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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Can a utility company allocate its gains from selling stocks, bonds, and options using the issuer's allocation percentage (the same method used for dividend income), the way it can under the general corporate franchise tax?
No -- unlike the general Article 9-A corporate franchise tax, sections 186 and 186-a don't allow gains on stock, bond, and option sales to be allocated using the issuer's allocation percentage; instea…
When an insurance holding company's Subpart F income is deemed a dividend, is the 50% of that deemed dividend included in New York entire net income treated as investment income (from investment capital) or as business income?
It depends on direct ownership: the taxable 50% of a Subpart F deemed dividend is investment income only to the extent the taxpayer has a direct investment (not exceeding 50% ownership) in the stock o…
How much motor fuel tax can Kansas garbage and solid waste disposal truck operators claim as a non-highway exemption?
The Department determined that operators of trucks designed, equipped, and used exclusively for garbage, refuse, or solid waste disposal may treat 35% of the fuel used in those trucks as exempt from f…
Did a law firm's separately stated reimbursement of taxable electronic legal-research costs create another taxable information-service sale to its client?
No. The database charge was the law firm's taxable expense. It could seek an equal, separately stated client reimbursement without additional tax and label the tax portion 'Sales Tax Reimbursement.'
What distinguished real-property maintenance from repair or remodeling under Texas Rule 3.357?
Maintenance preserved functioning property on a regular schedule; work that restored, enhanced, or improved a quality was repair. Scheduling or documenting a repair did not turn it into maintenance.
Are participating loans a real-estate lender made to out-of-state partnerships 'investment capital' (favorably allocated) or 'business capital,' and does a tax-free reorganization change how the resulting interest income is sourced to New York?
The loans are business capital, not investment capital -- because investment capital is limited to securities issued by corporations or governments, and a loan to a partnership doesn't qualify -- so t…
Does laboratory furniture used to test incoming electronic equipment for quality control qualify for New York's research-and-development or production machinery sales-tax exemption?
No — it qualifies for neither exemption, so it's taxable. Grumman Aerospace Corporation bought laboratory furniture (work stations, multi-wired legs, pedestals, etc.) for its avionics lab, where it te…
Were a toxicologist's consulting services for insurance claims taxable when subcontracted by an attorney or performed directly for an insurer?
Yes. Claims-investigation consulting was taxable in litigation and non-litigation settings. The attorney's legal service was nontaxable but could not buy the toxicologist's work for resale.
How did Texas tax custom millwork installed in original construction, incorporated into an existing nonresidential building, or supplied without installation?
For separated original construction, materials and finish work were taxable but the installer's labor was not. Existing-building remodeling and supply-only sales were taxable on the total charge.
Was a truck stop's $5 fee for weighing a truck a taxable service in Texas?
No. The Comptroller said the described $5 truck-weighing fee was not a taxable service.
How did Texas tax HVAC new construction, commercial remodeling, residential work, and window-unit sales and service under different contract types?
New construction and residential real-property work followed contractor rules based on contract type; commercial repair or remodeling was taxable in full, as were window-unit sales and service.
Were receipts from coin-operated breath analyzers taxable, and did the operator owe tax when buying the machines?
The receipts were not subject to sales tax, but sales tax was due when the operator purchased the breath-analyzer machines.
Were compensated risk-management services taxable insurance inspection services in Texas?
Yes. Risk managers' evaluation and risk-reduction advice fell within taxable insurance inspection under Rule 3.355(a)(2), so they needed a sales-tax permit and had to collect tax.
How did Texas tax billboard-face rotation, painting steel billboard structures, other sign repairs, transferred materials, and mowing around signs?
Billboard-face rotation and steel-structure painting were taxable real-property work. Other sign repair was taxable as personal-property service, and most mowing around signs was taxable.
Were post-completion punch-list charges for fixing scratches and dents or moving plugs taxable under Texas's 1988 real-property rules?
Yes. Once original construction was complete, charges to fix scratches or dents or move plugs were taxable. On repair or remodeling contracts, labor performed after December 31, 1987 was taxable.
How did a foreign consular officer or family member obtain a Texas motor-vehicle-tax exemption under this 1988 guidance?
The Comptroller said qualifying consular officers, technical employees, and certain family members generally had to obtain motor-vehicle title and registration through the U.S. State Department's Offi…
Were daily gauge readings and written reports taxable when a pumper also performed minor well-site maintenance?
Gauge reading and written reports alone were not taxable, but the provider's general equipment maintenance made the described service taxable. The Comptroller approved the tax being charged.
As a general matter (not tied to one company's specific facts), does a foreign corporation become subject to New York's corporate franchise tax merely by becoming a limited partner in a limited partnership that does business in New York?
No -- addressing this as a general hypothetical rather than one company's specific facts, the Department held that a foreign corporation which is otherwise not subject to Article 9-A does not become d…
Could a seller obtain a Texas refund of tax, penalty, or interest collected from customers before returning the tax and interest to those customers?
No. Rule 3.325(c)(4) required the seller to refund all tax and interest to the people from whom it collected them before the state would refund the seller's tax, penalty, or interest.
When were lump-sum bookkeeping, bundled payroll data work, and separately stated computer-generated reports taxable in Texas?
Lump-sum bookkeeping was not taxable. Bundled payroll data work at 5% or less of the total stayed nontaxable, but separately stated computer-generated report charges were taxable.
Was the described child-identification program a taxable service, did it need a Texas sales-tax permit, and how were its supplies treated?
The program was not a taxable service and did not need a sales-tax permit. It still had to pay sales tax on all materials and supplies used to provide the service.
Was a lump-sum pit-scale installation incorporated into an existing dirt road fully taxable after Texas's January 1, 1988 real-property change?
Yes, for work on or after January 1, 1988, because the scale was incorporated into an existing road. The letter applied a historical 7% rate because the agreement predated the county tax.
Could a supplier accept the exemption certificate printed on a purchase order for property bought for offshore exploration outside Texas?
Yes. The Comptroller found the purchase-order certificate sufficient for the described out-of-Texas offshore exploration use, so the supplier could accept it instead of tax.
Is a telecommunications utility wholly owned and operated by a foreign government (here, Australia) exempt from New York's franchise tax on foreign transportation and transmission corporations just because it's a government utility, if it maintains a small liaison office in New York?
No -- there is no statutory exemption in sections 183 or 184 for a foreign transportation/transmission corporation merely because it's owned and operated by a foreign government; maintaining even a sm…
Is the technical advice of a licensed professional engineer — evaluating and recommending upgrades to a building's air-conditioning system — subject to New York sales tax?
No — a licensed professional engineer's technical advice is not subject to sales or use tax. R.H. McDermott Corp., a licensed professional engineer, is engaged (usually by other engineering firms) to …
What sales tax rate applies when a dealer sells a new boat together with a trailer — the rate where it's delivered, or the rate where the buyer lives?
The boat is taxed at the delivery-point rate, but the trailer is taxed at the rate where the buyer resides. M & D Inc. asked the correct sales tax rate on a sale of a new boat and trailer. Tax Law § 1…
Can New York require an out-of-state mail-order subsidiary with no in-state presence to collect sales tax, when its parent solicits New York customers and steers them to the subsidiary?
Yes — on these facts the subsidiary is deemed a New York vendor that must collect sales tax. A CPA asked (as a hypothetical) whether an out-of-state direct-marketing Subsidiary — no NY property or off…
How did Texas's 1988 rules treat HVAC maintenance contracts, repairs, residential and commercial installations, freight, tools, refunds, and window units?
Routine real-property maintenance was nontaxable if repairs stayed within 5%; commercial repair was taxable, residential and new-construction labor was not, and window-unit work was taxable.
Are corrugated point-of-sale display materials sold with a product exempt as packaging, or are they taxable — and does it matter whether the display is a separate insert or part of the shipping carton?
It splits by design: a shipping carton reused as a display is exempt packaging, but a separate insert display is taxable. A carton manufacturer designs and sells corrugated point-of-sale display mater…
Is an advertising agency that buys media and materials for the U.S. Army a purchasing agent for the federal government (so its buys are tax-exempt), or a taxable contractor selling to the Army?
The agency is a taxable contractor, not the Army's purchasing agent — so its purchases aren't exempt federal-government buys. Young & Rubicam Inc. is the advertising agency for the United States Army …
Is the gas and electricity a subcontractor uses to reprocess a manufacturer's rejected metal, glass, or plastic parts back into resalable material exempt as production fuel?
Yes — the gas and electricity is exempt production fuel to the extent used directly and exclusively (100%) in the reprocessing, even though the subcontractor never owns the material. Burn Brite Metals…
When could sellers accept resale or agricultural-exemption certificates for horseshoeing supplies, horseshoes, halters, and bridles?
Resale stores could give resale certificates. Horseshoers generally paid tax on supplies used in lump-sum jobs, but could buy separately resold items for resale. Horseshoes, halters, and bridles quali…
New York Advisory Opinion TSB-A-88 (1)I: For personal income tax purposes, can a shareholder of an electing S corporation still claim a pro rata share of the special additional mortgage recording tax credit for taxable years beginning after 1987?
Yes. The Department ruled that shareholders of electing S corporations may continue to claim their pro rata share of the special additional mortgage recording tax credit (originally allowed to the cor…
How does South Carolina's accommodations tax apply to a hotel 'golf package' that bundles lodging, greens fees, and a meal for one price?
Break the package into its parts. Revenue Ruling 88-2 held that after a 1987 amendment excluded 'meals and other special items in promotional tourist packages' from the 2% accommodations tax, a hotel …
How did Texas tax painted or vinyl lettering on vehicles, movable signs, traffic signs, and commercial building doors, windows, and walls?
Vehicle and movable-sign work was taxable before and after the 1988 change. Commercial-building window, door, and wall graphics became taxable real-property remodeling on January 1, 1988.
How did Texas classify window air conditioners and portable buildings as tangible personal property or real property for repair-tax purposes?
Window-opening units were personal property; wall-installed units could be permanent realty. Portable buildings were real property only if permanently slab-affixed, plumbed, and wired.
Were claims-adjustment services exempt when provided to a federally administered flood-insurance program or to an insurer reimbursed by that program?
A FEMA-created and administered federal flood program was exempt, but services sold to an insurance company were taxable even when the federal program reimbursed the insurer.
Could a free weekly advertising shopping guide buy newsprint, ink, and outside printing without Texas sales tax?
Yes, if the guide was printed on newsprint and therefore qualified as a newspaper. It could issue an exemption certificate for newsprint, ink, and outside printing. If it was not printed on newsprint,…
Were confidential paleontologic and geologic analyses and studies taxable Texas information services?
No. Texas classified the described paleontologic and geologic work as an information service but treated the charges as nontaxable under Rule 3.342(d)(2), based on the exclusive-use facts presented.
Could a yearbook seller treat books distributed on one designated carnival day as tax-exempt while taxing all other distributions?
Yes. The Comptroller accepted the proposal to exempt yearbooks distributed on the first designated carnival day and tax all other distributions or sales, based on the facts presented.
Is hazardous-waste cleanup and hauling to a disposal site taxable, is a separately stated transportation charge taxable, and can the company buy its supplies for resale?
The service is taxable trash removal, the separately stated freight is taxable too, and whether the supplies are resale-exempt is a factual audit question. West Central Environmental Corp. cleans up h…
Can a franchisor that buys the gas and electricity for its franchisee-operated stores get a sales tax refund for the portion the franchisees use in an exempt, production manner?
Yes — the franchisor gets a refund for the exempt production portion of utilities it buys, unless it resells the utilities to franchisees, in which case it must collect tax. The Southland Corporation …
Were freight and U.S. postage charges taxable when a parts seller arranged shipping and rebilled the customer?
Yes. Freight or postage that the seller incurred and rebilled to the customer was taxable. Transportation was not taxable when the customer arranged pickup and the freight company billed the customer …
Who collected and remitted Texas sales tax when a city bought commercial trash collection and billed its own customers?
The city did. After receiving additional contract facts, Texas treated the city as purchasing trash collection for resale. The city gave the contractor a resale certificate and was responsible for col…
Were gas-chart work, gas-volume calculations, and calibration or repair of oilfield meters taxable in Texas?
Gauger-like chart recording and volume calculations were nontaxable. Calibration and repair of meters on flow or gathering lines were taxable as personal-property work. Pipeline or booster-station met…
Was labor to repair or remodel a long road used primarily to access a residence nontaxable residential real-property work, even if it could also serve a ranch?
Yes, for the road leading to the residence. Farm and ranch roads were not normally residential, but the access portion serving the residence was a residential improvement under Rule 3.357.
Did a retired vehicle have to be sold in Texas to qualify for Texas's fair-market-value deduction?
No. The Comptroller said the retired vehicle did not have to be sold in Texas. It needed to be titled in Texas for business or personal use, retired, and offered for sale, but the offer could be made …
How did Texas tax an association's member journal, magazine subscriptions, textbook sales by a Section 501(c)(3) organization, and out-of-state artwork?
Printing could be bought tax-free when a stated journal or magazine price made the publication a resale. Six-month-or-longer second-class-mail subscriptions were exempt, but single copies were taxable…
Which pest, insurance, and general real-estate inspection services were taxable under Texas's 1988 rules?
Pest-infestation inspections and insurance-related property inspections were taxable. General real-estate inspections of building components and systems were not taxable.
Were exercise bicycles and treadmills exempt therapeutic devices when sold on a doctor's prescription for rehabilitation?
Yes. Texas treated prescription exercise bicycles and treadmills sold for rehabilitation as exempt therapeutic devices. Sales to doctors, hospitals, or clinics were taxable unless the institution inde…
After revising its earlier answer, did Texas tax the total charge for providing and setting up chairs at a graveside?
No. The February 11 revision treated the total chair rental-and-setup charge as a nontaxable service because no true rental occurred and the funeral director did not have constructive possession of th…
Were speech and hearing evaluations or therapy taxable, and was calibrating customers' audiometers taxable?
Speech and hearing evaluations and therapy for communicatively handicapped people were not taxable. Calibrating audiometers for other agencies and industries was taxable.
Did a contractor charge Texas sales tax on lump-sum waterproofing, caulking, tuck-pointing, and sealing of existing commercial buildings?
Yes. Beginning January 1, 1988, the contractor had to tax the total materials-and-labor charge for repair or remodeling of existing commercial real property. The rule did not apply to new construction…
Does an in-store 'eye examination unit' used by a retail optical chain to test customers' vision before filling eyeglass prescriptions qualify for New York's investment tax credit as manufacturing/processing equipment?
No -- the investment tax credit requires property principally used in manufacturing or processing (a substantial or significant change to the shape, form, or nature of tangible personal property), and…
Could a contractor credit use tax paid to another state against South Carolina use tax on materials fabricated elsewhere and installed in South Carolina?
No. Section 12-35-815 allowed a qualifying credit for sales tax paid to another state, but not for another state's use tax. The sales-tax credit also required proof of payment and substantially simila…
When a trucking firm hauls material for contractors with its own driver, is it providing a nontaxable transportation service or a taxable rental of the truck — and when does it owe tax on the material?
Hauling with the firm's own driver and control is a nontaxable transportation service; only when the firm buys and sells the material does resale-tax handling apply. C.K. Industries Corp., a trucking …
When a social services agency commits to pay a public-assistance client's electric bill directly, is the utility's sale of that electricity an exempt sale to a government agency?
Yes. This Modified Advisory Opinion supplements a Con Edison opinion issued August 31, 1987 — TSB-A-87(27)S, on the same Petition No. S870602C — by analyzing its new 'Direct Vendor' program. Under the…
Was a separately stated 1% airport authority gross-receipts or commission fee included in the taxable sales price?
Yes, when connected with a taxable item or taxable labor. The fee was business overhead and stayed in the taxable sales price even if separately stated; overhead on nontaxable labor was not taxable.
Which ranch and oilfield jobs did Texas treat as new construction, taxable real-property repair, or taxable cleanup?
New fences, tank pads, working pits, and qualifying new water-line ditches were new construction. Work on existing roads, locations, cellars, and reserve pits was taxable repair; tank-battery cleanup …
Were oil-and-gas publications forecasting market trends taxable information services when sold to multiple subscribers?
Yes. Texas treated the publications as taxable information services because market forecasts were still news or information and the publications fit the oil-and-gas survey example. The particular-clie…
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