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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When were charges to sell or install software updates taxable, including installation of a third-party update?
Selling and installing an update were both taxable, even if separately stated. Installing a third-party update was taxable when the installer had sold the underlying program, because it modified the i…
How did Texas tax French drains, drainage-system construction and repair, regrading, and unprocessed gravel or soil used in the work?
New drainage construction and residential repair followed contractor rules; nonresidential repair was taxable on the full charge. Regrading and adding soil to correct drainage were taxable landscaping…
Did a single purchase of gas plants, gathering systems, vehicles, equipment, contracts, and related operating assets qualify as an exempt occasional sale?
Yes. Each seller transferred the entire operating assets of an identifiable business segment, and the segment's income, expenses, and assets were separately ascertainable from its books and records, s…
Were a doll guild's membership dues, public show admissions, and vendor display-space charges taxable?
The answer depended on the guild's status. Membership dues were exempt if it was a hobby club or qualified under Rule 3.298(g)(1). Public show admission was taxable if the guild was for-profit or not …
Were a nonprofit shooting club's membership dues, match entry fees, spectator admissions, and exempt-entity range fees taxable?
Membership dues and required assessments became taxable October 1, 1991 because the club provided a shooting range. Qualifying competitor entry fees were not taxable, spectator admissions were taxable…
Did the 1991 Texas tax change make fraternity and sorority membership fees and dues taxable?
No. Although the legislation removed the amusement-service exemption for nonprofit organizations such as country clubs, dues and membership fees paid by members of fraternities, sororities, and simila…
Were unprocessed rock, dirt, sand, gravel, and similar materials taxable when used in a contract combining new construction and landscaping?
Materials incorporated through taxable landscaping were taxable as part of that service, while materials incorporated through new construction were not taxable to the customer. If one lump-sum materia…
How did Texas tax new sprinkler systems, residential and commercial repairs, and unprocessed materials used in the work?
New construction and residential repair followed contractor rules; nonresidential sprinkler repair was taxable on the full charge. The correction clarified that unprocessed material transferred throug…
How did Texas tax monitoring wells, underground-tank removal and replacement, contaminated waste, soil work, testing, and cleanup equipment?
New wells and replacement tanks were new construction; existing-well repairs were taxable. Tank excavation was nontaxable demolition, but hauling, storing, and disposing of the old tank was taxable. Q…
How did Texas tax combined telephone-answering and secretarial-service charges?
Telephone answering was taxable, while ordinary secretarial service was not unless it was another taxable service such as word processing. One combined monthly charge was fully taxable when answering …
Did the amendment to Texas Tax Code § 151.3101 make sports league fees or spectator admissions taxable?
No. The letter said neither league fees paid by individuals or teams to participate in games nor admission paid by individual spectators was taxable for the requesting organization.
Were Texas local recording agents' separately authorized client-service fees subject to sales or use tax?
No. Fees authorized by Senate Bill 324 for services outside the agents' insurance-company commissions were not taxable. The agent still had to pay tax on taxable property or services purchased for the…
Were lumbar cushions and cervical pillows taxable when sold to health-care providers or prescribed individuals?
They were taxable when sold to hospitals, clinics, nursing homes, physicians, and other health-care providers for their use, but exempt as therapeutic devices when sold to an individual under a doctor…
Which Texas utility uses qualified for exemption, and how did a taxpayer support a predominant-use claim?
Residential and specified noncommercial uses were exempt, including qualifying agricultural, manufacturing, processing, mining, and drilling use. Utilities used to provide data processing or other tax…
Was a voluntary one-dollar charitable donation added to a restaurant guest check part of the taxable meal price?
No. The Comptroller said the donation was not taxable consideration for the meal when the customer voluntarily selected it, the guest check separately stated it as a charitable donation, and the resta…
Were a country club's initiation fees and monthly dues exempt when its amusement services were provided exclusively in a Recorded Texas Historic Landmark?
Yes. Although amusement services of Section 501(c)(7) organizations had become taxable, the Comptroller said the historic-landmark exclusion still applied when the country club provided those services…
Was an air-purifying system sold to an allergy patient exempt from Texas sales tax when prescribed?
Yes. The Comptroller treated the air purifier as a therapeutic device and said its sale was exempt when made to an individual under a written prescription from a licensed healing-arts practitioner.
Did a seller owe Texas sales tax when a Texas buyer accepted an aircraft and took title in South Carolina before bringing it to Texas?
No Texas sales tax applied to the South Carolina sale, but the buyer owed Texas state and applicable local use tax when the aircraft entered Texas for use. The buyer could claim credit for legally due…
Which animal-feed purchases qualified for Texas's agricultural sales-tax exemption for a horse-and-llama ranch?
Feed was exempt for horses and mules, animals ordinarily used as human food, qualifying work or assistance animals, breeding animals whose offspring were held for sale, animals held for sale, and wild…
How did Texas tax property-management maintenance, employee reimbursements, management fees, construction supervision, and passed-through project costs?
Qualifying scheduled maintenance, unrelated management fees, and supervision-only services were not taxable. Employee reimbursements depended on permanent assignment and documentation. A manager respo…
Could a cable-television company buy electricity tax-free for resale because electricity helped produce the signal delivered to subscribers?
No. Electricity used to perform the cable service was not resold because subscribers did not receive care, custody, and control of it. The cable company therefore could not give its electricity suppli…
Were purchases and transactions connected with a private contractor's operation of a federally funded Job Corps Center exempt from Texas sales and use tax?
Yes. The letter said private for-profit and nonprofit contractors were not required to collect or pay state or local sales and use tax on property, services, or other items connected with operating a …
How did Texas tax excavation and disposal when an underground storage tank was removed or replaced?
Excavating the tank for disposal or replacement was nontaxable demolition, but hauling and disposing of it was taxable waste removal. A lump-sum mixed charge was presumed fully taxable when taxable se…
Was a metal building used seasonally for kidding and shearing Angora goats exempt as agricultural equipment?
No. The building remained a taxable general-purpose structure because it could economically serve other uses. Exemption required a design so specialized that the structure essentially became equipment…
Did a post-production company collect Texas sales tax for adding sound effects to a television-program master?
No, when the company added sound effects to a motion-picture master under a producer's direction. The provider was treated as a production or post-production company, but it owed sales or use tax on a…
Were contract measuring services and certification of the results subject to Texas sales tax?
A stand-alone measuring service was not taxable. If the measuring was performed in connection with selling a taxable item, the service was taxable even when separately stated. The letter defined a tax…
Was mesquite wood purchased by a restaurant for cooking food for sale exempt from Texas sales tax?
Yes. Wood used to cook food for sale qualified for exemption, provided the seller obtained a properly completed exemption certificate from the purchaser instead of collecting tax.
Were membership charges for a personalized dating and matchmaking service subject to Texas sales tax?
No. The Comptroller said the described matchmaking service was not subject to sales tax. The service interviewed and profiled members, introduced compatible members by letter, and used their feedback …
How did Texas tax cable installed in new construction, existing nonresidential property, and federal or exempt-entity projects?
New-construction installation labor was not taxable; materials treatment depended on lump-sum versus separated pricing. Existing nonresidential installation was taxable remodeling. Federal-project tre…
How did Texas tax equipment-and-operator charges for laying, burying, delivering, and removing sold or rented polyethylene pipe?
For rented pipe, laying, installation, trenching, and equipment-with-operator charges were taxable; separately stated later removal was not. For sold pipe, laying was taxable, but separately stated pe…
How did Texas tax moving, storage, packing, crating, repair, packaging-material sales, and export-packing services?
Moving, storage, transit preparation, and customer packing were nontaxable, but the provider generally owed tax on materials. Repairs and retail packaging sales were taxable. Manufacturer crates could…
How did Texas tax underground-tank demolition, tank and contaminated-soil removal, backfilling, surface restoration, repairs, replacement construction, and soil testing?
Tank excavation and backfilling were nontaxable; tank hauling and disposal were taxable. Qualifying contaminated-soil removal was exempt with a certificate. Surface repair and tank repair were taxable…
Which local recording agent fees were taxable under Texas sales-tax rules after Senate Bill 324?
The authorized service fees and a new-client setup fee were not taxable. A property-picture fee was taxable tangible property, and a motor-vehicle-record fee was a taxable information service above th…
Did the builder exemption for a commercial dry dock survive a sale to a related corporation and leaseback to the builder?
No. The builder's first sale of the over-eight-ton dry dock was exempt, but the related buyer's leaseback was taxable because that corporation was not the builder. Operating-lease tax followed reporte…
Could a homeowners association use Texas's historical prior-contract exemption for garbage service, and how was its separately stated garbage charge treated?
The letter said qualifying fixed-rate homeowner contracts entered before July 22, 1987 could support the historical exemption, while quoting a statutory note that the exemption had no effect after Jan…
Which stuck-pipe recovery, gamma-ray, cement-bond, and casing-inspection services were subject to sales tax or Texas's 2.42% well-service tax?
The described gamma-ray/cement-bond and casing-inspection logs were not subject to sales tax or the 2.42% tax. Locating and cutting stuck tubing was subject to sales tax but not the 2.42% tax. The sam…
Were intraocular lenses sold in Texas exempt from sales and use tax as prosthetic devices?
Yes. The Comptroller classified an intraocular lens as a prosthetic device and said it was exempt from Texas sales and use tax.
Which radio-dispatch, signal-boosting, and elevator-phone services were taxable telecommunications or telephone-answering services?
Radio signal amplification and retransmission was taxable telecommunications. Dispatching that answered radio calls and routed them to land lines, plus elevator-phone answering, was taxable telephone …
Were liquid eggs, frozen eggs, egg substitutes, and unheated hard-boiled eggs exempt from Texas sales and use tax?
Yes. Liquid and frozen eggs and egg substitutes were exempt food. Hard-boiled eggs were also exempt when sold unheated and without eating utensils. A seller with no taxable Texas sales did not have to…
Which member and guest charges at a nonprofit Texas golf and country club became taxable on October 1, 1991?
Monthly dues, initiation and transfer fees, guest and green fees, range and trail fees, locker and bag storage, cart storage, locker rentals, minimum food charges, and golf or tennis club dues were ta…
How did Texas's October 1, 1991 amusement-tax change affect prepaid country-club dues, cart storage, opening fees, party cover charges, and gratuities?
Charges paid before October 1 stayed untaxed even for later service. Later member-privilege and cart-storage charges were taxable; the club could not buy charging electricity for resale. Alcoholic-bev…
How did Texas treat state contracts for abandoned strip-mine reclamation that permanently incorporated lime into the land?
The December 11 letter replaced a November 25 opinion and treated the reclamation as real-property improvement. After House Bill 11, consumed items were not exempt under Section 151.311; a separated c…
How did Texas tax railroad-track materials and labor for new construction versus repair, remodeling, or renovation?
Rails, ballast, bridges, trestles, ties, and other essential track materials were exempt; depot and nonessential construction materials were taxable. New-construction labor was not taxable, while exis…
Was an aircraft charter used to transport passengers subject to Texas sales tax?
No. The Comptroller said sales tax was not due on an aircraft charter for passenger transportation or on individual tickets for travel on a common carrier.
Did a Mexican pedimento simplificado prove export well enough to support a Texas sales-tax refund?
No. Rule 3.323 required formal destination-country entry documents. For Mexico, the letter required a pedimento de importaciones with a computerized certified customs number, or alternatively a Mexica…
Was a jointly funded artificial-intelligence software-development agreement a taxable custom-software sale or nontaxable contract programming?
The developer's retained legal rights controlled: retaining rights made the arrangement a custom-software sale taxable to the extent used in Texas; retaining no title made it nontaxable contract progr…
How did Texas tax labor and materials for removing rust and rechroming a motor vehicle's grille and bumpers without alteration?
Rechroming the grille and bumpers was repair of component parts. Labor was not taxable, but materials were. Under a lump-sum repair the repairer paid materials tax and charged the customer no tax; und…
Were charges for a computerized telephone weather-and-advertising service taxable when customers did not control the equipment?
No. Advertising and franchise fees were nontaxable when the provider retained control and performed all equipment operations, while the provider paid tax on its equipment and supplies. Radio stations …
When did recurring motel repainting qualify as scheduled maintenance instead of taxable restoration or remodeling?
A recurring cycle alone was insufficient. The motel needed fixed, regular schedules or work orders showing repainting was planned before paint declined. Repainting faded, damaged, blistered, or peelin…
Did copy machines and supplies used to reproduce customer documents qualify for Texas manufacturing exemptions?
The copying business was treated as a manufacturer. Direct-use copiers with the required useful life qualified for the historical phase-in exemption when purchased in the stated period; financing leas…
Could a Texas provider of taxable services separately state bond and insurance costs and leave them out of the sales-tax base?
No. The November correction revised the attached June letter and said bond and insurance costs connected with selling a taxable service remained taxable even when separately stated.
How did Texas tax unprocessed aggregate and equipment-with-operator charges used in taxable, construction, residential, or nontaxable services?
Unprocessed sand, gravel, dirt, and soil were nontaxable unless included in a taxable service. Equipment-and-operator charges followed the service when combined. For a nontaxable service, separate equ…
Was complimentary valet parking hired by a club, individual, or event group subject to Texas sales tax when guests paid no parking fee?
Yes. The service remained taxable motor-vehicle parking whether the hiring group paid the hourly fee or the vehicle owner paid directly. Operating temporarily on client property, owning no parking lot…
Was a subcontractor that poured tilt-wall panels and other concrete work—but did not physically erect the panels—a manufacturer or a contractor?
It was a contractor. The subcontractor poured the foundation, walls, curbs, sidewalks, plug concrete, patches, and final slab and remained responsible for correct wall placement before payment, even t…
Were one-way or round-trip train tickets taxable admissions when the trip ended in a historic district?
No on the described facts because the trip's primary purpose appeared to be transportation. Admissions to tour trains or buses primarily showing tourist sights along a route were taxable; the Comptrol…
When did Texas sales tax apply to trained drug-detection dogs sold to law-enforcement or investigation agencies?
No Texas tax was collected when the seller delivered the dog outside Texas and retained delivery proof. A customer taking possession in Texas owed tax unless it was a qualifying exempt entity. Other s…
Did taxable data processing qualify for Texas manufacturing exemptions because it produced printed reports or other physical results?
No. Data processing was a taxable service, not manufacturing or processing tangible personal property for sale. The service provider collected tax on the service price but could not claim manufacturin…
How did Texas allocate tax on remodeling a jointly owned power facility between exempt cities and private utilities holding direct-payment permits?
Each owner was treated as the sole owner of its percentage. Cities bought their shares exempt; private utilities used direct-payment certificates and accrued use tax on their shares. The entire nonres…
Could a company rebuilding purchased used core assemblies buy wrapping and packaging supplies tax-free as a manufacturer?
Yes. The company was a manufacturer because it bought used cores, completely disassembled, cleaned, inspected, remachined, rebuilt, tested, and added the finished assemblies to inventory for sale. It …
Was revenue from renting space on installed utility poles subject to Texas sales tax as tangible-personal-property rental?
No. Utility poles installed as part of a utility line were improvements to real property, so renting space on them was not a rental of tangible personal property and the rental revenue was not taxable…
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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.