Texas State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Texas, with full citations and the original source on every page.
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If a company leases its employees to an affiliated business partnership through a staff leasing arrangement, are the otherwise-taxable services performed by those leased employees exempt from Texas sales tax — even if the leasing company turns out to be exempt from state licensing because of common ownership?
Yes, either way. Whether the leasing company (Lessor) is licensed as a staff leasing company under Labor Code Chapter 91, or is exempt from that licensing requirement under the Labor Code § 91.001(14)…
Does a company that collects and processes human blood plasma for sale to out-of-state pharmaceutical manufacturers qualify for Texas's manufacturing exemption on its equipment, packaging, and utilities purchases?
Yes. A company that processes human blood plasma for sale to pharmaceutical manufacturers qualifies for Texas's manufacturing exemption (Tax Code § 151.318) on machinery and equipment that physically …
When a Texas racetrack pays a totalisator company to process betting data for simulcast races, is that charge taxable, and does it matter whether the race is hosted in Texas or out of state?
Yes, taxable either way. A Texas guest track owes tax on the service charge a totalisator company assesses for processing wagering data, whether the race is hosted at another Texas track or an out-of-…
Are private sports lesson fees — for example, ice skating, swimming, gymnastics, golf, or tennis instruction — taxable as amusement services in Texas?
No. Lessons and classes are not amusement services under Rule 3.298. Neither private ice skating lessons taught by independent contractors nor group lessons/skating school taught by the rink's own emp…
Is stress testing of metal, plastic, or concrete taxable as an insurance service in Texas, and does it matter whether the client is an insurance company, a policyholder, or an unrelated third party like a law firm?
It depends on whether an insurance policy is involved, not on who hires the tester. Stress testing metal, plastic, or concrete on behalf of an insurance carrier, its insured, or others in connection w…
Can a company that manages and coordinates real property surveys for its customers buy the underlying surveying services tax-free for resale, and does it matter that the company itself isn't a licensed surveyor?
No, not to escape tax on resale — the total amount the company charges its customers for coordinating real property surveys is taxable, because it's buying and reselling a taxable real property servic…
Can a business get a refund of sales tax it paid when buying decontamination trailers and brush chippers that it now rents out to customers, and how does that differ from using the same equipment to provide a service?
Yes, if the equipment is genuinely rented to customers who get operational control (not used by you to perform a service) and doesn't carry a manufactured-home label. A decontamination trailer and a b…
Does a Laryngeal Mask Airway (LMA) — a device inserted through the mouth to keep a patient's airway open during anesthesia — qualify for Texas's sales tax exemption for prosthetic devices?
Yes. The Laryngeal Mask Airway qualifies for exemption as a prosthetic device under Tex. Tax Code § 151.313, because it functions like an endotracheal tube — providing an unobstructed airway from the …
Is a company that brokers advertising space on school buses — finding advertisers, arranging printing/installation, billing advertisers, and paying the school district a revenue share — required to charge sales tax on its charges to advertisers?
No, the broker's charge to advertisers is not subject to sales tax. But the broker must pay sales tax on all the supplies, materials, and equipment used to provide the service — including graphic arts…
Can a web design/Internet development company's consulting charges (client meetings, strategy discussion, marketing research) be sold tax-free and separately from its taxable HTML production and data entry work?
Yes, if the consulting is genuinely separable. Entering information and creating HTML documents are taxable data processing services, but expert/professional consultation (client meetings, strategy di…
Are used auto parts bought from a junkyard subject to sales tax again when resold or incorporated into a repair, even though sales tax was already paid when the part was first sold as new?
Yes. Sales tax applies every time a taxable item is sold for consideration, regardless of whether it's new or used and regardless of whether tax was already paid on an earlier sale of the same item. W…
Are personal and corporate concierge services — like picking up dry cleaning, planning parties, setting up tee times, ordering flowers, or getting car registrations — taxable in Texas?
Generally not taxable, if the concierge is only providing a transportation/delivery or planning service. Charges to plan parties, set up tee times, or get car registrations are not taxable. Picking up…
Are anti-static grounding wristbands and anti-static floor mats/carpeting, used by circuit board manufacturing workers to prevent static electricity damage, exempt from Texas sales tax as manufacturing safety apparel?
Split answer. Grounded anti-static wristbands qualify for the safety apparel/work clothing exemption under Tex. Tax Code § 151.318(a)(9) because the circuit board manufacturing process couldn't happen…
Can someone buy an aircraft tax-free with a resale certificate if they plan to lease it to both a certificated carrier and, occasionally, private individuals?
Yes, buy the aircraft tax-free with a resale certificate. Leases to a certificated or licensed carrier of persons or property are tax-exempt under Tex. Tax Code § 151.328(a), if the carrier issues an …
Is the labor to repair a manufacturing machine — like a threading machine directly used to manufacture products for sale — exempt from Texas sales tax the same way the machine itself is exempt?
Yes. Under Tex. Tax Code § 151.3111(a), a repair service on property that would itself be exempt because of its nature or use is exempt too — so the repair of a threading machine used directly in manu…
Is individual house cleaning or maid service taxable in Texas, and does it matter whether you're an independent solo cleaner, a janitorial company, or hired by a builder for construction cleanup?
It depends on your business structure. A single individual cleaning private residences with no employees is treated as a household employee, not a taxable service provider. But a cleaning business (wi…
Which eyewear and eye-care products are exempt from Texas sales tax when dispensed by an optometrist or ophthalmologist, and does the same exemption apply to opticians?
An eye doctor asked whether frames, lenses, and contact lenses sold in a new optical office are taxable. Under Tex. Tax Code § 151.313, corrective lenses and necessary related supplies dispensed or pr…
If a corporation has under $150,000 in gross receipts and owes no franchise tax, must it file the regular (long) form to keep using a business-loss carryover, and does a no-tax-due year still consume the loss?
A no-tax-due year still consumes the loss, and filing the long form is how you preserve or add to the carryover. A taxpayer with a business-loss carryover and under $150,000 in gross receipts everywhe…
Are software royalty payments exempt from Texas sales tax just because they're labeled a 'royalty' rather than a sale, lease, or license fee?
No, not automatically. Tax is due on the sale, lease, or licensing of software under Rule 3.308, and calling the charge a 'royalty' instead of a sale, lease, or license fee doesn't change that. There'…
Are enteral and parenteral feeding systems — nasogastric/gastrostomy tubes and related supplies — exempt from Texas sales tax as prosthetic devices, and what about the liquid food delivered through them?
Yes. Nasogastric and gastrointestinal (enteral and parenteral) feeding devices and their directly related supplies qualify as prosthetic device 'systems' under 34 TAC Rule 3.284, exempt whether or not…
Is moving existing gas or telephone lines to accommodate a building addition treated as a taxable real property service, or as nontaxable relocation?
Not taxable. Moving gas lines and telephone lines to make room for an addition to an existing building is treated as a relocation of the lines, and relocating gas and telephone lines is not taxable.
Is a charge for an asbestos survey to determine whether asbestos is present in a building taxable in Texas?
Generally not taxable. A charge for an asbestos survey (to determine if asbestos is present) is not taxable unless it's performed for an insurance investigation or claim under 34 TAC Rule 3.355 — in w…
Does the equipment that loads scrap metal into a shredder qualify for Texas's manufacturing exemption, or is it excluded as intraplant transportation equipment?
No, it doesn't qualify for the manufacturing exemption. A caterpillar material handler used to put scrap metal into a shredder is intraplant transportation equipment — moving product or raw material i…
When a manufacturer bills a customer separately for the die (mold/tooling) used to make the customer's product, but keeps possession of the die itself, is that a taxable sale of the die?
It depends on whether there's a written agreement making the customer the actual owner of the die. With a written ownership agreement, the die charge is a taxable sale (unless the customer is a manufa…
Now that the long-form requirement is gone, must a short-form filer still reduce its business-loss carryover, and does using the short form extend the loss carryforward period?
A short-form filer still must use its loss each year, and the short form does not extend the carryforward period. After the instruction requiring the long form to preserve a business-loss carryover wa…
Does acetone used to flush catalyzed resin out of fiberglass spray equipment (chopper guns) qualify for the sales tax manufacturing exemption?
Yes. A custom fiberglass manufacturer's acetone, used in a built-in flush system to purge catalyzed resins from spray-equipment lines and guns during the manufacturing process, qualifies for exemption…
Is a hotel's separate charge to trade show exhibitors for access to electrical power (outlets and extension cords) taxable, and can the hotel buy the electricity and cords tax-free for resale?
The charge to exhibitors for electrical outlets and extension cords is not subject to sales tax, because it's considered part of the booth or space rental (a real property lease), not a separate taxab…
When a fire sprinkler contractor chemically cleans corroded pipe interiors and treats the water to stop further corrosion, is that taxable real property repair or nontaxable maintenance?
It depends on timing and whether the work is scheduled. Cleaning and treating pipe that has already been attacked by corrosion, done as a one-time or as-needed job, is taxable nonresidential real prop…
Do fast-wearing cutting tools like circular saw blades and drill bits used in a manufacturing operation qualify for the sales tax manufacturing exemption, even though they wear out quickly?
Yes. Circular saw blades and drill bits used in manufacturing qualify for the manufacturing exemption as long as they're used directly in the manufacturing process and cause a chemical or physical cha…
Is labor to sell and install a car stereo system taxable, and does the answer change if the stereo is later repaired or if the installation involves remodeling the vehicle?
Yes, if you're both selling and installing the stereo — the installation labor is taxed along with the stereo as part of one sales price. If you're only installing a stereo the customer already owns, …
If I sell my goods at a cooperative mall where the mall owner collects and remits the sales tax and sends me my proceeds, do I still need my own sales and use tax permit?
It depends on who's identified as the owner of the item before the sale. If you're identified as the owner before the sale, you're the seller and must have your own sales and use tax permit to collect…
When did Texas allow a motor vehicle tax refund after a manufacturer or distributor repurchased a defective vehicle?
The memo allowed a refund when a manufacturer or distributor repurchased a defective vehicle under the lemon law or comparable negotiated terms. The refund was limited to tax on the net amount returne…
If a doctor prescribes an in-ground swimming pool for physical therapy, is building it exempt from Texas sales tax the way a prescribed spa can be?
No. Even with a physician's prescription, an in-ground swimming pool doesn't qualify for the health care supplies/therapeutic device exemption because it's a permanent improvement to realty — neither …
Can a caterer/event planner buy specialty equipment (like tables, chairs, or a margarita machine) tax-free with a resale certificate if it plans to charge clients a separately stated rental fee for using that equipment?
No. A caterer must pay sales tax when it purchases equipment used to provide its food service, even if it separately bills clients a rental-style charge for using that equipment (tables, chairs, servi…
Is labor to clean and detail a private corporate aircraft taxable, and does it matter if the cleaning includes steam-cleaning the carpet?
No tax is due on labor charges for general cleaning/detailing maintenance of a private aircraft. But carpet cleaning specifically is its own taxable service under Tex. Tax Code § 151.0045 and Rule 3.3…
As of April 1, 2000, do retailers need to collect Texas sales tax on vitamins, minerals, and nutritional/herbal dietary supplements (including ones marketed for weight loss)?
No. Effective April 1, 2000, sales of vitamins, minerals, and nutritional supplements for humans — including herbal dietary food supplements marketed for weight loss or other medicinal purposes — are …
Can a tax-exempt nonprofit organization use its exemption certificate to buy beer, wine, or liquor tax-free?
It depends on which kind of exempt organization you are. Most organizations exempt under Rule 3.322(b) are only exempt on purchases that relate to their specific exempt purpose — so a nonprofit educat…
Is cleaning a vacant apartment after a resident moves out taxable, and is painting that same apartment treated the same way?
Cleaning is taxable in all three scenarios asked about — vacant apartments, the leasing office, and the model apartment — because keeping a building's interior and exterior clean, orderly, and functio…
Which diabetic supplies (test strips, insulin, needles/syringes, lancets, blood testing equipment) are exempt from Texas sales tax, and which ones need a doctor's prescription to qualify?
Blood glucose monitoring strips, insulin, and hypodermic needles/syringes are exempt from Texas sales tax without needing a prescription. Lancets and blood testing equipment (diabetic monitors), by co…
Is a coupon-style discount on amusement tickets treated the same as a sales tax exemption, and does a tax-exempt organization (like a school) owe sales tax on amusement tickets bought for its own members?
A coupon or other discount taken at the time of sale reduces the taxable sales price under Tex. Tax Code § 151.007(c)(1) — but a valid sales tax exemption is a completely different thing from a discou…
When a business is sold to an unrelated buyer, how long can the Comptroller go back to assess unpaid sales tax against the successor, and can the successor dispute a tax bill that was really the predecessor's fault?
The four-year limitations period runs from whichever is later: the date the predecessor was assessed, or the date the buyer (successor) purchased the business, under Tex. Tax Code § 111.020(e). That f…
If a Texas seller delivers equipment to a Texas customer (who then ships it out of state) and later sells maintenance contracts on that equipment, is Texas tax due on the maintenance charges even though the equipment is located elsewhere?
It depends on the timing and shipping pattern of each maintenance purchase. The original maintenance contract sold at the same time as the equipment (delivered to the customer in Texas) is taxable in …
What counts as an acceptable trade-in for sales tax purposes, and what happens if a store accepts an unrelated item (not normally sold in the business) as a trade-in?
An acceptable trade-in is a "like item" — something the business normally sells in the regular course of its business — but "like" doesn't mean it has to be the exact same item. A jewelry store, for e…
Are herbal dietary supplements taken for weight loss or other medicinal purposes treated as exempt "drugs or medicines" for Texas sales tax, independent of how they're classified under federal dietary supplement law?
Yes. Effective April 1, 2000, over-the-counter drugs and medicines, vitamins and minerals, and nutritional supplements — including herbal dietary supplements taken for weight loss or other medicinal p…
Does a wastewater/leachate treatment system built at a former fertilizer manufacturing site — that treats storm water dissolving leftover gypsum waste and produces a sellable ammonium sulfate byproduct — qualify for the pollution control or manufacturing sales tax exemption?
Not as pollution control equipment: since the facility no longer manufactures fertilizer and the wastewater/leachate being treated comes from rain and other sources dissolving old gypsum waste (not fr…
Is dredging dirt, mud, silt, or sand out of a waterway to add boat slips and improve access a taxable real property repair, or nontaxable new construction?
It depends on what the dredging accomplishes. Dredging done to repair or remodel a man-made waterway, or a naturally occurring channel that's previously been widened, deepened, or otherwise reconfigur…
Does using a Texas-based stockbroker to trade for an out-of-state limited partnership create Texas franchise-tax nexus for the partnership's foreign corporate general partner?
No — so long as the broker does not represent the partnership in dealing with its customers. A foreign corporation was the general partner of a foreign limited partnership that does no business in Tex…
Is an apartment complex's manager's office and lobby treated as residential property (with nontaxable repair labor) or commercial property, for sales tax purposes?
Apartment complexes are residential property, so labor charges for repairs or remodeling there are not taxable (though materials are still taxable). Residential property under Rule 3.357(a)(10) includ…
My distributors told me nutritional supplements are no longer taxable in Texas — is that correct?
Yes. Effective April 1, 2000, sales of over-the-counter drugs and medicines are exempt from Texas sales tax. To qualify, a product must be a drug or medicine — an article or substance intended for use…
A network marketing company sells a specific list of vitamin/mineral/supplement products with no NDC number, some marketed for athletes, seniors, or even pets. Are all of these exempt as over-the-counter drugs and medicines under the April 1, 2000 exemption?
Yes for the human products — none of them need an NDC number. To qualify, a product must be a "drug or medicine": an article or substance intended for use in the diagnosis, cure, mitigation, treatment…
Who is responsible for collecting and remitting state and local sales tax when a direct sales/multi-level marketing company's independent distributors sell to end consumers, and how should local tax be tracked across Texas's different city/county/district/transit rates?
The direct sales organization itself — not its individual independent distributors — is responsible for collecting and remitting state and local sales/use tax on Texas sales made through its distribut…
Are gun club membership fees taxable, and separately, is labor to repair appliances or real property taxable?
Gun club membership fees are taxable as an amusement service under Rule 3.298. Separately, labor to repair tangible personal property (like appliances) is taxable, but labor to repair real property is…
Is fluoride toothpaste, and denture toothpaste/cleaners, exempt from Texas sales tax under the new over-the-counter drugs and medicines exemption?
Yes. Fluoride toothpaste is a medicated dental product and is exempt from Texas sales tax effective April 1, 2000, under the new over-the-counter drugs and medicines exemption. Denture toothpaste and …
Is an optional warranty contract to repair a leaking roof taxable, and does it matter whether the roof is on a residential or nonresidential building?
It depends on the type of property. A warranty contract to repair nonresidential realty is taxable per Rule 3.357, though the warrantor may purchase items tax-free that will be incorporated into the r…
I personally paid sales tax when I bought a business's inventory in a rush with my own personal funds, then transferred that inventory to a partnership I formed the next day to run the business. Since there was no real change in ownership, can I get that sales tax refunded even though the partnership (not me personally) has the sales tax permit?
No, not without your own permit first. Texas follows the separate legal entity theory — a partner and a partnership, though related, are separate legal entities in fact and in law, and that separatene…
A billing-services firm processes and mails account statements using computers, laser printing, and manual folding/inserting/mailing steps — which of these steps count as taxable data processing (eligible for the 20% exemption), which count as nontaxable printing/mailing, and which are just taxable sales of tangible personal property?
It depends step-by-step on what's actually happening to the data and the physical materials. Manipulating data to produce statements/notices (computing, laser printing driven by data manipulation, cou…
An accountant wants to offer telephone technical support answering bookkeeping 'how to' questions and software questions to clients — does that require charging Texas sales tax?
Technical support answering questions about accounting or bookkeeping procedures is not subject to Texas sales tax. But a charge for software technical support IS taxable specifically if the person pr…
Does the April 1, 2000 over-the-counter drugs and medicines exemption relieve a direct sales organization from collecting sales tax on vitamin, mineral, and dietary supplement sales?
Yes. Effective April 1, 2000, sales of over-the-counter drugs and medicines are exempt — a qualifying product must be a drug or medicine, meaning an article or substance intended for use in the diagno…
Does weighing/scale equipment at a Texas food processing facility qualify for the manufacturing exemption, and does the answer change depending on where in the process the scale is used?
It depends on the scale's specific function. A scale used as part of the manufacturing line to ensure the correct weight of ingredients going into a formula qualifies for exemption. A scale used to ve…
When a company sells vacation packages bundling hotel rooms, meals, amusement services, and incentive certificates, which components does it collect sales tax on, and which does it just pay tax on itself as the purchaser?
The company must collect tax from the customer on any amusement services charge that's separately stated within the travel package (or where surrounding additional costs are inconsequential), per Rule…
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These are official tax letter rulings and advisory opinions issued by Texas's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.