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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Does a rental company owe sales tax on the amount it charges a customer for a rented piece of equipment that was stolen during the rental period?
No. The Comptroller ruled that sales tax is not due on a charge by a rental company for a rented item that was lost, misplaced, or stolen, because sales tax applies to the transfer of a taxable item f…
Is an interior decorator's design fee, purchasing fee, administrative charge, freight/move-in charge, or consultation fee taxable under Texas sales and use tax?
It depends on how the charge is billed. A separately stated interior design fee or a stand-alone consultation fee is not taxable. But a design fee folded into a lump-sum charge for taxable property be…
Is a mail-based reminder service (reminding clients of special dates or events) subject to Texas sales tax, and what about gift baskets sent to Texas recipients as part of that service?
No, charges for reminder services are not taxable when the reminders are sent through the mail rather than by telephone. However, if the service also involves selling and delivering gift baskets to po…
Is a company's charge for custom or noncustom training materials on compact disc, or for other training materials like books and video tapes, taxable under Texas sales tax, and can a separately stated training fee avoid tax?
Yes, the charge for the training materials themselves is taxable. The Comptroller ruled that the total charge for each custom or noncustom training project documented on compact disc is taxable, as is…
If a company designs tools, dies, jigs, and fixtures on a computer for manufacturers, is the sale of those designs subject to Texas sales tax?
Yes. The Texas Comptroller ruled that selling a computer-generated design is taxable as the sale of a pattern for use in manufacturing. Selling a design modification for an existing production-line ma…
Is the radioactive wafer used in nondestructive X-ray testing a taxable purchase of tangible personal property, even though what the tester actually wants is the radioactivity it emits?
Yes. The Comptroller ruled that the wafer containing radium 192 is the sale of tangible personal property, so sales or use tax is owed on its purchase even though the buyer's real interest is in the r…
For an interior designer/decorator in the Houston area, what local sales tax rate applies, and how is tax collected on wallpaper, drapery/blinds, carpet, delivery charges, and painting labor depending on whether the work is new construction, residential repair/remodeling, or nonresidential repair/remodeling, and whether the invoice is lump-sum or separately stated?
The Comptroller confirmed the local tax rates for Houston (8.25%), Katy (8.25%), and Sugar Land (7.75%), explained that interstate deliveries are exempt from Texas tax, and then walked through eight s…
Is proof coil chain used to lower and dip raw materials into cleansing and galvanizing vats exempt from Texas sales/use tax as manufacturing equipment, or is it taxable intraplant transportation equipment?
It is taxable. The Comptroller ruled that proof coil chain used to lower and dip raw material into chemical cleansing and galvanizing vats is excluded from the manufacturing exemption as intraplant tr…
Is the $10-a-year membership fee for a private anti-crime organization subject to Texas sales tax, and what about the tangible items it gives out?
No, the membership dues are not taxable. The Comptroller ruled that a private anti-crime organization's $10 annual membership fee is not subject to sales tax, but the organization must still collect a…
Can a caterer, hotel, or event planner give a resale certificate for tables, chairs, lighting, audio-visual equipment, or a margarita machine provided to a customer as part of a catering service?
No. The Comptroller's office treats these items as used by the caterer to render its catering service, not as sold or rented to the customer, because control and possession of the property never pass …
Is tattooing a dog or other companion animal for identification purposes subject to Texas sales tax?
Yes. Tattooing a dog or other companion animal is a taxable graphic arts service because the animal is tangible personal property and imprinting tangible personal property is a taxable service. By con…
Does a company that only delivers, assembles, and installs greenhouses (bought separately from the manufacturer) have to collect Texas sales tax on its charges?
It depends on whether the greenhouse becomes part of the real property once installed. If the greenhouse becomes an improvement to realty, the installer's delivery/assembly/installation charges are tr…
If my company makes and installs fireplace facings or mantles for home builders, is the whole charge (materials, labor, overhead, markup) taxable as a sale of tangible personal property, or is it a nontaxable real property improvement?
It depends on the contract with the home builder. If the facing/mantle is simply sold, or installed without becoming a permanent improvement to the home, the company is a manufacturer selling taxable …
If a local transit sales tax rate drops during the term of a fixed-term equipment lease, does the lease switch to the lower rate or keep the rate that applied when it was signed?
A fixed-term operating lease (rental) of tangible personal property that was executed before a local MTA tax rate decrease stays taxable at the old, higher rate until the fixed term expires -- it does…
Is the rental of a mobile office/office trailer subject to Texas sales tax, and is a separately stated property tax charge taxable?
Yes. Effective October 1, 1993, mobile offices are no longer classified as motor vehicles but as tangible personal property, so their sale, lease, or rental is subject to state and local sales/use tax…
Is a glamour photography studio's session fee (covering wardrobe, makeover, and a private photo session) taxable, even if the customer receives no tangible personal property at the session and only orders photographs — if ever — at a later date?
Yes, the session fee is taxable. The Comptroller ruled that the session-fee services (wardrobe, makeover, private photo session) are part of the sale of any photographs, image copies, negatives, or pr…
Does a company have to collect Texas sales tax on charges for setting up and supervising a contest?
No. The Comptroller ruled that charges for setting up and supervising a contest are not taxable services, but the company must still collect tax on any materials and prizes it sells to its client.
Does a property management company owe sales tax on an 'overtime air conditioning' fee it charges tenants?
No. The Comptroller ruled the overtime air conditioning charge is not taxable, because the property management company already paid sales tax to the electric or gas utility and is using the utility se…
Is a petroleum additives package sold with a vehicle warranty taxable in Texas, and is the warranty repair labor taxed?
Yes — the sale of the petroleum additives package is taxable as tangible personal property. Whether the warranty repair labor is later taxed depends on billing: a lump-sum labor-and-parts charge is no…
If I rent out roll-off garbage containers and charge a $50 setup fee, is the whole charge taxable, and which city's local sales tax applies?
Yes, the entire charge is taxable, including the $50 setup fee to place the roll-off container. If the container comes with garbage collection service, local sales tax is based on where the garbage is…
Texas Letter Ruling 9211579L: Draperies/Curtains — Installation In New Houses/Residences Vs. Existing Houses/Residences
It depends on your role. Draperies are tangible personal property, so selling and installing them is normally taxable in full. But if an interior designer is acting as the contractor on a residential …
Texas Letter Ruling 9210L1200F09: Caterer — Definition — Treated As Restaurant
Yes. The Comptroller ruled that a caterer is treated the same as a restaurant for Texas sales tax purposes, so it owes tax on tangible personal property it rents to put on catered events (tables, chai…
Texas Letter Ruling 9210L1198D01: Caricature Artists/Cartoonists Charges For Drawings At Party/Parties
Yes. Caricature drawing is a sale of taxable tangible personal property (graphic art), so the artist must collect sales tax on the total charge. But if the artist is hired by an amusement-service prov…
Texas Letter Ruling 9210L1205A08: Storage Tank — Above Ground With 500 Barrels Less Or More Capacity — Tpp Vs. Improvement To Realty
Yes, taxable. Each tank in the battery held only 400 barrels, under the 500-barrel line that keeps a tank classified as tangible personal property in Texas. Because it stayed TPP rather than becoming …
Texas Letter Ruling 9210504L: Satellite Dish — Home/Residential Or Commercial Use — Sale And Installation Vs. Improvement To Realty
Generally no. The Comptroller ruled that satellite systems are tangible personal property, not permanent improvements to realty, so the full charge for both labor and materials to sell and install the…
Texas Letter Ruling 9210L1204F12: Lock Or Locking Cylinder Exchange Service For Storage Facilities — Fee Charged
Yes. The Texas Comptroller ruled that a flat fee charged for organizing and coordinating the exchange of locking cylinders between storage facilities is the taxable sales price of the different lockin…
Texas Letter Ruling 9209L1193A01: Speed Bumps/'No Parking' Signs — Installed By City And Charges Billed To Citizens — Treated As Reimbursement To City
It depends on ownership and installation. If the sign stays city property and the citizen's charge is pure reimbursement, it's not taxable. If the sign becomes the citizen's property, the charge can b…
Texas Letter Ruling 9209424L: Software — Contract Programmer Develops For A Specific Customer — If Exclusive Legal Rights Are Retained By Customer And Program Created From Scratch — Exclusion Applies
It depends on who keeps the right to sell or license the software. If the programmer keeps that right, the sale is taxable, even for a program's first sale. If the customer alone gets the right to sel…
Is labor to power-wash and acid-clean hotel air conditioning units taxable in Texas, or is it exempt real property maintenance?
It depends on how the unit is installed. Units installed into a window opening are tangible personal property, so the full charge to power-wash or acid-clean them is taxable. Units installed into the …
Is boarding up or tarping a damaged home or business to protect it from vandalism or weather a taxable sale of materials, or a nontaxable improvement to real property?
Taxable. The Comptroller ruled that temporarily boarding up or tarping a damaged residence or business is a sale and installation of tangible personal property (plywood, boards, tarps), not an improve…
How is Texas sales/use tax applied to three separate vendor invoices: a used scale and scale house, a new water well drilling job, and converting an existing tank into a silo?
Three separate answers for three separate invoices. The used scale and scale house is taxable tangible personal property (being bolted to a concrete slab does not make it realty). The water well drill…
Was a mandatory charitable Christmas-tree sponsorship taxable when the sponsor received possession of a decorated tree for three weeks?
Yes. The payment was mandatory to receive the tree, and the sponsor received value commensurate with the payment through three weeks of possession. The Comptroller treated the arrangement as a taxable…
Was a corporation's transfer of equipment to a new limited partnership for a 99% interest exempt as a joint-ownership transfer?
Only if the corporation retained a joint or undivided interest in the equipment after transfer and had paid tax when it acquired the property. If limited-partnership law prevented that ownership, the …
Was a service that gathered information and produced a map or diagram of a client's computer network taxable in Texas?
Yes. The full charge for gathering information and creating the network map or diagram was taxable as a sale of tangible personal property. Consulting or training alone was not taxable.
Was labor to install a separately purchased, nonpermanent air compressor taxable in Texas?
No, on the stated facts. The installer did not sell the compressor, the compressor was not permanently affixed to realty, and the work was not part of repairing or remodeling other tangible personal p…
How did Texas tax cathodic corrosion-protection systems installed on existing pipelines, well casings, tangible equipment, or new construction?
Installation on an existing nonresidential pipeline or well casing was taxable real-property repair or remodeling on the total charge. Installation on equipment remaining tangible personal property wa…
How did Texas tax a contract that removed an old microwave tower and repaired the roof, then designed and installed a new pole and antenna?
Old-tower demolition was nontaxable, but roof repair and waste removal were taxable; the whole Project A charge became taxable if those taxable parts exceeded 5% unless demolition was separately state…
Does a creditor owe Texas sales tax when it takes furniture from an insolvent customer in exchange for reducing the customer's debt?
Yes. Taking furniture in exchange for reducing an insolvent customer's debt was a taxable sale. The tax base was the debt forgiven, or the furniture's book value if that amount could not be determined…
Was a separately stated charge for a technical specialist's future installation advice taxable with the sale of an oil-well packer?
Yes. The specialist's advice was requested with the packer and accompanied its sale, so Texas treated the service as part of the taxable sale even though it was separately stated and performed after t…
Were charges for balancing and changing the stroke of an oilfield pumping unit subject to Texas sales tax?
Yes. Texas treated an oilfield pumping unit as tangible personal property and classified balancing and bore-stroke modification as taxable remodeling, making the entire charge taxable.
Was leasing a permanently affixed above-ground storage tank larger than 500 barrels subject to Texas sales tax?
Generally no, because Texas treated it as real property. But the lease was taxable if its terms made clear that the tank remained tangible personal property, regardless of size.
How did Texas sales tax apply when a contractor filed a damaged-freight claim and transferred the damaged item to the carrier?
Treatment depended on whether the contractor was a seller or consumer. A seller generally excluded tax from the claim if the carrier resold the item. A consumer included previously paid tax in the cla…
Were inedible white grease, dried blood, and dry rendered tankage made from livestock offal subject to Texas sales tax?
Yes, as taxable tangible property. A buyer could still claim resale or manufacturing-ingredient treatment by giving the appropriate certificate.
Were indoor plant leasing, maintenance, sales, and short-term rentals taxable, and which inputs could the provider buy for resale?
They were taxable under the letter. The provider could buy plants and qualifying transferred inputs for resale, but STAR now directs readers to amended Rule 3.285 for current guidance.
Were Texas-origin audio and video line-feed services sold to commercial broadcast stations taxable telecommunications services?
Yes. Texas treated the line-feed service as taxable, while allowing specified resale-certificate treatment for cable-TV sales and transferred property.
Was a truck-driver monitoring program taxable when the provider installed its own device and supplied ongoing calls, reports, and performance materials?
No. Texas treated the arrangement as a nontaxable monitoring service rather than a device rental, but the provider owed tax on the device components and other materials.
Could corporations transfer business assets into a new partnership, or sell an undivided interest for cash, without Texas sales tax?
Potentially. No-consideration contributions were not sales, and joint-ownership transfers could be exempt if prior tax and bona fide-contract conditions were met.
Were separately listed design, engineering, manufacturing, and performance-testing charges taxable when a manufacturer sold custom equipment?
Yes. Every listed charge was part of producing and selling the custom equipment, so design, engineering, manufacturing, and testing were all taxable.
Was an optional, nonrefundable damage-waiver fee on a Texas tuxedo rental taxable?
Yes. The Comptroller treated the waiver fee as a prepayment toward taxable restoration or repair services, so the rental business had to tax it.
Did steam generators and distribution lines used for tertiary oil recovery become improvements to Texas real property?
No. The generators and lines remained tangible personal property because they retained their identity and could be removed without extensive damage; attached support arms might differ.
Was monthly microbial treatment that prevented paraffin buildup in oil-well equipment taxable in Texas?
Yes. Texas classified the treatment as taxable maintenance of tangible personal property because it limited deterioration of tubing, rods, and flow lines.
Did an auto-crushing business need a Texas sales-tax permit when buying title-surrendered salvage units and selling crushed vehicles to a steel mill?
Yes. Once the units lost their identity as motor vehicles, purchases and sales involved tangible personal property, with resale certificates on both transactions.
Were lighting and HVAC/refrigeration maintenance agreements taxable when they covered both real property and tangible personal property?
The lighting agreement and the single-charge mixed HVAC agreement were fully taxable; separate charges and the share attributable to repairs could change real-property treatment.
When did Texas treat an underground pipeline on easements as real property, and when was an oilfield flow line tangible personal property?
A pipeline was real property when it was permanently affixed, the parties intended permanent affixation, and the attachment enabled its intended use. Transmission lines generally met that classificati…
Were estate beneficiaries' auction purchases exempt as joint-ownership transfers when they had no common ownership with the estate before or after each sale?
No. Section 151.306 required the transferee to own a joint or undivided interest with the transferor before or after the transfer. The beneficiaries had no such common ownership and no qualifying bona…
Did exclusion from Texas's 2.42% miscellaneous occupation tax make services for converting a production well to a saltwater-disposal well exempt from sales tax?
No automatic sales-tax exemption followed. Conversion activities could be taxable or nontaxable depending on the work. Replacing the production wellhead with disposal-well equipment was a taxable sale…
Did a Texas tattoo shop have to collect sales tax on tattooing charges and on related books, magazines, or photographs?
Tattooing people was not taxable. Sales of tangible items were taxable, including books or magazines showing tattoos and photographs of tattooed people.
How did Texas tax removable lockers leased to nightclubs and then rented by the clubs to patrons?
The nightclubs had to collect tax on patron rentals because the lockers remained tangible personal property. The locker company could receive its share tax-free with a resale certificate, but it still…
Was annual calibration of tools used to inspect manufactured parts subject to Texas sales tax?
Yes. The described calibration qualified as taxable maintenance or repair of tangible personal property under Rule 3.292, so the total service charge was taxable.
Were horse-racing forms taxable when sold in Texas or bought out of state for use in Texas, including from October 1985 through July 1989?
Yes. Racing forms were taxable tangible personal property, not newspapers or magazines. Texas sales tax applied to in-state sales, and use tax applied when forms were bought elsewhere for use in Texas…
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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.