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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Is the money a customer pays directly to a table/couch dancer at a topless club subject to Texas sales tax as an amusement service?
No. The Comptroller ruled that a table dance or couch dance is an amusement, but the payment a customer makes directly to the dancer is not a taxable sale of an admission to an amusement service under…
I bought subsurface pumps for my gas/oil wells to remove water so gas can flow to the surface -- do they qualify for the sales tax manufacturing exemption?
No -- the pumps are taxable. The Comptroller ruled that bringing oil or gas to the surface is "production," not "manufacturing, processing, or fabrication" under Tax Code 151.318. Even though the subs…
Can I buy a recumbent bicycle tax-free in Texas if my doctor prescribed it for rehabilitation, and what does the prescription need to say?
Yes, but only if the prescription is written correctly. A recumbent bicycle can be purchased tax free with a prescription from a licensed practitioner of the healing arts, but the prescription must st…
Is renovating a specialty hospital taxed as work on nonresidential (commercial) real property, or as work on residential real property?
Taxable. The Comptroller ruled that hospitals are considered nonresidential (commercial) property, so the total charge to renovate an existing building into a specialty hospital is taxable, even thoug…
I'm leasing land, a car wash building, and the car wash equipment together to my own S corporation -- is that lease subject to Texas sales tax?
No. The Comptroller ruled that leasing the land, building, and equipment together to the S corporation is treated as a lease of real property, so no sales tax applies to the lease payments -- the same…
We had to completely rebuild an ice skating rink that never worked because of construction defects, before it ever opened to the public -- does the rebuild count as new construction or taxable repair?
New construction. The Comptroller ruled that rebuilding the ice rink qualifies as new construction (rather than a taxable repair to existing real property) because the original rink was never used for…
Are charges for telemarketing sales calls, list-based calling, and related services (compiling lists, mail fulfillment, final reports) subject to Texas sales tax?
Charges for making sales calls (soliciting sales and taking orders) are not subject to Texas sales tax. But charges tied to gathering or selling customer/prospect information -- such as calls made usi…
Are natural gas and electricity used at a personal care home taxed as residential or commercial utility service?
Residential -- provided the predominant use of the natural gas and electricity is by persons who initially contracted to live at the personal care home for periods exceeding 29 days. The Comptroller a…
I'm a cotton ginner and I use gas and electricity to keep my warehouse or storage area cool and dry so cotton seed doesn't sprout, including during the off-season -- is that electricity exempt from Texas sales/use tax?
Mixed answer, split by predominant use. The electricity used to actively lower the temperature or humidity of stored cotton seed to a target level counts as exempt processing. But electricity used jus…
Is a fee for gathering medical records from doctors and hospitals on behalf of an insurance company's underwriting department subject to Texas sales tax?
Yes, it's taxable. The Comptroller ruled that a firm's fee for contacting doctors, hospitals, and other medical service providers to obtain medical information for an insurance company's underwriting …
Is the wastewater treatment system my manufacturing company must install to meet TNRCC environmental requirements exempt from Texas sales and use tax?
Partially exempt. The pollution control equipment itself qualifies for the Texas manufacturing exemption because it's necessary and essential to the manufacturer's production process, and the company …
Are closed-caption decoders and wireless phone jack extenders used by deaf people exempt from Texas sales tax?
Yes. The Comptroller ruled that a closed-caption decoder for televisions and a wireless phone jack extender used with a phone flasher are both exempt from Texas sales tax when used by a deaf person, a…
Can a buyer reduce the sales or use tax it already paid on equipment purchases when the vendor later gives back a cash or credit rebate or discount tied to those specific purchases?
Yes, in most of the scenarios described. The Comptroller ruled that volume discounts and cash rebates paid directly by a vendor to a purchaser -- including cooperative marketing funding, consigned-uni…
Does Texas sales tax apply to charges for mechanical warranty inspections that determine what caused equipment or a motor vehicle to break down, without appraising the dollar amount of damage?
No. The Comptroller ruled that charges for inspecting tangible personal property are not taxable unless the inspections are performed under a policy or policies of insurance. Because mechanical warran…
Does Texas use tax apply to repair or replacement parts (such as retreaded tires) bought out of state and installed in Texas on a common carrier's self-propelled vehicle?
No, use tax is not due on repair or replacement parts acquired outside Texas and actually affixed in Texas to a self-propelled vehicle used as a licensed and certificated common carrier -- but the car…
Is a booting fee charged to remove a boot from an illegally parked car taxable as part of a taxable motor vehicle parking service?
Yes. The Comptroller ruled the parking violation (booting) fee is taxable because it is part of a taxable parking service -- booting a car parked in an illegal space in a garage constitutes an "impoun…
Is a cable company's "Technical Access Fee" taxable, and should local sales tax on cable service be based on the provider's business location or the customer's service location?
Yes, the fee is taxable. The Comptroller ruled that a cable provider's "Technical Access Fee" is part of the taxable charge for cable television service under Section 151.007(a) of the Texas Tax Code,…
What documentation does a Texas seller need to prove a sale was shipped out of state and is exempt from Texas sales tax?
Shipping documents such as a bill of lading, federal express receipt, or postal receipt, together with an invoice showing an out-of-state shipping address, are acceptable proof of an exempt out-of-sta…
How is Texas sales tax applied to charges for designing, coding, and updating a web page for a client?
Taxable as a data processing service. The Comptroller ruled that web pages are electronic data and graphics rather than computer programs, so charges for designing, programming, and updating a web pag…
Does a mobile home skirting/door/window installer owe sales tax on the charge to the dealer, or on the materials, when installing skirting on mobile homes treated as real property?
It depends on how you bill. For sales tax purposes a mobile home is treated as real property, so you can use either a lump-sum contract (you pay tax on materials, and your lump-sum charge to the deale…
When a caterer or event planner rents out a facility with recreational amenities and provides food, is the facility rental charge taxable as an amusement-service admission?
Yes, in most cases. Because the taxpayer's facility included a swimming pool, volleyball court, horse riding trails, baseball fields, and fishing area, the Comptroller ruled the facility rental itself…
When a city raises its local sales tax rate mid-project, does a construction contract signed before the increase still shield materials and subcontracts from the higher rate?
Yes, if the requirements are met. The Comptroller ruled that a written construction contract signed before a city's local sales tax rate increase takes effect can exempt the general contractor's mater…
Is electricity and gas used in an electroplating and precision-grinding business exempt from Texas sales tax, or does it matter whether the work is processing new parts versus repairing/regrinding existing ones?
It depends on what the power is used for. Gas and electricity used to chrome and grind parts as a sub-processor for original part manufacturers is exempt as processing personal property for sale, and …
When is help provided by a temporary help service exempt from Texas sales tax as a 'temporary employee,' even if the assignment lasts an extended period?
There is no fixed time limit that turns a 'temporary' worker into a taxable service. The Comptroller applies a three-part test under Tax Code 151.057: the help must supplement the customer's existing …
Is a farm or ranch scale exempt from Texas sales tax, and does it matter whether the scale is free-standing or built into the ground or a building?
It depends on whether the scale stays tangible personal property or becomes part of the real property. A free-standing scale used exclusively on a farm or ranch in producing or marketing agricultural …
Does Texas sales tax apply to a floral order that a Texas florist takes over the internet from an international customer, if the flowers are delivered outside the U.S. by an unrelated florist?
Yes, taxable. The Comptroller ruled that charges for floral orders taken in Texas over a web site are subject to Texas sales tax, even when the flowers are delivered outside the state or outside the c…
What certificate wording can apartment complexes and multifamily property managers use to claim the residential exemption on electricity purchased from utility companies?
Yes, with the right wording. The Comptroller approved two proposed certificate wordings utility companies could accept from customers: one for apartment complexes where 100% of a meter's electricity i…
Are industrial back/lumbar support belts sold as braces exempt from Texas sales tax?
Yes. The Comptroller ruled that the listed industrial back support belts/harnesses qualify for exemption as a brace under Texas Tax Code SEC. 151.313(a)(4) and Rule 3.284(a)(1) and (c)(1). Because bra…
Is Texas sales tax owed on claims processing services performed for the Texas Public Entity Excess Insurance Pool?
No. The Comptroller ruled that claims processing services performed for the Texas Public Entity Excess Insurance Pool, or for an administrator hired by the Pool, are not taxable — because the Pool its…
If I rent out a 'grip package' (electrical production equipment plus a 5-ton truck and driver) for one price, do I owe motor vehicle rental tax on the truck, and can I buy the equipment tax free for resale?
Pay motor vehicle tax when you buy the truck, and don't collect motor vehicle rental tax when you rent out the grip package, because you're renting production equipment with transportation, not rentin…
Are Jobst burn-treatment garments (pressure vests, gloves, garments with leg zippers, and vest-with-gloves-and-face-mask combinations) exempt from Texas sales tax as braces?
Yes, but only as braces, not as orthopedic devices. The Comptroller reversed part of an earlier opinion and ruled that the Jobst pressure gradient vest, Jobst pressure vest, Jobst pressure gradient gl…
Is a separately stated charge for air quality monitoring during an asbestos abatement project taxable in Texas?
Not taxable. A separately stated charge for air quality monitoring performed during an asbestos abatement project is not taxable, though the monitoring and other equipment used is taxable to the servi…
Is the labor to set up a computer -- connecting the monitor, mouse, keyboard, and printer to the CPU -- taxable in Texas?
Yes. The Comptroller ruled that the initial set up of a computer -- connecting the monitor, mouse, keyboard, and printer to the CPU -- is considered assembly of tangible personal property and is subje…
Is ISDN internet equipment and connectivity used to transfer prepress printing files exempt from Texas sales tax as manufacturing equipment?
Mostly no. The Comptroller ruled that computers or equipment that directly drive digital printing presses qualify for the manufacturing exemption, but the ISDN line, routers, and other equipment used …
Does a promotional-advertising company owe Texas sales tax on searchlights, inflatables, banners, balloon giveaways, and clowns it provides for grand openings and sales events?
It depends on the item. Imprinting balloons for giveaway and selling balloons is taxable, but searchlights, inflatables, banners, flyovers, decorating, and clowns/entertainment are nontaxable advertis…
Is carpet bought for a minister's parsonage exempt from Texas sales tax, and does it matter who pays for it?
It depends on who pays. A church can buy carpet to refurbish a parsonage tax-free by giving the supplier an exemption certificate, but only if the materials are billed to and paid for by the church it…
Is a fee-based Internet dating service that maintains a database of interested persons taxable as an information service in Texas?
Yes, taxable. The Comptroller ruled that charging a fee for individuals to access a database of interested persons built for an Internet dating service constitutes an information service, and charges …
Is a rail carrier exempt from Texas sales and use tax on its own purchases, and can Texas make it collect local sales tax on food and beverages sold aboard its trains?
The rail carrier itself is exempt from state and local tax on its own purchases under 49 U.S.C. § 24301(k). But that federal exemption does not let the Comptroller force the carrier to collect local a…
Is electricity used in vacant apartment, duplex, condominium, or townhouse units exempt from Texas sales tax as residential use?
It depends on the type of unit. Once at least one unit in a multifamily apartment complex is occupied, electricity in the complex's other vacant units and common areas is exempt as residential use -- …
Does a citrus de-greening unit that becomes part of a packing shed still qualify for Texas's manufacturing equipment sales tax exemption?
Yes, but it depends on the contract. If the de-greening unit stays tangible personal property, both the unit and installation are exempt. If it becomes an improvement to realty, the exemption survives…
Does an insurance agent owe Texas sales tax on an administrative fee charged to clients to reimburse the agency for expenses like postage, printing, and phone calls, or on a pass-through charge for a third-party coverage evaluation?
Generally not taxable. The Comptroller ruled that an insurance agency's $50 administrative fee is not taxable if it merely reimburses the agency for enumerated costs like postage, printing, and teleph…
Is equipment for a home recording studio exempt from Texas sales tax if it's used to produce master audio recordings for distribution to record labels?
Yes, with limits. The Comptroller ruled that producing audio recordings for sale, license, distribution, broadcast, or exhibition counts as "manufacturing," so a home-studio producer qualifies for the…
Can the Comptroller exempt interstate trucking companies from sales and use tax on repair parts and tires, or let them apportion the tax based on Texas miles versus total miles?
No blanket exemption and no mileage-based apportionment. The Comptroller explained it cannot rule on whether the sales tax on repair parts and tires is unconstitutional as applied to interstate trucki…
Are disconnection or cancellation charges billed by a telecommunications company subject to Texas sales tax?
Yes. The Comptroller ruled that disconnection or cancellation charges tied to telecommunications service are taxable in the same manner as the underlying service, because they fall within the Tax Code…
Can a motor-repair company buy small parts like nuts, bolts, grease, and paint tax-free under a resale certificate, even if it stops billing customers separately for those items?
Yes. The Comptroller ruled that a company repairing and rebuilding electric motors can still purchase small parts like nuts, bolts, grease, and paint tax-free under a sale-for-resale certificate, and …
Is mowing, grading, dirt work, and other land-clearing or site-preparation work taxable in Texas, and does it matter whether the work is for new construction or an existing property?
It depends on the activity and the type of property. Agricultural mowing (hay, pasture) is not taxable, but mowing vacant lots for weed/pest control is taxable lawn maintenance. Site preparation, clea…
Can an unincorporated local chapter of a national 501(c)(3) organization use the parent organization's Texas sales tax exemption?
Yes. The Comptroller ruled that a local chapter meets the requirements for exemption from Texas sales, excise, and use tax because it is an unincorporated branch of a parent organization that already …
Does a nonprofit organization have to collect sales tax on snack items its youth members sell as part of a fundraising drive?
It depends. Two one-day tax-free sale days per year are exempt if designated in advance, and food products (including candy, carbonated beverages, and diluted juices) sold by a member under 19 of a no…
Does a city have to collect sales tax on a separately stated drainage utility district fee billed alongside its electricity and solid waste charges?
No. The Comptroller ruled that a city's monthly drainage utility district fee is not related to its taxable sales of electricity or solid waste collection services, so the city is not required to coll…
When a contractor repairs railroad track versus depots or parking areas for a railroad company, what parts of the job are taxable?
It depends what's being worked on. Repairing parking facilities is fully taxable as nonresidential real property repair. For track work, the track materials themselves are exempt (bought tax-free via …
Is a sale-leaseback of equipment the lessee already owns and paid tax on subject to Texas sales and use tax?
It depends on the type of transaction. A true sale-leaseback where the lessor leases the equipment back to the lessee under an operating lease is taxable on the lease charges. But if the sale-leasebac…
Which kinds of fishing bait are exempt from Texas sales tax as perishable bait, and how does a seller refund tax already collected on them?
Exempt. Live and perishable bait -- including live bait, minnows (fresh or frozen), goldfish, scaleless carp, shrimp, crawfish, worms/night crawlers, shad, shad guts, chicken livers, and chicken heart…
Is sales tax due on insurance adjusting services for claims related to a declared disaster or catastrophe?
Yes, taxable. Insurance adjusting services are a taxable 'insurance service' under Texas Tax Code Section 151.0039, and nothing in the tax code exempts adjusting services just because the claim relate…
Should a staffing arrangement where workers are dedicated full-time to one client be taxed as staff leasing services or as temporary help services?
Staff leasing services. The Comptroller ruled that once the contract was revised to give the staff leasing firms (along with the limited partnership) authority to hire, fire, discipline, reassign, and…
Is a Foley urine meter tray (catheter, urine bag, betadine, and other supplies) exempt from Texas sales tax as a prosthetic device or medicine?
Partially exempt. The catheter and urine bag in a Foley urine meter tray are exempt as prosthetic devices because the catheter performs the function of the ureter and the urine bag performs the functi…
Can a Texas seller who is audited by another state (Alabama) and forced to pay that state's tax on the same materials get a multistate tax credit against, or a refund of, the Texas sales tax it already collected from its Texas customer?
No. The Comptroller ruled that Texas's multistate tax credit only offsets Texas use tax owed by a purchaser on items brought into Texas — it cannot be used to refund or credit sales/use tax the seller…
When a hotel is remodeled into an apartment complex, is the remodeling contract taxed as residential or nonresidential real property work?
It depends on the property's use after conversion, not before. The Comptroller ruled that remodeling a hotel into an apartment complex is treated as residential real property work, because after conve…
Are chemicals used to treat water and wastewater exempt from Texas sales tax?
It depends on what the water is used for. Chemicals that become part of water processed and sold for drinking are exempt from Texas sales tax under the manufacturing/processing rule, but chemicals use…
Are catheters, and colostomy bags and related supplies, exempt from Texas sales tax as prosthetic devices or medical appliances?
It depends on the item. Colostomy bags, flanges, paste, tape, barriers, seals, gaskets, and dressing-change wipes are exempt under Rule 3.284(c)(2) as colostomy appliances and related supplies. Cathet…
Which charges by a public relations/advertising firm — campaign coordination, ad production, air time, copywriting, graphic design, printing, mailing lists, postage, billboards, and specialty items — are taxable in Texas?
It depends on the service. Campaign coordination, producing radio/TV ads, buying air time, public relations copywriting, newspaper ads, and billboard space are not taxable. Graphic design, printing, m…
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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.