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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How did Texas tax casino-party fees and event decorations that were installed, removed, reused, discarded, or taken home by guests?
Casino admissions or per-person chips were taxable, but a lump-sum party service was not. Decoration transactions were taxable sales or rentals, with limited separately stated installation and return-…
Did shop-order envelopes qualify for Texas's manufacturing exemption as short-lived machinery, equipment, accessories, or essential manufacturing materials?
No. The Comptroller said shop-order envelopes were not manufacturing machinery, equipment, or accessories and were neither essential to nor directly used or consumed in manufacturing.
Could a company use Texas's aggregate use-tax reporting method retroactively from September 1, 1985, and how were existing assets and a capitalized repair treated?
No retroactive start was allowed; the method began November 1, 1986. Undepreciated balances and a separately capitalized $24,000 repair were reportable over four years.
Is installing a home water distillation unit a tax-free capital improvement, and how are the sale and installation taxed?
Yes — it is a capital improvement. Alfred E. Luckette Jr. (Alfran Modern Home Products) asked whether selling and installing a home water distillation unit is a capital improvement to real property. T…
Which training-company charges did Texas treat as taxable sales or materials and which seminar, delivery, or consulting fees were nontaxable?
Product sales and training-material charges were taxable; several seminar, delivery, and consulting categories were nontaxable, but the provider sometimes owed tax on materials used in Texas.
Was a turnkey drilling-mud provider selling taxable mud or providing a nontaxable well service, and could charges for consumed mud be treated as loss reimbursement?
The company was a drilling-mud retailer, not a well-service provider. It could buy chemicals for resale but had to tax the full mud price; consumed mud was a sale, not reimbursed loss.
Could a county claim its political-subdivision exemption for Astrodome purchases and real-property improvements benefiting a private lessee?
No. Property bought for the private lessee's use and contracts improving county realty for that private party's benefit were not covered by the county's exemption.
How did Texas treat pager setup and insurance charges, invoice wording for freight, and handwritten sales-tax corrections?
Pager setup and damage insurance were taxable; loss-only insurance was not, while combined coverage was fully taxable. Freight needed contract or bill-of-lading proof, and invoice alterations required…
My partnership is constructing an office building at 33 Whitehall Street, with the base building completed in a first stage and individual floors built out for tenants in a second, ongoing stage running into 1989. 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. Broad Financial Center Partners, a New York partnership building an office building at 33 Whitehall Street in lower Manhattan, financed first by Manufactu…
My partnership is constructing an office building at 32 Old Slip in lower Manhattan, with the base building finishing in phases (elevator banks completed on different dates) and individual floors being built out for tenants as leases are signed. 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. Assay Partners, a New York partnership building an office building at 32 Old Slip in Manhattan financed by Bankers Trust Company, was completing the build…
Which sewing, cleaning, and packaging supplies sold to garment manufacturers did Texas classify as exempt, taxable, or fact-dependent?
Texas exempted listed incorporated, processing, and qualifying nonreturnable packaging items with a certificate; taxed listed equipment and supplies; and required more facts for 14 items.
After Rule 3.295 changed, did a utility need replacement electricity-exemption certificates for customers whose certificates had been accepted before the revision?
No replacement was required for certificates accepted before the revision. Current predominant-use certificates had to state that a valid study supported the actual exempt percentage.
Is a market-research firm's sale of customized retail sales and inventory reports a taxable information service?
Yes. Putnam Associates sells reports charting inventory levels and sales of retail products (cosmetics, fragrances, dinnerware) in nationwide stores, and argued it provides a consulting service furnis…
Was interest on GNMA (Ginnie Mae) mortgage-backed securities exempt from South Carolina income tax as a U.S. obligation?
No. RR 87-4 held that interest from securities guaranteed by the Government National Mortgage Association (Ginnie Mae) was not exempt from South Carolina income tax, because a federal guarantee does n…
Was interest on Puerto Rico bonds taxable to South Carolina residents, whether held directly or received as exempt-interest dividends from a mutual fund?
No, it was exempt. RR 87-3 held that interest on Puerto Rico bonds was exempt from South Carolina income tax under 48 U.S.C. § 745, both when residents held the bonds directly and when it reached them…
Were tire-shredding machines exempt as processing machinery when they cut discarded tires into pieces before municipal landfill disposal?
No exemption applied. Cutting discarded tires into six segments for landfill disposal was not processing tangible personal property for sale. The Commission treated processing as preparing or converti…
When did a price increase end a Texas prior-contract exemption, and did an outside-factor exception apply when the contract omitted the increase formula?
The exemption lasted through December 31, 1987 or until a price increase. An outside-factor increase could preserve it, but not where the contract omitted the basis for computing the increase.
Could patients buy or rent the described electronic muscle stimulator tax-free as therapeutic equipment in Texas?
Yes, with a doctor's prescription. The Comptroller classified the stimulator as a therapeutic device; nonprescription purchases and practitioner purchases were taxable.
How did Texas tax party entertainment, decorating labor and materials, sales to exempt organizations, and unpaid customer bills?
Client-paid entertainment was nontaxable when no admissions were sold; separately stated decorating labor was nontaxable, materials were taxable, and bundled labor and materials were fully taxable.
Was a $57 fee covering three admissions to an apparel mart and a buyers-guide listing taxable as admission to an amusement service?
No. The Comptroller did not consider the apparel-mart admission an amusement-service admission and said the described $57 charge was not taxable.
Is an out-of-state national bank subject to New York's Article 32 bank franchise tax merely because it serves as trustee for a New York industrial development bond, when all its substantive trustee work is performed at its out-of-state headquarters except for a single one-day trip to sign documents and deliver securities in New York?
No -- a national bank with no New York office, employees, or property, whose only New York contact is signing a trust agreement and hand-delivering bond documents during a single one-day visit (with a…
How is a car dealer taxed on vehicles it loans to customers as courtesy cars, especially if it depreciates them as business assets?
It depends on how the dealer holds and uses the cars. Crestview Cadillac loans courtesy cars to customers whose vehicles are being serviced and asked how they are taxed. The Department explained the d…
Could a multi-location restaurant operator use one electricity-exemption study for multiple locations instead of preparing a separate study for each?
Only for locations proven to be the same, not merely similar, in electricity-relevant respects. Differences in building, equipment, operating hours, or heating and cooling required separate studies.
How did Texas tax a livestock producer's employee uniforms, cattle-auction rentals and refreshments, motel space, pickups, trailers, and farm machinery?
Uniforms and cattle-auction toilet, chair, and table rentals were taxable; other items depended on food, hotel, or vehicle rules, while qualifying farm trailers and machines were exempt.
Were a nonprofit-financed county jail and the interest paid to holders of lease-payment certificates exempt from South Carolina property and income tax?
Yes, conditionally. The jail qualified for the public-purpose property-tax exemption even with incidental office space. Interest paid to certificate holders was state-tax-exempt only if the IRS accept…
What Texas sales-tax rule did an internal Comptroller memo identify for complimentary restaurant meals, appetizers, and beverages?
Rule 3.293(e)(3) made free promotional meals and beverages taxable to the restaurant owner only to the extent tax would have been due on the original supplier purchase.
Were cartons of 18 fully cooked, hard-boiled, dyed Easter eggs sold in grocery stores taxable in Texas?
No. The Comptroller found the described sealed cartons of 18 cooked and dyed eggs nontaxable, even though some of the grocery stores had sit-down eating areas.
I'm constructing an office building floor-by-floor as tenants sign leases, rather than all at once. For gains-tax purposes, can I allocate construction-period interest, real property taxes, insurance, security, and specifically identified indirect project costs to each floor in proportion to that floor's share of the building's total square footage, counting costs only through the date each floor's construction is finished?
Yes, as long as it's an equitable allocation. 45 Broadway Atrium Partners was constructing an office building at 45 Broadway in Manhattan in two stages -- a first stage completing the foundation, shel…
Could sales tax be refunded or removed from a construction debt when the purchaser never issued an exemption certificate and a bonding company later assumed the debt?
No. Without a properly completed purchaser certificate, tax remained due. The bonding company had assumed the debt and lacked its own exempt-entity contract basis to remove the tax.
Were separately stated rock-and-sand transportation charges exempt when the seller relied on oral FOB-pit terms but lacked a written contract or carrier bill of lading proving pre-shipment title transfer?
No. The final April letter found oral agreements and unsupported FOB terms insufficient, so the transportation charges were taxable without records proving title passed before movement.
Does an out-of-state manufacturer that sells only through independent (non-employee) commissioned sales representatives lose the protection of federal P.L. 86-272 -- which shields mere order-solicitation from state income tax -- because it rented a New York showroom for those representatives' convenience for part of the year?
Yes -- P.L. 86-272 protects a company whose ONLY in-state activity is soliciting orders that are approved and filled from outside the state, but renting even a small showroom in New York (here, at the…
As the New York State Teachers' Retirement System, I invest a significant portion of my pension funds in first mortgages on New York real property. Are those mortgages exempt from New York's mortgage recording tax based on my status as a state agency, even though I'm not listed among the specific statutory exemptions in Tax Law §§ 252 and 252-a?
Yes. The New York State Teachers' Retirement System, a public pension fund created under Education Law Article 11 that invests a significant portion of its assets in first mortgages on real property (…
Is an out-of-state mortgage banking subsidiary of a national bank subject to New York's Article 32 bank franchise tax once it opens a New York loan-origination office, must it file combined with its parent, and are its receipts from selling mortgage-backed securities on the secondary market taxable New York receipts?
Yes, it's a taxable 'banking corporation' once it opens the New York office (as a subsidiary 65%+ owned by a national bank, engaged in bank-related mortgage business); whether it must file combined wi…
Was a handling fee taxable when a company only marketed vacation packages and referred interested clients to a travel agency?
No. Based on the stated limited role, the Comptroller said the handling fee was not connected to a taxable item or taxable service and therefore was not taxable.
Are sales of gold, silver, precious-metal coins, and bullion by banks, coin dealers, and pawn shops subject to Kansas sales tax?
Yes. Kansas determined that retail sales of gold, silver, precious-metal coins, and similar items — including Canadian Maple Leafs, American Eagles, South African Krugerrands, and gold and silver bull…
When were an advertising agency's art-direction and postage charges taxable depending on whether it acted as a seller or disclosed agent?
Art direction tied to the agency's sale or employee fabrication of property was taxable; disclosed-agent art direction was not. Postage followed whether the underlying negatives were part of a taxable…
Was a pipeline-welder testing company's charge taxable when it prepared pipe coupons, stress-tested the welds, reported results, and transferred samples?
No. The Comptroller treated the welder-testing charge as a nontaxable service even though the customer received the tested coupon; the provider owed tax on taxable inputs it used.
Is installing in-ground water pipe to a property a tax-free capital improvement?
Yes. Thompson's Mobile Manor, a trailer park, hired a contractor to install in-ground water pipe from the existing main line to and throughout the park (the pipe becomes town property once installed).…
Could a retailer use Texas's purchase-ratio sales-tax reporting method, and what records were required for exempt agricultural sales?
No, because the retailer was outside the eligible seller categories. Exempt sales required detailed invoices and, when exemption depended on use, timely detailed certificates; vague farm-use claims fa…
Were body-wrapping service charges subject to Texas sales tax?
No. After reviewing the submitted materials, the Comptroller said the body-wrapping service charge was not taxable and that the customer could seek a refund from the studio.
How did Texas treat separately invoiced freight for purchased and leased construction forms under a contract signed before October 2, 1984?
FOB-origin freight separately invoiced on purchased forms was not taxable. Freight on leased forms could use the prior-contract exemption, which expired September 30, 1987.
Could a Texas telephone-system seller revise a completed turnkey invoice after the transaction to separate nontaxable labor from materials?
No. The original written contract and billing controlled, so an after-the-fact invoice could not separate labor to change the tax result; sales tax applied to the total charge.
How did Texas tax the solution, delivery equipment, and applicator tips in the Caridex dental-caries removal system?
The solution was exempt, but the delivery system and applicator tips were taxable. If sold together for one lump sum, the entire charge was taxable unless the solution was separately stated.
Could buyers issue Texas resale certificates for magazine inserts, statement enclosures, catalogue inserts, scratch-and-sniff labels, or fragrance slurry?
Advertising inserts, enclosures, and labels were not bought for resale and were taxable based on Texas delivery or control. A printer could issue a resale certificate for slurry incorporated into prin…
Were charges for using passive exercise equipment at a Texas salon subject to state and city sales tax?
Yes. The Comptroller treated the salon's paid use of passive exercise equipment as a taxable service, subject to state tax and city tax when located in a taxing city.
Did a South Carolina resident have to report his share of an out-of-state S corporation's income, and could he claim a credit for tax paid to the other state?
Partly. The resident started from federal taxable income (which already included his Subchapter S share), then modified out the S corporation income, losses, and deductions apportioned to the other st…
Did change orders and extras added to a pre-1987 Texas contract automatically qualify for the prior-contract sales-tax rate exemption?
No. Added work qualified only if the certificate issuer could prove the change resulted from factors beyond the parties' control; good-faith certificate acceptance protected the seller's audit positio…
Could a Texas industrial processor buy oxygen and similar gases tax-free when the gases were consumed in processing or used in repairs?
Gases consumed while processing an item for resale could be bought with an exemption or resale certificate. Gases used to repair tangible property were taxable supplies.
Were materials, equipment, and supplies used by a Texas manufacturer to develop a prototype exempt from sales tax under this 1987 ruling?
No. The 1987 letter treated research-and-development and sample-making inputs as taxable. STAR now warns that a later R&D exemption was repealed effective January 1, 2026.
Could a lease-car trade-in reduce Texas motor vehicle tax when the dealer and leasing company were the same entity?
No. The Comptroller said a trade-in reduced the taxable amount only when it reduced what the leasing company paid the dealer. If the dealer and leasing company were the same legal entity, there was no…
How did Texas treat repair, painting, parts, tires, and installation costs for heavy equipment and motor vehicles prepared for auction resale?
For property actually sold at public auction, heavy-equipment costs could be supported by resale certificates; motor-vehicle repair and installation labor was nontaxable and parts could be bought for …
When did Texas exempt drilling rigs, components, and pipe bought for mineral exploration or production outside the state?
An intact or completed drilling rig and its accessories qualified when bought for use in another state. Pipe qualified only for an offshore facility beyond Texas territorial waters.
Could a contractor claim an exempt-entity construction exemption for an airport hangar expanded primarily for a private nonexempt user's benefit?
No. The Comptroller said materials and supplies were not exempt when exempt-owned realty was improved primarily for a nonexempt entity, so the certificate lacked good-faith support.
Were Slim-Fast chocolate nutrition bars, powdered shakes, pudding, hot cocoa, and cookies subject to Texas sales tax?
No. Texas treated the listed Slim-Fast bars, powdered shakes, pudding, hot cocoa, and cookies as exempt food products.
When a Nebraska unitary business group includes an S corporation, how is the group's income apportioned, who files which return, and how are the S corporation's shareholders taxed?
The S corporation and the other corporations in a unitary group all use the same apportionment formula. Under Revenue Ruling 24-87-1, the apportionment factors are computed for the entire unitary grou…
Are my single-axle mobile home toters classified as "trucks" or "tractors" for New York's highway use tax, and does it matter that they usually run empty on the return trip?
Mobile home toters are classified as "tractors," not "trucks," for New York's highway use tax -- and they are taxable vehicular units either way. Under 20 NYCRR § 470.3, a "tractor" is a self-propelle…
Were Texas day-care service charges and student lunches subject to sales tax?
Day-care service charges were not taxable. Student lunches were also exempt when the center was state-licensed for child care under the rule then in effect.
When a syndicate sends newspapers photocopies of a comic strip to publish, is it selling a reproduction right or taxable property?
It is a taxable sale of tangible personal property — not a tax-free reproduction right. The Hearst Corporation's King Features Syndicate mails newspapers photocopies of six daily installments of a com…
How did Texas tax a flint-coat process on oil-field casing and the sand, epoxy, and flint rock used in that process?
The processor's total customer charge was taxable. Sand consumed in the process and epoxy and flint rock transferred to the customer could be bought tax-free with exemption certificates.
Did a Texas taxpayer have to notify the Comptroller of contracts claimed exempt from the January 1, 1987 sales-tax rate increase?
No notice was required. The taxpayer had to keep the written contracts, bids, and exemption certificates available for a Comptroller auditor to verify the claimed exemptions.
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