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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Were customer charges for an electronic toll-account service taxable when each customer also received an in-car counting device?
No. The Comptroller treated the transaction's essence as a nontaxable service even though customers received Tolltags. The provider had to pay sales tax when buying the devices, and its separate charg…
Were green fees, yearly golf-course memberships, golf-cart rentals, and pull-cart rentals taxable when provided by a Texas governmental entity?
Governmental green fees and yearly memberships representing admission to the golf course were not taxable amusement services. Golf-cart and pull-cart fees were taxable rentals of tangible personal pro…
How did Texas tax repair or maintenance of automatic fire systems and periodic grease removal from kitchen exhaust systems?
Repair or maintenance of a fire system treated as tangible personal property was taxable, as was repair, restoration, or remodeling of a realty improvement in a nonresidential building. Scheduled prev…
Were gangway rentals to foreign-flag and domestic vessels taxable in Texas?
Yes. Gangways were tangible personal property, so their rental was taxable for both foreign and domestic vessels. A port authority's requirement to use a proper gangway did not create an exemption.
When were installed warehouse racks treated as new construction rather than taxable tangible personal property?
Only rack-supported systems built as part of a new warehouse were treated as new construction. Other rack systems remained tangible personal property, making the total installed charge taxable.
When was labor to install new sheet-metal manufacturing equipment taxable in Texas?
Independent labor that only placed equipment in position was not taxable; assembly or installation by the equipment seller was taxable.
Were charges for lifting and moving large equipment with a crane taxable when no other taxable service was performed?
No. Texas treated the work as nontaxable third-party transportation, regardless of lump-sum or separated billing and regardless of the property's classification.
When was seismic data delivered on tape nontaxable information versus a taxable sale of copy tapes?
A tape carrying newly furnished nontaxable seismic information was not taxable. Copy tapes of information the customer already owned were taxable tangible property.
Is the transportation charge to return a repaired trailer taxable, and does it matter whether the repaired item is a motor vehicle?
The transportation charge to return a repaired trailer is not taxable. Because a tube trailer is a motor vehicle, its repair labor is nontaxable and the separately stated parts are taxable — and the c…
When a contractor assembles or installs lockers, racks, and similar items, which charges are subject to Texas sales tax?
It turns on assembly versus installation. If you assemble tangible personal property — such as bolting together locker parts, building a wire cage, or hooking together pallet/drive-in racks — the tota…
Is repair work on a pleasure yacht taxable in Texas, and when does the commercial-vessel exemption apply?
Yes — repairing a pleasure yacht is taxable. Pleasure yachts are tangible personal property under Rule 3.292, so a repairman is a retailer who must hold a tax permit and collect tax on the entire char…
Is stone that a company digs from the earth and cuts to size, then sells uncrushed, taxable in Texas?
Sales tax is due on cut stone. A company that digs stone out of the earth and cuts it to different sizes — selling it without washing, screening, or crushing — has produced tangible personal property,…
Did Texas audit policy treat chairs, tables, refrigerators, and similar property in stadium sky boxes as taxable?
No. An internal Texas Comptroller memorandum said chairs, tables, refrigerators, and similar tangible personal property in stadium sky boxes had not been taxed in the audit and were to be treated as e…
Were charges for installing, assembling, repairing, refinishing, or moving a customer's tangible personal property taxable in Texas?
Standalone installation and moving without reassembly were not taxable, but assembly or erection and repair or refinishing were taxable. Related services became taxable when performed with the taxable…
Were school pictures sold to students exempt from Texas sales tax when the photographer sold them directly or through the school?
No. School-picture sales to students were taxable whether made by the photographer or through the school, because the students—not the school—were making the purchases.
How did Texas classify and tax cleaning, repairing, and repainting storage tanks under its 1988 rules?
Tanks over 500 barrels were real property; tanks of 500 barrels or less were personal property. Cleaning was maintenance, and repainting was remodeling, with the letter treating the described services…
Were rent-to-own agreements true leases or contingent sales for Texas's historical prior-contract exemption?
Texas treated the agreements as true leases, not contingent sales. Only renewal periods already in effect before July 21, 1987 qualified for the historical prior-contract exemption.
Did Texas classify oil-and-gas flowlines as tangible personal property whether they were above or below ground?
Yes. The Comptroller retained its industry-wide position that flowlines above and below ground were tangible personal property and declined to change it in 1988.
How did Texas tax billboard-face rotation, painting steel billboard structures, other sign repairs, transferred materials, and mowing around signs?
Billboard-face rotation and steel-structure painting were taxable real-property work. Other sign repair was taxable as personal-property service, and most mowing around signs was taxable.
How did Texas classify window air conditioners and portable buildings as tangible personal property or real property for repair-tax purposes?
Window-opening units were personal property; wall-installed units could be permanent realty. Portable buildings were real property only if permanently slab-affixed, plumbed, and wired.
Were pickup, delivery, incoming-freight, and UPS charges taxable when connected with taxable sales, leases, or services?
Yes. Beginning October 1, 1987, Texas required sales tax on all transportation charges when the seller sold or leased tangible personal property or provided a taxable service such as repair.
Could an airline take delivery of taxable items in Texas without sales tax when it transported them outside Texas?
Yes. A common carrier could purchase and take delivery of taxable items in Texas without sales tax when the carrier delivered the items outside Texas under its bill of lading.
Was a property owners' association's single annual fee taxable when the association bought taxable items and services for members?
No. The association's annual fee charged to property owners was not taxable. The association instead had to pay tax when buying taxable tangible personal property and taxable services.
Were modular walk-in coolers and freezers that could be readily disassembled and relocated tangible personal property, and was labor on them taxable?
Yes. The pre-engineered modular units were tangible personal property, so assembly, installation, repair, maintenance, restoration, and remodeling labor was taxable.
Which oil-and-gas repair, remodeling, maintenance, and well services did Texas treat as taxable in February 1988?
Texas treated repair and remodeling of listed real property as taxable, and repair or maintenance of tangible personal property as taxable. Work inside a well bore was generally taxable, while work to…
How did Texas tax residential ceiling-fan repair, tangible-personal-property repairs, trip charges, service contracts, and items shipped out of state?
Residential ceiling-fan repair labor and its trip charge were nontaxable, while personal-property repairs were taxable in full. Fan service-contract charges and out-of-state shipments were not taxable…
Were transportation, delivery, and handling charges connected with taxable tangible personal property taxable when separately stated?
Yes. Transportation and delivery charges for tangible personal property sold, leased, or rented were taxable even when occurring after the transaction and separately stated. Handling charges tied to a…
Was an engineering scale model taxable when built from client specifications, and did the result change when the provider created the design after consultation?
Yes, a model made from client specifications was taxable on labor and materials. When the provider created the design after consultation, the client charge was a nontaxable professional service; the p…
How did Texas tax frac-tank cleaning, oilfield waste hauling, drilling-mud transportation and pumping, and trucking-only charges?
Frac-tank cleaning was taxable equipment maintenance, while oil-and-gas waste collection and disposal and trucking-only service were exempt. Mud transportation was taxable if the provider did not pump…
Were separately stated delivery charges on taxable equipment sales and mileage charges incidental to equipment repair taxable in Texas?
Yes. Effective October 1, 1987, delivery charges tied to taxable property were taxable regardless of separate billing, carrier, postage, or F.O.B. terms. Rule 3.292(c)(1) also taxed the entire repair …
How did Texas tax pagers or beepers rented with telecommunications service compared with equipment sold or rented without service?
A pager rented with telecommunications service used the same tax rate as the service. A beeper or pager sold outright or rented without service was treated as an ordinary sale or rental of tangible pe…
Was the total charge for installing leased electrical capacitors on existing commercial systems subject to Texas sales tax?
Yes. The capacitors remained tangible personal property under the lease, so their sale and installation were taxable; the financing lease was treated as a sale with tax due at the time of sale.
Could a retailer treat an installed home satellite system as a lump-sum improvement to realty and avoid collecting Texas sales tax from the consumer?
No. Texas treated the satellite system as tangible personal property, so the retailer had to collect tax on the equipment and, after October 1, 1987, the installation charge.
Did Texas use tax apply when a Texas resident bought repair services outside the state and realized the repair in Texas?
Yes. The letter said Texas residents owed use tax on goods and services bought from out-of-state sellers when the repair was realized in Texas, even if the seller did not have to collect it.
Was a separate customer charge for manufacturer-supplied shop drawings used as installation instructions taxable in Texas?
Yes. The shop drawings were a taxable sale of tangible personal property even though they were separately charged installation instructions.
Did anchoring, plumbing, and wiring a rented prefabricated building make it real property for Texas tax purposes?
No. The building remained tangible personal property because it was intended as a one- or two-year temporary bank facility and was rented separately from the land.
Were $40 sales of a family-history book taxable when the buyers were only family members and friends?
Yes. Family and friend sales were taxable sales of books. Supplier tax could be recovered for copies actually resold, while copies kept or given away remained taxable to the publisher.
Were film libraries leased by subscription taxable in Texas, including when used by a federal contractor?
Yes. Based on the limited facts, the Comptroller treated the subscription as a lease of taxable tangible personal property; a federal contractor was not exempt for items it used.
How did Texas tax a service that made written and photographic records of customers' property for future fire or theft claims?
The photograph charge was taxable. A separately stated written-record charge was not taxable, but the overall transaction was not treated as a wholly nontaxable information service.
Were charges for a Texas 'Knowledge Engineering' business-management consulting service taxable when taxable items could be used or transferred?
The consulting charge was not taxable because the transaction's essence was business-management consulting, but the provider had to pay tax on taxable items used or transferred with the service.
Was a lump-sum charge taxable when a business computer-printed standardized real-estate advertising postcards and mailed them for customers?
Yes. Texas treated the business as producing tangible personal property—standardized advertising postcards—and taxed the total lump-sum charge.
How did Texas tax a petroleum storage facility's capital contribution, leaseback, third-party sale, ground lease, and related subleases?
The capital contribution and realty leases were nontaxable. The ruling nevertheless called the third-party sale taxable immediately after saying the improvements were not tangible personal property, w…
Were monthly leases of real estate with incidental personal property or of an entire purchased operating business subject to Texas sales tax?
No under the stated facts. Real-property rent remained nontaxable with incidental tax-paid personal property, and the purchased business assets qualified as an occasional sale before the exempt lease.
Was placing a portable sign at a customer's premises a taxable rental or a nontaxable advertising service?
It depended on customer control. If the customer could not control the sign, the transaction was a nontaxable advertising service; if the customer could change its message, it was a taxable rental of …
Could an exempt religious organization treat a requested payment for property as a donation rather than a sale?
No. If the organization did not freely give the item away, the payment-for-item exchange was a sale even when called a requested donation or paid in a different amount. Taxability depended on the item…
Did Texas treat the bolted-down pulp-making and paper-making equipment at a paper mill as real property or tangible personal property?
The classifications differed. The pictured pulp-making machinery was realty, while the quarter-mile paper-making machinery and cut-size shelter were tangible personal property.
How did Texas determine whether an installed pipeline sale involved real property or tangible personal property, and could the sale qualify as an occasional sale?
An installed pipeline generally qualified as real property, subject to a good-faith agreement or the fixture tests. If personal property, its sale could qualify as an identifiable-segment occasional s…
Were custom poems taxable when recited as entertainment, sold in written form, or given away as gifts?
A delivered and recited poem was a nontaxable service; a written poem was taxable tangible property. Gifts were not taxed to the recipient, but the poet owed tax on materials used for services and gif…
Was a performer's charge for recording a voice-over for a television commercial subject to Texas sales tax?
No. The performer's voice-over fee was neither tangible personal property nor a taxable service, although the station's total production charge was taxable.
Did a provider of Las Vegas-style parties have to collect Texas sales tax or hold a sales-tax permit?
Not unless the provider charged admission. The party service was otherwise nontaxable, but the provider owed tax on all equipment and property used.
How did Texas tax brick-and-concrete residential mailboxes versus standard mailboxes on wooden posts?
Brick-and-concrete boxes were real-property improvements taxed by contract form; standard post-mounted boxes were taxable property with nontaxable stated installation.
Were balloon drops, balloon releases, centerpieces, decorations, and their installation taxable in Texas?
The decorations' selling price was taxable because customers kept them, but a separately stated charge to install the decorations was not taxable.
Was an automated manufacturing-facility rack system tangible personal property or an improvement to realty in Texas?
It was tangible personal property. The contractor was advised to separate materials from installation and collect tax from the customer on materials.
Was property contributed by two companies to capitalize a new partnership subject to Texas sales and use tax?
No. The transfers were nontaxable when ownership interests substantially matched contributed values and no consideration other than those interests was received.
Was a contribution for placing a contributor's named brick in a public park walkway subject to Texas sales tax?
No. The contributor received neither title nor possession of the brick, so the contribution was not a sale of tangible personal property.
Was a separately stated handling charge connected with a taxable repair service subject to Texas sales tax?
Yes. The Comptroller confirmed that handling charges connected with a taxable repair service were taxable to the customer.
How did Texas classify oilfield welding and determine the city tax rate?
Oilfield welding was presumed to be performed on tangible personal property unless the invoice clearly showed real-property work. The local rate depended on where work orders were accepted; orders acc…
Which pressure-equipment calibration and related charges were taxable?
Customer-equipment calibration and calibration included with rented pressure equipment were taxable. Calibration of the supplier's equipment used by its own personnel was not. Equipment sales and trav…
Did the October 2, 1984 sales-tax changes make the two-step Crimp-Kote pipe process taxable?
Yes. The 1985 letter said services that remodel tangible personal property became taxable on October 2, 1984, making the total charge for both Crimp-Kote steps taxable. An attached 1980 letter had rea…
Was pumping hot oil down a Texas well bore to remove paraffin or another obstruction taxable?
Yes. Pumping hot oil down a well bore to dissolve paraffin or remove another obstruction was taxable maintenance because the tubing was tangible personal property.
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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.