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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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…
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…
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 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…
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…
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…
Can a landlord buy construction materials tax-free for a charter-school campus while it's still under construction, under a 25-year lease that hasn't started yet?
Yes. The Comptroller ruled that the charter school's 25-year lease IS an exempt contract under Section 151.311 -- even though construction hadn't reached Substantial Completion and the lease term itse…
Is a charter school's 25-year lease financing a student-housing apartment complex for international students an exempt improvement-to-realty contract?
Yes. The Comptroller ruled that a charter school's 25-year lease financing a new student-housing apartment complex -- built for international students in its Mandarin-immersion program -- IS an exempt…
Is a charter school's 25-year build-to-suit campus lease an exempt improvement-to-realty contract that lets the landlord buy construction materials tax-free?
Yes. The Comptroller ruled that the charter school's 25-year lease IS an exempt contract under Section 151.311, because a 25-year term is sufficiently long relative to the campus's 22-year useful life…
Is an in-store product demonstration and sampling service taxable in Texas, and does the provider owe tax on the supplies it uses even if it bills clients a flat fee for them?
In-store product demonstration and marketing services are NOT taxable in Texas because demonstration services aren't on the statutory list of taxable services -- but the provider still owes sales tax …
When a company that bought an aircraft tax-free for leasing dissolves and distributes the aircraft to its parent for no payment, does Texas sales or use tax become due?
No tax is due. The Comptroller ruled that an LLC's original tax-free resale purchase of an aircraft stays intact because the aircraft was leased out (under third-party operational control) more than 5…
Which location's local sales tax rate applies when a grocery store's flower outlet sells flowers online for pickup or delivery from a different city than where the order was placed?
Local sales tax on online flower orders is sourced to the location where the order is fulfilled -- meaning the store location from which the flowers are picked up or delivered -- not the location wher…
Is a hospital payment-review service that re-examines already-filed and already-reimbursed insurance claims a taxable insurance service or a nontaxable medical billing service?
Taxable. The Comptroller ruled that a consulting firm's hospital payment-review service is a taxable insurance service (claims adjustment/processing), not a nontaxable medical billing service, because…
Can a contractor buy construction materials tax-free when building a retail shopping center on land owned by a tax-exempt university, if a for-profit university subsidiary is the actual tenant?
Not exempt. The Comptroller ruled that a contractor's purchases of construction materials for a retail shopping center on university-owned land are NOT tax-exempt under Section 151.311, because the fo…
Can a sports team buy construction materials tax-free for a new city-owned ballpark, if the team purchases the materials and then resells them to the city under the lease deal?
Yes, doubly exempt. The Comptroller ruled that a major league sports team's purchases of construction materials for a new ballpark qualify for the resale exemption (because the team will resell the ma…
Is a fee paid for an electronic data-bridge that connects a loan-origination system to a mortgage-pricing engine a taxable telecommunications service, and can it be purchased tax-free for resale?
Taxable, but resellable tax-free. The Comptroller ruled that fees paid for an electronic data 'bridge' that routes mortgage loan information between a loan-origination system and a pricing engine are …
If a company buys an aircraft tax-free for resale and leases it to its own parent company, does replacing that lease with a lower-payment lease -- or the company later using the plane itself -- undo the resale exemption?
The resale exemption survives all three scenarios. In this companion ruling to 201801014L (same structure, an aircraft purchased about three months earlier), the Comptroller again held the resale exem…
When a contractor demolishes an old septic system and installs a new sewer line tying into the city system, which parts of the job are taxable repair/remodeling and which are nontaxable new construction or demolition?
It's a four-way split. New sewer line installation in a fresh trench is nontaxable new construction; complete demolition of the old septic tank and its pipe is nontaxable; but the labor to tie the new…
If a company buys an aircraft tax-free for resale and leases it to its own parent company, does replacing that lease with a lower-payment lease -- or the company later using the plane itself -- undo the resale exemption?
The resale exemption survives all three scenarios. The Comptroller ruled that the aircraft purchase qualifies as an exempt sale for resale even though the lessee wholly owns the purchasing company; re…
Which mixed-use retail, restaurant, and commercial facilities near a new city-owned convention-center hotel qualify as 'ancillary facilities' whose sales and hotel taxes the city can have rebated to help pay off the project's bonds?
A mixed answer: food/beverage operations and shops that exclusively sell tangible personal property qualify as 'facilities ancillary to the hotel' -- generating rebatable state sales, use, and hotel o…
After a corporate restructuring creates new subsidiaries with different federal tax filing statuses (S corp, disregarded entities, consolidated C corps), do all the resulting entities still qualify as 'affiliated entities' for Texas's intercorporate services sales tax exemption?
Yes. The Comptroller ruled that after restructuring twelve business divisions into four new subsidiaries, the S-corp parent, its consolidated-filing C-corp subsidiaries, and its disregarded-entity LLC…
Is a live-streaming video platform's paid subscription tier (ad-free video plus enhanced chat features) taxable in Texas as cable television or amusement service?
Taxable. The Comptroller ruled that a live-streaming platform's paid monthly subscriptions -- offering ad-free video, custom chat emoticons, and extended video storage on top of the free service -- ar…
Do refractory materials stacked in layers on kiln cars, which both protect the car and help distribute heat evenly to bricks being fired, qualify for the Texas manufacturing sales tax exemption?
It depends on the layer's function. Refractory materials stacked on kiln cars that serve EXCLUSIVELY to distribute heat evenly during brick firing qualify for the manufacturing exemption -- but the bo…
Is a charter school's 10-year campus lease (with renewal options) an exempt improvement-to-realty contract if the campus's useful life is 22 years?
No. The Comptroller ruled that the charter school's 10-year initial lease term is NOT an exempt contract under Section 151.311, because 10 years falls far short of the campus's 22-year useful life -- …
Can an internet-calling and messaging company source its Texas sales tax based on a customer's IP-registration address, and can it advertise a tax-included price without violating the ban on advertising that it 'absorbs' the tax?
Yes to both, with caveats. The company could source sales using the customer's IP-registration address when no business or residential address was available. It could also advertise a tax-included pri…
Are fees for disposing oil and gas waste at a permitted landfill, and separately for washing out the trucks that hauled it, taxable in Texas?
Both nontaxable. The Comptroller ruled that a permitted landfill's oil and gas waste disposal fees are nontaxable because Texas's real property services tax specifically excludes oil and gas waste dis…
Is a single-use spinal implant deployment kit -- where the implant is a small part of the total cost and can't function without the disposable delivery tools -- exempt from Texas sales tax as a medical device?
Exempt, but under a different category than requested. The Comptroller ruled that spinal implant deployment kits are NOT exempt 'prosthetic devices' (the implant can't be separated from the disposable…
Can a wholly-owned LLC subsidiary of a tax-exempt charter school issue sales tax exemption certificates in the school's name when making purchases on the school's behalf?
Yes. The Comptroller ruled that a charter school's wholly-owned LLC subsidiary (a disregarded entity for federal tax purposes) may issue sales tax exemption certificates in the school's name when acti…
Can a licensed customs broker use a smartphone app to remotely verify a foreign shopper's export tax refund claim instead of meeting the shopper in person?
No. The Comptroller ruled that a proposed smartphone app is NOT a valid export verification method, because Texas law requires the foreign purchaser and the customs broker to be physically present wit…
Are a homeowners association's membership dues, guest fees, and golf-related charges taxable as amusement services, and does that change for a golf cart rental fee?
Split result. The Comptroller ruled that a nonprofit homeowners association's membership assessments, guest fees, green fees, and trail fees ARE amusement services but are EXEMPT because the associati…
Is electricity used to power refrigeration equipment that merely stores already-exempt food products (with no processing) exempt from Texas sales tax?
Taxable. The Comptroller ruled that electricity used to power refrigeration equipment that only stores food products (even food that is itself exempt from sales tax) is taxable, because Texas's electr…
Is installing, maintaining, or repairing a residential mosquito misting system taxable in Texas, and does it matter whether pesticide is involved or who originally sold the system?
Split by whether pesticide is involved. Selling/installing a mosquito misting system and adding pesticide to one are TAXABLE structural pest control services (tax on the whole charge, even separately-…
Are separately-billed CRM platform advisory/consulting services taxable as part of the taxable data processing service, even though consulting isn't itself a taxable service in Texas?
Taxable. The Comptroller ruled that a CRM software company's advisory/consulting services -- though separately billed and not themselves a taxable service category -- are taxable as part of the price …
Do six separate 25-year build-to-suit leases with six different landlords, financing six new charter-school campuses at once, all qualify as exempt improvement-to-realty contracts?
Yes, all six. The Comptroller ruled that all six of a charter school's separate 25-year build-to-suit leases -- covering six new campuses financed by six different landlords -- qualify as exempt contr…
Are 'Cross-Connect' fees that a data center charges customers for access to permanently installed fiber optic cable subject to Texas sales tax as a telecommunications service?
Not taxable. The Comptroller ruled that a data center's separately-stated 'Cross-Connect' fees for customer access to fiber optic cable are NOT subject to Texas sales tax, because the cable is permane…
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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.