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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Does a company's mobile filter press that refines industrial wastewater qualify for New York's manufacturing-machinery exemption?
No — it doesn't qualify. Central New York Industrial Services runs mobile filter presses (pumps, compressors, screens) that refine clients' liquid industrial waste on-site; the filtered water is pumpe…
Is charging to irradiate a core sample — making it radioactive so it can be tested — a taxable service in New York?
Yes — it's taxable. Company X, which analyzes core samples, needs each sample made radioactive before testing; Company Y performs the irradiation and returns the radioactive sample with a report of th…
Does a company that laser-prints tax returns from clients' data files sell taxable tangible personal property, or a service?
It's selling taxable tangible personal property, not a service. Lasar Image Corp. takes computer tapes from its accountant and tax-preparer clients and prints paper copies of income tax returns, then …
New York Advisory Opinion TSB-A-86 (15)I: May a railroad-equipment-leasing limited partnership, whose only place of business is in New York, allocate part of its income to sources outside New York based on its lessee's out-of-state activities?
No. The Department ruled that Hallin Equipment Company, a limited partnership leasing railroad cars solely to Penn Central (later Conrail), could not allocate any of its income to non-New York sources…
When did cotton module builders and tarps qualify for Texas's agricultural exemption, and did a cotton gin qualify as the original producer?
They could qualify only when used exclusively to process, pack, or market the original producer's own products. A cotton gin was not the original producer and had to pay tax.
How did Texas tax hotel guest phone charges, complimentary calls, supplier-tax credits, and mixed interstate and intrastate long-distance billing?
Tax applied to the guest charge. Complimentary calls required no guest tax, supplier tax could be credited, and failing to separately state taxable and nontaxable calls made the total charge taxable.
How did proposed Texas contractor Rule 3.291 treat short-lived assets, financing leases later returned as rentals, and intracompany sales under the aggregate method?
Actual useful life could replace four years for short-lived nonvehicles; capitalized financing leases stayed in the aggregate method, and intracompany transfers did not count as sales.
Was horse feed subject to Texas sales tax when used for work, pleasure, show, parade, trail-riding, 4-H, or breeding horses?
No. The Comptroller said feed sold for horses was not taxable across all the listed uses.
Could a cable company give resale certificates for converters and their repair when the converters were included in subscriber service?
Yes. The company could buy the converters and their repair tax-free for resale. A separate repair fee billed to a subscriber was taxable; without an added fee, no additional tax was passed to the subs…
If a subsidiary pays its parent corporation a 'management fee' that reimburses the parent's own officers' salaries and overhead, does the subsidiary have to count part of that fee as compensation to a 5%-plus stockholder when computing New York's entire-net-income-plus-compensation franchise tax -- even though the fee is technically paid to a corporation, not an individual?
Yes -- the portion of a management fee that a subsidiary pays to its parent (a 5%-plus stockholder) that exceeds genuine reimbursement of the parent's out-of-pocket expenses on the subsidiary's behalf…
New York Advisory Opinion TSB-A-86 (14)I: Are Railroad Unemployment Insurance Act benefits and Title VII Regional Rail Reorganization Act of 1973 benefits exempt from New York personal income tax?
Different results for each. The Department ruled that Railroad Unemployment Insurance Act benefits are exempt from New York personal income tax, because federal law (45 U.S.C. § 352(e)) flatly bars an…
How could a monthly Texas sales-tax filer use a 13-period accounting year when only 12 returns were accepted annually?
The filer could use the 13-period system, but had to combine two periods once each year. A period ending by the 10th was due on the 20th of that month; a later-ending period was due on the 20th of the…
Was an 'equa chair' exempt from Texas sales tax because it was purchased with a doctor's prescription?
No. The Comptroller said the chair did not qualify as a therapeutic appliance or device, so the doctor's prescription did not provide a sales-tax exemption.
When were downhole fishing services taxable during drilling, completion, and later work on an oil or gas well?
They were not taxable during drilling or before initial completion. After completion they were taxable unless performed during a workover or to repair the casing string; a taxable job's full labor-and…
When a bank gives a depositor a 'gift' for buying a CD and builds the gift's value into a lower interest yield, is that a taxable sale?
Yes — they're taxable sales, not free promotional giveaways. A commercial bank planned to give each certificate-of-deposit buyer a 'gift' (all tangible personal property, none nominal in value), build…
Which electric-utility billing periods first used the temporary 1987 Texas sales-tax increase and the later rate decrease?
The higher rate first applied to a billing period beginning on or after January 1, 1987. The lower rate first applied to a billing period ending on or after September 1, 1987.
Was placing a portable sign at a customer's premises a taxable rental or a nontaxable advertising service?
It depended on customer control. If the customer could not control the sign, the transaction was a nontaxable advertising service; if the customer could change its message, it was a taxable rental of …
When a film distributor licenses films to TV networks and also sells its right to collect future syndication payments to a bank, how should it source those two kinds of receipts to New York State in its franchise-tax receipts factor?
Whether a film distributor's network-licensing receipts source to New York depends on whether the distributor is acting as the film producer's AGENT (in which case its commissions are 'services perfor…
Could an exempt religious organization treat a requested payment for property as a donation rather than a sale?
No. If the organization did not freely give the item away, the payment-for-item exchange was a sale even when called a requested donation or paid in a different amount. Taxability depended on the item…
When could a dealer sell motor vehicle parts tax-free to a Texas farmer or rancher under this 1986 guidance?
Only when the vehicle was used exclusively on the farm or ranch and was not licensed for highway use. Before granting the exemption, the parts dealer had to obtain an exemption certificate stating tho…
Was clothing for foster children exempt when bought with a county voucher or later reimbursed by the county?
A purchase made by the county was exempt, and its voucher sufficiently proved that status. But tax was due when another person bought the clothing and the county merely reimbursed that person.
Is a freestanding walk-in freezer bolted to a concrete slab a tax-exempt capital improvement, or a taxable purchase?
The freezer itself is taxable; only the concrete foundation is an exempt capital improvement. Dairy Barn Stores installs freestanding outdoor walk-in freezers — assembled on site, wired, and bolted to…
New York Advisory Opinion TSB-A-86 (13)I: Is Hope Sayles, an adjudged-incompetent individual whose guardian maintains a New York residence for her but who spends less than 183 days a year in New York, a New York resident for personal income tax purposes?
No, presumptively. The Department determined that, absent a showing that Hope Sayles' guardian or the appointing Probate Court took some action to change her domicile, her original Rhode Island domici…
Was Barley green, made from dried barley-plant juice, brown rice, and kelp, subject to Texas sales tax?
No. The Comptroller classified Barley green as a powdered food product and therefore exempted it from Texas sales tax.
New York Advisory Opinion TSB-A-86 (12)I: Does machinery and equipment that turns foods, milk, and cheeses into finished foods qualify for the Tax Law § 606(a) investment tax credit, when the business both caters/serves prepared meals and sells processed food in bulk at retail?
It depends on how the equipment is principally used. The Department ruled that Anthony Pieragostini's 'Cheese World' machinery and equipment does NOT qualify for the section 606(a) investment tax cred…
Was a single insurance charge covering both loss of and damage to rented pagers taxable?
Yes. Separately stated loss-only insurance was not taxed, but damage-waiver fees were taxable from September 1, 1986. A single charge covering both loss and damage was entirely taxable.
Could fishing nets be purchased tax-free as component parts of a commercial fishing boat?
Yes, under the later letter, when the boat exceeded eight tons displacement and was used commercially. The customer had to provide an exemption certificate; an earlier letter in the same record had de…
Should sales tax have been included in a freight claim when shipped equipment was totally destroyed?
Yes. Tax charged on the original sale became part of the selling price and should have been included in the claim. The carrier's statement was not a valid resale certificate and could not support a ta…
Does New York tax an aircraft engine warranty-repair contract, and where — the repair site or the aircraft's base?
It's a taxable service contract, and the tax follows where the aircraft is hangared — not where the repair is done. Garrett Turbine (Arizona) sells flying-hour engine warranties; customers get repairs…
Can New York force an out-of-state affiliate to collect sales tax just because its sister company operates in New York?
Possibly yes — if the out-of-state company is really the 'alter ego' of its New York affiliate. Levitz Furniture planned a new New Jersey corporation, owned by the same parent as its existing New York…
Does an out-of-state mail-order subsidiary have to collect New York tax just because a sister company runs stores here?
No — on these facts the mail-order company isn't the alter ego of its New York affiliate, so it has no nexus and needn't collect New York tax. Spencer Gifts planned to reorganize into a New Jersey 'Ma…
Were charges for cleaning and maintaining pleasure yachts and commercial vessels taxable?
Charges for a noncommercial pleasure vessel were taxable, while the same services on a commercial vessel were not. The provider owed tax on equipment and consumable supplies, with resale treatment lim…
Were 'Smoky Canyon Pouch foods' taxable when the sales materials presumed heating before consumption?
No. Because the pouches were presumed to be heated before eating—even by being left in the sun—the Comptroller said the food was not sold for immediate consumption and was not taxable.
What did an airline need to show for out-of-state purchases temporarily stored at a Texas facility before being transported out of Texas for use solely elsewhere?
Section 151.011(e) excluded qualifying temporary storage from use tax, regardless of delivery method or payer. The airline needed purchase-specific certificates where required and detailed inbound, st…
How did sales tax apply when a shared-tenant provider bought telephone service and resold local and intrastate long-distance access to tenants?
If it made no use of the lines, the provider could buy service with a resale certificate and collect tax from tenants on local and intrastate long-distance service. Alternatively, it could claim credi…
Must a city collect sales tax on the sewer 'user charges' it bills residents, even when a private firm runs the treatment plant?
No — the city's sewer user charges aren't taxable. The City of Long Beach bills residential and commercial users a 'user charge' for sewage treatment, and plans to have a private company build, own, a…
Which pieces of lab and manufacturing equipment used by a biotech diagnostics company qualify for New York's 10% research-and-development credit versus the 6% investment tax credit -- and can the same equipment ever qualify for both, or must the company pick one?
All of Petitioner's laboratory equipment used directly to perform, monitor, or store materials for its disease-diagnostic research (centrifuges, incubators, spectrophotometers, gene sequencers, freeze…
Were natural-gas compression charges a taxable compressor rental or a nontaxable service?
It depended on use. A community compressor station serving several users for usage-based fees provided a nontaxable service; exclusive use by one company was a taxable rental.
Could patients buy custom shoe inlays made of viscoelastic polymer tax-free?
Yes, when purchased on a doctor's prescription. The Comptroller treated the custom inlays as therapeutic appliances; sales without that prescription were taxable.
Which of an advertising agency's services and sales are taxable in New York, and how does a principal-agent agreement change the result?
It depends on what the agency is really selling: pure advertising services are exempt, but selling tangible property is taxable — and a valid principal-agent agreement shifts who owes the tax. In a de…
Did hotels and motels have to collect Texas sales tax on amounts charged to guests for local and intrastate long-distance telephone calls?
Yes. The Comptroller said tax applied to the full amounts charged for local and intrastate long-distance calls; uncollected tax could be assessed with penalty and interest for four years.
Are energy-efficient vertical blinds installed in office buildings a tax-exempt capital improvement?
No — the blinds are taxable, not a capital improvement. Verticals Inc. installs energy-efficient vertical blinds in commercial office buildings, often into permanent structural pockets at the windows,…
Does a trade association that runs a single three-day trade show each year count as a taxable-show 'promoter'?
No — running a single yearly show doesn't make the organizer a 'promoter,' though the landlord may be one. The Master Furriers Guild holds one three-day trade show a year. Under Tax Law § 1131(5)-(6),…
Is a landlord who only rents show space — without organizing the shows — a 'promoter' who must meet New York's show-permit rules?
Yes — if it hosts more than three shows a year, even a landlord that only rents space is a promoter. Madison Square Garden Center rents space to show organizers who subdivide and sublet it to vendors,…
Were a common carrier's interstate long-distance telephone charges subject to Texas sales tax, and what applied if tax had been charged in error?
No. Interstate telecommunications were not subject to Texas tax, and erroneous tax charges could be claimed back within four years without an exemption certificate. Intrastate telecommunications remai…
A Texas securities firm has no New York office, only floor brokers ('$2 brokers') executing orders on the NYSE/AMEX. How much of its commission income -- from unrelated firms' orders, and from its OWN customers' orders -- gets allocated to New York for franchise-tax purposes?
Commissions Petitioner's New York floor brokers earn executing OTHER (unrelated) firms' orders are 100% allocated to New York, since those are services performed entirely in New York by Petitioner's o…
Was an annual membership fee taxable when a Texas service company only acted as the member's agent to secure a bail bond after a first-offense DWI arrest?
No. The Comptroller said the annual fee was not taxable where the company only did the legwork to secure a bail bond for a member arrested and jailed in Texas on a first-offense DWI charge.
Does a newly formed co-op corporation qualify for New York's reduced 0.04% franchise-tax capital rate for 'cooperative housing corporations,' if its units are currently zoned/certified for commercial use but the co-op plans to convert them to residential dwelling use?
New York's reduced capital-base rate for cooperative housing corporations under section 210.1(a)(2) applies automatically to any corporation that qualifies as a 'cooperative housing corporation' under…
If an oil company accepts a properly completed resale certificate from a petroleum customer who ISN'T listed on the Tax Department's roster of registered motor-fuel distributors, does that absence from the roster automatically mean the oil company didn't accept the certificate 'in good faith' -- exposing it to tax on those resale receipts?
No -- a customer's absence from the Tax Department's roster of Article 12-A motor fuel distributors is not, by itself, sufficient to establish that the oil company's acceptance of that customer's resa…
New York Advisory Opinion TSB-A-86 (11)I: Do payments made to a former officer under a paid leave-of-absence agreement with his employer qualify as 'pensions and annuities' eligible for the $20,000 section 612(c)(3-a) exclusion, and does the employer's use of Form W-2 (rather than W-2P) matter?
No, the payments don't qualify, and yes, the W-2 form matters as evidence. The Department ruled that payments Nat Gilbert received under a leave-of-absence agreement with Matsushita Electric Corporati…
Was tax due on complimentary laundry and dry-cleaning services provided without charge to key hotel staff under hotel valet contracts?
No sales tax was due on the complimentary cleaning because there was no charge. The cleaner did owe use tax on materials bought tax-free and given with that cleaning.
Did land-based equipment used mainly for oil-and-gas workover activities qualify for the drilling-rig exemption merely because it could also perform completion services?
No. Only the drilling rig and component accessories qualified under Section 151.324(b); primarily workover equipment did not. Separate exemptions could apply to seller-shipped exports or qualifying of…
Was Texas sales tax due on printed goods bought under a contract that included storage in Texas before later distribution, including shipments out of state?
Yes. Because the contract included storage and the purchaser exercised ownership rights over the goods in Texas, the Comptroller treated possession as occurring in Texas and said Texas tax was due.
Could a floppy-disc manufacturer buy lapping film tax-free when it used the film to polish magnetic sheets and remove debris before sale?
Yes. The Comptroller found the lapping film necessary and essential to manufacturing marketable floppy discs, so it could be purchased tax-free with an exemption certificate.
Our state university system is leasing a building for a college, to be financed through publicly sold certificates of participation. The landlord's construction obligations will be secured by a mortgage naming us as mortgagee -- to protect us if the landlord defaults on the required renovation work, not because we're the real economic lender. Is recording that mortgage, and later assigning it to a bond trustee, exempt from mortgage recording tax?
Exempt on both counts, for two different reasons. CUNY entered a 20-year Capital Lease-Acquisition Agreement with a private landlord to lease renovated and newly constructed space at Tenth Avenue and …
How did Texas sales tax apply when a contractor bought mixed-use inventory tax-free, used some materials in lump-sum real-property repairs, and later lost or had materials stolen?
The contractor could buy mixed-use inventory with a resale certificate and accrue tax when items were used in lump-sum jobs. It still owed tax on the purchase price of items lost or stolen after remov…
Could schools buy trophies, ribbons, and letter jackets tax-free when awarding them to students, and when did an item become a taxable sale instead?
Schools could buy trophies, ribbons, and awarded letter jackets tax-free with an exemption certificate. An item was taxable when the student had to contribute to receive it or when a jacket was sold.
Which advertising-agency charges were taxable when the agency sold finished art, commissions, placement work, preliminary concepts, royalties, and photographs?
Finished art and related service charges, printing commissions, approved concepts, and photographs were taxable. Placement fees, documented preliminary art, related news-release charges, and royalties…
Did federal tax-exempt disability benefits make an unmodified vehicle purchase exempt from Texas motor vehicle tax?
No. The Comptroller said a federal exemption for a disabled veteran's allowance or pension did not extend to property bought with those proceeds. The vehicle had not been modified, and the purchaser d…
Could gases such as oxygen, carbon dioxide, nitrous oxide, and nitrogen qualify for a Texas sales-tax exemption when sold for medical use?
Yes, they could qualify when sold to doctors, hospitals, and other health-related organizations as drugs and medicines. The seller should obtain an exemption certificate from the customer.
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