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 U.S. corporation's Subpart F income from its foreign subsidiaries treated as a 'dividend' for New York's Article 9-A and Article 33 franchise taxes, and if so, how much of it can be excluded from entire net income?
Yes -- Subpart F income is treated as a deemed dividend for both Article 9-A and Article 33 purposes, following the Department's own 1966 policy and analogous state-court rulings; if the taxpayer owns…
Could new gas-and-electricity study rules be applied retroactively to support equipment, and could Texas require engineer-prepared or reviewed energy audits?
The support-equipment rule was to apply prospectively, requiring split study periods. The letter also defended engineer review for future audits.
Was a labor-only direct-mail preparation and delivery service subject to Texas sales tax?
No. The Comptroller treated the described labor-only mailing service as nontaxable because it was not connected with the sale of taxable items.
Who made the taxable sale when customers redeemed seven cheese labels for a free dish fulfilled by a Texas company?
The customer received a gift, not a sale. The fulfillment company sold to the cheese company and collected tax on Texas shipments, including shipping and handling.
How did Texas tax flight suits used in photographs and a flight simulator rented with or without an operator?
The photographer paid tax on suits. For a nontraining simulator, operator rentals taxed components but not rent; customer-only rentals reversed that.
Were purchases by the U.S. Economic Development Administration exempt from Texas sales and use tax?
Yes. Texas treated the agency as an instrumentality of the U.S. Government and exempted its purchases from sales and use tax.
When a company counts new full-time employees to qualify for Nebraska's LB 775 (Employment and Investment Growth Act) tax incentives, how many hours does a salaried worker count for?
A salaried employee is counted using the number of hours the employer has established as the regular workweek for a full-time hourly employee. Under Revenue Ruling 29-87-4, a salaried worker is treate…
Will the Nebraska Tax Commissioner agree to change the required employment and investment levels in a signed LB 775 agreement?
Only in two narrow situations. Under Revenue Ruling 29-87-3, an Employment and Investment Growth Act agreement will only be amended as set out in the ruling. The Act does not specifically prohibit ame…
When is tangible personal property treated as 'invested' for Nebraska's LB 775 incentives -- at order, delivery, or when it is actually put to use?
When the property is placed in service or incorporated into real-estate improvements. Under Revenue Ruling 29-87-2, for the Employment and Investment Growth Act investment has occurred when tangible p…
For Nebraska's LB 775 incentives, what counts toward the 'original cost' of qualified property I buy and install -- just the purchase price, or also freight, interest, and my own workers' installation labor?
It is the purchase price plus the other placing-in-service costs you capitalize federally. Under Revenue Ruling 29-87-1, for the Employment and Investment Growth Act the 'original cost' of qualified p…
When could buyers of trash containers or compactors give a resale or exemption certificate instead of paying Texas sales tax?
A resale certificate applied when equipment was transferred in a taxable service or bought for resale, lease, or rental; municipal own-use purchases could be exempt.
Was a one-time 50-cent validation fee for a promotional 'twicket' taxable as an admission charge?
Yes on the submitted facts. Texas treated the validation fee as a reduced charge for entry, while offering to reconsider with the ticket and accounting records.
Could a vehicle-rental business preserve or transfer unreimbursed motor vehicle tax when it sold its assets and liquidated?
No. The Comptroller said the approximately $25,000 unreimbursed balance would be lost when the corporation sold its assets and liquidated because no future rental receipts would remain for reimburseme…
Did a corporate stock sale or merger trigger new Texas motor vehicle tax on the corporation's trailers?
No under the facts presented. Buying the corporation's stock did not change the corporation's ownership of its trailers, so the corporation could continue its historical rental-tax reimbursement and d…
Which restaurant electricity uses qualified for exemption in 1987, and when did energy for immediate-consumption food become taxable?
Only production-equipment electricity qualified after August 3, 1987; energy used to prepare food for immediate consumption became taxable October 1, 1987.
When did a garbage collector billing one month after service first need to include Texas sales tax?
On the November invoice for October service. Garbage collection became taxable October 1, 1987, when the state sales-tax rate also increased to 6%.
Were transportation charges connected with a Texas sale of cement subject to limited sales and use tax?
No. Cement was exempt from limited sales and use tax because it bore cement production tax, and transportation of the exempt item was also exempt.
What Texas sales-tax credit could a gallery claim after a financed painting was repossessed under a recourse arrangement?
The gallery could claim credit only for the principal purchase-price balance still unpaid when the painting was repossessed.
Was Glister Anti-Plaque Chewing Gum taxable in Texas, or did it qualify as a food product?
It was taxable. The letter said chewing gum was candy under Rule 3.293(a)(2), not a food product for sales-tax purposes.
A contractor doing a job for a tax-exempt government agency buys sand to sandblast structures before painting, then leaves the used sand on site as fill. Is the sand exempt from sales tax?
No. Sullivan Humes Painting buys sand to sandblast structures before painting them under contracts with tax-exempt entities, and leaves the spent sand on site as fill. The Department held the sand is …
Equipment is taxed as real property under the Real Property Tax Law. Does that mean selling it is exempt from sales tax as a sale of real property?
Not necessarily. Consolidated Edison plans to sell installed transformers, network protectors, and vaults — items assessed as real property under the Real Property Tax Law — and asked whether that rea…
Does a bed-and-breakfast reservation service that books rooms for travelers have to collect sales tax on its charges?
No — the booking agency itself need not collect sales tax, but the hosts must. Bed & Breakfast U.S.A. lists available bed-and-breakfast homes ('hosts') for travelers ('guests'), makes reservations, ta…
Is machinery a scrap-metal recycler buys to process scrap into resalable material exempt from sales tax?
Partly. C & H Salvage Corp. asked whether machinery used strictly in recycling scrap metals is taxable. Processing scrap metal for sale is 'processing' under Tax Law § 1115(a)(12), so machinery used d…
A utility's customers on public assistance have their bills ultimately paid by a social services agency. Is that an exempt sale to the government?
No — these ordinary public-assistance sales are taxable. Consolidated Edison serves customers on public assistance whose monthly utility bills are ultimately paid by the New York City Human Resources …
Are aerial maps, surveys, and charts a tax-exempt information service, or are they taxable tangible personal property?
They are taxable tangible personal property. Lockwood Support Services makes aerial maps, surveys, and charts and argued they are an exempt information service under Tax Law § 1105(c)(1). The Departme…
After Texas HB 61, when were freight and local delivery charges on business forms included in taxable sales price?
Customer-paid freight billed directly by the carrier stayed nontaxable, but distributor-billed freight and transportation charges became taxable after October 1, 1987, even if separately stated.
When a mutual savings bank converts first from a federal to a state charter and then from mutual to stock form -- both treated as tax-free federal reorganizations -- how does that affect its New York Article 32 bank franchise tax filings?
The conversion is tax-free for Article 32 purposes too, following its federal IRC § 368(a)(1)(F) reorganization treatment -- but converting from a FEDERAL to a NEW YORK STATE charter requires filing t…
Were standby, idle-time, short-load, and other labor or service charges connected with concrete sales included in the taxable selling price?
Yes. The Comptroller treated standby, idle-time, less-than-load, and concrete-life-extension services as part of the taxable selling price rather than excludable labor.
How did Texas tax a lawn-care provider's total customer charge and its purchases of chemicals, fertilizer, plants, supplies, and equipment?
The total service charge was taxable. Chemicals, fertilizer, and plants transferred to customers could be bought for resale, while provider-purchased supplies and equipment were taxable.
Could an aircraft dealer buy used aircraft for resale, display and test-fly them in Texas, refurbish them, and sell to a qualifying foreign buyer without Texas sales or use tax?
Yes, on the stated facts. The purchase and refurbishing qualified for resale treatment, display and test flights were incidental to resale, and an immediate qualifying nonresident sale was exempt unde…
Which City of Waco landfill, roll-off-container, and disposal-coupon charges were taxable under Texas's 1987 garbage-service rules?
Landfill admission was nontaxable, but roll-off collection and public-site disposal coupons were taxable; convenience stores could buy coupons for resale and then report tax on retail sales.
Could parties make an affixed cogeneration plant taxable personal property merely by stating that characterization in their lease?
No. Contract language could matter when a fixture's status was genuinely doubtful, but this cogeneration plant was obviously an improvement to realty, so its lease was a nontaxable real-property lease…
If a retailer restructures its fuel supply chain through a related importing corporation, which company owes Article 13-A gross receipts tax, and on what price level?
Whichever related corporation actually imports the petroleum into New York is the one subject to Article 13-A tax on its full gross receipts from selling it -- if the subsidiary imports and resells to…
How did Texas tax landscaping and lawn-care charges and the fertilizer, chemicals, plants, supplies, and equipment used in the service?
Tax applied to the total service charge. Providers could buy chemicals, fertilizer, and plants for resale when transferred to customers, but owed tax on supplies and equipment not transferred.
Where did Texas source city, county, and MTA tax on intrastate private-line service when it appeared on the same or a separate bill from local exchange service?
Same-bill private-line service originated at the local-exchange situs; separately billed service originated at the customer's primary serving address fixed when service began.
Did South Carolina tax interest on GNMA securities, and what was the effective date of that position?
GNMA interest remained taxable. RR 87-6 modified RR 87-4 only to clarify its effective date — tax years beginning on or after January 1, 1987 — while keeping the conclusion that interest on GNMA-guara…
Did radioactive gold seeds permanently implanted in the body to treat malignant tumors qualify for Texas sales-tax exemption?
Yes. The Comptroller said radioactive gold seeds qualified for exemption when they were permanently implanted in the human body.
Could an auctioneer refund Texas sales tax when a successful bidder returned equipment and received a full refund?
Yes. Although the original auction sale was taxable, § 151.007(c)(2) excluded returned property from sales price when the total charge was refunded by cash or credit, allowing the tax refund.
How much Texas sales tax did a cash-basis lessor report when a Chapter 11 lessee paid only 35% of scheduled equipment rent?
Tax was due only on rental payments actually received under the lessor's cash-basis reporting method. If the remaining rent was later received, tax would then be due on the full amount received.
How is sales or use tax charged when someone buys a mobile home and installs it permanently on New York land — and does living out of state change it?
It turns on new-vs-used, where it's bought, and the buyer's residence. Elsa and Carlos Rosa, New Jersey residents, planned to buy a mobile home and install it permanently on their land in Bethel, New …
Did a computer used to track registration numbers and pedigrees for cattle raised for sale qualify for Texas's agricultural sales-tax exemption?
No. A computer used for recordkeeping was not equipment used in the direct production, processing, or marketing of an agricultural product.
How did Texas tax a portrait seller's purchase and resale of slides, photographic enlargements, and a painting?
The seller's pre-sale use of slides made film and processing taxable to her, while unused enlargements could be bought for resale; she collected tax on the full customer package price.
How did Texas treat transportation, mailing, word-processing, and clipping-service charges during the 1987 tax-law transition?
Transportation rules changed October 1, word processing became taxable January 1, 1988, standalone stuffing and stamping was nontaxable, and clipping plus necessary reading was taxable.
When could a Texas machinery auction avoid sales tax for interstate shipment or refund tax after documented export?
Interstate exemption required the auctioneer to deliver immediately to a common carrier and keep the bill of lading; Texas storage made tax due. Proper export proof supported a refund under Rules 3.32…
Were two-way radios and shared repeater services exempt as farm and ranch equipment, and could the Comptroller assess a dealer that relied on earlier agency information?
The radios were taxable because they were not used directly and exclusively in agricultural production, but the Comptroller deleted the existing audit liabilities due to the dealer's reliance on prior…
Were building components and materials used to build or repair a farm barn exempt from Texas sales tax?
No. The Comptroller said barn building components and materials were taxable, so the seller could not accept an exemption certificate for those purchases.
Was the lease with a purchase option equal to 69% of estimated fair market value an operating lease, and when was Texas sales tax due?
It was an operating lease because the option was not nominal under Rule 3.294. Tax generally became due with each lease payment, but tax collected upfront had to be reported in that period.
Which typing-service charges were taxable in Texas for a single personalized document, extra copies, and multiple original copies?
A single personalized letter or report was nontaxable, but extra copies for an added charge and multiple printing such as 20 original form letters were taxable.
Could an electric utility bill a customer later for Texas sales tax it failed to charge on earlier electricity bills?
Yes. The Comptroller said a retailer that failed to charge sales tax at the time of sale could later recover the tax from the purchaser.
Must a bank holding company reduce its Article 32 17% interest / 60% dividend deduction from noncombined subsidiaries by the amount of its own short-term borrowing costs attributable to that subsidiary capital?
No -- Article 32 has no provision requiring the 17% interest / 60% dividend deduction on income from noncombined subsidiaries to be reduced by expenses attributable to the parent's own short-term liab…
Could a South Carolina resident claim a credit for another state's tax on pension income earned through medical services performed in that state?
Yes. The physician's pension was earned through personal services performed in California, so tax paid there on the pension qualified for South Carolina's other-state tax credit. The credit could not …
For New York's business allocation percentage property factor, does the exclusion for 'real property and related equipment' under construction reach only buildings and building-integrated equipment, or also separate personal property like standalone machinery being installed at the same time?
The exclusion is broader than the taxpayer argued -- it also reaches personal property under construction that is functionally tied to the real property construction, such as an assembly line built to…
Is a nonprofit patent-holding corporation exempt from New York's corporate franchise tax if it's a STOCK corporation whose only shareholder is a tax-exempt university?
No -- New York's not-for-profit corporate franchise tax exemption is available only to corporations that have NO stock or shares at all; because Cornell Research Foundation is a STOCK corporation (eve…
Could a telephone company collect and remit Dial 976 sales tax for its information-provider sponsors under its own permit?
Yes, if sponsors agreed and the company's records supported audit verification. The later letter allowed sponsors holding permits only for 976 tax to cancel them after October 1987.
Were the listed blood-testing instruments and disposable cartridges taxable in Texas, and when could the seller accept an exemption certificate?
The devices were taxable. The seller could accept a timely Rule 3.285 certificate from a hospital claiming an organizational exemption under Rule 3.322(b) or (c).
Could a Texas auction purchase avoid sales tax when the buyer, rather than the seller, hired a common carrier for immediate shipment to New York?
Yes, if the goods were delivered immediately to the carrier at the auction site and the auctioneer kept the bill of lading. Buyer storage in Texas made the sale taxable.
Is building a ski lift a tax-exempt capital improvement to real property, or a taxable installation of equipment?
It splits. Peek 'n Peak Recreation asked whether building a ski lift at its resort is an exempt capital improvement to real property. The Department held it is not, except for the foundations. A capit…
Were Company A's aircraft sale to a nonresident foreign lessor and the aircraft's leaseback to Company A subject to Texas sales tax?
No. The sale qualified for the nonresident-aircraft exemption, and the leaseback was exempt because Company A would operate the aircraft as a licensed, certificated carrier.
Were construction materials exempt when homeowners hired the contractor but a city paid for housing renovations with federal grant funds?
No. The materials were sold for improvements benefiting individual homeowners, not sold to or used exclusively for the city, so no exempt-entity renovation exemption applied.
How did Texas sales and use tax apply to United States Constitution Coins?
Tax applied when coins or currency were sold above face value or had no face value. For U.S. money with a face value, that amount was subtracted before tax was computed.
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