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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Which ancillary facilities count toward a Texas hotel project's 1,000-foot tax-rebate zone, and does a spa/fitness center qualify as a 'shop'?
A spa or fitness facility does NOT qualify as a tax-rebate-eligible 'shop' or ancillary facility for a Texas hotel project because it doesn't exclusively sell tangible personal property, but retail sh…
Is a company's generic weather/market forecasting service, sold to multiple clients, subject to Texas sales tax, and does custom forecasting made just for one client get treated differently?
As originally issued: generic forecasting reports sold to multiple clients were a taxable information service (with 20% of the charge exempt), while custom forecasts built just for one client using th…
For a combined group's Texas franchise tax report, how do you apportion receipts from sales to a Texas warehouse, sales to unaffiliated buyers in and out of Texas, and sales between the group's own members?
A four-part combined-group apportionment ruling: (1) a supplier has Texas nexus and Texas-sourced receipts just from having inventory in a Texas warehouse it still owns, even before selling it; (2) sa…
Is a stand-alone vehicle trade-in appraisal service sold to car dealerships' customers a taxable information service in Texas?
Yes. A stand-alone motor vehicle trade-in appraisal service sold to a dealership's customers is a taxable information service (80% of the charge is taxable), because the service provider — not the dea…
Is a subscription-based online childhood education curriculum (with lessons, live tutoring, and assessments) subject to Texas sales tax?
No. A subscription-based online curriculum for home-schooled and classroom students — including lessons, videos, worksheets, live tutoring, and guided assessments aligned to Texas TEKS standards — is …
Is a SaaS platform that turns clients' raw customer data into structured advertising databases taxed as a data processing service or an information service?
It's a taxable data processing service (only 20% exempt under Tex. Tax Code § 151.351), not a nontaxable service and not an information service, because the platform processes, reformats, and restruct…
Is a trade association's live/recorded webinar training for bank employees, with free downloadable training materials, subject to Texas sales tax?
No. A nonprofit trade association's live and recorded webinar training for bank employees — including continuing-education and regulatory-compliance content, chat-room Q&A, and free downloadable train…
Is a company's online webinar training course subject to Texas sales tax as an amusement or information service?
No. A company's online webinar training courses are nontaxable educational services under Texas sales tax law, not taxable 'amusement services' or 'information services,' even though customers can ear…
Which pieces of compression, cooling, and refrigeration equipment in a Texas LNG export facility qualify for the sales tax manufacturing exemption?
Yes, with one narrow carve-out. Compressors and coolers that pressurize or temperature-condition the gas stream to the specs required by an already-exempt piece of processing equipment (like the Acid …
Does a joint ownership agreement, where a nominee holds legal title to real property for five co-owners, create a separate entity subject to Texas franchise (margin) tax?
No. A nominee that holds bare legal title to real property for five co-owners under a joint ownership agreement (JOA) is not a taxable entity for Texas franchise tax purposes — it's not a partnership …
Is frac sand that's washed, dried, and sized taxable as 'processed' material, or exempt as unprocessed sand, under Texas sales tax law?
It depends on whether the sand is recombined after sizing. A frac-sand producer's 40/70 sand stays exempt unprocessed sand because it needs no recombining after washing, drying, and size-separation, b…
Are monthly membership fees for a fitness center that ONLY offers scheduled, instructor-led training classes (no open gym access) taxable as an amusement service in Texas?
No. Monthly membership fees for a fitness center are not taxable as an amusement service when members can ONLY attend scheduled classes led by certified coaches — with no open access to the facility o…
Does a hotel owe Texas sales tax on staffing fees it pays a temporary employment service for housekeeping and banquet/catering employees?
No. A hotel's purchases of temporary housekeeping and food-and-beverage staffing services are exempt from Texas sales tax under Tax Code § 151.3503(a)(2) because the hotel maintains its own regular st…
Is sand mined from Texas sand dunes, washed in paddle-agitated attrition cells and dried to under 0.1% moisture, taxable as processed sand?
No. A sand mining company's product — mined from Texas sand dunes, washed in paddle-agitated 'attrition cells' to remove clay, dried to under 0.1% moisture, and screen-sorted into precise sizes with n…
How is Texas sales tax computed on an employee incentive program that charges website-design fees, transaction fees, and reward certificates redeemable for merchandise or gift cards?
A four-way split: website design/consulting charges are a taxable data processing service (80% taxable); transaction fees for issuing reward certificates are NOT taxable because certificates are an in…
Does washing frac sand in 'attrition cell scrubbers' to remove clay make it taxable processed sand under Texas law?
No. A frac-sand producer's sand — washed in attrition cell scrubbers to remove clay and organics, then dried and sorted into two sizes with no remixing — stays exempt unprocessed sand because the scru…
If mined sand is unprocessed, can the mining company still claim a tax exemption on the electricity used to move it, even without the manufacturing-equipment exemption?
Yes for electricity used to transport the sand, no for equipment or natural gas. A sand mining company's washed, dried, sorted, and hydroclone-separated sand is unprocessed and exempt from sales tax; …
Is frac sand run through attrition mills (spinning-paddle scrubbers) to remove clay, then washed, dried, and sorted by size with no remixing, taxable 'processed' sand in Texas?
No, it's exempt unprocessed sand. A sand mining company's frac sand — even though it passes twice through attrition mills that spin the sand with polymer paddles to clean off clay — stays nontaxable u…
Is a 25-year build-to-suit lease for a Texas charter school campus an exempt contract, letting the landlord/developer buy construction materials tax-free?
Yes. A charter school's 25-year build-to-suit lease with a private landlord qualifies as an exempt contract under Tax Code § 151.311, letting the landlord issue exemption certificates instead of payin…
Does a retail bakery that bakes and sells its own kolaches and pastries qualify for Texas's reduced retail/wholesale franchise tax rate?
No. Even though a retail bakery's sales of kolaches and pastries count as "retail trade" revenue, the bakery doesn't qualify for Texas's reduced retail/wholesale franchise tax rate because 88% of its …
Does Texas use tax apply to payments a company makes on an aircraft that will be delivered outside Texas and used predominantly out of state during its first year?
No use tax is due. Texas use tax does not apply to a company's payments on an aircraft — structured as a lease that converts into a purchase — because the aircraft will be delivered outside Texas and …
Can an Accountable Care Organization (ACO) exclude the Medicare Shared Savings Program payments it receives from CMS from its Texas franchise (margin) tax total revenue?
Yes. An Accountable Care Organization (ACO) that receives payments from CMS under the Medicare Shared Savings Program (MSSP) and passes them on to its member health care providers may exclude those pa…
Does a city-owned golf-resort hotel and conference-center development qualify for Chapter 351 tax rebates, and are its design and construction contracts exempt from sales tax as improvements to public property?
Partly yes on rebates, but no on the construction contracts. The city can qualify as an eligible central municipality (Section 351.001(7)(C)) once it adopts a capital improvement plan for a conference…
In a mixed golf-resort/hotel/conference-center development on city-owned land, which pieces qualify for hotel-project tax rebates, and are the construction contracts tax-exempt?
A mostly-no ruling on a complex multi-facility development: retail shops, restaurants, coffee shops, bars, and parking DO qualify as tax-rebate-eligible facilities ancillary to the hotel, but the spa/…
Has a city's 0.5% economic development sales tax been terminated by a letter that wasn't intended as formal cessation notice, blocking a Type B corporation from issuing bonds?
No, the tax was never terminated. The Comptroller confirmed a city's voter-approved 0.5% economic development sales and use tax (for the benefit of a Type B corporation) has been continuously collecte…
Are charges for a paid online course that includes streamed pre-recorded university lectures, course materials, and a completion certificate taxable in Texas?
No. The Comptroller ruled that charges for a paid online course — streamed pre-recorded university lectures plus course materials, quizzes, and a discussion forum, capped off with a completion certifi…
Are online training courses for property management professionals — with interactive lessons, progress tracking, and completion/mastery certificates — a taxable information service in Texas?
No. A company's online training courses for the property management industry — including interactive lessons, instructor content, student/supervisor progress tracking, and randomized assessments leadi…
For a Texas-based wholesale/distribution combined group, how do you apportion receipts from sales to unaffiliated buyers in and out of Texas, and sales between the group's own members?
For a Texas-based wholesale/distribution company's combined group: receipts from sales delivered to unaffiliated buyers outside Texas count in total receipts but are not apportioned to Texas; receipts…
When does an out-of-state video-game company create Texas sales-tax and franchise-tax nexus by sending employees to plan and host a one-time eSports tournament in Texas, and when does that nexus end?
ALERT: This ruling's nexus analysis predates Wayfair-driven rule changes (Rule 3.586 added an economic-presence nexus test effective 12/29/2019; Rule 3.286 was amended effective 1/1/2019 for online sa…
Does an out-of-state video-game company create Texas sales-tax and franchise-tax nexus by sending employees to plan and host a one-time esports tournament in Texas?
Yes. An out-of-state gaming company and its subsidiaries created Texas nexus for both sales/use tax and franchise tax the moment their employees first entered Texas for pre-event planning visits ahead…
When a marketing company buys equipment on a client's behalf as the client's purchasing agent, can it charge the client sales tax on that equipment if the out-of-state supplier didn't collect tax?
No. When a marketing company acts as its client's purchasing agent to buy equipment from an out-of-state supplier that didn't collect Texas tax, the agent — not the client — must accrue and remit use …
If a company negotiates free perks (golf, water park passes, bike rentals) for a property-management company's rental guests and pays sales tax on those items itself, does it owe additional sales tax on the fee the property manager pays it?
No. A company that negotiates complimentary golf, water park, bike-rental, and similar perks for a property-management company's rental guests, and pays sales tax directly to each vendor when a guest …
Does an out-of-state clothing-subscription retailer owe Texas sales tax on shipments where customers get a 7-day try-on period before being charged?
Yes. An out-of-state online clothing-subscription retailer has a Texas sales and use tax collection obligation, because it retains ownership rights over the clothing — the right to charge for it — whi…
Does a battery system a wind farm installs to store generated electricity for grid-reliability service qualify for Texas's manufacturing sales tax exemption?
No. A battery system a wind farm installs to store electricity for a grid fast-response reliability program does not qualify for Texas's manufacturing sales tax exemption, because the exemption exclud…
Does a battery system a wind farm installs to store generated electricity for grid-reliability service qualify for Texas's manufacturing sales tax exemption?
No. A battery system a wind farm installs to store electricity for a grid fast-response reliability program does not qualify for Texas's manufacturing sales tax exemption, because the exemption exclud…
For Texas franchise tax purposes, is revenue from an online airport-parking reservation service apportioned based on where the parking lot is located or where the company's servers/customers are, and does a Multistate Tax Commission voluntary disclosure program cover franchise tax?
ALERT: This ruling's core apportionment holding has been PARTIALLY SUPERSEDED. As originally issued, the Comptroller ruled that an online airport-parking reservation company's receipts are apportioned…
Is repair and remodeling labor on fractionally owned vacation homes taxable in Texas, and are the homes treated as residences or as hotels?
Yes — the repair and remodeling labor is taxable. Charges for real property repair and remodeling labor on the fractionally owned homes are taxable under Section 151.0047 because the homes are not 're…
Is a mobile app that lets multi-level-marketing distributors view their sales and downline data, sold alone or bundled with a dashboard and personal website, a taxable data processing service?
Yes. A mobile application and bundled dashboard/personal-website service that let multi-level-marketing distributors view their own sales and downline data are taxable data processing services — tax a…
Is labor to repair and remodel a fractionally owned vacation home taxable, if owners are barred from renting their ownership interest but the operator can rent the homes to the public as hotel accommodations?
Yes. Repair and remodeling labor on fractionally owned vacation homes is taxable, because the homes qualify as "hotels" (not exempt "residences") once the operator holds the right to rent them to the …
Is a sports-training facility's personal and group training memberships, where members can only access the facility during scheduled sessions, a taxable athletic-club membership?
No. A fitness and sports-training facility's personal-training and small-group-training memberships are nonamusement instructional services, not taxable athletic-club memberships, because members can …
Can a U.S. company that retains title to raw materials still issue a Texas Maquiladora Exemption Certificate as agent for its Mexican maquiladora when buying those materials tax-free in Texas?
Yes, in principle. Retaining title to raw materials exported to a Mexican maquiladora does not by itself prevent a U.S. company from acting as the maquiladora's agent and issuing a Texas Maquiladora E…
Is dormitory-style educational housing that only training-course and conference attendees may use — not the general public — a 'hotel' subject to Texas hotel occupancy tax?
No — the educational housing is not a 'hotel,' so its stays are not subject to hotel occupancy tax. Under Section 156.001(a) a hotel is a building where members of the public obtain sleeping accommoda…
Is the sale and installation of an F-5-rated prefabricated storm shelter, anchored into a concrete foundation, taxable as tangible personal property or exempt as an improvement to real property?
It depends on how you bill. A prefabricated storm shelter anchored into a permanent concrete foundation is an improvement to real property, so a lump-sum charge for its sale and installation is not ta…
Is a medical billing and coding company's lump-sum fee taxable, when its services include both nontaxable coding/claim-filing work and taxable insurance-claims-appeal work?
It depends on the mix. A medical coding and billing company's coding, eligibility-verification, and initial claim-filing services are nontaxable, but its work appealing denied insurance claims is a ta…
When does a vehicle qualify as a Texas trade-in, how must a dealer document it, and what must a blanket resale certificate show?
A trade-in reduces taxable value only when the dealer accepts it as consideration in the same purchase transaction. The buyer's order, installment contract and Form 130-U should document it. A blanket…
In a toll-road operator's revenue-sharing deal with TxDOT, are the roadside gantries and toll-collection equipment exempt from Texas sales tax as improvements to a state agency's realty?
Split ruling. The physical gantry structures a toll-road operator installs over the highway are exempt from Texas sales tax as improvements to TxDOT's exempt real property, but the toll-collection equ…
Can a lab that tests blood plasma samples for infectious diseases before its client manufactures medicine claim Texas's manufacturing exemption on its testing equipment and supplies?
No. A laboratory that tests source-plasma samples for infectious diseases on behalf of pharmaceutical manufacturers cannot claim Texas's manufacturing sales tax exemption on its testing equipment and …
Does a private investigation and forensic accounting company owned by a licensed CPA owe Texas sales tax on its services as a taxable 'security service,' or is it exempt because the owner is a CPA?
Taxable. Private investigative and forensic accounting services performed by a company holding an Investigations Company License are taxable Texas security services, and there is no exemption just bec…
Are a land surveying firm's right-of-way negotiation services for oil and gas pipelines taxable, when billed separately from — or combined with — the firm's taxable surveying services?
Nontaxable. A land surveying firm's right-of-way (ROW) services — negotiating easements, following up on land reclamation, and resolving owner issues for oil and gas pipelines — are not taxable real p…
When a customer damages a tire under a road hazard warranty and gets a credit toward a replacement tire, is the replacement tire taxable and can the original sales tax be refunded?
No refund, new tax due. When a customer damages a tire covered by a road hazard warranty and receives a credit toward a replacement tire, the tax paid on the original tire is not refunded, and the rep…
Is demolition debris removal a nontaxable industrial-solid-waste service, and can a demolition company buy third-party debris hauling tax-free for resale?
No, demolition debris removal is not exempt industrial solid waste — it's taxable municipal solid waste removal. Whether the whole job is taxable then depends on the type of demolition: partial demoli…
Is a law-firm subscription bundling document-drafting software, CLE courses, and an online community for one monthly fee taxable in full?
Yes. A legal-practice-support subscription that bundles a taxable document-drafting software license with nontaxable CLE courses and an online community for one lump-sum fee is taxable in full, becaus…
What prescription and documentation must a retailer collect to sell massage chairs, hot tubs, and similar therapeutic appliances tax-exempt in Texas, and does a chiropractor's prescription count?
A retailer needs only a written prescription (signed, with the practitioner's name/address/license info, identifying the item) for most therapeutic appliances like massage chairs and adjustable mattre…
Is cloud-based website hosting a taxable Texas data processing service, and does it matter where the customer or the underlying cloud data center is located?
Taxable. The Comptroller ruled that all aspects of a Texas company's cloud-based website hosting service (deploying code, monitoring, maintenance, bandwidth) are taxable data processing services -- ta…
Is a 25-year build-to-suit lease of a new charter-school campus, with a 20-year early-termination option, an exempt contract that lets the for-profit landlord buy construction materials tax-free?
No. The Comptroller ruled that the charter school's 25-year lease is NOT an exempt contract under Section 151.311, because the lease includes a 20-year early-termination option that undercuts the requ…
Can a manufacturer's representative that buys equipment from manufacturers and resells it to customers under its own contracts take the cost of goods sold (COGS) deduction, even though it never physically handles the product?
Yes. A manufacturer's representative that contracts separately to buy equipment from manufacturers and resell it to its own customers — never physically touching the product, which ships directly from…
Is a bundled call-tracking-and-marketing-consulting service package a taxable data processing service or a nontaxable consulting service?
Nontaxable. The Comptroller ruled that a lump-sum call-tracking, recording, and reporting package sold alongside marketing consulting is nontaxable consulting services, because the essence-of-the-tran…
Are an IT vendor's PC deployment, maintenance, and asset-management services taxable in Texas, or do they qualify as nontaxable 'services by employees'?
Taxable. The Comptroller ruled that an IT vendor's PC pre-deployment, installation, break-fix, move/add/change, asset-management, and reporting services are all taxable in Texas because they're perfor…
Is admission to a children's scaled-city role-play facility a taxable amusement service or a nontaxable educational program?
Taxable. The Comptroller ruled that admission to a scaled-city facility where children role-play adult jobs is a taxable amusement service, because the instructors don't meet the scholarly/expert stan…
Does a mid-term termination-fee option in a 28-year charter-school ground lease defeat the exempt improvement-to-realty contract test, if the property reverts to the school on termination?
Yes, still exempt. The Comptroller ruled that a charter school's 28-year Ground Lease/Lease IS an exempt contract under Section 151.311, even though it includes an option to terminate (for a fee) betw…
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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.