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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Did a homeowners association owe Texas sales tax on swimming-pool maintenance, and could it avoid tax with a federal ID number?
Pool maintenance was taxable, and a federal ID number alone gave no exemption. The association needed Texas approval before giving the pool company an exemption certificate.
Was on-site biological remediation taxable garbage collection when microbes treated contaminated soil or water and the waste stayed at the site?
No. Treating the material with microbes and leaving it on site was not garbage collection or disposal, though the provider owed tax on equipment and supplies used.
Was a Cunningham clamp used to control incontinence exempt from Texas sales tax?
An implanted clamp was exempt. An externally used clamp qualified only when sold to an individual under a licensed healing practitioner's prescription.
Was a corporation's software-license transfer to a joint venture tax-free when the venture acquired it solely to relicense it to customers?
Yes. The transfer was a sale for resale, so the venture could issue a resale certificate, but it needed a sales-tax permit and owed tax on software bought for its own use.
Was an automobile-detailing service taxable when the business sold no products?
No. Texas said auto detailing was not taxable, but the detailing business had to pay sales tax when buying the supplies, materials, and equipment used to perform the service.
Was a one-time fee for setting up a new digital-pager rental account subject to Texas sales tax?
Yes. The activation fee was part of the consideration paid for renting the pager and was taxable.
Was a basket of cookies taxable when the package contained both exempt food and a taxable basket?
It depended on value. No tax was due if the basket was not the package's primary component, but the whole package was taxable if the basket was worth more than the cookies.
Were city-licensed horse-drawn carriage rides operated on public streets subject to Texas sales tax?
No. The carriages were treated as nontaxable transportation services rather than taxable amusement services when operated on public streets and licensed by the city.
Were indoor plant leasing, maintenance, sales, and short-term rentals taxable, and which inputs could the provider buy for resale?
They were taxable under the letter. The provider could buy plants and qualifying transferred inputs for resale, but STAR now directs readers to amended Rule 3.285 for current guidance.
Were stand-alone polygraph examinations used to investigate internal embezzlement subject to Texas sales tax?
No when billed by themselves under the stated facts. They became taxable when rebilled as part of an investigation requiring a licensed investigator.
Were medical-item purchases exempt from Texas sales tax merely because Medicare or Medicaid funded or reimbursed them?
No. The tax fell on the patient or health-care provider consuming the items, not directly on the United States, though independently exempt drugs, medicines, and devices remained exempt.
Was mowing vacant lots and acreage for weed and rodent control subject to Texas sales tax?
Yes. The work was taxable lawn maintenance, except when sold to a qualifying exempt organization or government customer with proper exemption documentation.
Did equipment used to rebuild engines or straighten collision-damaged vehicles qualify for Texas manufacturing refund and phase-in benefits?
Usually no for repair work. Engine equipment qualified only when used predominantly to manufacture rebuilt engines for inventory or exchange, while collision-repair equipment did not qualify.
Could a cable-franchise asset sale qualify as an occasional sale when the seller kept land, its office, cash, its name and logo, and some billing computers?
Yes. The listed real property, financial and identity assets were not operating assets, and withholding general-purpose billing computers did not by itself defeat the occasional-sale exemption.
Were multiday Rio Grande rafting trips exempt because they crossed into Mexico and sometimes camped outside Texas?
No. The rafting trips were taxable amusement services unless a trip lasted more than 24 hours with the group remaining entirely outside Texas territory.
Was labor for an annual acid wash of a large vessel treated as nontaxable real-property maintenance?
Yes, if the wash kept the real property in good working order and was performed on a documented scheduled, periodic basis. The provider still owed tax on items used.
Were sales of Vietnamese pot-bellied pigs exempt as animals whose products ordinarily constitute food for human consumption?
No. Texas sales tax applied whether the pigs were sold as pets or for breeding because they were not considered pork-producing animals ordinarily used for human food.
Was destroying an electronic chip layer by layer to diagram its pathways and prepare a client report subject to Texas sales tax?
No. The chip-analysis and reporting work was a nontaxable service, but the provider owed Texas sales or use tax on every item used to perform it.
Which utility bills had to support a predominant-use exemption or refund, and what happened when an invalid exemption was claimed?
Year-round businesses needed the latest 12 months; seasonal businesses needed bills for the operating period. Invalid claims triggered tax, penalty, and interest, generally within four years.
Did random or pre-employment drug testing require a private-investigator license, and how did STAR classify the tax result?
The memo says drug testing alone required no license, while an investigation did. STAR's official subject classifies testing alone as nontaxable and testing combined with licensed services as taxable.
Were automated employee-anniversary tracking and computer-generated award-recipient letters subject to Texas sales tax?
Yes. The tracking was taxable data processing, and sales tax applied to the total charge for producing the computer-generated letters.
Could a long-distance service seller shift its sales-tax filing, remittance, and recordkeeping liability to a billing-and-collection agent?
No. Texas allowed an agent to handle billing and collection, but each long-distance company remained responsible for its own tax collection, reporting, remittance, and sales records.
Were an electric cooperative's security-light charges taxable when the cooperative owned and controlled the light?
No if the cooperative retained ownership and control and the customer did not operate or maintain the light. Customer control made the total charge taxable.
Which utilities used to stone-wash, press, bag, package, and move garments counted as exempt processing use?
Utilities directly used to wash, press, and bag garments were exempt uses; shipping-package equipment, conveyors, general areas, and tenant utilities were taxable uses.
Was a separately stated optional road-hazard warranty sold with a tire subject to Texas sales tax?
No. Once installed, the tire was part of a motor vehicle, so the separately stated repair warranty was nontaxable; the warrantor owed tax on repair inputs.
Which veterinary drugs, devices, and animal feeds could be purchased tax-free under the Texas letter?
Prescribed animal drugs, hypodermic needles and syringes, prescribed dog and cat diet feed, and normal farm, ranch, or wildlife feed were exempt; other items were taxable unless bought for resale.
Was telephone software support taxable when the support was delivered to an out-of-state location for use outside Texas?
No. Software telephone support was taxable maintenance generally, but support delivered to an out-of-state location for use outside Texas was exempt under Texas Tax Code § 151.330(e).
Were charges for computer equipment repaired in Texas taxable when the repairer shipped the equipment back out of state?
No when the repairer shipped the equipment out of Texas and kept records proving shipment. If it shipped to a Texas location, the total charge was taxable.
Could a direct-payment permit holder choose which purchases and suppliers its certificate covered, and how were uncovered taxes handled?
Yes. The holder could use blanket, item-specific, or supplier-specific certificates, but had to pay or accrue all state and applicable local tax on other purchases.
Were purchases of oil-and-gas working interests with production equipment and an entire gas-processing plant subject to Texas sales tax?
No. The working interests and in-use basic production equipment were real property, and the entire gas-processing plant sale qualified as an occasional sale.
Could a seller refund tax collected on geologic studies after Texas expanded its exemption for scientifically observed geologic information?
Yes, subject to the letter's historical categories and four-year limit. Texas said post-October 1987 tax on qualifying geologic information services could be refunded.
Did transferring an entire software-licensing business and its inventory to a new subsidiary qualify for Texas sales-tax exemptions?
Yes. The licensing business was an identifiable segment transferred in one transaction, so its operating assets qualified; inventory was separately exempt as a sale for resale.
How did Texas tax jewelry trade-ins, including a customer trading a higher-value ring for a lower-value watch and receiving cash back?
Tax generally applied to the balance after a qualifying like-kind trade-in. When a $9,000 ring was traded for a $7,000 watch with $2,000 returned, no tax resulted.
Were marketing leads sold to insurance agents, home remodelers, and similar customers taxable information services?
Yes. Texas treated the marketing leads as taxable information services because the same information could be sold to multiple customers and therefore was not proprietary to one client.
Were a corporation's lease payments taxable when it leased parking lots to provide free parking for employees or customers?
Yes. Texas said lease payments for parking lots used to provide free employee or customer parking were taxable under Rule 3.315 on motor-vehicle parking and storage.
Could a business donate uniforms, equipment, prepared food, and disposable serving items to tax-exempt organizations without owing sales tax?
Generally yes, with proper exemption treatment and records. Uniforms and equipment bought under a valid exemption certificate could be donated to qualifying exempt organizations, while donated taxable…
What happened when a customer refused to pay sales tax, or the seller initially omitted tax from the invoice?
The seller still had to collect and remit the tax. Tax became part of the sales price and could be recovered like the original price; an omitted tax charge could be back-billed.
How did Texas classify nitrogen and coil-tubing well services between limited sales tax, the 2.42% well-servicing tax, and neither tax?
The job's purpose controlled. A service could fall under limited sales tax, the 2.42% well-servicing tax, or neither—but not both taxes on the same job—and documentation was essential.
Did a seller still owe Texas sales tax when customers paid for taxable asset-location services but refused to reimburse the tax?
Yes. Customer refusal did not relieve the seller of remitting tax. Asset-location investigations required a license and were taxable services under the letter.
Was a scientific golf-swing measurement service taxable, and how were optional slow-motion videotapes treated?
The measurement service was nontaxable. Optional videotape sales were taxable, while the provider paid tax on inputs and could credit supplier tax on tapes later sold.
Was a per-gallon charge for pumping, treating, and permit-discharging residual liquid from removed underground fuel tanks taxable?
No. Texas said the per-gallon charge was not taxable because the permitted industrial discharge was excluded from the rule's definition of garbage or other solid waste.
Was surgical autotransfusion taxable, and could the provider buy disposable supplies tax-free when serving an exempt hospital?
Autotransfusion was a nontaxable medical service, but the provider had to pay tax on disposable and other taxable supplies—even when its customer was an exempt hospital.
Which separately stated health-spa charges were taxable: massages, facials, pedicures, manicures, or hydrotherapy baths?
Only the hydrotherapy-bath charge was taxable. Texas said separately stated charges for massages, facials, pedicures, and manicures were not subject to sales tax.
How did Texas sales tax apply to a nonprofit benefit auction's unique experiences, artwork, and any separately imposed federal luxury tax?
A dinner-with-the-governor experience was not taxable, artwork was taxable like other tangible property, and any federal luxury tax could be excluded when calculating Texas tax.
Which handling of sand, dirt, and gravel counted as processing, and when was delivery nontaxable?
Mixing or crushing was processing; sizing, screening, sorting, washing, or drying was not. Delivery of unprocessed material was nontaxable, while processed material was taxable.
Could a security company exclude a separately stated, dollar-for-dollar employee health-insurance reimbursement from its taxable service charge?
No. The reimbursement was taxable overhead within the security-service price, whether separately stated or marked up; it was not a distinct unrelated service.
Did the offshore-drilling exemption apply when the platform and wellhead were outside Texas waters but the wellbore entered Texas territory?
No. The exemption required exploration or production exclusively outside Texas; equipment used for a well operating inside and outside Texas territory was taxable.
When was a delivered and installed portable building taxable as personal property rather than treated as an improvement to realty?
The total sale, delivery, and installation charge was taxable unless the building was permanently foundation-affixed with plumbing and electricity appropriate to its use.
How could a purchaser prove goods were exported to Mexico and obtain a refund of Texas sales tax paid to the seller?
The purchaser needed proof of export, such as a Mexican customs pedimento, and had to seek the refund from the seller. A passport and driver's license did not prove export.
Could a pay-telephone provider give its local-exchange supplier a resale certificate instead of paying tax on the purchased access service?
Yes. Texas said the provider could issue a resale certificate to the supplier for basic local-exchange service purchased to facilitate public pay-telephone service.
Could a private Texas engineering contractor buy equipment and materials tax-free merely because it used them on federal-government contracts?
No. The contractor was the taxable consumer of items used to provide nontaxable engineering services; only items sold directly to the federal government qualified for resale treatment.
Was labor to install a rubber lining in a Texas storage tank taxable as remodeling or exempt as new construction?
It depended on the tank. Labor was nontaxable new construction if installed before the unfinished tank's first use, but taxable remodeling if the tank was finished or used.
When did Texas treat software work as nontaxable programming created from scratch rather than a taxable completed program?
Creating a specific new program for one customer was nontaxable contract programming, but a later sale of that completed program to another customer was taxable.
How did Texas tax window- and door-screen installation on new, residential, and existing nonresidential property?
New and residential installations used contractor rules, while repair or remodeling of existing nonresidential property was taxable on the total charge.
Could a fertilizer company buy replacement tires for free-loan fertilizer applicators under Texas's agricultural exemption?
Yes, only if the applicators were used exclusively on a farm or ranch for the qualifying agricultural production described in the letter.
Could a purchaser obtain a tax refund by getting a seller to separate qualifying repair-part charges after an original lump-sum invoice?
Sometimes. A corrected seller invoice or letter could support a refund when separation did not shift who owed tax; purchaser notes from a phone call were insufficient.
Were Texas-origin audio and video line-feed services sold to commercial broadcast stations taxable telecommunications services?
Yes. Texas treated the line-feed service as taxable, while allowing specified resale-certificate treatment for cable-TV sales and transferred property.
Could farmers claim Texas's agricultural exemption for installed underground irrigation pipe, tanks, or water-well casing?
No. Texas treated underground components as taxable permanent real-property improvements, while qualifying portable and above-ground equipment could be exempt.
Was a truck-driver monitoring program taxable when the provider installed its own device and supplied ongoing calls, reports, and performance materials?
No. Texas treated the arrangement as a nontaxable monitoring service rather than a device rental, but the provider owed tax on the device components and other materials.
Were horoscope readings, 12-month biorhythm charts, lucky numbers, and personal astrology or psychic consultations taxable in Texas?
Yes. Texas classified all of those offerings as taxable amusement services under Rule 3.298(a)(1)(F) and sent the provider a sales-tax permit application.
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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.