motor-vehicle tax, because the accessories were separately purchased and attached after the trailer sale.
Were installation, software, and communication charges taxable when sold with a Texas information service?
Yes. The Comptroller treated all three charges as part of the taxable information service whether billed separately or as one lump sum.
Were literary-agent fees taxable Connecticut sales-agent services when agents helped authors place manuscripts with publishers?
No. Literary agents represented authors in approaching publishers and were paid through retainers or commissions, but the manuscript was the author's intellectual product and was not tangible personal…
Were charges for guided tours of a choose-and-cut Christmas tree farm subject to Texas sales tax?
Yes. The Comptroller treated the guided tours as taxable because they were not primarily educational, although an exempt organization could buy admission for its members with an exemption certificate.
Could an association obtain a Texas sales-tax refund for monthly publications prepared and mailed to members by an outside publisher?
No. The Comptroller treated the association as the publisher rather than a purchaser of publications, so the referenced court case did not produce a refund.
Did an aircraft modified and used for aerial photography qualify for Texas's manufacturing-equipment exemption?
No. The Comptroller treated the aircraft as support equipment because it was not used directly to manufacture a photograph.
Could a retailer claim a Texas sales-tax bad-debt credit for an estimated loss when it sold installment receivables without recourse?
No. An estimated bad-debt allowance did not identify the customers who would default; relief required a qualifying actual bad debt, such as a recourse account returned after default.
How did Texas local sales taxes apply to residential and commercial natural-gas and electricity use, and to exemption certificates?
Commercial utility use was taxable and residential use was generally exempt for special-purpose districts, but a city could tax residential use if it retained or reimposed that tax.
Is J.P. Morgan's proposed new New York investment subsidiary -- formed under the federal Bank Holding Company Act's section 4(c)(7) to make leveraged-buyout and venture-capital securities investments -- taxed as an Article 32 banking corporation, or under general Article 9-A?
It depends on year-end facts, not the federal charter. J.P. Morgan & Co. Incorporated ('JPM'), which owns 100% of Morgan Guaranty Trust Company of New York ('MGT') and files combined Article 32 return…
When were an advertising agency's internal-work commissions and radio or television production charges taxable in Texas?
Commissions tied to taxable in-house finished art were taxable, while preliminary art and third-party acquisition commissions were not; commercial production was generally nontaxable.
How did Texas tax advertising-agency work related to finished art, and how should fixed-price billing adjustments affect collected tax?
Work related to finished art was taxable, including post-approval copywriting; billing records and any client tax adjustment had to match the final taxable charge.
How did Texas tax garbage-collection costs when Houston reimbursed a homeowners association and residents paid the difference?
If residents were billed the unreimbursed difference, tax applied only to that amount; if the association absorbed it, the contractor's entire charge was taxable.
Buffalo Brass Company, Inc., a foreign corporation that elected both federal and New York S-corporation status, asks whether its shareholders must add back to their New York adjusted gross income their pro rata share of the deduction Buffalo Brass took on its federal return for the new corporate-level franchise tax and surtax that Chapter 190 of the Laws of 1990 imposed on New York S corporations.
No add-back is required. The Department ruled that the new corporate-level tax and temporary surtax that Chapter 190 of the Laws of 1990 imposed on New York S corporations under Article 9-A are 'franc…
Lionel E. and Maxine Gordon, Florida residents who sold a Long Island telephone-answering business, ask whether payments Lionel Gordon received from the buyer under a noncompetition agreement are New York source income to him as a nonresident, even though he receives them in monthly installments long after the sale.
Yes. Restrictive-covenant payments tied to the sale of a New York business are New York-source income to a nonresident seller, taxable as received even years after the sale. Because the covenant's val…
Were Shaved Ice Flavor Packets exempt food products for Texas sales-tax purposes?
No. The Comptroller treated the flavor packets as taxable because packaged soft drinks and diluted juices were excluded from the rule's food-product definition.
Were separately stated port charges on passenger tickets for an entertainment vessel subject to Texas sales tax?
Yes. The port charges were part of the selling price of the taxable amusement service, so tax applied to the total admission price including those charges.
Must a title-holding company that sells club-membership stock register as a vendor, and does the assessment statute of limitations run if it never filed sales-tax returns?
It must register, and no time limit protects it. St. George Operating and Improvement Co. is a title-holding company whose golf course is leased to the St. George Country Club; new members must buy st…
Does a bookstore have to charge New York sales tax on the sale of bibles?
Yes. Lauriat's, Inc., which operates a chain of retail bookstores in New York, asked whether selling bibles is taxable. The Department held that bibles, like any other books, are tangible personal pro…
How these rulings are useful
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