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 multiple vehicles, including destroyed or stolen vehicles, support a fair-market-value deduction?
Multiple vehicles could support deductions against one replacement with no numerical limit, but tax could not become negative. Destroyed or stolen vehicles did not qualify because they were not sold o…
Was a properly completed Mexican Manifesto acceptable proof for a Texas sales-tax refund on exported goods worth less than $1,000?
Yes. A properly completed Manifesto was acceptable proof for goods valued below $1,000 if it specifically described the quantity and merchandise purchased in Texas. The purchaser had to give the selle…
Was a bus excursion that began and ended in Texas but traveled to the East Coast and Canada taxable as an amusement service?
No. Although the excursion included sightseeing, its primary element was transportation between Texas and the East Coast and Canada. The Comptroller treated it as a trip rather than a taxable amusemen…
Were materials for an out-of-state lump-sum construction contract taxable when a Texas seller delivered them to a Texas fabricator that then sent the assembled product out of state by common carrier?
No. The May 1990 letter corrected an earlier answer and held the materials nontaxable when the seller delivered them to a Texas third-party fabricator and the fabricator delivered the assembled produc…
For Texas franchise-tax purposes, could a trust, partnership, association, corporation, or employee stock-plan trust count as one shareholder of a close corporation?
Yes. Each qualifying entity could count as one shareholder if it was not created primarily to hold the close corporation's stock. An employee stock-plan trust generally counted as one shareholder, sub…
Did replacing an old building's entire internal structure count as new construction when two historic exterior brick facades remained?
Yes under the historical rule. The project created a new four-story building with new floors, support columns, walls, and internal materials; only two historic brick facades remained and were reanchor…
Was labor taxable when a cable television operator completely replaced its distribution plant by hanging a new plant and then tearing out the old one?
No. The Comptroller treated the complete cable-plant replacement as new construction, so the installation labor was not taxable, and treated removal of the old plant as nontaxable demolition.
Were engineering design services taxable for plant equipment shelters and for a small mobile, easily disassembled control building?
Building-design services for private clients were taxable regardless of the building's use, including shelters for equipment at wastewater, solid-waste, or waste-treatment plants; municipal projects w…
How did Texas tax broadcast-receiving equipment, its installation in new or existing buildings, and charges to receive broadcast signals?
The equipment and seller-installed tangible-personal-property installations were taxable. Permanent installation in existing nonresidential realty made the full charge taxable repair or remodeling; ne…
Were natural gas and electricity exempt when a Texas food business used them to prepare food sold to mobile vendors for resale?
Yes, for utilities directly used to prepare food for resale, because the business was acting as a food processor rather than preparing food for immediate consumption. Utilities for storage, lighting, …
Could a Texas tax-exempt hospital buy tickets to taxable amusement services tax-free for its members, and what happened if it resold the tickets to employees?
The exempt hospital could buy amusement services tax-free for itself or its members, but it had to collect sales tax if it bought taxable tickets and then sold them to employees.
Which fees charged at a dealer-to-dealer motor vehicle auction were taxable as services of a seller's agent?
Under this historical ruling, the selling commission, vehicle entry fee, and delayed title-work fee were taxable seller-agent services. The dealer registration fee, buyer's commission, and genuine veh…
Did Texas's agricultural sales-tax exemption cover equipment used in a commercial crab-fishing operation?
No. Texas treated commercial crabbing as fishing rather than agriculture because the crabs were not animals in captivity, so the operation's equipment did not qualify for the farm-and-ranch equipment …
How did Texas tax fundraising products, video yearbooks, and advertising sold through schools and organizations?
Cookies and summer sausage were exempt food, while candy was exempt only in specified circumstances. Schools could buy taxable video yearbooks for resale, with tax due on the student selling price, bu…
Was labor subject to Texas sales tax when it was performed at a twin plant in Mexico, with or without Maquiladora export documents?
No. Labor performed in Mexico was not subject to Texas sales tax whether billed to a twin plant with valid Maquiladora documents or to a Mexican company without them. When the documents were absent, t…
Were charges taxable when the City of Huntsville operated a central burglar-alarm monitoring facility in its police station?
No. The Comptroller ruled that the city's alarm-monitoring charges were not subject to sales tax because Texas political subdivisions were exempt from licensing under the Private Investigators and Pri…
How did Texas tax heating and air-conditioning repairs to residential and nonresidential mobile homes, RVs, and office trailers?
Residential mobile-home repair labor was exempt but materials were taxable; nonresidential mobile-home repairs were fully taxable. RV and office-trailer repair labor was exempt, while the contract for…
When did a Texas structural-steel business act as a contractor rather than a supplier, and how did that affect sales tax?
It was a contractor when it was responsible for erecting the steel itself or through a hired company; under a lump-sum contract it owed tax on the material cost. When it had no erection responsibility…
Could a Texas dairy farmer buy paper towels tax-free under the agricultural exemption?
Only when the towels were used directly to produce milk for sale, such as cleansing udders. Towels used for the farmer's hands or general washing or drying of a cow were taxable. STAR warns that a 201…
Were charges taxable for moving finished steel within a manufacturer's yard and for separately stated collection and disposal of its industrial waste?
No. Moving finished steel within the manufacturer's yard before sale was not taxable, and separately stated industrial-waste collection and disposal was also exempt. Office rubbish or garbage remained…
How did Texas tax a provider's cross-border telecommunications services between Texas and Mexico?
Charges for calls originating in Texas and routed or retransmitted to Mexico were taxable, while calls originating in Mexico and telecommunications wholly between Mexican points were not. Texas-purcha…
When may a Texas motor vehicle dealer or leasing business deduct the fair market value of a replaced vehicle?
The fair-market-value deduction required a motor vehicle sales, rental, or leasing business to hold Texas title to both vehicles, obtain them for personal or business use, and offer the replaced vehic…
Was MLO Milk and Egg Protein taxable in Texas as a powdered drink mix or therapeutic product?
No. The Comptroller's April 19 letter reversed its February 16 answer and concluded that MLO Milk and Egg Protein qualified as a nontaxable food product.
How did Texas tax a nationwide voice-messaging service's local and long-distance call charges?
The voice-messaging service was taxable telecommunications. Local calls and long-distance calls originating in Texas and billed to a Texas service address were taxable; qualifying out-of-state long-di…
Were payments taxable under an equipment transaction in which the user retained legal title and possession but transferred ownership rights to a financier and leased those rights back?
No. The Comptroller treated the arrangement as financing with the financier acting as a secured creditor, so the payments were not taxable. The equipment user had already paid sales tax or accrued use…
Did exempt aircraft parts lose their Texas sales-and-use-tax exemption while held in inventory before installation on qualifying carrier aircraft?
No. Parts bought to be permanently attached to qualifying common- or contract-carrier aircraft remained exempt while stored for installation as needed, as long as they were not diverted to another pur…
Did excluding an employment and noncompetition agreement from a one-buyer sale of a business's operating assets defeat Texas's occasional-sale exemption?
No. The sale still qualified as an occasional sale of the entire operating assets because the excluded employment and noncompetition agreement was intangible property, and Rule 3.316 excluded intangib…
When was labor taxable for maintenance, modification, or new construction work on Texas petroleum or chemical storage tanks?
Documented scheduled maintenance labor was exempt. Most upgrades to existing tanks were taxable, while qualifying new construction—such as a new dockline, concrete spill pad, or initial finish-out bef…
Does an out-of-state manufacturer owe New York use tax on free promotional products it ships to New York customers, and on what value?
Yes — after September 1, 1989 the free promotional hose are subject to New York use tax, valued at the manufacturer's normal selling price. Sara Lee - Hanes Hosiery makes hosiery outside New York and,…
Is installing raised access flooring a nontaxable capital improvement or 'floor covering,' or a taxable sale and installation of tangible personal property?
It is taxable — raised access flooring is neither a capital improvement nor 'floor covering.' Raised Computer Floors, Inc. installs access flooring on bolted or epoxied pedestals above a building's sl…
Is hauling waste water and sludge from a customer's site to a disposal plant a taxable real-property service, or a nontaxable transportation service?
It is taxable. Ecologics Management, Inc. contracts (usually annually) with generators of liquid waste — municipalities, food processors, landfills — to haul their waste water and sludge (96%–98% wate…
Is a solvent recycler's charge for removing recyclable materials from a New York site taxable, even though the materials are recycled and processed out of state?
It is taxable. Marisol, Inc., a solvent recycler, picks up recyclable material from sites in New York (in its own or subcontracted trucks), transports it to processing facilities in New Jersey, and us…
May a car distributor pay use tax on resale-inventory vehicles that officers and employees also drive using the 2%-per-month depreciation method, and are showroom demonstrators a taxable use?
Yes to the depreciation method, and showroom demonstrators are not taxed. BMW of North America, Inc. — the sole U.S. importer-wholesaler of BMWs — keeps cars in inventory for resale to dealers but let…
Which of a dog club's charges — show admissions, dog-entry fees, cage rentals, and baked-goods sales — are subject to sales tax, and does 501(c)(7) status exempt them?
Most are taxable, and 501(c)(7) status does not exempt them. A dog club organized under IRC § 501(c)(7) holds dog shows to raise money, giving any excess to animal-welfare charities. The Department he…
Is renting out a crane with an operator a taxable rental of tangible personal property, and are the operator's wages excludable?
It is taxable, but separately stated operator wages come out. Northeast Timber Erectors, Inc. planned to rent out a crane with an operator to place modular homes, set beams and trusses, and hoist stru…
Is a charge for monitoring air for asbestos content during removal, and issuing reports, a taxable information service?
It is not taxable — the charge falls within the personal/individual exclusion for information services. George Industries, Inc. hired a consultant (A & A) to take air samples monitoring asbestos conte…
Does a California company that sells computerized movie-theater management systems nationwide, with a New York sales footprint limited to about 4% of revenue and just 13 installation trips over five years, owe New York Article 9-A franchise tax for sending an employee to install and train customers on each system sold there?
Yes, subject to tax for all years at issue. Theatron Data Systems, Inc., a California corporation marketing automated movie-theater management systems nationwide, had no New York office, assets, or ba…
Arthur R. Rosen of Morrison & Foerster asked, on behalf of a hypothetical client ('Mr. Y'), what categories of income are included in the New York taxable income of a New York resident individual who is a nonresident alien for federal income tax purposes.
The Department ruled that Mr. Y remained a New York domiciliary - and therefore a New York resident - because he had not yet actually moved and established a new permanent home elsewhere, even though …
Was a bank's mortgage servicing taxable when it continued collecting and processing payments after selling the mortgage?
Yes under this historical ruling when the service was rendered to or received by a Connecticut bank holding the mortgage loans. DRS classified mortgage servicing as a business analysis and management …
Were bus trip packages with extensive travel and overnight accommodations taxable Texas amusement services?
No. The Comptroller treated the packages as general travel arrangements rather than taxable scenic bus tours because they included extensive travel and overnight lodging, and agreed to refund the sale…
Were pinstriping, decal application, and mileage or service charges taxable when performed on diesel motor vehicles in Texas?
Yes. The Comptroller ruled that the total charge for pinstriping, applying decals, and mileage or service to the job location was subject to sales tax when the work was performed on diesel rigs.
Was electricity exempt when it powered pumps, crushers, and conveyors at a Texas crushed-stone plant?
Yes. Electricity for the pumps, crushers, and conveyors was exempt. Conveyor power qualified because it transported material extracted from the earth, even though the conveyors themselves were intrapl…
Could the Texas Comptroller pay city and county sales-tax refunds promised through a local enterprise-zone program?
No. The Comptroller lacked authority to pay those local refunds. The person who paid the tax had to file separate claims directly with the city and county that created the refund program, and those lo…
Were foam chemicals and foam-dispensing equipment exempt when customers used them to protect taxable products during shipment?
The foam chemicals could qualify as exempt wrapping or packaging supplies when used to further the sale of taxable items, but the dispensing equipment and foam-in-place system were taxable. A qualifyi…
Did selling partnership interests totaling 50% of profits trigger controlling-interest transfer tax when the buyers were unrelated and not acting in concert?
No on the ruling's assumed facts. Although the transaction met five elements of the historical tax, the controlling interest was not transferred to one buyer or a group acting in concert. DRS stressed…
When was specialized cleaning or waterblasting of Texas storage tanks, cooling towers, buildings, pools, and parking garages taxable?
Ordinary cleaning of residences, commercial buildings, pools, and parking garages was taxable. Specialized cleaning of large storage tanks and refinery or chemical-plant cooling towers was treated as …
Did a family support magistrate owe Connecticut's attorney occupational tax when the magistrate did not otherwise practice law?
No under this historical ruling. DRS concluded that family support magistrates performed judicial duties, which the 1982 amendment had removed from the occupational tax's practice-of-law base. A magis…
Could a bingo operator charge less per card for a game when the card was included in a multigame package?
No. A card for a particular game had to carry the same per-card price whether sold individually or inside a package with cards for other games. Effective July 1, 1990, licensees also had to keep an on…
Were dental prosthetic appliances and dentist-dispensed or prescribed medicines exempt from Texas sales and use tax?
Yes. Dental devices that remained in a patient's mouth to replace a missing or deficient part were exempt prosthetic appliances, and drugs or medicines dispensed by a dentist or on a dentist's oral or…
Were lump-sum bulldozer charges taxable for digging a new pond, preparing a home site, or clearing land and building roads for a new subdivision?
No. Those activities were treated as new construction or site preparation, so lump-sum charges were not taxable. Landscaping was different: it was a taxable service, and tax applied to the total charg…
Was completely gutting and refinishing previously occupied space in a Texas shopping mall new construction or remodeling?
It was remodeling. The Comptroller applied Rule 3.357(a)(6) to the work in the existing mall space rather than treating the gut-and-refinish project as new construction.
How did Texas tax new pipeline construction, tie-in labor, gas-plant demolition, and debris removal?
New pipeline construction labor was not taxable, but labor tying the new and existing lines together was taxable remodeling unless it stayed below the letter's 5% threshold within the new-construction…
Did South Carolina's former military automobile exemption cover a nonresident service member who stopped in the state to pick up a car while traveling to an out-of-state assignment?
No. The ruling said a service member merely passing through South Carolina under orders was not settled or established in the state and therefore was not “located” there as the former exemption requir…
Was a separately stated coin-wrapping charge taxable when a company transported bulk coin to its facility and wrapped it there?
No. Coin wrapping performed by the company's personnel at its facility was not subject to sales tax when the charge was separately stated from charges for taxable services.
Which Texas hydrographic, vessel-positioning, marine-staking, and subseabed surveying services were taxable?
Underwater topographic surveys and vessel positioning based on direct scientific observation were not taxable. Boundary, as-built, and post-construction location surveys were taxable, while centerline…
Did a qualifying Texas group need to submit each future calendar for Comptroller review before treating its sales as exempt writings?
No. The Comptroller concluded that all calendars of this nature sold by groups like the requester were exempt writings under Tax Code § 151.312 and would not distinguish calendars based on content. Th…
Was the total charge taxable when a Texas CAD provider converted customer sketches into enhanced computer drawings and delivered printed hardcopies?
Yes. Sales tax applied to the total charge for the computerized drawings. Materials actually transferred to the customer as part of the service, such as the paper used for the final drawings, could be…
Were waiting-time fees, small-load charges, and separately stated delivery charges taxable on sales of ready-mix concrete?
Yes under this ruling. Waiting-time fees and minimum-load charges were part of the seller's gross receipts for ready-mix concrete. Delivery charges were also taxable when delivery occurred before titl…
Was a new-car package combining VIN window etching with theft insurance subject to Connecticut sales and use tax?
Yes. DRS treated the entire charge for the window-etching and theft-insurance package as part of the gross receipts from selling the new motor vehicle. The package remained taxable even when the deale…
Was a one-time cleaning of a newly constructed store taxable when performed before the certificate of occupancy?
Yes under this historical ruling. After the July 1, 1989 change, DRS treated janitorial services as taxable in all instances, including one-time cleaning before a new store received its certificate of…
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