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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Does the Texas Workers' Compensation Insurance Facility owe sales tax on the debt collection services it buys to recover unpaid premiums?
Yes. The Comptroller ruled on January 26, 1993 that the Facility's purchases of debt collection services used to collect delinquent premiums are taxable. The Facility's statutory exemption (Texas Insu…
A Texas investigation firm did a traffic-accident investigation in Mexico for a California client (and separately does investigations for maquilas in Juarez) — is Texas sales tax due on the investigation service?
No Texas tax is due on an investigation service if both the purchaser and the subject of the investigation are outside Texas, the final report is delivered outside Texas, and the firm obtains an exemp…
Is a forensic engineer's accident-investigation work for insurance companies and attorneys taxable as an 'insurance service' under Texas sales tax law, even though attorney legal fees themselves are not taxable?
Yes. Under Rule 3.355, a professional engineer's work investigating accidents to help determine whether an insurance claim should be paid is a taxable 'insurance service,' regardless of the engineer's…
Do I have to charge Texas sales tax for boarding or training dogs at my kennel?
No. The Texas Comptroller ruled that boarding dogs and training dogs are both nontaxable services, so a kennel does not charge its customers sales tax on those charges. However, the kennel owner must …
Does a Texas business have to charge sales tax for pumping out grease traps/septic tanks or clearing stoppages in sewer lines?
It depends on what exactly is done and for whom. Removing waste from a septic tank or grease trap that is part of a sewer system is a non-taxable service, but cleaning out a sewer line for a non-resid…
Can a creditor or client who hires an automobile repossession company issue a resale certificate instead of paying sales tax on the repossession service?
No. The Comptroller ruled that a client (such as a lender) who hires a company to repossess an automobile cannot issue a resale certificate to avoid sales tax on that repossession service. The service…
Is a scholarship-matching or financial-aid database search service taxable in Texas?
Yes. A service that matches students to scholarships using a database is a taxable information service under Texas Rule 3.342. The provider owes tax on materials, supplies, and equipment used to deliv…
Is waste and garbage collection service provided to an ocean-going vessel operating under a foreign flag exempt from Texas sales tax?
No. The Comptroller ruled that waste collection and disposal services performed for ocean-going vessels in Texas are not exempt from sales tax. The Tax Code's exemptions for a vessel's component parts…
If we perform real property services at a bank building the bank partly uses itself and partly rents out, are we a 'property management company' under Texas Rule 3.356?
Not for that property. Under Rule 3.356(a)(6), a person performing taxable services at a property held by the owner for a purpose other than rental — such as a bank using its own building for its own …
Texas Letter Ruling 9212L1208G14: Towing Charges — Second Tows Or Transfer Fees In Connection With Repossession Services And Separately Billed Are Part Of Debt Collection Services
It depends on who is towing. Plain towing charges are not taxable unless the towing company is also the repossessor, and towing hired directly by a financial institution to repossess a vehicle is not …
Texas Letter Ruling 9211L1209A08: Towing/Transport Charges — Part Of Debt Collection/Repossession Services
Yes, if the repossession company itself does the towing. A repossession company's towing charges are taxable as part of its taxable debt collection/repossession service to the financial institution, e…
Texas Letter Ruling 9211L1209A07: Are towing charges taxable when a vehicle is repossessed?
It depends on who hires the tow truck. If a repossession company hires a towing company to move a vehicle it just repossessed, the towing company's charge to the repossession company is not taxable, a…
Texas Letter Ruling 9211L1209G06: Homeowners/Property Owners Association — Taxable Services (Cable Television, Landscaping, Garbage/Trash Pick — Up) And Nontaxable Services Provided To Members — Billings
A Texas property owners association that buys taxable and nontaxable services (like cable TV) for its members and bills a lump-sum periodic fee is treated as the consumer, paying sales tax to its vend…
Texas Letter Ruling 9211L1204G11: Is stainless steel polish bought by a janitorial service to clean customers' metal restroom dispensers exempt from tax under a resale certificate?
No. The Comptroller ruled that stainless steel polish bought by a janitorial company to clean customers' metal restroom dispensers is taxable at purchase, because the polish is consumed by rubbing and…
Texas Letter Ruling 9211L1211C01: Does an on-line service that lets buyers and sellers trade consulting services, software, and information electronically owe Texas sales tax, and has it created nexus in Texas?
Yes to both. Attending Texas trade shows, conventions, and users group meetings gave the out-of-state on-line service nexus in Texas. Once nexus exists, the service must collect Texas sales tax on pre…
Texas Letter Ruling 9211563L: Does a company owe sales tax on temporary security guards hired to supplement its existing security force?
It depends on whether the guards are licensed security personnel or true temporary help. If the guards are licensed by the Board of Private Investigators and Private Security Agencies, the charge is a…
Is a manufacturer's waste-removal bill exempt as 'industrial solid waste' under Texas Rule 3.356?
No, not automatically. Texas taxed the waste-removal charges here because most of the plant's trash was empty paint/glue/varnish containers and shipping refuse, not waste from the actual manufacturing…
Texas Letter Ruling 9209L1209E03: Property Management Company — Services Performed At Bank That Uses Building For Own Operations And For Rental
No. Because the bank uses the building for its own operations in addition to renting it out, the bank is not holding the property solely for rental. That means the company managing the building does n…
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…
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…
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…
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…
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…
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…
A commercial vehicle monitoring service places decals with an 800 number on trucking/shipping company vehicles so other drivers can call in complaints about how the vehicle is being driven; the service forwards the complaint reports back to the vehicle-owning company. Is this service taxable as an information service?
No. The Comptroller withdrew its two earlier opinion letters and ruled that this vehicle-monitoring service is not taxable because it qualifies as a proprietary information service under Rule 3.342(d)…
Are charges by contractors who trace telephone circuits and lines (as part of a telephone bill auditing service) subject to Texas sales tax?
No. The Comptroller ruled that tracing circuits is not a taxable service, so charges by contractors who trace telephone circuits and lines from the telephone company demarcation point to the equipment…
Are genealogy research, book sales, teaching, and notarial services provided by a genealogy business subject to Texas sales tax?
Split ruling. Sales of genealogy and family-history books are taxable on the full sales price (not just the markup), and preparing a genealogical report by pulling from the company's own maintained da…
Is a charge for running personal errands, like grocery shopping, picking up dry cleaning, or dropping off shoes for repair, subject to Texas sales tax?
No -- a charge for running errands, such as grocery shopping, picking up dry cleaning, taking shoes to a repair shop, or picking up event tickets, is not taxable. However, sales tax still applies to t…
Is a merchant's returned/bad-check fee taxable, and does the answer change when the debt is turned over to an outside collection agency?
Split ruling based on who performs the work: a merchant's own returned/bad-check fee is not taxable when the merchant handles the collection in-house. But once an outside collection agency is involved…
Were separately stated travel time and trip expenses for piano repair and maintenance taxable in Texas?
Yes. The Comptroller said transportation and other expenses connected with taxable repair or maintenance services were taxable, so tax had to be collected on the travel-time and expense charges.
Was a machine shop's separately stated EPA processing fee taxable when charged with engine repair work?
The fee followed the underlying labor. It was taxable when connected with taxable repair work, but not when connected with nontaxable automotive-engine repair or maintenance.
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…
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.
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…
Could a waste hauler buy roll-off boxes for resale, and was its total charge for placing, picking up, dumping, and returning the boxes taxable?
Yes to both. The company could buy the roll-off boxes tax-free with a resale certificate and seek a vendor refund for six previously taxed boxes. Its entire customer charge for collecting and removing…
Was a separately stated fuel charge taxable when machinery was supplied with a service, with an operator, or as a bare rental?
It depended on the arrangement. Fuel was taxable as part of a taxable service and as part of an equipment rental with an operator, but a separately stated fuel charge was not taxable when the equipmen…
What documentation could a service provider accept before stopping sales-tax collection from a manager acting for the RTC?
A completed, signed exemption certificate was enough to protect the service provider if accepted in good faith. The manager could sign as RTC's agent and assert the agency relationship; the manager, n…
Were services to collect delinquent real-property rent and medical bills subject to Texas sales tax?
Yes. Although rent and medical services were not taxable, activities performed to collect or adjust those past-due debts were taxable debt-collection services.
Was a Network WATS subscription fee excluded from Texas sales tax because it was separately named and was not a local-access or equipment charge?
No. Telecommunications services were taxable items, so the total charge was taxable unless a component had its own exemption; renaming the charge did not exempt it.
Did House Bill 1588 or the Petroleum Storage Tank Remediation Trust Fund exempt taxable items and services used to remove, repair, or replace leaking fuel tanks?
No. The trust fund paid for remediation, but House Bill 1588 did not amend the sales-and-use tax law to exempt tangible personal property or taxable services used in that work. Taxable remediation inp…
Did a service vendor avoid Texas sales tax merely because its customer was a joint venture holding a government contract?
No. The vendor had to charge tax on taxable services sold to the joint venture unless it received a valid resale certificate. The joint venture could issue one only if it directly resold the service t…
Were charges for temporary workers taxable when they performed general tasks or helped during a busy period?
No for general temporary help. A business that regularly sold a taxable service still had to collect tax, even for a short engagement.
Is the pay to a part-time worker in my department subject to Texas sales tax, and when does hiring outside help become taxable?
The part-time worker's pay is not taxable. Because she works on an hourly basis under your direction, using your supplies and equipment, she is acting as your employee for sales-tax purposes, so her s…
Is hydraulic dredging of dirt, mud, silt, and sand from channels, rivers, ponds, and boat slips a taxable service in Texas?
Yes, generally. The hydraulic dredging service described in the taxpayer's brochure is a taxable real property service under Rule 3.356, which treats solid waste removal as a taxable service. However,…
Can a provider of taxable amusement services buy the gas and electricity it uses tax-free in Texas?
No. Utilities used to provide taxable amusement services are themselves taxable — the Legislature chose not to exempt utilities used to provide amusement services, and gave no utility exemption to any…
Are services a parent corporation provides to its subsidiaries — and services one subsidiary provides to a joint venture — subject to Texas sales tax?
The parent corporation's services to its two subsidiaries are not taxable, but only if all the entities report to the IRS on a single consolidated income tax return for the tax year the transactions o…
Which charges for surveying and drafting to locate a pipeline right-of-way are subject to Texas sales tax, and which are not?
Charges to establish a pipeline right-of-way are taxable surveying of real property, because the work determines the boundaries of the right-of-way and of the land the pipeline crosses. Taxable work a…
Is the merchandise a security company buys during secret (mystery) shopping taxable, and how should it be billed alongside the taxable security service?
The merchandise itself is not taxed if it is bought and then returned to the client for a refund — that is treated as a return of merchandise, separate from the taxable surveillance and polygraph serv…
Are claims-adjusting services an insurance agency performs for an insurance carrier taxable in Texas?
Yes. Claims-adjusting services an insurance agency performs for an insurance carrier are taxable insurance services under Rule 3.355. Insurance coverage (for which premiums or sales commissions are pa…
Are storage charges taxable in Texas — for fur garments, motor vehicles, and other items?
Storing fur garments and storing motor vehicles are specifically taxable services in Texas. But a charge to store other kinds of items — when it is not connected with the sale, lease, or rental of the…
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.
When was a debt-collection service taxable in Texas, what charge was taxed, and when did an agency report the tax?
The total service charge was taxable when the debtor had a Texas address and the underlying seller was in or doing business in Texas. The agency collected tax from its client; accrual filers reported …
Was liquid petroleum gas exempt from Texas limited sales tax, and could an itemized fuel expense still be taxed as part of a taxable service?
The gas itself was exempt, but an itemized fuel expense incurred in performing a taxable service was subject to limited sales tax.
Was a $25 employee per diem recharged to customers part of the Texas sales-tax base for taxable services?
Ordinarily yes, because per diem connected with taxable services was an includable expense. The Comptroller allowed this company to exclude it because the company did not book the amount as income.
Were charges for using passive exercise equipment at a Texas salon subject to state and city sales tax?
Yes. The Comptroller treated the salon's paid use of passive exercise equipment as a taxable service, subject to state tax and city tax when located in a taxing city.
Were total charges for wig styling, cleaning, and repair subject to Texas sales tax?
Yes. The Comptroller said the total charge for wig styling, cleaning, and repair became taxable effective October 2, 1984.
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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.