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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Would the company's revised pattern-equipment ownership agreement establish that it sold a pattern to its customer?
Yes, if the agreement was properly executed before the sales invoice and the pattern received the accounting treatment described in the Comptroller's earlier March 16 letter.
Could a contractor or subcontractor claim the 1987 prior-contract exemption without having its own written contract or bid with suppliers?
Yes, if the owner-general-contractor contract or bid met the pre-January 1, 1987 timing and fixed-price requirements. The contractor did not need separate written supplier contracts.
How did Texas tax the lease-purchase agreement after classifying it as a financing lease?
Tax was due when the lessee took possession or the first payment became due, whichever came first, and it was calculated on the contract value rather than the equipment's original cost.
Was electricity used to operate disposal wells exempt when it transported artificially mixed salt water injected into oil wells?
No. The artificially mixed salt water was not naturally occurring brine or a material extracted from the earth, so electricity used to transport it was not exempt.
Could a customer's letter document a Texas sales-tax exemption for valves intended for offshore use or export?
For the offshore-use exemption, yes if the letter identified Section 151.324(a), described the property, and otherwise formed a valid good-faith certificate. It was not enough under the drilling-equip…
Was a $25 employee per diem recharged to customers part of the Texas sales-tax base for taxable services?
Ordinarily yes, because per diem connected with taxable services was an includable expense. The Comptroller allowed this company to exclude it because the company did not book the amount as income.
Were materials, supplies, and equipment bought by Houston Lighting and Power to support litigation for South Texas Nuclear Power Plant participants exempt from Texas sales tax?
No. The Comptroller found no exemption for Houston Lighting and Power's litigation-support purchases; a contract exemption for incorporated construction materials did not extend to them.
Did a riding mower used to cut grass around commercial greenhouses qualify for Texas's agricultural machinery exemption?
No. The mower maintained the grounds around the greenhouses rather than producing agricultural products for sale, so it did not qualify.
Who had to collect and remit Texas sales tax on property sold by resident and nonresident table holders at a gun show?
Every table holder selling tangible personal property had to collect tax regardless of home state. The promoter could remit for them or require each seller to hold a Texas permit.
Did anchoring, plumbing, and wiring a rented prefabricated building make it real property for Texas tax purposes?
No. The building remained tangible personal property because it was intended as a one- or two-year temporary bank facility and was rented separately from the land.
Does equipment used to design and develop computer hardware and software products qualify for New York's investment tax credit and research and development credit, and can an unprofitable startup get the investment credit refunded rather than carried forward?
Yes to both credits -- equipment used to design and develop computer software (following the federal treatment of software costs as research expenditures under Revenue Procedure 69-21) and computer ha…
How would an MTA rate election affect Helotes, could a city withdraw, and what would a city telecommunications-tax ordinance do?
The MTA-wide vote and rate applied throughout the authority, and the full rate funded transit. Rule 3.423(b) provided a withdrawal method; a city telecom ordinance extended local tax without changing …
Which parts of a master equipment lease qualified for Texas's pre-1987 prior-contract exemption, and what later changes ended that treatment?
Only the master lease and schedules signed before January 1, 1987 qualified. Later schedules, subleases, renewals, purchases, upgrades, or renegotiations were new taxable transactions.
Were normally taxable tubing-removal services nontaxable when performed to enable an oil-well acid job?
Yes. Viewed as a whole, the crew's work facilitated the acid job, so the normally taxable down-hole services became nontaxable.
Were liquidated-damage fees paid to a delayed granite fabricator included in the Texas sales-tax price of the granite?
Yes. The fees were part of the granite's sales price. The resale purchase caused no immediate tax, but the contractor owed tax if supplier cost including fees exceeded the customer contract price.
Was the seller's Shippers Export Declaration sufficient proof for a Texas sales-tax exemption on exports to Mexico?
No. It did not meet Rule 3.323(c)(1). The seller had to collect tax when the customer took possession in Texas, then could refund it after receiving proper export documents.
Could a seller use a stamped impression on its invoice as an agricultural exemption certificate, and what information had to appear?
A stamp could work, but the submitted wording did not. It needed purchaser details, item description, a purchaser-written specific exemption reason, and a separate signature and date.
Was drilling mud lost or consumed during a drilling operation taxable when part of the price was paid as a rental charge?
Yes. The mud was a consumable supply sold with deferred compensation, and sales tax was properly billed on the amount consumed rather than returned.
Which equipment and supplies could commercial trawlers buy exempt from Texas sales tax?
Vessels over eight tons could exempt items becoming component parts, such as navigation equipment and rigging. Broader supplies required exclusive interstate or foreign coastwise commerce and Rule 3.2…
Were blend-stock products used as gasoline components subject to Texas motor-fuels tax or sales and use tax?
They were outside the motor-fuels tax law but subject to sales and use tax. A reseller could buy with a resale certificate and then collect tax or take one from its customer.
If a taxpayer doesn't contest an erroneous notice of deficiency disallowing part of an investment tax credit, and that year later becomes a closed period under the statute of limitations, can the taxpayer still claim the full investment tax credit carryforward from that closed year when a later, open year is audited?
Yes -- even though the taxpayer can no longer directly contest the closed year's deficiency (both the 90-day protest window and the statute of limitations have run), the Tax Commission can still redet…
I'm a gasoline distributor licensed in Ontario, Canada. Can I buy gasoline in New York State tax-free if I'm exporting it straight to Ontario for resale there?
Yes, by policy. New York law lets a New York distributor sell gasoline tax-free (and get a credit or refund) when selling to a purchaser who is a duly registered or licensed distributor in another U.S…
Is an out-of-state fuel distributor subject to New York's corporate franchise tax merely because its New York-based parent company keeps its books and provides a shared officer, when the subsidiary itself has no New York office or employees -- but does take title to petroleum within New York before shipping it out of state?
Having a parent-company officer maintain a New York office, and having the parent's own employees keep the subsidiary's books in New York, are NOT by themselves enough to create nexus -- but the subsi…
How is Kansas sales or compensating tax collected on boats, especially boats bought out of state, after 1987 Senate Bill 195?
Under 1987 Senate Bill 195, effective July 1, 1987, a boat owner had to show proof that sales or compensating tax was paid before the Fish and Game Commission would process a boat-number application. …
Once the IRS actually confirms that Bank Negara Malaysia is a tax-exempt foreign government under IRC section 892 with no U.S. trade or business, does that change the earlier New York ruling that its franchise tax is capped at the $250 minimum?
No -- the result stays the same. This modified opinion appends the IRS's actual March 31, 1987 ruling (that Petitioner is a tax-exempt foreign government under IRC section 892, with its U.S. investmen…
Could verbal quotations qualify for Texas's 1987 prior-contract exemption?
No. A qualifying real-property contract had to be written and signed by both parties before January 1, 1987, without tax-based change or modification.
When were free-point, pipe-recovery, cutting, and other down-hole oil-well services taxable in Texas?
Tax depended on the overall well job. Ordinarily taxable services became nontaxable when necessary to specified nontaxable work, but the provider needed invoice or operator documentation.
When were municipal-bond fund dividends exempt from South Carolina income tax for South Carolina shareholders?
A fund series needed at least 50% of its assets in South Carolina-exempt securities to qualify to pay exempt-interest dividends under the ruling. The National Series, with about 10%, failed. A South C…
Did a parent company become taxable in South Carolina by owning a manufacturing subsidiary and performing sales, billing, purchasing, and invoicing services outside the state?
No, on the stated facts. Ownership, common officers, out-of-state sales support, billing, collection, purchasing, disbursing, and arm's-length invoicing did not make XYZ taxable when those services we…
Were fishing-guide and fishing-excursion-boat services subject to Texas sales tax?
No. The Comptroller classified fishing-guide services as personal rather than recreation services, gave them the same exempt treatment as hunting guides, and also excluded fishing excursion boats.
Were hunting and fishing guide services and fishing excursion boat services subject to Texas sales tax?
No. The Comptroller's 1987 letter treated fishing and hunting guide services as nontaxable personal services and also said fishing excursion boat services were not taxable.
Could an export packer buy crating and packaging supplies tax-free, and did that treatment clearly cover sheet lead used as export shielding?
Listed supplies used exclusively for export could be bought with an exemption certificate, which needed no permit number. Sheet lead was not listed, and this record contains no final Comptroller decis…
New York Advisory Opinion TSB-A-87 (4)I: May amounts in a Tax Law § 612(k) qualified higher education fund be used, tax-free, to fund a college's prepaid alumni tuition plan, and does the section 612(c)(17) tuition deduction apply to such payments?
Yes to the first question, no to the second. The Department ruled that Clarence and Barbara Tobin could use amounts held in their qualified higher education fund to establish a prepaid Canisius Colleg…
Could a company buy a tractor, trailer, and installed medical equipment tax-free for immediate resale to a lessor?
Yes. Company A could buy the tractor, trailer, and specialized medical equipment without tax because it would immediately resell them to Company X without using them first. Motor vehicle tax became du…
Was used drilling equipment bought at a Texas auction exempt because its new owner immediately moved it to Mississippi for exclusive use there?
No. Because a prior owner had apparently used the drilling equipment in Texas, it was not built for exclusive out-of-state use; the auctioneer properly charged tax and no refund was due.
Does manufacturing equipment used to physically produce and reproduce computer hardware and software products (as opposed to just designing/developing them) qualify for New York's investment tax credit, and does a general-purpose office computer used for project management also qualify?
Yes for the manufacturing/reproduction equipment -- taking a blank tape or disk and imprinting a software program onto it, and manufacturing the physical hardware connector products, both constitute '…
For a printing company's New York receipts factor, should printed materials shipped in bulk to a customer's New York locations be sourced to New York even if the CUSTOMER isn't itself based in New York, and how should mailings to third-party consumers (not the direct customer) be sourced?
Yes -- receipts from books, magazines, and catalogs are sourced to New York whenever the printed goods are actually shipped (via common carrier, company truck, or mail) to a point in New York, regardl…
When a utility agrees to transport a customer's own natural gas (contract carriage) and separately reimburses an upstream pipeline for transportation costs, is the utility's own transportation fee taxable under sections 186 and 186-a, and does simply passing along reimbursement payments to the upstream pipeline count as taxable income to the utility?
The utility's own contract-carriage fee for transporting the customer's gas IS taxable gross earnings/gross income under both section 186 and section 186-a; amounts the utility collects from the custo…
Does reincorporating from Delaware to New York State (without formally electing federal F-reorganization treatment) terminate a company's existing New York S corporation election?
It depends entirely on whether the federal S election survived the reincorporation -- if the change qualifies for tax-free federal F-reorganization treatment (per Revenue Ruling 64-250) and the FEDERA…
What did a May 1987 Texas Comptroller internal memo and approved announcement say about fishing guide services?
The memo called the measure a proposed rule and sought its filing and effective date. Its approved announcement said fishing guides and fishing excursion boats were not taxable.
My partnership built an office building at 126 East 56th Street in two stages, finishing the base building in 1983 and completing individual tenant floor build-outs through 1985. Can I allocate construction-period interest, real property taxes, insurance, security, and specifically identified indirect project costs to each floor by square footage, for gains-tax original-purchase-price purposes?
Yes, as long as it's an equitable allocation. Tower 56 Partners, a New York partnership that built and leased an office building at 126 East 56th Street in Manhattan, financed by National Bank of Nort…
Were $40 sales of a family-history book taxable when the buyers were only family members and friends?
Yes. Family and friend sales were taxable sales of books. Supplier tax could be recovered for copies actually resold, while copies kept or given away remained taxable to the publisher.
Could an out-of-state buyer obtain a refund of Texas sales tax on auction equipment shipped out by common carrier without Texas use or possession?
Yes, if the buyer made no Texas use, did not take possession in Texas, and documented common-carrier shipment out of state. The auctioneer could refund the tax and claim credit.
Did the medical needles listed in a supplier's product literature qualify for a Texas sales-tax exemption?
Yes. The Comptroller said the nine listed Chiba, myelography, Cournand, Seldinger, angiography, spinal, arterial, and intradiscal needles qualified for exemption.
Can a broadcaster allocate the sales tax on its production purchases based on where its viewers are, since the audience is in and out of New York?
No. Showtime Entertainment prepares videotape programs for satellite broadcast and asked whether the sales and use tax on its purchases of tangible personal property, editing/dubbing processing servic…
Can a pay-per-view movie company take over the hotel's responsibility to collect and pay the sales tax on in-room movie charges?
No. Spectradyne installs and maintains pay-per-view movie equipment ('Spectravision') in hotels and asked whether it could assume the hotel operator's liability to remit the sales tax collected on in-…
Were newsletter subscription charges, shipping and handling, and binders taxable in Texas?
Newsletter subscription charges and a $5 shipping-and-handling fee were taxable. Included binders could be bought for resale, but binders given away were taxable to the publisher.
Were film libraries leased by subscription taxable in Texas, including when used by a federal contractor?
Yes. Based on the limited facts, the Comptroller treated the subscription as a lease of taxable tangible personal property; a federal contractor was not exempt for items it used.
Were address cards used by the postal service to deliver a free newspaper exempt wrapping or packaging materials in Texas?
No. The Comptroller said the postal address card was not exempt wrapping or packaging material under Rule 3.314, so the charges associated with producing it were taxable.
Was a charge to a food-booth operator for booth space taxable in Texas when calculated as a flat fee, a percentage of sales, or both?
No. The Comptroller said food-booth space rental was not taxable whether charged as a flat amount, a percentage of the operator's gross sales, or a combination.
Did a Texas health club or physical fitness center have to collect sales tax on customer fees for using its weight-training facilities?
Yes. The Comptroller classified health clubs and physical fitness centers as taxable amusement services under Rule 3.298 and required tax on facility-use fees.
How did Texas tax a modeling agency's promotional package, agency-book listing fee, composite cards, and installment payments?
A separately stated annual agency-book listing fee was nontaxable, but the portfolio package and composite cards were taxable tangible property. Tax could be reported with final payment under stated c…
Are the fees a health club charges for aerobics classes and workout machines taxable as club dues or admission charges?
No. Donald B. Schwartz asked whether the fees a 'health club' charges — for aerobic exercise classes and the use of workout machines by dues-paying members, with showers but no pool — are taxable unde…
Can a caterer buy paper cups, napkins, tablecloths, and plastic tableware tax-free as items bought for resale?
Only partly. Festive Caterers Inc. asked whether its purchases of paper cups, napkins, tablecloths, and plastic tableware are exempt as items bought for resale because they become part of a customer's…
In a multi-tier structure -- a nonresident individual owning an S corporation, which is a general partner in a New York partnership, which is itself the managing partner of a foreign partnership doing 35% of its business in New York -- how does New York tax flow through each layer down to the individual, and how is the New York-source share of income determined at each level?
Nothing is taxed at the partnership or S-corporation entity level itself (each tier only files an informational return) -- New York-source income flows up through each tier using that tier's own books…
Could a flat-glass manufacturer use an 11% annual property-tax depreciation rate for machinery instead of the statutory 9% schedule?
Yes, for XYZ's proposed flat-glass plant. Based on the company's evidence, a Property Tax Division visit, and information from plant design and construction firms, the Commission allowed an 11% annual…
Could a dealership receive a motor vehicle tax refund for vehicles titled in its name but driven while supposedly held for resale?
Only for vehicles held exclusively for resale. The Comptroller compared mileage when the dealership titled each vehicle with mileage at resale. Vehicles showing use generally failed, including 24 driv…
A typesetter sells imprinted film used to print catalogs. Is that a taxable sale of property or an exempt typesetting service?
It is a taxable sale of property unless the buyer certifies an exempt use. Stibo Datagraphics, a commercial typesetter, produces imprinted film used by printers to make catalogs and sells the film dir…
Can a corporate partner in a partnership claim its allocable share of the partnership's investment tax credit on production equipment the PARTNERSHIP purchased, even though the partnership has no Article 9-A tax liability of its own and a partner's interest is technically just intangible personal property rather than a direct share of partnership assets?
Yes -- even though a partnership has no Article 9-A tax liability to apply a credit against, and a partner's interest is technically intangible personalty rather than a direct share of partnership ass…
New York Advisory Opinion TSB-A-87 (2)I: In the year they change status from nonresident alien to resident alien (or vice versa), may Japanese treaty traders claim the New York standard deduction and 'married filing jointly' status even though federal law denies the federal standard deduction and forces 'married filing separately'?
Partly yes, partly no, for the 1986 taxable year. The Department ruled that Japanese treaty traders may claim the New York standard deduction in their dual-status year even though federal law forces t…
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