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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Is a Swiss nonprofit medical-research joint-stock company, federally tax-exempt under IRC section 501(c)(3) and dedicated entirely to charitable cancer research with no shareholder profit rights, exempt from New York's Article 9-A franchise tax simply because it has stock?
No, it's taxable. The Ludwig Institute for Cancer Research is a Swiss nonprofit joint-stock company devoted entirely to charitable cancer research, funded by an endowment, with fifty shares carrying o…
Was a bunker receipt enough to document Texas's sales-tax exemption for fuel consumed by a vessel operating exclusively in foreign or interstate commerce?
No. The fuel could qualify when consumed in a vessel operating exclusively in foreign or interstate commerce, but the purchaser had to give the supplier a valid, complete exemption certificate. The ce…
When were interior-design drawings taxable as graphic arts rather than nontaxable decorating services?
Drawings resulting from decorating services were not taxable; plans created for sale or drawn to another person's specifications were taxable.
Was Texas tax due when a Texas watch-repair seller subcontracted the actual repair work to a business in New York?
Yes. The Texas shop remained the seller to the customer and delivered the repaired watch in Texas, although it could buy the subcontracted repair for resale.
Were a paper distributor's cutting and freight charges taxable when the customer bought the paper for resale and supplied a valid resale certificate?
Cutting and freight were taxable components of the paper's selling price, but the distributor did not collect tax when the customer gave a valid, properly completed resale certificate covering the res…
Was providing trailer-mounted searchlights with operators a taxable equipment rental or a nontaxable advertising service?
It was a nontaxable advertising service. The business did not rent units without operators, its staff delivered, set up, adjusted, started, directed, and secured the lights, and customer control did n…
Was a city's charge for slicing waste tires taxable when the city also removed them to a private landfill, and what if customers brought tires directly to a landfill for slicing?
Tire slicing by itself was nontaxable, but slicing performed as part of taxable waste removal made the entire charge taxable. If the slicing machinery were at the landfill and customers simply brought…
Which long-distance telecommunications charges were taxable, and could cable-television companies buy taxable intrastate transmissions for resale?
Interstate and international long-distance transmissions were exempt when they were not both originated from and billed to a Texas number or address. Services originating in Texas and billed to a Texa…
How did Texas tax rented water-conditioning systems, salt used in the service, sold-and-installed systems, and scheduled maintenance in existing nonresidential buildings?
The water-conditioning service was nontaxable, but the provider owed tax when buying all rental equipment and consumable materials, including salt. Selling and installing a permanent system in an exis…
Was a city's environmental protection fee on residential garbage-collection bills subject to Texas sales tax?
Yes, when tied to a separately billed garbage-collection charge; the letter said no tax was due when the city combined it with nontaxable services without itemizing garbage collection.
Which fruit-juice and bottled-water products did Texas treat as exempt, and when did dilution or flavoring make them taxable?
One-hundred-percent fruit juice remained exempt when calcium-fortified or restored from concentrate to original single strength. Juice diluted beyond single strength was taxable. Unflavored water was …
Was Texas tax due when a stock item held in Texas inventory for resale was shipped to an Illinois sales office and given to an Illinois prospect as a sample?
No. The Comptroller treated the item as held for resale before it was shipped out of Texas. The Illinois salesman ordered the normal stock item from inventory, received it at the Illinois office, and …
Were home-dialysis machines and mixed supply kits exempt from Texas sales tax?
Machines and operating supplies were exempt; mixed kits followed the predominant cost, and therapeutic items required a prescription.
Did Texas waive use tax for a Texas-resident service member registering a vehicle while stationed elsewhere?
No. The 1990 letter found no exemption when the Texas-resident service member planned to register in Texas while returning to a New Mexico duty station. The historical 6% use tax was due at Texas titl…
How were a city's separately billed new water taps, sewer taps, and driveways taxed, and how did replacement taps and culverts differ at residential and nonresidential locations?
For new improvements under separated billing, incorporated materials were taxable and labor was not. Replacing water or sewer taps, or installing a culvert in an existing nonresidential driveway, was …
Could a company use its multistate sales-tax exemption certificate in Texas, and when would it need a Texas sales-tax permit?
The enclosed multistate certificate was not acceptable as either a Texas resale or exemption certificate. The Comptroller could not decide the permit question without more facts, but said a company pe…
Did a seller owe Texas tax when its Missouri customer directed taxable goods to be drop-shipped to a recipient in Texas?
Yes. The seller should charge Texas use tax unless the Missouri customer was reselling the goods and gave a valid resale certificate.
Did historical SC Revenue Ruling 90-7 tax membership fees for health clubs, gyms, spas, and fitness centers?
Yes. Beginning May 1, 1991, membership fees for for-profit health clubs, gyms, spas, fitness centers, and similar places of amusement were subject to admissions tax. Charges to members of a nonprofit …
Were software development and maintenance receipts taxable when one corporation occasionally hired the software seller's employees as independent subcontractors?
No, under the stated arrangement. The service corporation did not have to collect tax from its customer or pay tax to the independent subcontractor when the hired programmer had developed the program …
When a natural gas utility sells and installs vehicle conversion kits, sells compressed natural gas (CNG) as motor fuel at its own filling stations, and wholesales natural gas to fleet owners and other filling stations, which of those transactions trigger sales tax, motor fuel excise tax, and section 186/186-a utility gross earnings tax?
Different treatment for each of five transaction types. The Brooklyn Union Gas Company planned to sell/install below-cost CNG vehicle conversion kits, sell CNG as motor fuel at its own filling station…
MAJ Stephen E. Charkow, a New York domiciliary in the U.S. Army stationed in Germany, plans to retire from active duty at the end of October 1991 and then return to New York State. Will he be treated as a New York nonresident for calendar year 1991, the year he retires?
It depends on which 548-day window he picks and how many days he actually spends in New York, but if structured carefully he can qualify as a nonresident for all or part of 1991 under the 548-day fore…
Did a local exemption for telecommunications services also exempt equipment sold to customers and repairs to customer-owned equipment?
No. Equipment sold with title transferred to the customer and repairs to customer-owned equipment remained subject to local sales tax even where the local jurisdiction exempted telecommunications serv…
Which sales tax exemption documents should a painting contractor obtain when working as a subcontractor for a prime contractor or directly for an owner or tenant?
It depends on the type of job. Sharon P. Sheinfeld asked, for a painting contractor who does both capital improvements and repairs (as a subcontractor for prime contractors and directly for owners and…
When a taxable information report is delivered to a client's offices both inside and outside New York, how much of the charge is subject to New York sales tax?
Only the part delivered in New York is taxable. Paul R. Comeau asked how much sales tax an information-service company must collect when it sends taxable research and marketing reports to a client tha…
Must a New York manufacturer collect sales tax when an unregistered out-of-state wholesaler buys goods for resale and has them drop-shipped to New York school districts?
Yes — the manufacturer must collect New York sales tax unless it gets a valid resale certificate, and the unregistered wholesaler cannot issue one. Vanguard Corporation, a New York maker of steel fili…
When could a lump-sum vessel repairer buy repair materials tax-free in Texas?
For a vessel of at least eight tons used exclusively and directly in a commercial enterprise, qualifying repair materials were exempt, but tools and equipment were not.
How did Texas distinguish nontaxable industrial-solid-waste collection from taxable office-trash collection in a mixed container?
Industrial waste came from manufacturing, mining, or agriculture; for a mixed container, the customer could document both services and self-pay tax on the taxable share.
What counted as industrial solid waste for Texas waste-removal tax purposes, and how should a customer handle a collector providing both taxable and nontaxable removal?
The letter used the Solid Waste Disposal Act definition: waste from manufacturing, mining, or agriculture, excluding regulated liquid or semiliquid waste and waste from service, retail, or manufacturi…
What credit did Texas allow when vehicles or equipment leased outside Texas were brought into the state?
Texas allowed the owner or lessee credit for tax legally paid to another state on the same vehicle and allowed similar credit for other leased equipment. The letter separately said a motor vehicle ren…
If a Utah parent company contributes its trade name, logo, and proprietary technology to a newly formed IP-holding subsidiary in exchange for stock, is the contribution tax-free, is the new subsidiary automatically part of the parent's unitary group from day one, and is the royalty income the subsidiary earns from licensing that IP back to affiliates (and to outsiders) treated as apportionable business income?
Yes to all three questions, on the facts presented. Contributing the trade name, logo, and proprietary technology solely in exchange for the new subsidiary's stock is a nonrecognition transaction unde…
Was advertising delivered through free public-use machines taxable, and were the machines treated as vending machines?
The service was not taxable and the machines were not vending machines, but the provider owed tax on machines and promotional materials.
Did Texas's agricultural exemption cover a ranch water-softening system used by ranch hands rather than exclusively for livestock watering or crop irrigation?
No. Agricultural equipment had to be used exclusively in qualifying agricultural operations such as watering livestock or irrigating crops for sale. Materials used to build or operate a ranch house an…
Did House Bill 1588 or the Petroleum Storage Tank Remediation Trust Fund exempt taxable items and services used to remove, repair, or replace leaking fuel tanks?
No. The trust fund paid for remediation, but House Bill 1588 did not amend the sales-and-use tax law to exempt tangible personal property or taxable services used in that work. Taxable remediation inp…
Who had Texas sales-tax duties at a flea market held on city property—the vendors, the city promoter, or both?
Vendors had to collect and remit tax. The signed response said the promoter could also be liable for unpermitted vendors, but attached staff memos recorded conflicting enforcement practice.
Was a coupon booklet taxable when it included maps and local descriptions but primarily transferred consumers' rights to merchant discounts?
No. The Comptroller treated the booklet sale as a nontaxable transfer of intangible discount rights because that was its primary purpose. The producer still owed tax on all printing costs incurred to …
Did Connecticut Attorney General attorneys owe the historical attorney occupational tax when they performed no-fee pro bono work outside their state employment?
No on these limited facts. The state-employee exemption did not itself cover legal work outside the attorneys' official duties, but the 1989 occupational tax was aimed at legal services performed for …
Did leases requiring customers to pay taxes imposed during the term qualify for Texas's 1990 prior-contract rate protection?
No. The tax clause allowed the increase to be passed through, so the leases failed the statutory no-change-or-modification condition.
Was the full $275 flat fee taxable when a business bundled a nontaxable three-hour limousine service with a taxable dinner for two?
Yes. Limousine service alone was nontaxable at the time and the dinner was taxable. Because the seller charged one all-inclusive price without separately stating the taxable and nontaxable components,…
Were farm stands and farmers' markets treated as sellers of taxable meals, and which products remained taxable?
Traditional farm stands and farmers' markets were not sellers of meals under Bulletin No. 17, so farm-origin eggs, cider, seasonal fresh produce, honey, maple syrup, milk, and dairy products were not …
Did a sales-tax-exempt anti-drug organization have to collect Texas tax when it sold its own campaign book and a red ribbon?
The book was exempt as a writing, but the red ribbon was taxable. The organization's exempt status protected qualifying purchases for its own use; it did not excuse the organization from collecting ta…
Was a city's landfill dump fee taxable when the city only received waste at the landfill and did not collect or remove it from the customer?
No. A fee solely for receiving waste at the landfill was not taxable. The taxable service was collecting or removing garbage or solid waste; when a provider picked up household trash and carried it to…
Were pressure washers used to clean farm and ranch equipment exempt from Texas sales tax?
Yes, if used exclusively to maintain equipment used exclusively to produce agricultural products for sale; a later registration rule also applies.
Did heating thickened black liquor solely so it could be vacuumed from outdoor storage and moved indoors count as processing in Texas?
No. The Comptroller treated the activity as transportation rather than processing and allowed an exemption certificate stating that purpose.
Are sales of aerosol sprays that detect drugs or explosives taxable, and does it matter whether the buyer is a government agency, a business, or an individual?
The sprays are taxable tangible personal property when sold to private buyers, but sales to federal, state, or local government are exempt. Sher Test Corporation planned to sell sets of aerosol sprays…
When a company's New York net operating loss for a particular year has already been fully used up in an earlier aggregate carryforward, but the federal loss for that same year still has unused carryforward remaining, can the company still claim a New York aggregate NOL deduction for a later year that includes that already-exhausted year?
No -- a year with a fully exhausted New York NOL drops out of later New York aggregates, even while the corresponding federal loss for that year still has carryforward remaining. Arista Records, Inc. …
Barry N. Wish, a founding partner of a merchant-banking and securities dealer/trader partnership, reported large net short-term capital gains from trading regulated futures contracts as part of his 1986 self-employment income, and treated that income as 'personal service income' eligible for New York's Maximum Tax on Form IT-250. Do Wish's partnership distributive share and, in particular, his regulated-futures-contract trading gains, qualify as personal service income under former Tax Law § 603-A?
As a matter of law, no - Wish's regulated futures contract trading gains are not 'earned income' or personal service income under IRC § 401(c)(2)(C) or Tax Law § 603-A(b)(1)(B), because his personal e…
When did SC Revenue Ruling 90-6 tax video-rental club membership fees and late-return charges?
A video-club membership fee was taxable when it entitled the customer to free or discounted movie or VCR rentals. A fee serving only as a security-deposit substitute or nominal processing charge, with…
Did a federal contractor owe South Carolina sales or use tax on supplies bought for Army watercraft kits when title vested in the government upon vendor delivery?
No under the stated contract. Purchases of reimbursable end-item hardware were wholesale sales for resale because title vested in the Army upon vendor delivery, and the contractor's transfers to the f…
Did an American Red Cross chapter classified as a governmental entity have to collect Texas tax, obtain a sales-tax permit, and pay the permit fee when making taxable sales?
Yes. The Comptroller continued to treat Red Cross chapters as governmental entities, but an Attorney General opinion required every governmental entity making taxable sales to follow the same seller r…
Were computer-based payroll services taxable when they included printing checks, filing payroll reports, withholding taxes, and paying payroll taxes?
Yes. The Comptroller treated computer-performed payroll work as taxable data processing, including checks, reports, withholding, and tax payments. A customer with Texas exempt-organization status coul…
Were leases of taxable equipment between brother-sister or otherwise affiliated corporations exempt because of common ownership or consolidated federal filing?
No. Related-corporation equipment leases were taxable on the full lease price and excluded from the joint-ownership exemption. Consolidated federal filing did not help because the intercorporate exemp…
Was a parent corporation's sale of taxable items to its subsidiary exempt as a joint-ownership transfer, or offset by tax the parent paid on its original purchase?
No. A parent-to-subsidiary sale was taxable, and common ultimate stock ownership did not qualify for the joint-ownership exemption. If the parent had used the property, tax was due on both its purchas…
Which sewer, drain, septic-tank, grease-trap, transportation, and disposal charges did Texas treat as taxable for residential and nonresidential property?
Nonresidential sewer and rain-line cleaning was taxable; residential line cleaning and septic-tank cleaning were not. Sewer-connected nonresidential grease-trap cleaning was taxable repair unless it q…
Could a leasing company issue resale certificates for labor on repairs, maintenance, and painting of property held exclusively for lease?
Yes under this historical ruling, effective for services on or after September 1, 1990. A lessor could issue a resale certificate for repair and maintenance services -- including vehicle painting -- p…
Could a company providing nontaxable construction-management services to a Texas city buy its telephone service, office supplies, and other inputs tax-free for resale?
No. The contract said the company was not the city's agent, servant, or employee, and it was not a sales-tax contractor because it was not hired to improve real property. As the provider of nontaxable…
How did Texas tax trade-show booths and supplies, floor-space rental, electrician work, and repairs or parts for aircraft delivered outside Texas or owned by other states?
The business owed tax on booths, displays, phones, brochures, decorations, giveaways, and other items it used at shows; only items bought strictly for resale or rental qualified for resale treatment. …
Could a country club recover Texas sales tax collected in error from members without first making exact refunds, credits, or member-authorized assignments?
No. The members who paid the tax were entitled to exact cash refunds. With written permission, the club could instead credit a member's account or accept an assignment of that member's refund right. T…
Were plastic bowls used in automated blood-plasma collection units exempt from Texas sales and use tax?
Yes. The bowls replaced blood bags that the Tax Division had already exempted and served the same exempt function.
Were transportation charges taxable when a storage-tank repairer billed every freight leg, including delivery to an independent cleaner before the taxable repair?
Yes, when connected with the repair. Storage-tank repair was taxable, so every transportation charge billed by the repairer as part of that job—including transport to the separate cleaner—formed part …
May a painting contractor accept a Resale Certificate (Form ST-120) in good faith when claiming a sales tax credit for tax paid on materials used in services sold for resale?
Yes — a properly completed resale certificate may be accepted in good faith. Sharon P. Sheinfeld asked whether a painting contractor claiming a Tax Law § 1119(c) credit for New York sales tax paid on …
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