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 local phone company's flat End-User Common Line (EUCL) charge taxable, or is it an exempt interstate charge?
Yes, it is taxable. Rochester Telephone Corporation, a local exchange carrier serving six counties in Western Central New York, asked whether the flat-rate End-User Common Line ('EUCL') charge it bill…
When did Texas treat oil-spill cleanup as taxable or nontaxable based on the spill's location and regulatory setting?
The letter treated well-site and qualifying oil-and-gas production cleanups as nontaxable. It treated in-plant or other land cleanup away from the well site as taxable when performed on property other…
Is a nuclear plant decommissioning trust fund subject to New York's corporate franchise tax or personal income tax, and can the Department rule on New York City's General Corporation Tax?
No to both state taxes -- the trust isn't a stock-issuing 'corporation,' so Article 9-A doesn't apply, and because it has no federal taxable income (it would otherwise qualify as a grantor trust), it …
New York Advisory Opinion TSB-A-87 (9)I: Is a withdrawal by a NYC teacher, who is not retired and is under 59½, from a Tax Deferred Annuity Program account subject to New York personal income tax?
Yes. The Department ruled that amounts withdrawn by a teacher who is not retired and is under 59½ from a Tax Deferred Annuity Program account (New York City Teachers' Retirement System) are subject to…
Were charges for mowing acreage and vacant lots for commercial and private clients taxable in Texas?
Yes. The letter said mowing acreage and vacant lots for commercial and private clients became subject to sales tax on October 1, 1987.
Did Texas classify coffee, hot chocolate, and 100% pure juice as soft drinks, and gum and breath mints as candy?
Coffee, hot chocolate, and 100% pure juice were not classified as soft drinks. Gum and breath mints were classified as candy. The body does not state a tax rate or expressly decide the broader sports-…
Were freight charges taxable when a separately operated common-carrier subsidiary billed the construction-material customer directly?
No, under the described facts. The carrier was a separate legal entity operating independently, delivered for its parent and unrelated companies, and billed the customer directly and independently fro…
When did Texas treat computer-assisted work as taxable word processing or data processing rather than nontaxable professional accounting?
Computer word processing, accounts-receivable billing, and payroll-check printing were taxable data processing. Financial reports, printed tax returns, and other work requiring accounting or tax exper…
Were brokerage houses' receipts taxable as data processing when computers were used to give clients the status of their investments?
No, under the described facts. The brokerage houses provided investment services, and computers merely facilitated giving clients investment-status information. The letter applied proposed Rule 3.330(…
When does equipment a data-communications hardware maker buys for research and development qualify for New York's sales-tax exemption for R&D property?
It depends on how the equipment is actually used. Protocom Devices Inc. makes data-communication hardware and software (packet assemblers/disassemblers for X.25 networks) and asked whether the equipme…
A company builds window and floor displays of liquor products inside retail liquor stores and bills the distributor. Does it have to charge New York sales tax on that service?
Yes. Starlite Display, Inc. creates window and floor displays of liquor distributors' products inside retail liquor stores — arranging liquor bottles owned by the retailer, sometimes adding signs and …
Can a retail petroleum distributor avoid New York's Article 13-A gross receipts tax on its retail markup by having a related corporation become the importer and pay the tax instead?
Yes -- if a newly formed related corporation actually holds the required licenses and pays the Article 13-A gross receipts tax on the petroleum it imports, the retail distributor buying from that rela…
Did using a computer make financial statements and tax-return preparation taxable data processing, and which computer services were taxable?
No. Financial statements and printed tax returns requiring accounting and tax expertise were nontaxable professional services even when a computer was used. Word processing, payroll and business-accou…
Was an association's bundled in-home service fee taxable when employees helped elderly or disabled people with cleaning, yard work, cooking, grooming, medication, letters, and bills?
House cleaning and yard work were taxable real-property services, but the described overall in-home service fee was nontaxable if employees were not hired specifically for cleaning or yard work and no…
When a utility must give a mandated 3% rate reduction to certified businesses in an economic development zone, how should it compute its section 186-a gross receipts tax and claim the offsetting credit?
The utility's approach was correct: reduce the eligible customer's bill by 3% before adding sales tax, use that reduced amount as the section 186-a tax base, and then claim a credit equal to 97% of th…
Were termite-protection plans, prepaid pest-control services, and included structural repairs taxable in Texas?
Pest-control services became taxable October 1, 1987. Certain written contracts entered before July 21, 1987 could remain exempt for their remaining term, but renewals, modifications, and new contract…
Were cemetery foundation fees taxable when a tombstone seller merely collected and passed them through without preparing the ground?
No, if separately stated in the contract or customer bill. The seller collected the cemeteries' fees as a customer service and remitted them to the cemetery, while separately collecting tax on the tom…
Did this Texas letter definitively decide whether attorneys and law-firm staff owed sales tax on debt collection or insurance-claim services?
No definitive tax result appears in the published text. The Comptroller's counsel said an enclosed Attorney General opinion on attorneys' tax-collection services would likely also apply to attorney in…
How did Texas tax a private investigator's security-related work, mixed charges, photographs, expenses, and employee compensation?
Security-connected work and a single charge combining taxable and nontaxable services were fully taxable. Film, processing, fees, and client charges were taxable, with resale treatment if photos and n…
Did a city owe tax on garbage pickup, its 10% late-payment penalty, and a debt-collection company's services?
The city had to collect tax on garbage pickup beginning October 1, 1987. A true 10% late-payment penalty—not loss of an early-payment discount—was nontaxable, while the outside debt-collection service…
Were client-specific financial-planning and investment-advisory information services taxable in Texas?
The letter treated the adviser's client-specific financial-planning information as nontaxable because it was gathered or compiled for a particular client, proprietary to that client, and not available…
How did Texas tax a business that manufactured and installed septic tanks, wastewater treatment plants, and culvert pipe as improvements to real property?
The business was a real-property contractor, not a manufacturer eligible for manufacturing exemptions. On lump-sum contracts it paid tax on incorporated materials; on separated contracts it could buy …
How did Texas tax labor for residential carpet, wall-covering, flooring, and drapery work, and when were installed draperies treated as improvements to realty?
Labor for the listed residential carpet, wall-covering, and flooring work was not taxable, including rental housing. Drapery labor was taxable unless the draperies met one of three stated improvement-…
How did Texas tax alarm-system sales, leases, installation, maintenance, and monitoring, and was fire-alarm monitoring treated as a security service?
Alarm-system sales or leases, installation, and maintenance were taxable, as was Texas-location monitoring generally. Fire-alarm monitoring was not taxable under the security-services rule because fir…
When did a Texas private investigative firm have to tax work performed inside or outside Texas, subcontracted services, expenses, and exempt-customer jobs?
Texas tax applied when investigations were conducted in Texas or for a Texas client, including wholly out-of-state work benefiting a Texas client. Work conducted outside Texas for an out-of-state clie…
How did Texas distinguish residential carpet installation, nonresidential carpet replacement, and carpet installed in new construction after January 1, 1988?
Residential installations and new construction remained under contractor Rule 3.291. Nonresidential carpet replacement became taxable remodeling on the total charge. A mixed remodeling/new-constructio…
New York Advisory Opinion TSB-A-87 (7)I: Does New York State follow the Internal Revenue Service's procedure for avoiding repetitive audits of the same issue?
No. The Department ruled that New York has no law, regulation, or policy adopting the IRS's repetitive-audit relief procedure, so a taxpayer who was audited by the IRS on an issue in a prior year (wit…
Were cargo condition and damage surveys taxable in Texas when performed for importers, exporters, cargo underwriters, and other principals?
Condition surveys were not taxable. An insurance-related damage survey was taxable on its total charge when the examined property was in Texas and the customer did business in Texas; otherwise the cus…
What certifications and records did Texas require for post-August 3, 1987 electricity studies supporting a sales-tax exemption or refund?
The study had to be certified by a registered engineer or qualified engineering graduate, including kilowatts, duty factors, and computations. The exemption package needed original signatures or seal,…
Which Texas surveying services were taxable, which were not, and how did the Comptroller treat a well-location job containing both kinds of work?
Boundary- and property-location work was taxable, while listed control, topographic, tree, pipeline-centerline, and lot-staking work was not. For well jobs, lease-boundary work was taxable but locatin…
Could a manufacturer qualify for the five-year new-establishment property-tax exemption after buying an existing industrial building and some equipment?
Yes. The plant qualified as a new manufacturing establishment because ownership, products, market, and capital changed and the former operator had ceased business. Reusing the building and about half …
Could South Carolina penalize an electric cooperative and inspect pre-1978 records under the Unclaimed Property Act, and did the ruling decide its limitation and capital-credit defenses?
The Commission could impose the $100-per-day civil penalty before June 22, 1989 and inspect available cooperative records from before January 1, 1978. It issued no opinion on whether limitations barre…
How did Texas define residential property, repair, remodeling, and new construction for the January 1, 1988 tax on real-property repair and remodeling?
Repairmen and remodelers generally collected tax on the total sales price, while residential-only work and new construction were treated differently. A new parking lot and added square footage were ne…
Does a business have to charge New York sales tax for cleaning the carpeting and upholstery inside a customer's car?
No, not for the cleaning itself. Broome Steam Carpet Cleaning Inc. asked whether cleaning automobile carpeting and upholstery is subject to sales or use tax. Tax Law § 1105(c)(3) taxes maintaining, se…
When was subcontracted drapery fabrication labor taxable, and how did Texas treat materials and installation when draperies were or were not improvements to realty?
For draperies treated as realty, fabrication alone by an unrelated subcontractor was taxable, but fabrication plus installation was not. Materials were taxed to the seller on lump-sum billing or to th…
Did a Texas contractor have to switch from specific identification to the aggregate method for reporting equipment use, and how could it change methods later?
No. Continuing to use specific identification after the earlier rule change counted as the contractor's election. A later switch to the aggregate method required notice to the Comptroller at least 45 …
Was an annual fee taxable when clients received monthly economic-research reports, telephone answers, and personal presentations from a shared database?
Yes. The Comptroller treated the economic-trends material as a taxable information service because the same general database supported information sold to each client. One fee bundled the reports with…
Which fees earned by a commercial mortgage banker and servicer were taxable, including origination, brokerage, servicing, late, and prepayment fees?
Loan and equity origination, brokerage, late, and prepayment fees were not taxable. Servicing was taxable only when it was taxable debt collection; collecting current mortgage payments and paying real…
Were medical records and reports taxable information services when supplied as part of healthcare or to workers' compensation insurance carriers?
No. The Comptroller's counsel confirmed that providing medical records and reports was not a taxable information service either as part of healthcare services or when supplied to workers' compensation…
Which expedited filing, document retrieval, UCC search, and public-record services were taxable, and could government record fees be excluded?
Expedited filing of client-prepared papers was nontaxable, but retrieving public documents, UCC searches, and obtaining and summarizing public lien or judgment information were taxable. Separately sta…
Did Texas require a new utility predominant-use study every year, and when did operational or equipment changes require a replacement study?
No annual study was required. But a business with taxable and exempt utility use on one meter had to prove predominant exempt use, using 12 consecutive months for continual manufacturing or processing…
Was an engineering scale model taxable when built from client specifications, and did the result change when the provider created the design after consultation?
Yes, a model made from client specifications was taxable on labor and materials. When the provider created the design after consultation, the client charge was a nontaxable professional service; the p…
Does a manufacturer owe New York use tax on its own products that its sales reps use as demonstration units before those units are eventually sold?
Yes. Datascope Corp. manufactures electronic medical monitoring equipment and asked whether compensating use tax is due on units it capitalizes and principally uses for demonstration by its field sale…
Are subscription newsletters exempt from New York sales tax as periodicals, and is a training video sold with them taxable?
The newsletters are exempt periodicals and their printing can be bought for resale, but the training video is taxable. R.C. Anderson Associates Inc. publishes two monthly subscription newsletters — th…
Did Texas tax the total monthly charge for a commodity-market service supplying continuous quotations, news, weather, and customer monitoring equipment?
Yes. Effective October 1, 1987, the service was taxable as an information service and the provider had to collect tax on the total customer charge, replacing the attached March 1987 telecommunications…
How did Texas apply sales tax to independent claims-adjusting services for self-insureds, attorney work, percentage-based fees, and insurance-company pools?
Services for self-insureds were not taxable, while a fee calculated from premiums remained taxable. Attorney-connected work and the taxpayer's insurance-pool arrangement were not finally decided becau…
Could a city buy contracted garbage collection for resale without tax, and did it have to tax the amounts billed to residents and businesses?
Yes. The city could issue a resale certificate to the collector, but it had to collect tax on garbage-service charges billed to its customers.
Can an aircraft that its owner uses more than half the time for its own corporate travel — and charters out the rest — qualify for New York's commercial-aircraft sales-tax exemption?
No. Stephen J. Epstein asked whether an aircraft used more than 55% of the time by its owner (a corporation or partnership) for corporate purposes, and chartered to others the rest of the time, qualif…
Were charges for analyzing, trapping, and removing wild animals taxable in Texas, and what about labor to repair the resulting property damage?
Yes. The Comptroller treated varmint analysis, trapping, and removal as taxable real-property services even without a Structural Pest Control Board license. Repair labor on improvements to realty was …
How could a landscaper recover tax paid on inventory later transferred to customers, and could equipment used to provide landscaping services be bought for resale?
Tax paid on resale inventory could be refunded by the supplier after a resale certificate or credited on the sales-tax return for materials transferred to customers. Equipment used to perform services…
Was freight on a special-order item taxable when a supplier drop-shipped the item to the seller's customer?
It depended on who paid the carrier. Freight billed to the seller and rebilled to the customer was taxable, even on a drop shipment; freight paid directly by the customer to the carrier, never enterin…
If a company moves used equipment from another state into its Nebraska LB 775 project, does that equipment count as a qualifying investment in Nebraska?
Yes. Under Revenue Ruling 29-87-8, qualified property placed in service in Nebraska for the first time after filing an application under the Employment and Investment Growth Act (LB 775) is an investm…
How did Texas tax frac-tank cleaning, oilfield waste hauling, drilling-mud transportation and pumping, and trucking-only charges?
Frac-tank cleaning was taxable equipment maintenance, while oil-and-gas waste collection and disposal and trucking-only service were exempt. Mud transportation was taxable if the provider did not pump…
Did a private retail club have to collect Texas sales tax on its $5 annual membership fee when the club existed to sell gasoline to members?
No. The gasoline retail club did not provide entertainment, recreation, sports, dining, or social facilities, so it was outside Rule 3.298's taxable private-club membership category.
Were separately stated delivery charges on taxable equipment sales and mileage charges incidental to equipment repair taxable in Texas?
Yes. Effective October 1, 1987, delivery charges tied to taxable property were taxable regardless of separate billing, carrier, postage, or F.O.B. terms. Rule 3.292(c)(1) also taxed the entire repair …
When was a debt-collection service taxable in Texas, what charge was taxed, and when did an agency report the tax?
The total service charge was taxable when the debtor had a Texas address and the underlying seller was in or doing business in Texas. The agency collected tax from its client; accrual filers reported …
Could a service provider accept an exemption certificate from a federal credit union, and were loss or damage appraisals for insurers taxable when the property was credit-union financed?
A federal credit union was exempt when buying taxable items or services for its own use, and the seller could accept an exemption certificate. But loss or damage appraisals performed for insurance com…
Did federal tax-exempt status make a homeowners association exempt from Texas sales tax, and how were landscaping charges treated when billed to members?
No. A homeowners association generally was not sales-tax exempt unless the Texas Comptroller granted that status. Separately billed landscaping required a permit, resale certificate, and tax collectio…
Was commercial and residential window cleaning taxable in Texas, and how did the Comptroller apply state and city tax to the service?
Yes. The window-cleaning service was taxable. Because the provider's city had no city sales tax, it collected the historical 6% state tax; a customer in a city with a 1% city tax also owed city use ta…
When did a pre-July 21, 1987 trash-collection contract qualify for the prior-contract exemption, and did automatic renewal preserve the exemption?
A pre-July 21, 1987 contract could qualify if it fixed the price, service level, and period. On-request work did not qualify, a 30-day arrangement did not qualify, and exercising an automatic renewal …
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