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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As a developer, I acquired and re-subdivided an entire tract of land into a plaza, and I've been selling off individual parcels to different buyers over several years, with each sale under $1 million on its own. I'm willing to swear that I'm not selling this way to dodge the gains tax. Does my sworn no-avoidance-intent statement let me avoid aggregating all these sales together for New York's Real Property Transfer Gains Tax's $1 million threshold?
No -- the sworn statement doesn't save the taxpayer here, because the facts themselves (a developer acquiring, re-subdividing, and progressively selling off a single tract) show a plan or agreement to…
Which purchases for a bond-financed air-pollution-control facility were exempt from Texas sales tax?
Materials and equipment incorporated into the facility could be bought tax-free with an exemption certificate; items merely used but not installed were taxable.
Nine months after getting an advisory opinion on our proposed NBC/Rockefeller Center restructuring based on a preliminary term sheet, we've now finalized and signed all thirteen actual transaction documents (leases, purchase option agreement, condominium declaration, IDA deeds, overlease, and more). Does the Department's earlier gains-tax analysis still hold now that we're submitting the final, executed paperwork?
Yes -- reviewing the complete, finalized set of thirteen signed transaction documents, the Department reached the identical conclusions it gave nine months earlier on the preliminary term sheet: only …
Did a guaranteed residual-value rider make the described equipment lease a financing lease under Rule 3.294?
No. Based on the transfer, purchase-option, lease-term, return, and residual-value facts presented, the agreement did not meet Rule 3.294's financing-lease definition and was an operating lease.
Were aircraft engines and parts taxable when installed in South Carolina but delivered by the seller with the aircraft to the buyer in North Carolina?
No. ABC installed the engines and parts in South Carolina but retained control of them and delivered the aircraft to the buyer in Charlotte, North Carolina. Because transfer did not occur in South Car…
Was a property manager's fee for overseeing an owner's commercial remodeling contract taxable?
No. The manager acted as the owner's eyes and ears and did not perform the remodeling or daily construction supervision, so the 5% fee was not taxable.
Was bovine somatotropin used to stimulate dairy-cattle milk production exempt from Texas sales tax?
Yes, as medication or a tonic when used exclusively on a farm or dairy to produce agricultural products for sale and bought with an exemption certificate.
How did Texas tax the sale and installation of tires, batteries, shock absorbers, and mufflers under its revised 1988 policy?
Installation labor was not taxable. On lump-sum repairs the repairman paid tax on the part; on separated bills the customer paid tax on parts but not labor.
If a beverage distributor gets IRS approval to switch its accounting method for container-deposit income (from a reserve method to the cash method required by Rev. Rul. 78-273), must it use that same new method for New York franchise tax purposes?
Yes. New York's Article 9-A entire net income must always be computed using the same accounting method approved for federal income tax purposes — so once the IRS approves the switch to the cash method…
When could a seller accept resale certificates from janitorial suppliers or carpet cleaners, and which cleaning products qualified?
Resale treatment covered products transferred to customers, not consumed supplies. The seller needed good-faith acceptance without actual knowledge that the sale was not for resale.
How did Texas tax geophysical-data licenses, transferred media, reproductions, and third-party computer processing?
Exclusive and nonexclusive data licenses were not taxable. Some related media charges were nontaxable, while third-party reproduction and computer processing were taxable.
Could a credit-reporting service use a customer's historical taxable percentage for multistate purchases?
Yes. The customer could use prior-year data for an exemption certificate, but the percentage and certificate had to be updated annually and supported by records.
Was an out-of-state computer service that processed Texas-prepared tax-return data subject to Texas use tax?
Yes. Texas classified the host-computer work as data processing and said the per-return service fee was subject to Texas use tax.
Were independent contract programmers taxable when creating a program from scratch or modifying software sold by someone else?
No under this 1988 letter. Texas distinguished nontaxable contract programming from sales of completed software, which were taxable.
Was a dealer participation fee for administering lease-vehicle deductions subject to motor vehicle tax?
No. The fee paid for matching a lease vehicle to an available deduction, calculating taxable value and tax, preparing Form 132-U, and reporting deduction balances. The letter treated those as paperwor…
Did telephone-cooperative patronage allocations retroactively reduce individual sales prices and support sales-tax refunds?
No. Texas treated the allocations as profit sharing rather than renegotiation of specific sales, and cash-flow settlements obscured whose money was credited.
Was a club membership fee taxable when access to trip routing, product prices, and automobile dealer-cost information was a significant benefit?
Yes when bundled. If the information charge was separated from other privileges, only that charge was taxable; as marketed, the entire membership fee was taxable.
Were charges for visiting a customer's home twice daily to feed, water, and walk dogs taxable?
No. Texas treated the described dog-sitting service as nontaxable, but the provider had to pay tax on supplies used to perform it, such as dog food.
Was a separately stated $1 city programming and access fee passed through on cable subscribers' bills subject to sales tax?
Yes. Texas treated the separately stated pass-through fee as part of the cable-television sales price under Rule 3.313(b).
When did a parent's equipment transfer to its wholly owned subsidiary become a taxable sale rather than a nontaxable capital contribution?
No tax applied without consideration, including added stock while ownership stayed at 100%. Assumed debt was consideration and made the transfer a taxable sale unless exempt.
How did Texas tax a manufacturer-installer's permanently affixed airport baggage-handling system?
The system was an improvement to realty and the installer was a contractor. New-construction treatment depended on lump-sum or separated billing; nonresidential remodeling was fully taxable.
Were Texas cellular calls made by visiting out-of-state users taxable when billing went through their home-state cellular provider?
No under the stated facts. The calls were not billed to a Texas telephone number, billing address, or service address, so Texas sales tax did not apply.
Were charges for advertising space on freely distributed laminated message boards taxable as sales of tangible property?
No. Texas treated the business as selling advertising space, while requiring it to pay tax on printing, laminating, or materials used to produce the boards.
What did good-faith acceptance of resale or exemption certificates require from a Texas retailer?
A properly completed certificate protected a seller without requiring an investigation, unless the seller actually knew the claim was invalid or the item could not be resold.
Were labor charges for aircraft inspection estimates, resulting work, general service, repair, or remodeling taxable?
No. Texas said the aircraft labor charges were not taxable, while materials used in repair, remodeling, maintenance, or restoration were taxable.
Are reports from searching computerized databases — like trademark or legal research — taxable as an information service, or exempt like a professional service?
They are taxable. Reports produced by searching computerized databases are a taxable information service under Tax Law § 1105(c)(1), because the information is drawn from common databases available to…
How did Texas tax electronic transmission of income-tax returns to the IRS and monthly bookkeeping or profit-and-loss preparation?
Electronic filing was taxable telecommunications, with local tax based on origin. Franchise transmissions were resale transactions; monthly bookkeeping and P&L work were not taxable.
How did Texas tax contract gauging, written reports, greasing, maintenance, and repair when billed separately or together?
Gauge reading and reports were not taxable; greasing, maintenance, and repairs were taxable. A lump-sum combination was fully taxable unless nontaxable work was separated.
Was teleprompting taxable as data processing or equipment rental when the provider supervised the equipment?
No. Texas found teleprompting was not data processing, and provider-supervised equipment meant the customer received a nontaxable service rather than a rental.
Were enteral and parenteral feeding systems and their related supplies exempt as prosthetic devices?
Yes for the systems and supplies directly related to and integral to them. The exemption applied without a prescription but required a specific exemption certificate.
When was Texas use tax due on foreign equipment stored in a Texas bonded warehouse before delivery to a job site?
Tax was deferred while the equipment remained in the bonded warehouse and became due when it was removed for use. A direct-pay permit offered a separate inventory rule.
Was a water district's charge for measuring and reporting landowners' water depletion taxable as an information service?
No. Texas said the described water-depletion information was not taxable as an information service under Rule 3.342(d)(2).
How did Texas tax advertising on free driving-guide maps, gift certificates accepted for ads, and later sales of the maps?
Advertising charges were not taxable, but the publisher paid tax on production. Gift certificates were taxed when redeemed for taxable items, and map sales were taxable.
When was seismic data delivered on tape nontaxable information versus a taxable sale of copy tapes?
A tape carrying newly furnished nontaxable seismic information was not taxable. Copy tapes of information the customer already owned were taxable tangible property.
Were short-lived vacuum cleaners used to remove oil and metal chips from manufacturing machinery exempt production equipment?
No. Even though they lasted under six months, the vacuum cleaners were taxable because they were not used in the actual manufacturing process.
Does income from interest rate swaps and financial futures contracts that a bank's New York International Banking Facility (IBF) uses to hedge against interest rate risk count as tax-exempt IBF income, and can the related expenses still be deducted?
No. Interest rate exchange agreements and financial futures contracts used to hedge against interest rate fluctuations are not "foreign exchange trading or hedging transactions" under the IBF regulati…
Was the annual fee for the described preferred vision-care plan subject to Texas sales tax?
No. Texas said the annual fee charged for the preferred vision-care plan was not taxable under the facts submitted.
How did Texas tax an advertising agency's outsourced audio masters, tape copies, shipping, print production, commissions, and agent purchases?
Client-specific master creation was not taxable, but tape copies and related Texas delivery were taxable. Agent status determined whether the agency paid suppliers or bought for resale.
Which pipeline surveying, drafting, staking, permit, easement, and right-of-way charges were taxable when separately stated?
As-built and boundary-related surveys were taxable. Certain drafting, contractor drawings, centerline staking, permit drawings, and right-of-way negotiation could be nontaxable if separated.
How did Texas tax a provider's hotel calling-card service, purchased transmission time, customer billing, and installed equipment?
The provider could buy transmission for resale, while billing phone companies remitted customer tax. Provider-owned hotel equipment and other Texas property were taxable to the provider.
Was electricity used by one subsidiary to process seismic data gathered by another subsidiary exempt as exploration?
No. Because the processing subsidiary did not gather the data, Texas found it was not itself engaged in exploration and taxed the computer electricity.
When were hotel housekeepers supplied by a staffing company nontaxable temporary help, and were permanent-placement fees taxable?
Fill-in or peak-period housekeepers were not taxable; an ongoing contracted housekeeping staff was taxable. Permanent professional-placement fees were not taxable.
Are a creative advertising firm's services taxable, and does it owe tax on the materials and production work it buys to make ads and commercials?
A creative advertising firm's services — developing and placing advertisements — are not taxable, but the firm generally must pay sales tax on the materials and production services it buys to create t…
Did Texas grant governmental sales-tax exemption to a state-authorized transportation association?
Yes. The association could buy, lease, or rent taxable items tax-free for its exempt function with a certificate and seek refunds of tax paid on those items.
Were Myotrac biofeedback units exempt therapeutic devices when sold to an individual under a practitioner's prescription?
Yes. Texas treated Myotrac units as therapeutic devices exempt for prescribed sales, leases, or rentals to individuals, but taxable when sold to providers or institutions.
Was a fee for a discount-service membership card taxable, and who collected tax on members' discounted purchases?
The membership fee was not taxable or an amusement charge. Participating merchants collected tax when members bought taxable items at the discounted price.
How did Texas tax installed erosion-control systems, nonresidential repair, related real-property services, and products sold for customer installation?
Permanently installed systems followed contractor rules. Nonresidential repair was fully taxable, related real-property services were taxable, and direct product sales were taxable.
How did Texas's 48-month aggregate method treat equipment sold, traded in, scrapped, or abandoned, and did one rock crusher qualify as an occasional sale?
Sold equipment left the formula at sale; traded, scrapped, or abandoned equipment stayed for 48 months. The single rock crusher was not an occasional sale of a business segment.
How did Texas tax hot-tapping labor on plant transmission lines and other pipe, tanks, or pressurized vessels?
Plant-line hot taps were nonresidential real-property repair or remodeling, with labor taxable from January 1, 1988. Tangible-property repair labor was already taxable.
Can a business that brought an out-of-state yacht into New York for chartering pay use tax on the yacht's fair rental value instead of its full purchase price?
No. A company that brought an out-of-state yacht into New York to operate an ongoing charter business owes compensating use tax on the yacht's full purchase price plus renovations — not on its fair re…
When is a limousine hire an exempt transportation service, and when is it a taxable rental of the vehicle?
It depends on who has dominion and control of the vehicle. When a limousine operator retains dominion and control — providing the car and driver, directing the operation, choosing the routes, keeping …
Is the pay to a part-time worker in my department subject to Texas sales tax, and when does hiring outside help become taxable?
The part-time worker's pay is not taxable. Because she works on an hourly basis under your direction, using your supplies and equipment, she is acting as your employee for sales-tax purposes, so her s…
Were prosthetic devices sold by an out-of-state supplier to South Carolina hospitals, clinics, and doctors exempt as devices sold by prescription?
No exemption applied. Hospitals, clinics, and doctors were consumers of prosthetic devices used in providing medical services. The historical exemption for devices sold by prescription applied only wh…
Were catalogs printed and mailed from South Carolina taxable when sent to the out-of-state retailer's customers inside and outside South Carolina?
Catalogs mailed to South Carolina residents were taxable; catalogs mailed to residents of other states were exempt under the out-of-state delivery rule. For the taxable South Carolina copies, gross pr…
Were plastic bags, corrugated cartons, and fiber drums supplied to medical-waste customers exempt as containers used to deliver tangible personal property?
No exemption applied. ABC was the end user of the bags, cartons, and drums in its waste-disposal service. The container exemption covered packaging used incident to the sale and delivery of tangible p…
Is custom contract programming taxable in Texas, and what about the compilers, languages, and library modules a programmer uses?
Custom contract programming — designing and building a system specifically for a client 'from scratch' — is not taxable, and the programming languages, compilers, and other software the programmer use…
Which fees, sales, and services at a private hunting and fishing club are subject to Texas sales tax?
Memberships, annual dues, hunting and fishing fees, guide services, dog boarding and training, and cleaning members' game are not taxable. Taxable items include shotgun shells, logo hats and merchandi…
Is hydraulic dredging of dirt, mud, silt, and sand from channels, rivers, ponds, and boat slips a taxable service in Texas?
Yes, generally. The hydraulic dredging service described in the taxpayer's brochure is a taxable real property service under Rule 3.356, which treats solid waste removal as a taxable service. However,…
For Texas franchise tax, at what value does a corporation report property an owner contributed tax-free in exchange for stock — federal tax basis or fair market value?
It depends on the corporation's surplus. Under Tex. Tax Code § 171.109(c), a corporation whose surplus is less than $1 million may compute its surplus using the same method it uses for its federal inc…
Can an accrual-basis water utility deduct a reasonable amount for bad debts (uncollectible customer accounts) when computing its gross-earnings franchise tax under section 186 of the Tax Law, the way it can under the separate section 186-a utility gross-receipts tax?
No. Section 186's gross earnings tax defines gross earnings as "all receipts from the employment of capital without any deduction," and unlike section 186-a (which has a regulation specifically allowi…
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