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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Is demolishing part of a building's interior and removing its roof, trusses, and elevator taxable remodeling, and does it matter whether the demolition contractor is the same firm doing the reconstruction or a separate third party?
Yes, it is taxable remodeling either way. The Comptroller held that charges for interior demolition and removal of the roof, trusses, and elevator are taxable real property remodeling under Tax Code S…
After a corporation withdraws from Texas, does it still have franchise-tax nexus?
No. The Comptroller advised that after the date of its withdrawal from Texas, the corporation would no longer have nexus in Texas and therefore would not be subject to either component of the Texas fr…
Is the $10-a-year membership fee for a private anti-crime organization subject to Texas sales tax, and what about the tangible items it gives out?
No, the membership dues are not taxable. The Comptroller ruled that a private anti-crime organization's $10 annual membership fee is not subject to sales tax, but the organization must still collect a…
Is erosion control work on a creek bank near a pipeline — including bulkheading, concrete mats, and rock or dirt fill — taxed as landscaping, new construction, or repair/remodeling of real property?
It depends on what is added. Simply adding dirt or rock to an eroded creek bank is landscaping, but because it is not done for aesthetic purposes it is not taxable landscaping. However, adding dirt or…
Can a retailer pay a sales-tax export refund to a customs broker instead of directly to the purchaser who paid the tax?
Yes, on an interim basis. The Comptroller reviewed a customs broker's proposal in which a purchaser who exports goods assigns their right to a sales-tax refund to the broker, and concluded that — even…
Is the North American Development Bank (NADBank), created under NAFTA, exempt from Texas sales, excise, use, and hotel occupancy tax?
Yes. The Comptroller confirmed that NADBank qualifies for exemption from Texas limited sales, excise, and use tax and from hotel occupancy tax as an entity exempted from tax by federal law. No exempti…
When a customer breaches a taxable data-processing services contract and settles a lawsuit for damages plus past-due charges, is the entire settlement amount subject to Texas sales tax?
No. Only the portion of a lawsuit settlement that covers the price of taxable services already rendered is subject to Texas sales tax. Amounts covering attorney's fees and amounts covering damages for…
Is Texas sales tax due on liquor pool dues and other minimum-spending charges billed by a private club to its members?
It depends. Liquor pool dues and similar minimum-spending fees charged by a private club (including a Sec. 501(c)(7) nonprofit club that provides amusements) are generally taxable as fees for a specia…
If a company factors an exhibit-booth invoice and passes on a factoring fee (interest) to the client because the client can't pay the manufacturer up front, is that factoring fee subject to Texas sales tax?
Yes. The factoring fee (interest charge) is part of the taxable sales price of the custom-made exhibit booth, because Sec. 151.007 of the Texas Tax Code defines 'sales price' without any deduction for…
Is Texas sales tax due on the gross receipts from coin-operated air machines (tire inflators)?
No. The Comptroller ruled that gross receipts from coin-operated air machines (tire inflators) are not subject to Texas sales tax.
Is Texas sales tax due when a city bills a telephone company to reimburse it for repairing water lines that the telephone company's employees accidentally damaged?
No. The Comptroller concluded the reimbursement charge for repairing the damaged water lines is not taxable.
Does a trade show promoter owe Texas sales tax on booth space rentals, booth furniture rentals, electricity charges, or telephone service provided to exhibitors?
No sales tax is due on booth space or booth furniture rental, because renting a booth (real property) along with furniture like tables and chairs is treated the same as renting a furnished apartment. …
Does a title insurance company owe Texas sales tax on the premium-split payments it makes to attorneys or other title companies for title examinations, title evidence, and real estate closing services?
No. The Comptroller concluded that title examinations, title evidence, and real estate closing services purchased by a title insurance company from attorneys or other title companies — and paid for ou…
Is Texas sales tax due on foot reflexology services provided at a reflexology shop?
No, not if the shop is licensed as a physical therapist or massage therapist — the Comptroller advised that licensed physical or massage therapists are not required to collect tax on reflexology servi…
Does a medical case management / disability management consultant have to collect Texas sales tax on its services to insurance companies?
It depends on what the consultant actually does. Texas taxes "insurance services" — including insurance claims adjustment/claims processing and insurance investigation (evaluating eligibility for cove…
Is Texas sales tax due on towing charges for repossessed vehicles?
It depends on who has possession of the vehicle. If a repossession company is hired by a financial institution to repossess a vehicle the institution doesn't yet have access to or possession of, all o…
Can an individual paying with personal funds still buy items tax-exempt for a school district, and can a school district use an identification card instead of an exemption certificate for its purchasers?
An identification card can help identify authorized purchasers, but it cannot replace a written purchase order or exemption certificate — the school district must still give the vendor one of those. I…
Is a waste collection service that picks up used oil and oil filters taxable, and can the service provider buy the collection containers tax-free?
The waste collection service is taxable until the customer gives the provider certification or other documentation that the waste (such as used oil and oil filters) is excluded from the definition of …
Can a stadium skybox landlord separately state charges for parking passes, TV/phone use, electricity, and janitorial services in a suite license agreement so that only those specific items are taxed?
No. The full charge for the skybox license is taxable as an amusement admission charge with no deduction allowed, even if items like parking passes, electricity, and janitorial services are separately…
Is Texas sales or use tax due on a microbial enhanced oil recovery (MEOR) process, in which bacteria are injected into a crude oil reservoir to produce organic by-products that improve oil mobility?
No. The Comptroller ruled that the MEOR process is not a taxable service under Rule 3.324 because it does not involve repairing, remodeling, maintaining, or restoring tangible personal property, and i…
Is Texas sales tax due on mud logging services performed at oil and gas wells?
No. Mud logging services — recording information from analyzing formation cuttings and mud circulated out of the well bore, as defined in A Primer of Oil Well Service and Workover — are not taxable un…
Is Texas sales tax due on labor to demolish, repair, and rebuild a shopping center that was partially destroyed by fire?
Yes, in most cases. Charges to rebuild, repair, or remodel the existing structure — including demolition labor — are taxable, whether billed separately or lump-sum, even if the existing slab turns out…
Can a Texas retailer switch from accrual to cash-basis reporting of sales tax, and how does that affect installment/credit sales where interest is charged on the tax portion of the balance?
Yes. A retailer may switch from accrual to cash-basis sales tax reporting (remitting tax as payments are received), but the change cannot be made retroactively, and the retailer must set up a proper t…
Does a direct sales (multi-level marketing) organization have to collect and remit Texas sales and use tax on the sales its independent distributors make in Texas?
Yes. The Comptroller advised the company that, as a direct sales organization, it is responsible for collecting and remitting Texas sales and use tax on taxable sales its independent distributors make…
Can U.S. citizens claim the same Texas sales and use tax export exemption that Mexican citizens use when exporting purchased goods?
Yes. The Texas export exemption under Tax Code Section 151.307 applies to exported goods regardless of the purchaser's nationality — it is not a special exemption reserved for Mexican citizens, and U.…
Is a deionized-water treatment system installed for a semiconductor (clean-room) manufacturer taxable as an improvement to real property, or exempt as manufacturing equipment?
It depends on installation and use. If the system becomes an improvement to real property (loses its identity as equipment and can't be removed without substantial damage), labor is exempt when instal…
Could a buyer obtain a Texas vehicle-tax refund when disability modifications were made eight months after purchase without prior documentation?
No. Although the taxpayer met the historical orthopedic-disability definition, the exemption required modifications at purchase or a timely sworn statement describing planned work and the installer. N…
Is Texas sales tax due when a facsimile-service company installs, rents, and maintains fax equipment in hotel rooms so guests can send and receive faxes?
It depends on who actually operates the equipment. If the equipment is transferred to the care, custody, and control of the hotel (or, in turn, the guest) — meaning the customer has the right to move,…
Is Texas sales tax due on mileage or travel charges billed alongside taxable pay-telephone repair, installation, or maintenance services?
Yes. Mileage charges connected to the sale of a taxable item or taxable service are taxable in Texas whether they are billed separately or bundled with the other charges.
Is Texas sales tax due on seal coating and striping a parking lot's asphalt?
It depends on the circumstances. Seal coating and striping done shortly after new asphalt is laid is non-taxable new construction. On an existing lot, doing it for the first time is taxable remodeling…
Is renting film, video, or audio production equipment (cameras, lights, microphones, costumes, fog/wind machines) exempt from Texas sales tax?
Yes, but only the equipment used directly in producing a motion picture, video, or audio recording that will be sold, licensed, distributed, broadcast, or exhibited is exempt, and only if the producer…
Is a direct sales/multi-level marketing company treated as the seller of the products its independent distributors sell, responsible for collecting and remitting Texas sales and use tax?
Yes. The Comptroller confirmed that under Texas Tax Code Section 151.024, a direct sales organization is regarded as the seller (not its independent distributors) and must collect and remit sales and …
What counts as a 'bona fide chapter' of an exempt organization for purposes of Texas's two one-day tax-free sale days, and does this apply to groups within a local church as well as school clubs?
A bona fide chapter is a local branch of an organization that is structured and organized enough to carry out its own business — for example, by electing officers, holding meetings, and conducting bus…
Does the manufacturing exemption apply to light bulbs used in a machine that sorts rice kernels before they are ground into flour?
No. The Comptroller ruled that light bulbs used to illuminate a sorting machine that separates and selects broken rice kernels before grinding do not qualify for the manufacturing exemption, because s…
Is a flash-dried fruit and vegetable product sold in capsule form ('Juice Plus+') exempt from Texas sales tax as a food product?
Yes. As long as the capsules contain pure fruit or pure vegetable products, the Comptroller treats them as exempt food products, not taxable items.
Can a caterer, hotel, or event planner give a resale certificate for tables, chairs, lighting, audio-visual equipment, or a margarita machine provided to a customer as part of a catering service?
No. The Comptroller's office treats these items as used by the caterer to render its catering service, not as sold or rented to the customer, because control and possession of the property never pass …
Is Texas sales tax due on simulcast horse/dog racing services purchased by a racetrack for its patrons to view, and can the racetrack buy those services for resale?
Simulcast services sold to a racetrack are classified as cable television services and are subject to Texas sales tax under Tax Code Section 151.0101(a)(2). However, the racetrack can purchase the sim…
Is repair labor exempt from Texas sales tax for property damaged in a disaster area, and are Red Cross voucher purchases taxable?
Yes to both. Texas exempts separately stated labor charges to repair real or personal property damaged by the event that caused an area to be declared a disaster area, though the replacement parts and…
Is Texas sales tax due on information services sold to a newspaper?
No. Under Tax Code Section 151.0038, sales of information services to a newspaper are excluded from Texas sales tax regardless of how the newspaper uses the information, and the seller does not need a…
Can a racetrack buy simulcast horse/dog racing signals tax-free with a resale certificate, or does it owe sales/use tax on the simulcasting fee?
It depends on whether the receiving track charges admission. If the receiving track charges an admission fee to see the live or simulcast races, the simulcast signal is being resold as part of a taxab…
Can a direct pay permit holder resell repair parts or supplies to another company without losing its direct pay permit, if it didn't know at the time of purchase that the items would be resold?
Yes. A direct pay permit holder does not lose its permit by occasionally reselling items to another business, as long as it did not know at the time it purchased those items under the permit that they…
Can a racetrack buy simulcast horse/dog racing signal services tax-free using a resale certificate?
Yes, but only if the receiving track charges an admission fee to see the live races and/or the simulcast. Because the simulcast is being resold as part of a taxable amusement service in that case, the…
Can subsidiaries of financial institutions owned by the FDIC or RTC buy taxable items tax-free using an exemption certificate?
Yes. The Comptroller concluded that 100%-owned subsidiaries of the RTC (Resolution Trust Corporation) may purchase taxable items under an exemption certificate for use in operating the subsidiary busi…
Was an airport access fee taxable when a vehicle rental company passed it through to customers?
Yes. Whether characterized as a fee or tax charged by the airport, it was the rental company's expense. When passed to the customer, it became part of taxable rental receipts even if separately stated…
Does a direct sales (multi-level marketing) organization, rather than its independent Texas distributors, have to collect and remit Texas sales and use tax on sales made through those distributors?
Yes. The Comptroller told this direct sales organization that it, not its independent distributors, is responsible for collecting and remitting Texas sales and use tax on taxable sales its distributor…
Is Texas sales tax due on the installation of permanent accent lighting in residential and commercial landscapes, and how does the contract type affect the tax?
Labor to install permanently attached exterior lighting is not taxable because it's an improvement to real property. Tax on the lighting and wiring materials depends on the contract type: under a lump…
What did the 1994 internal Comptroller memo say about whether prewiring a building for a burglar alarm system is taxable as a security service?
This is NOT a taxpayer-specific letter ruling — it's an internal November 1994 Comptroller staff email (with an attached Legal Services memo from Chung Chu Cha and a supporting letter from the Texas B…
Is labor to install window and door screens taxable under Texas sales tax, and does it matter whether the job is new construction or repair/remodeling of residential versus nonresidential property?
It depends on the type of job. Installing window and door screens is treated as improving real property, and labor is NOT taxable when the screens are installed in new construction, unfinished structu…
Is tattooing a dog or other companion animal for identification purposes subject to Texas sales tax?
Yes. Tattooing a dog or other companion animal is a taxable graphic arts service because the animal is tangible personal property and imprinting tangible personal property is a taxable service. By con…
Does a company that rebuilds customers' ink rollers for the printing industry owe Texas sales tax on materials and equipment, or can it claim a manufacturing exemption?
The company may buy rebuilding materials tax-free with a resale certificate, but must charge its customers tax on the full charge to rebuild each roller. Equipment used solely to rebuild customers' ro…
Should a manufacturer give its supplier a resale certificate or an exemption certificate when buying component parts or ingredients that will become part of an item manufactured for sale?
Either one. The Comptroller confirmed that a supplier may accept either a resale certificate or an exemption certificate in lieu of tax when a manufacturer purchases component parts or ingredients of …
Are a limited partnership, a trust, and the holders of the trust's interests subject to Texas franchise tax?
None of them were subject. Under the pre-2008 franchise tax, a limited partnership and a trust were not subject because neither is a corporation, and the holders of the trust interests were not subjec…
Does the Texas manufacturing exemption apply to equipment, materials, and services purchased by a television broadcaster?
Partially. Because broadcasters produce programs for consideration, they qualify for the Section 151.318 manufacturing exemption on materials and equipment used directly in production (with a phase-in…
Is Texas sales tax due on motorized braces and orthotics sold or rented to patients on a doctor's prescription?
No. The motorized braces and orthotics described qualify as orthopedic appliances under Rule 3.284, and the sale, lease, or rental of a corrective lens, hearing aid, orthopedic appliance, prosthetic d…
Is a Texas sale exempt from sales tax when an out-of-state customer hires a common carrier to pick up the items at the seller's place of business, rather than the seller arranging the shipment itself?
Yes, the sale is still exempt. Under Tex. Tax Code § 151.330(a)(2), a sale is exempt from Texas sales tax if the seller delivers the goods to a common carrier for shipment to an out-of-state consignee…
Does a tire dealer owe sales tax on the sales price and does a warranty credit for a returned defective tire reduce the tax due, when tires are sold on open account and later adjusted under a manufacturer's warranty?
Selling and installing tires is treated as repairing a motor vehicle, and no tax is due on parts or labor furnished by the manufacturer under a manufacturer's warranty. When a customer returns a defec…
Is the electricity used by a florist to power coolers or cooling rooms that keep cut flowers from opening too quickly exempt from Texas sales tax as used in processing?
No. The Comptroller ruled that refrigeration used to slow the natural opening (deterioration) of flowers is storage, not processing, so the electricity used to power florist coolers and cooling rooms …
Is Texas sales tax due on the finder's fee a licensed private investigator charges for locating owners of unclaimed property held by a state agency?
Yes. The Comptroller ruled that a licensed private investigator's fee for locating claimants of unclaimed property is taxable as a security service, so sales tax must be added on top of the investigat…
Does a maid or housekeeper have to charge Texas sales tax on cleaning services performed in a private home?
It depends on who is really in control. If you hold yourself out as a maid service (like "Happy Maids") and clean a home with only minimal direction on which rooms to clean, you are performing a taxab…
Does a company that only delivers, assembles, and installs greenhouses (bought separately from the manufacturer) have to collect Texas sales tax on its charges?
It depends on whether the greenhouse becomes part of the real property once installed. If the greenhouse becomes an improvement to realty, the installer's delivery/assembly/installation charges are tr…
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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.