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.
No Texas rulings match these filters
Try a different search term or clear the filters.
Texas Letter Ruling 9209L1198D05: Donation/Gift Of Printed Book Covers/Brochures/Posters To Schools
The business selling advertising space on posters donated free to a school may give the printer an exemption certificate instead of paying tax on the posters, but owes tax as the consumer of other ite…
Texas Letter Ruling 9209L1196G11: Hot Air Balloon Services — Used For Promotional/Advertising Purposes — Nontaxable Services
The charges billed to the client for travel, equipment, and operating the hot air balloon are not subject to Texas sales tax, because providing the balloon and crew for another company's advertising i…
Texas Letter Ruling 9209L1195G05: Grounds Cleaning — Around Structures/Units That Are Not Buildings — Taxable Cleaning Services
Yes. Texas ruled that a contractor's service of picking up used materials (like spent welding rods and rags) around a chemical plant's manufacturing units is a taxable real property service, fitting u…
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 9209L1192G09: Heating Manufacturing/Processing Areas — Gas/Electricity Used
When a shop area is used partly for taxable repair work and partly for exempt re-manufacturing, the natural gas used to heat and cool that area must be allocated. First separate production/repair area…
Does a company owe sales tax on a computer lease it shares with two other companies through time sharing?
Yes, in most cases. If one company leases a computer system and separately charges two other companies for time sharing, sales tax applies to the lease and the time-sharing charges are a taxable data …
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…
Do insurance companies in receivership have to pay Texas sales tax on goods and services bought to wind down and liquidate the company?
It depends on who is making the purchase. If purchases to liquidate an insolvent insurance company's receivership are made by, on behalf of, or paid for by the Texas Department of Insurance (or its au…
After Texas amended its rule on construction contracts, do change orders on contracts signed before the amendment have to be redone under the new rule?
No. This internal Comptroller memo confirms that Texas's amended rule on how change orders are taxed applies only prospectively — to contracts executed on and after July 23, 1992. Change orders on con…
Can a mail-order business get its Texas sales and use tax permit cancelled by showing it no longer has nexus in Texas after Quill Corp. v. North Dakota?
Yes, in this case. The Comptroller cancelled the taxpayer's Texas sales and use tax permit after the taxpayer represented, following the U.S. Supreme Court's Quill Corp. v. North Dakota decision, that…
Does a Texas soil remediation company owe sales tax on its cleanup service, on materials it uses, or on remediated soil it later sells?
The remediation service itself is not taxable, and soil cleaned and left on-site isn't a taxable sale of tangible personal property. But if the taxpayer removes contaminated soil, treats it, and sells…
Are a risk management consultant's services taxable as insurance services under Texas sales and use tax?
Yes. The Comptroller confirmed that a risk manager's services are taxable as insurance inspection and/or insurance loss prevention services under Rule 3.355(a)(2) and (a)(6), reaffirming a 1988 policy…
Does a Texas risk management consultant have to charge sales tax on services performed for insurance carriers, insureds, or policyholders?
Yes. The Comptroller confirmed that a risk management consultant's services are taxable insurance services in Texas -- specifically insurance inspection services under Rule 3.355(a)(2) and loss preven…
Does a Texas electric utility have to charge sales tax on the $8.00 monthly bill credit it gives residential customers for participating in a peak-demand program?
No. The Comptroller ruled that the $8.00 monthly bill credit given to residential customers for taking part in an electricity peak-demand program is a cash discount under Rule 3.301(d), so it is exclu…
If an advertising agency processes phone/mail orders and ships merchandise for an out-of-state manufacturer, who owes Texas sales tax, and what proof is needed that out-of-state shipments are tax-free?
The manufacturer, not the advertising agency acting as its order-processing agent, is responsible for collecting and remitting the 6.25% state tax plus local city tax on sales from the agency's Texas …
Are spinal needles used by a physician during a diagnostic procedure exempt from Texas sales tax as hypodermic needles?
No. The Comptroller ruled that spinal needles used by a physician to perform a diagnostic procedure are not exempt hypodermic needles under Tax Code Section 151.313, because the physician uses the nee…
Does a trackmobile railcar mover lose its Texas rolling-stock sales tax exemption because it has rubber tires and can move under its own power on a highway?
No. The Texas Comptroller ruled that a trackmobile railcar mover is exempt rolling stock under Tex. Tax Code § 151.331, even though it has rubber tires that let it move over the highway from one set o…
When did sweeping and pressure-washing services for parking garages and parking lots become subject to Texas sales tax, and as of what date must a provider start collecting it?
Sweeping and cleaning parking lots has been taxable since October 1, 1987. Sweeping and cleaning parking garages became taxable under a December 6, 1991 revision to Rule 3.356 (Real Property Services)…
Is a consulting firm's software design and implementation work for an insurance fund taxable data processing/software licensing, or nontaxable custom programming?
It depends on who ends up owning the software. If the consulting firm keeps the rights to the software it develops, its fees are a taxable software license/lease. If the client (the Fund) owns the res…
Is dog food, fertilizer, and other feed-store merchandise taxable in Texas, and when is feed for dogs and cats exempt from sales tax?
Generally taxable. Feed and supplies at a feed and grain store are exempt from Texas sales tax only when used exclusively on a farm or ranch for agricultural production, or for animals held for sale i…
Does a Texas private investigator have to charge sales tax on reimbursed expenses like mileage, hotel bills, and photographs billed to a client?
Yes, in most cases. Mileage, hotel bills, cassette tapes, photographs, film, and report-purchase costs billed by a private investigator are part of the taxable sales price of security/investigative se…
When a bankruptcy trustee sells a debtor's vessel, gaming equipment, inventory, and other assets by sealed bid, does Texas sales tax apply, or is the sale an exempt 'occasional sale'?
No exemption. Because title to the bankruptcy estate's assets legally vests in the trustee once the estate files for bankruptcy, a trustee-run sale can't meet the occasional sale exemption's ownership…
When a Texas gas company passes its municipal franchise fee on to customers as part of the gas bill, does sales tax apply to that fee?
Yes. When a natural gas company passes along its municipal franchise fee as part of what it charges customers for gas, that fee is part of the taxable sales price, so the gas company must charge sales…
Does the prior contract exemption from a state sales tax rate increase apply to a contract to simply buy electricity (or other goods), or only to a contract/bid to perform work for a third party?
No. The prior contract exemption from a sales tax rate increase only protects contracts or bids in which the purchaser agreed to perform a contract for a third party using the purchased items. A simpl…
Does a contractor building a new golf course owe Texas sales or use tax on site preparation work like clearing, grading, excavation, and earthmoving for tee boxes, greens, and bunkers?
No tax applies to the contractor's own new-construction labor for site preparation, because building a new golf course is new construction and new construction labor isn't taxed. But the contractor ma…
Is enclosing and finishing out an existing open-air pavilion structure taxed as remodeling or as new construction under Texas sales tax rules?
It's taxable remodeling, not new construction. The Comptroller ruled that adding a concrete slab, walls, and plumbing/wiring/AC to an existing occupied pavilion is remodeling because no new square foo…
If a Texas oil field well service company passes on its fuel costs and over-the-road trip permit costs to customers, is that reimbursed amount subject to Texas sales tax?
Yes. When an oil field well service is taxable under Rule 3.324, the fuel costs and over-the-road (trip) permit costs a company passes on to its customers are part of the company's overhead and must b…
Does an out-of-state company owe Texas use tax on catalogs it directs to be mailed to Texas customers, even though the catalogs are printed and mailed from outside Texas?
Yes. The Comptroller ruled that a company with Texas sales representatives owes Texas use tax on catalogs mailed to Texas consumers on its behalf, because choosing which Texas addresses receive the ca…
Does a Texas shop that sprays a protective polyurethane coating on pickup truck beds have to charge sales tax on the job?
The Comptroller treated spraying a protective polyurethane coating onto a pickup truck bed as motor vehicle maintenance. The coating material itself is taxable, but the labor and skill to apply it is …
Is the sale of two land drilling rigs, along with their associated equipment, an exempt occasional sale when the rigs are only part of the seller's business but each rig is separately tracked as its own identifiable segment?
Yes. The Comptroller ruled that selling two land drilling rigs (and their associated equipment) qualified as an exempt occasional sale, even though the rigs were not the seller's entire business, beca…
When a Texas equipment lease is renewed or extended, does the seller charge sales tax at the old rate from the original lease or the new rate in effect at renewal?
A renewal or extension of an equipment lease is treated as a brand-new lease, not a continuation of the old one. So the lessor must charge, report, and remit Texas sales tax at whatever rate is in eff…
Does a company have to charge sales tax on the full pre-rebate price when it later pays its customers a cash rebate based on their volume of purchases?
No. The Comptroller ruled that volume-based cash rebates a company pays its customers after the sale are excludable from the sales tax base, as long as they are properly documented, the tax refunded i…
Does a Texas contractor owe sales tax on labor to install wall-to-wall carpet, and does it matter if the job is new construction, repair, or a gutted building?
It depends on the type of property and the type of job. Labor to install wall-to-wall carpet in residential property is never taxed. For nonresidential property, labor is exempt only if the job counts…
Does a Texas company that reclaims land after strip mining (dirt work, fertilizing, planting, and hay production) owe sales or use tax on its equipment, and can the agricultural exemption or resale certificates apply?
The reclamation company owes tax on the machinery and equipment it uses; the agricultural exemption does not apply because the land is being restored after strip mining, not farmed. Reclamation itself…
If a contractor tears out a parking lot down to the soil and rebuilds it, is that taxable remodeling or tax-free new construction under Texas sales tax rules?
It is nontaxable new construction. Because the asphalt and base material are entirely removed down to the soil before the parking lot is rebuilt, the project counts as new construction rather than tax…
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 …
Does a research and development joint venture's purchase of software with a useful life over six months qualify for the Texas Section 151.348(b) sales tax exemption?
Yes. The Comptroller confirmed that a company qualifying as a joint research and development venture under 15 U.S.C. Section 4301 is exempt from sales tax on taxable items with a useful life over six …
Is wrapping and packaging material used to ship shucked and unshucked oysters exempt from Texas sales tax?
Through September 30, 1991, wrapping and packaging used to ship both shucked and unshucked oysters to customers was exempt from Texas sales tax. After that date, the general wrapping-and-packaging-to-…
Does a Texas auto shop owe sales tax on window tinting, alarm installation/repair, and cellular phone sale/installation/repair for vehicles?
It depends on the activity. Tinting a vehicle's windows and repairing a customer-owned alarm are treated as nontaxable motor-vehicle maintenance/accessory-repair labor. But selling and installing a ce…
Is the natural gas used by a tortilla factory (tortilleria) exempt from Texas sales tax as gas used in manufacturing, or is it taxable commercial/residential use?
Taxable. The Comptroller ruled that gas used by a tortilleria to make tortillas (and other items like barbacoa) that are packaged warm and sold for immediate consumption through a drive-up window, wit…
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…
Does Texas charge sales tax on telemanagement services that get refunds for clients who were overbilled by telecom companies?
No. The Texas Comptroller ruled that telemanagement services consisting of obtaining refunds for clients who were overbilled for telecommunications services and equipment are not subject to Texas sale…
Does a Texas laboratory that tests soil, water, wastewater, and materials samples and sells the results as a report have to charge sales tax on that service?
No. The Comptroller ruled that a laboratory's testing and analysis of soil, water, wastewater, concrete, and metal samples is not a taxable service under the information services rule. But the lab sti…
If a health club member gets a written prescription from a doctor for an exercise program, is the membership fee exempt from Texas sales tax?
Only partly, and only for some members. The Comptroller ruled that a health and fitness facility's membership and initiation fees are exempt from sales tax as an amusement service only to the extent t…
Is an electric cart bought as a substitute for a wheelchair exempt from Texas sales tax?
Yes. The Texas Comptroller confirmed that an electric powered cart bought to use in place of a wheelchair is exempt from Texas sales tax, and no doctor's prescription is required for that exemption.
Does a shop that adds armor and modifies brakes/suspension on motor vehicles have to charge sales tax on the whole job, and can it buy the armor materials tax-free?
Yes. Texas treats this armor and brake/suspension work as taxable 'remodeling,' so the shop must collect tax on its total charge — materials, skill, and labor combined. The shop can buy incorporated m…
When can a Texas retailer accept an export certificate in good faith, and when does a sale to a Mexican buyer become taxable?
A Texas retailer cannot accept an export certificate in good faith if it already knows the goods have not yet left the country. But the retailer also does not have to collect sales tax until the sale …
Which surveying services are taxable and which are exempt under Texas sales tax?
It depends on the type of survey. Surveys that establish or determine a property boundary (boundary surveys, lot staking for conveyance, platting) are taxable. Surveys that only locate structures with…
Can a paging company give its local telephone company a resale certificate for the incoming phone lines and numbers it leases and then provides to its paging customers?
Yes. Because the paging company passes the leased telephone numbers and incoming lines through to its paging customers as part of a taxable paging service, it may issue a resale certificate to the loc…
Can a Texas business file sales tax returns based on a 4-4-5 (or 5-4-4) retail fiscal accounting calendar instead of standard calendar months?
Yes. Texas lets a business file sales tax returns on its 5-4-4 (or similar 4-4-5-style) fiscal accounting calendar instead of strict calendar months, as long as returns are still due the 20th and the …
If a Texas trucking company's driver buys a replacement tire in another state and pays that state's sales tax, can the Texas tire dealer credit that tax against the Texas use tax owed when the truck returns to Texas?
Yes. Texas use tax is owed on tires bought outside Texas only if the truck carrying them comes back to Texas within one year of purchase. When it does, the dealer can credit any sales or use tax legal…
Does a Texas broker owe sales tax on the fees earned brokering animal fat and byproducts sold to Mexican buyers, or on the underlying sales themselves?
No. The Comptroller ruled that a broker's fees for arranging sales of animal fat and byproducts between a seller and Mexican buyers are not subject to Texas sales tax. The underlying sales themselves …
Does a city Bureau of Vital Statistics have to charge sales tax when it sells summary lists of births in response to verbal open-records requests?
No. The Comptroller ruled that summary lists of births sold by a city Bureau of Vital Statistics are exempt from Texas sales tax under Rule 3.341(a), because the office is required under the Texas Ope…
Is an anesthesia ventilator exempt from Texas sales tax as a prosthetic device, even though the anesthesia machine it plugs into is taxable?
Yes. The Comptroller ruled that anesthesia ventilators, which mechanically breathe for a patient who cannot breathe on their own under anesthesia, qualify as exempt prosthetic devices under Rule 3.284…
Is a post-production video animation studio that adds computer-generated special effects and animation to video programs (like TV ads, courtroom presentations, and product demonstrations) at the direction of the producer performing a taxable service?
No. The Comptroller ruled that a video animation studio that adds special effects and animation to video programs under a producer's direction, with no creative control of its own over the finished vi…
Is computer consulting — system design, analysis, and estimating — taxable in Texas, and when does it become taxable because it's tied to a hardware or software sale?
Computer consulting charges (system design, analysis, estimating) are not taxable in Texas unless the consultant also sells the hardware or software recommended in the engagement. If all equipment or …
Can a farmer or rancher file a single agricultural/farm-purposes exemption certificate with a retailer and then just sign later invoices marked 'Exempt agricultural purposes,' instead of filing a new certificate for every purchase?
Yes. A farmer or rancher can file one properly completed exemption certificate with the retailer, who keeps it on file, and afterward the purchaser can simply sign subsequent invoices stamped 'Exempt …
Does a Texas hauler of dirt, sand, caliche, or rock have to charge sales tax on the material or on delivery charges?
It depends on whether the material is processed. Since June 1988, the Comptroller has exempted sales of unprocessed sand, dirt, and gravel from sales tax. But processing — including crushing, mixing, …
Is natural gas used to fuel a boiler that makes steam, which then powers chemical-processing equipment, exempt from Texas sales tax, or is it too 'one step removed' from manufacturing to qualify?
No, the natural gas is not too far removed from manufacturing to qualify. The Comptroller ruled that natural gas used to fuel a boiler that heats water into steam, where the steam powers equipment use…
Is a service that verifies the bond ratings in a customer's portfolio a taxable information service, even if the customer considers their portfolio contents confidential?
Yes. The Comptroller ruled that verifying bond ratings against a customer's portfolio is a taxable information service, because the bond rating information itself is general information available to a…
Browse Texas rulings by topic
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.