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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Who had to collect Texas sales tax on antique-mall consignment sales, and did the consignor need a permit for the mall location?
It depended on whether the consignor was identified to the buyer. If identified, the consignor was the seller and needed a permit at the mall; otherwise, the mall proprietor was the seller and had to …
We're a tax-exempt nonprofit buying a condo to house mentally retarded adults. Our purchase contract makes us pay all transfer taxes even though sellers normally pay them, and we'll need a mortgage to close. Does our nonprofit status exempt us from the real estate transfer tax on the purchase, and does it exempt us from mortgage recording tax on our loan?
No exemption from transfer tax, and only a PARTIAL mortgage recording tax exemption -- a nonprofit's tax-exempt status is much narrower protection than many assume. The Guild for Exceptional Children,…
Was city gross-receipts tax or a local franchise fee due from companies outside city limits when a nonutility producer sold electricity to a utility for resale?
No. The companies were outside the city, two were not utilities, and the electricity producer sold to an electric utility for resale under § 182.023. If the area were later annexed, the utility servin…
Does an unincorporated condominium association organized under New York's condominium law owe Article 9-A corporation franchise tax if it earns income beyond just common charges, like a laundry room concession?
Yes. A condominium association that earns income from a laundry room concession and storage charges — not just common-charge assessments — is providing a medium for conducting business and sharing gai…
How are vehicles from a second stage manufacturer or second stage converter titled and registered in Kansas?
Through the manufacturer's certificate of origin, with specific title-application details. This Division of Vehicles memo defines a 'second stage manufacturer' (one who affixes a body, cab, or special…
Were services by property-management employees taxable when they worked exclusively at one bank and the manager was reimbursed dollar for dollar for salary and benefits?
No. Employees permanently assigned to one property were treated as employees of that property when the management company was reimbursed for their salaries; the stated cleaning, repair, and maintenanc…
Did completely gutting and rebuilding the interior of a previously occupied office building count as tax-exempt new construction?
No. Because the superstructure remained and the building had already received its initial finish-out, the work was taxable nonresidential remodeling. Labor for genuinely added square footage would be …
Could a commercial nursery buy boards and nails tax-free to build plant tables needed for air circulation and disease prevention?
Yes under the 1990 ruling. The tables were equipment used exclusively to produce plants for sale, so their boards and nails could be bought with an exemption certificate. STAR warns that a 2011 law la…
Would South Carolina follow federal income-tax treatment for a savings-bank conversion and corporate reorganization involving X, Y, and Z?
Generally yes. South Carolina followed federal law as of December 31, 1988 for the listed reorganization provisions, but applied IRC § 593 as of December 31, 1986—including the Tax Reform Act of 1986—…
Were topographic and boundary surveys taxable on land or underwater, and was real-time vessel-position information taxable?
Topographic surveying was not taxable, whether on land or underwater. Boundary, right-of-way recovery, and lot surveying were taxable. The letter did not decide real-time vessel-position service becau…
Was a separately stated federal retail sales tax collected directly from the customer included in the Texas sales-tax base?
No for the post-April 1, 1983 federal retail tax described. When separately stated and collected directly from the customer, it was excluded from the Texas tax base; Texas tax paid on it in error coul…
Is a prewritten tax-preparation program taxable when the vendor personalizes it with the buyer's information to prevent copying?
Yes — the prewritten tax program (and its renewals and updates) is taxable. Lorraine L. Dunn, CPA, buys a tax-processing software program that the vendor personalizes with her name, address, Social Se…
Were architectural services for the State of Connecticut exempt when a Connecticut contractor subcontracted some or all work to a related foreign corporation?
Yes under this historical ruling. Architectural services rendered to the State were exempt whether performed directly or through the subcontract. The Connecticut corporation could issue the foreign af…
Does Utah sales/use tax apply when a company withdraws leased equipment from its resale/lease inventory and transfers it to a related company in a reorganization?
Yes. Tax is due when equipment that was purchased tax-free for a resale/leasing inventory is withdrawn from that inventory for a purpose other than sale — including a transfer to a related company in …
Was projecting live camera images of a performance onto a screen taxable when the event was not recorded?
No. Live projection without recording was a nontaxable service, so the provider paid tax on its equipment and materials. If the provider recorded the event on film or tape, the entire customer charge …
How did Texas require vending-machine operators to report food, candy, soft drinks, and cigarettes under the historical rules described in 1990?
From October 1, 1987, food was reported at 50% of retail price with no spoilage allowance. Candy, soft drinks, and cigarettes were reported at full retail price; cigarettes had been taxable since Octo…
Was lowering a concrete product into an excavation prepared by another contractor a taxable sale or an improvement to realty by the manufacturer?
It was a taxable sale when another company completed the installation. Lowering the product to street level or into the prepared hole was merely job-site delivery, so tax applied to the total selling …
When a stock savings bank reorganizes into a holding company structure through a transaction the IRS treats as a tax-free IRC section 351 exchange, does that reorganization also stay tax-free for New York bank franchise tax and personal income tax purposes?
Yes, tax-free for both. Cayuga Savings Bank, a New York stock savings bank, formed Iroquois Bancorp, Inc. as a holding company and executed a reorganization where a newly formed 'New Bank' merged into…
Cayuga Savings Bank asked whether reorganizing into a bank holding-company structure - becoming a wholly-owned subsidiary of a new holding company in a transaction the IRS ruled is a tax-free section 351 exchange - is likewise not a taxable transaction for New York purposes under Article 22 (personal income tax on shareholders) and Article 32 (bank franchise tax).
Yes. The Department ruled that because neither Article 22 nor Article 32 of the Tax Law contains any modification addressing a federal section 351 tax-free exchange, New York follows the same tax-free…
Were textbooks sold to students by two accredited South Carolina vocational business colleges exempt from sales tax?
Yes. The two accredited vocational business colleges were institutions of higher learning under the historical exemption, so their sales of textbooks to students were exempt from South Carolina sales …
Were concrete, reinforcing steel, and a metal pool liner used to construct a gamma irradiator exempt as manufacturing-machine materials?
Yes. The integrated irradiator—including its nearly six-foot concrete radiation shield and storage pool—was a manufacturing machine rather than a building, so the contractor's concrete, reinforcing ba…
Which software installation, customization, training, maintenance, programming, data-processing, and consulting charges were taxable?
Tax depended largely on whether the provider sold the software or another taxable item. Separately stated training and true contract programming were not taxable, while data processing and seller-conn…
Could a seller use tax refunded by Texas to reduce the purchaser's unrelated past-due account balance?
Not without the purchaser's consent. Tax collected from the customer had to be returned to that customer, and a state refund to the seller could not be applied against the customer's other debt unless…
Did 38 days of bank safekeeping defeat the export exemption for gold when the buyer did not take possession until removing it from the United States?
No. The rule's 30-day storage provision applied only when the buyer possessed the property in Texas. Because the seller or bank held the gold until export, the buyer did not possess it for 30 days and…
Were rentals of automotive golf carts and pull-carts taxable at private, public, and municipal facilities?
Yes. The historical statute defined a sale to include leasing or renting tangible personal property of any kind. DRS therefore ruled that rentals of automotive golf carts and pull-carts were subject t…
Did the historical exemption for repairing nonbusiness motor vehicles cover labor on boats or snowmobiles?
No under this historical ruling. DRS said the exemption for repairs to motor vehicles not used in a trade or business did not apply to boats or snowmobiles. Labor charges for repairing either were the…
Were real estate appraisal services subject to Connecticut sales and use tax?
No under this ruling. Connecticut DRS stated that real estate appraisal services were not subject to sales and use tax.
Were bridge engineering services by licensed professional engineers taxable as building engineering services?
No under this historical ruling. DRS said bridge engineering by licensed professional engineers was not building engineering and therefore was not subject to sales and use tax. DRS marks the ruling no…
Could an equipment lessor exclude a separately stated insurance charge from tax, and were damage-waiver fees taxable?
A separately stated premium paid to an insurance company could be excluded from tax. A damage-waiver fee remained taxable because it was not an insurance premium.
Were handling, insurance-premium, and damage-waiver charges taxable when connected with a taxable sale?
Handling charges were taxable even if separately stated. A combined handling-and-insurance charge was fully taxable; a separately stated premium underwritten by an insurer was not taxable, but a damag…
Which towing-company charges were taxable: motor-vehicle storage, impound, towing, or owner-notification fees?
Storage and impound fees were taxable. Separately stated towing and notification fees were not taxable under the letter's historical guidance.
When a long-distance carrier offers a 900-number billing-and-collection service to business customers, are its billing/collection fees taxed the same as its communications charges under New York's transmission-company and utility-services taxes?
Yes. Because MCI's billing-and-collection revenue is directly tied to its regulated telephone service, the full amount MCI charges 900-number "Sponsors" for both the communications and the billing/col…
Are non-destructive testing services and reports a taxable information service?
They are not taxable. PCA Engineering, Inc. tests and evaluates the physical characteristics of materials (mostly metal) in structures, machines, and equipment using non-destructive methods — magnetic…
New York Advisory Opinion TSB-A-90 (4)I: Dabelstein, is whether her domicile will change as a result of marrying a nondomiciliary Army officer stationed in New York.
No, not automatically. The Department ruled that Edith Dabelstein's New York domicile does not change on her marriage date merely because she now intends to eventually follow her Army-officer husband …
Were environmental-facility siting and remediation-design services taxable as building engineering or building design?
Generally no under this historical ruling. DRS excluded siting and design of landfills, impoundments, hazardous-waste facilities and incinerators, plus groundwater cleanup and remedial-program design.…
How did Texas tax portable-building sales versus permanently affixed residences or broiler houses, and did an agricultural exemption apply?
Portable-building labor and materials were taxable. Permanent real-property improvements followed contractor rules: lump-sum residential work was not taxed to the customer, separated materials were ta…
What forms had to accompany a Kansas utility sales-tax refund request beginning in 1990?
A Kansas retailer of electricity, gas, or water requesting a sales-tax refund had to submit completed supplemental schedule Form BT/st-33 together with exemption certificate Form STD-28B. The Departme…
Could an FAA Part 135 air taxi buy machinery, tools, and equipment tax-free for aircraft repair, remodeling, or maintenance?
Only items used directly and exclusively to service carrier aircraft or their component parts qualified under the described exemption. General equipment supporting the shop or overall carrier operatio…
Could a nursing-home lessee claim the residential-utility exemption and a refund when the utility account still named a former owner?
Not without establishing that it was the purchaser and operator. The utility could accept a future certificate after written confirmation, and earlier refunds required proof that the lessee operated t…
Were an architect's project inspections for a construction lender taxable as architectural work or business consulting?
They were taxable business consulting under this historical ruling, not exempt new-construction or architectural services. The architect verified a borrower's payment requests for the lending bank and…
Did nonprofit craft centers have to collect tax on craft and artwork sales and on consignment fees charged to artists?
Yes under this historical ruling. The exemption covered sales to qualifying nonprofits, not their sales to customers, apart from two permitted one-day events. Craft centers had to tax craft and artwor…
Was a March 1987 custom-software maintenance agreement taxable, and what happened after Texas began taxing custom programs in October 1987?
The custom program and its maintenance were not taxable under the rule in force when the agreement began. A qualifying prior-contract exemption could cover the term through March 29, 1988, but a March…
When were a Texas firm's investigation services taxable based on where the work occurred and where the client was located?
Texas taxed investigations performed in Texas for any client and out-of-state investigations for Texas clients. Work performed outside Texas for an out-of-state client was not taxable; related expense…
Which landscaping, surveying, stakeout, feasibility, engineering, roadway, drainage, and septic-design services were taxable?
Under this historical ruling, residential and commercial landscaping, subdivision surveying, and stakeout for real-estate development were taxable. Site feasibility studies, site-development engineeri…
Could the insurer buy equipment and telecommunications for resale when hospitals used its automated claims-submission and inquiry system?
Not on the submitted documents. They did not show that the insurer rented equipment, resold telecommunications, or sold a taxable service. A taxable information service or exclusive circuit-line lease…
How did Texas tax an automobile extended warranty and repairs performed under it?
The extended warranty and motor vehicle repair labor were not taxable, but parts, supplies, and materials were. Under a separated contract the repairer collected parts tax from the customer, usually t…
Could a taxpayer claim detrimental reliance based on a prior audit despite the disclaimer in Texas Audit Results letters?
Not merely because an auditor failed to detect an error. The disclaimer barred that theory, but it did not bar a claim based on specific erroneous written or oral advice given during the audit if the …
Does an out-of-state bank owe New York banking franchise tax just because it buys installment contracts secured by New York property and, if a borrower defaults, forecloses or sues through a New York attorney?
No. A Connecticut bank that buys the contracts entirely outside New York, has no New York office or employees, and only occasionally enforces a security interest or takes foreclosure title here is not…
Is a charge to drive a go-kart on a track taxable, and are packaged ice cream bars sold there taxable?
The go-kart charge is exempt; the ice cream bars are taxable. Little Ozzie's Inc. runs a go-kart raceway with no admission charge — only a charge to use a go-kart on the circular track — and sells pac…
Is replacing a built-in electric wall oven a nontaxable capital improvement?
Yes — it is a nontaxable capital improvement. Robert E. Harrison asked whether replacing the built-in electric wall oven in his home's kitchen is a capital improvement exempt from sales tax. The old 1…
If a parent holding company spins off its New York lending business into a new New York subsidiary, keeps a bank account and books here, but is otherwise run entirely from Japan, does the parent still owe New York corporate franchise tax?
No. Once the parent withdraws its authorization to do business in New York, becomes a purely passive investment holding company managed entirely from Japan, and confines its remaining New York contact…
Can an S corporation carry forward research and development tax credits it earned during a year when it wasn't subject to Article 9-A tax, to a later year after it becomes a regular C corporation again?
No. A research and development tax credit computed for a year when the corporation was an S corporation — and therefore not subject to Article 9-A tax at all — cannot be carried forward to a later yea…
Could a railroad buy a modified track loader tax-free under the rolling-stock exemption when it would remain aboard connected gondola cars?
Yes. Based on the assurance that the modified loader would remain on the train and move among connected gondola cars to unload material, the railroad could issue an exemption certificate for its purch…
Which investigation, surveillance, expert-testimony, consultation, and process-serving charges were taxable under Texas's security-services rule?
Licensed investigation and surveillance services were taxable, with directly related expenses included. Separately stated expert testimony and pure consultation could be nontaxable, and process servin…
Can a federal contractor buy tax-free as the government's agent, and is the state estopped by an old letter that wrongly said it could?
No on both counts — the contractor owes tax and cannot rely on the old letter. West Valley Nuclear Services Co., Inc., a Westinghouse subsidiary serving as general contractor to the U.S. Department of…
Our original borrower wants off the hook for a loan; the corporate owner who guaranteed it (and later took title to the collateral) will assume the note directly instead. The lender wants a supplemental mortgage recorded to add the new owner as obligor and clean up a drafting gap so the mortgage clearly secures the note. No new money is being lent. Does that trigger additional mortgage recording tax?
No additional tax due. Carol Management Corporation borrowed $6 million from a bank in 1987, evidenced by a note; Howard Kaskel personally guaranteed the note up to $6,114,000 (principal plus two year…
Which farm-equipment repair and farm-structure charges were exempt or taxable under Connecticut's agricultural exemption?
Separately itemized repair parts for machinery used exclusively in agricultural production were exempt, but repair labor was taxable. Labor to renovate farm structures was taxable, while lumber, hardw…
How were franchise-tax auditors to adjust pre-1988 surplus for unbooked employee post-retirement-benefit liabilities supported by actuarial studies?
A taxpayer needed at least one actuarial study. Auditors used or discounted the study liability, allocated group amounts among corporations by employees, applied the report-year employee ratio, and ma…
How were local taxes sourced when mobile-phone equipment was rented with telecommunications service, versus equipment sold or rented by itself?
Bundled equipment and telecom service was sourced as telecommunications at the call's origin, or the billing address if origin was unknown. Equipment sold or rented without service was tangible proper…
Was a charge for the right to fish from banks, piers, a boathouse, stalls, and a fishing barge subject to Texas sales tax?
No. The Comptroller compared the payment to leasing land for hunting rights and treated it as a nontaxable non-amusement service.
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