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 the charge a recycling business collects to receive asphalt shingles hauled in by others subject to Texas sales tax?
No — the charge a recycling business collects from a hauler to receive asphalt shingles for processing into usable products is not subject to Texas sales tax. However, the hauler who pays that receivi…
Is teleconferencing/audio conferencing a taxable telecommunications service in Texas, and can a provider buy long-distance calls or equipment tax free?
Teleconferencing is a taxable Texas telecommunications service, but interstate (out-of-Texas) long-distance charges are exempt from Texas sales tax. A call is only taxable if it both originates from a…
When a contractor or repair/remodeling firm uses consumable supplies on a job, who owes Texas sales tax on those supplies — and does it matter if the job is for a tax-exempt organization?
It depends on the customer. If the contract is for an improvement to realty for an organization exempt under Tax Code Section 151.309 or 151.310, the contractor can buy consumable supplies tax-free (v…
Can a retailer take a credit or refund for sales tax already remitted on a financing lease that later becomes a bad debt?
Yes — a retailer may take a credit or obtain a refund of the portion of accrued sales tax already remitted to the state that later becomes a bad debt, even when the bad debt arises from a financing le…
Is labor to repair or remodel a dormitory manager's office or cafeteria taxable, and how does that compare to the residential-use rule for apartment complex utilities?
It depends on how the space is actually used. Repair/remodel labor on residential property is tax-exempt, and Rule 3.357(a)(9) treats a manager's office as residential only if it doubles as the manage…
If a building owner leases space to a 501(c)(3) organization and pays for remodeling before the exempt tenant moves in, can the contractor's labor and materials be purchased tax-free?
Yes — the Comptroller ruled that where the remodeling is for the primary use and benefit of the exempt tenant (here, because the tenant builds equity through its lease payments and holds an option to …
Does a billboard company have to collect Texas sales tax on charges for repainting existing billboards?
Yes, in most cases. Repainting billboards — whether a straight repaint, a repaint with new colors, or a repaint with a partial copy change — is presumed taxable as repair, restoration, or remodeling o…
Is a ureteral stent exempt from Texas sales tax as a prosthetic device, even though it's only implanted temporarily?
Yes — ureteral stents qualify as exempt prosthetic devices under Rule 3.284, even though they are generally implanted only on a temporary basis. The Comptroller found that neither the statute nor the …
Is labor to relocate, modify, or rebuild railroad track taxable as remodeling, or exempt as new construction, under Texas sales tax rules?
It depends on what work is done. Installing a new switch into existing track, or replacing existing jointed track with welded rail, is taxable remodeling labor. Building brand-new track, road bed, or …
How does the statute of limitations for a sales and use tax refund claim work for reporting periods that were part of a prior audit?
The standard statute of limitations for a Texas sales and use tax refund claim is four years from the date the tax was due. But if the reporting period was part of an audit that went through redetermi…
Should a vehicle rebate be subtracted before reporting the sales price on line 21(a) of Texas Form 130-U?
Yes. The Tax Administration Division said the rebate could be subtracted before entering the sales-price amount on line 21(a). Its example reported $19,000 when the initial price was $20,000 and the r…
Does a Texas city owe sales tax on its sewage/wastewater charges, and how should a city handle sales tax on amusement services and related packages like 'Party Buddies'?
No — a city's charge for sewage service is not taxable, even if it is billed as 'waste water service,' because the taxable definition of garbage collection (a real property service) does not include d…
Can a NAFTA Certificate of Origin be used as proof that goods were exported, for Texas sales tax purposes?
No. The Texas Comptroller ruled that a North American Free Trade Agreement (NAFTA) Certificate of Origin is not helpful in proving that items have been exported for Texas sales tax purposes. The law r…
Is a foreign corporate limited partner in a Texas real-estate partnership subject to franchise tax, and what are the registration, penalty, and interest rules?
A foreign corporation that is only a limited partner in a Texas real-estate limited partnership is not doing business in Texas and has no franchise-tax nexus, but a general partner in the same partner…
Is Texas sales tax due on broadcast-quality television transmission and video conferencing services provided to networks and television stations?
Yes, if the transmission originates in Texas. The Comptroller ruled that broadcast-quality television transmission and video conferencing services are 'telecommunications services' under Tex. Tax Code…
Is a hot air balloon company's charge for flight instruction, sightseeing rides, or demonstration flights subject to Texas sales tax?
It depends on the type of flight. Pleasure/sightseeing balloon rides and demonstration flights (shown to a potential balloon buyer) are taxable amusement services. But a charge to a student for actual…
Is a cable TV company's hourly service call charge (for problems that aren't the operator's responsibility) subject to Texas sales tax?
Yes — service charges billed in connection with providing cable television service are subject to Texas sales tax. This includes the hourly-rate charge a cable operator bills for a service call that t…
Is renting equipment, set dressings, and picture cars for a television or movie production exempt from Texas sales tax?
Yes — effective October 1, 1993, a producer may claim an exemption from Texas tax on qualifying machinery or equipment rented or leased for the production of a motion picture, or a video or audio reco…
Does Texas sales tax apply to materials, equipment, and electricity used to build a product prototype?
Yes, tax applies — materials used to fabricate a prototype do NOT qualify for the Texas resale exemption. The resale exemption only covers property purchased exclusively for resale and not for use, bu…
Is sales tax owed on installing, repairing, or remodeling an underground sprinkler/irrigation system in Texas?
It depends on the work and the type of property. New installation and residential repairs are treated as improving real property — tax applies to materials, not labor, and how it's collected depends o…
If I bring goods into Texas only temporarily before shipping them out of state for use elsewhere, do I owe Texas use tax?
No use tax is owed on out-of-state purchases that are brought into Texas only temporarily for the purpose of transporting them outside the state for use solely outside the state — Tax Code Section 151…
Can a Texas insurance company claim a multistate benefit exemption on sales tax paid for actuarial services, when the resulting policies are later sold in other states?
No. Under Comptroller Rule 3.355(j), a purchaser can only claim the multistate benefit exemption on services like actuarial studies if it actually has a business location in another state and issues a…
If I buy equipment tax-free for rental/lease and later sell it as an 'occasional sale' when reorganizing my company, do I owe Texas sales tax?
Yes, partially — under Tex. Tax Code § 151.055(a), a company that buys equipment tax-free under a resale certificate to rent or lease it, then later sells that equipment in an occasional sale, still o…
Are insurance services performed for a self-insured or self-funded plan taxable in Texas?
No — under Rule 3.355(b), insurance services performed pursuant to a self-insured plan or for a third-party administrator (TPA) handling funds under a self-insured plan are not taxable, including serv…
Is a city's 20% construction-cost charge for installing new electric power lines taxable, when the line will serve both residential and commercial use?
Yes, it can be taxable. The Comptroller ruled that a city's charge to a customer or developer for installing power transmission lines — even though no property changes hands and the fee just offsets t…
Does a company that fabricates and installs gas distribution pipelines qualify as a 'fabricator' for the Texas manufacturing exemption?
No. The Comptroller ruled that a company that fabricates and then installs gas distribution pipelines as an improvement to real property is a contractor, not a fabricator/manufacturer — so it does not…
Is a dragline service that clears silt from a farm or ranch tail water pit subject to Texas sales tax?
Yes — a dragline service rented with an operator to remove silt from a farm or ranch tail water pit is taxable. The Comptroller treated the tail water pit as real property and the farm or ranch as com…
Is sales tax owed on the flyers and promotional items (pens, magnets, calendars) stuffed into free door-to-door advertising bags?
Yes, partially. Sales tax is due on all supplies, materials, equipment, and services used to produce the advertising flyers stuffed into the bags. The advertisers themselves owe tax on pens, magnets, …
Does a home business owe Texas sales tax on computerized calling services, like automated appointment reminders, wellness check-in calls, or community information lines?
It depends on the specific service. The Comptroller found automated wellness check-in calls (for homebound individuals) and automated calls to children not taxable, but ruled that automated patient ap…
Is a baggage protection wrapping service offered to airline passengers at the airport subject to Texas sales tax?
No — the Comptroller ruled this baggage protection service (wrapping a passenger's luggage in a specially designed plastic bag at the airport) is a non-taxable service. However, the company still owes…
Does sales tax or hotel occupancy tax apply to a timeshare condominium association's maintenance fees, bonus-time program, and repair/maintenance purchases?
The timeshare association's annual maintenance fee itself is not taxed (the association is the purchaser of the goods/services, and owners are just reimbursing it), and the "bonus time" program isn't …
How many one-day tax-free sales can a 501(c)(3), (4), (8), (10), or (19) nonprofit and its chapters hold each year in Texas?
A nonprofit organization exempt as religious, charitable, or educational (and, as of August 30, 1993, one classified by the IRS as 501(c)(3), (4), (8), (10), or (19)) may hold one one-day tax-free sal…
Is a service that signs homeowners up for accelerated mortgage payment drafting subject to Texas sales tax?
No — the Comptroller ruled that this mortgage payment service is not a taxable service, based on the facts presented. The taxpayer was an independent agent who signed homeowners up for a Florida compa…
Is a consultant's fee for helping clients choose electrical equipment and find suppliers subject to Texas sales tax?
It depends on what the fee covers. Selling information gathered for a client about the availability of parts, pricing, and shipping is a taxable information service under Rule 3.342, even though it wa…
Is a 'For Sale By Owners' list compiled and faxed weekly to real estate companies for a fee subject to Texas sales tax?
Yes — compiling a weekly list of 'For Sale by Owners' homes and faxing it to real estate companies for a $14.99 weekly fee is a taxable information service under Texas sales tax law. Information that …
Does a company that fetches and delivers police accident reports to insurance companies owe Texas sales tax on those charges?
It depends on the charge. No sales tax is due on the amount a company passes through to an insurance company to cover what it paid the police department for an accident report (no markup). But sales t…
Are repair and replacement parts for farm trucks and trailers exempt from Texas sales tax if the vehicles have farm license plates?
It depends on whether the vehicle is licensed for highway use. Repair and replacement parts for unlicensed vehicles used exclusively on farms or ranches are exempt from Texas sales tax. Repair and rep…
Can a farm or ranch buyer use an agricultural exemption certificate to buy an ATV in Texas without paying sales tax upfront?
Yes, starting February 1, 1994 — the Comptroller told motorcycle/ATV dealers they may accept an agricultural exemption certificate for a farm-use ATV purchase instead of collecting tax and sending the…
Do a school organization's two allowed one-day tax-free sales reset each school year, or are they limited to one calendar year?
The two one-day tax-free sale exemption applies per calendar year (January 1 through December 31), not per school year. If a PTO already held a tax-free sale earlier in the same calendar year (even if…
Does a self-employed house cleaner with no employees need a Texas sales tax permit?
No — a self-employed individual with no employees who cleans only residential homes is treated as an employee of the homeowner under Texas Tax Code Sec. 151.057, so no sales tax permit is needed and n…
Does a nonprofit hospital's school of nursing owe sales tax on textbooks and uniforms sold to students who pay with financial-aid loan funds?
Yes — the textbooks and uniforms a nonprofit hospital's nursing school sells to its students are taxable, even though students pay for them using "financial aid" that is actually a loan under a Financ…
Is producing a sonogram video tape for expectant mothers subject to Texas sales tax?
Yes — the total charge for producing a sonogram video tape of expectant mothers is taxable. The business may, however, purchase the blank video cassettes tax free by issuing a resale certificate to it…
After a Texas sales tax audit becomes final, how long do I have to claim a credit for resale or exemption certificates, and does the 60-day letter cut that off?
A special six-month period to claim credits or refunds begins on the date the audit determination becomes final (Sec. 111.104(c)(3)), even for transactions where the standard four-year limitations per…
If I pick up a government record (like an accident report) for a client and bill them for the record's cost plus my own labor fee, is my labor fee taxable?
Yes, your labor/pickup fee is taxable, but the government agency's own charge for the record itself is not — as long as you separately state the two amounts on your bill. The Comptroller ruled that a …
If a customer buys an aircraft under an exemption certificate for use outside Texas, does having it refurbished in Texas before removal make the aircraft taxable?
No. The Comptroller confirmed that an aircraft purchased under an exemption certificate for use exclusively outside Texas does not become taxable just because the customer has it refurbished or proces…
Are financial-information publications about bond ratings exempt from Texas sales tax as 'magazines'?
No. The Comptroller ruled that four publications providing current financial information on bond ratings did not qualify for the magazine exemption. Under Sec. 151.320(b), a 'magazine' does not includ…
Can a security services contractor buy tax-free parts and materials to repair vehicles it uses solely to guard a tax-exempt nonprofit's property?
No. The Comptroller ruled that even though the nonprofit is tax-exempt and the vehicles are used exclusively for its security contract, the security services contractor — not the nonprofit — is the pu…
Is building additional rows of sky boxes, a media box, and extra stadium seating treated as new construction or as remodeling for Texas tax purposes?
New construction. The Comptroller ruled that all four stadium improvements described — a second row of sky boxes, a new media box, additional seating above the entry ramps, and an additional row of se…
Is a foreign corporation that is a general partner in a partnership owning a Texas apartment building subject to Texas franchise tax?
Yes. The Comptroller advised that a Wisconsin corporation that owns a general-partnership interest in a Wisconsin partnership whose main asset is a Texas apartment building has franchise-tax nexus, be…
Can a wholesaler that buys a custom mold under a written agreement claim the 50% manufacturing sales tax reduction on that mold?
No — the customer, a wholesaler of auto parts, may not claim the 50% state sales tax reduction on a special mold it bought under a separate written agreement, even though the mold has a useful life ov…
Does equipment used to load a manufactured liquid product into barges, railroad tank cars, or truck tank trailers (loading arms, piping, instrumentation, pollution control equipment) qualify for the Texas manufacturing exemption or the wrapping/packaging exemption?
No. The Comptroller ruled that loading arms and piping used to move a manufactured liquid into barges, railroad tank cars, and truck tank trailers are intraplant transportation equipment, not manufact…
How are office/vending trailers taxed in Texas after the 10/1/1993 change, and what happens when an out-of-state buyer picks one up here?
Effective October 1, 1993, trailers of this type (previously taxed as motor vehicles under Tax Code Chapter 152) are taxed under the sales tax instead. They still count as motor vehicles for title, re…
Does Texas sales tax or motor vehicle tax apply to food and beverage special events trailers?
Sales tax applies, not motor vehicle tax. The Comptroller ruled that food and beverage special events trailers manufactured and sold by the taxpayer's business are subject to the limited sales and use…
Is scanning a document with an OCR scanner and saving it to a diskette a taxable service in Texas?
Yes — OCR (optical character recognition) document scanning is a taxable data processing service. Rule 3.330(a) defines data processing services to include the maintaining, entering, or retrieving of …
Were formation-stage vehicle transfers from a parent to a subsidiary and then to a partnership subject to Texas tax?
No tax was due if the parent received only subsidiary stock and the subsidiary later received only a partnership interest, assuming the parent had paid the correct original vehicle tax. Any additional…
Did separate 30-day and 19-day contracts for the same vehicle and customer each receive Texas short-term rental treatment?
Yes. The 30-day contract and the following 19-day contract were each treated as a rental of 30 days or less and each was subject to the historical short-term rental tax. The letter's 10% rate is histo…
Is a general contractor's charge to provide and install a temporary mobile office trailer, including wiring and security system installation, taxable in Texas?
Yes — the entire change-order charge is taxable. Effective October 1, 1993, mobile offices are treated as tangible personal property (not motor vehicles), so their rental or sale is subject to sales t…
Is the preservation (administrative) fee a city's auto pound charges to release an impounded vehicle subject to Texas sales tax?
Yes. The Comptroller ruled that sales tax is due on parking and storage fees for a motor vehicle, including the preservation fee the City's Auto Pound Division charges for impounded vehicles.
When a commonly-owned partnership contributes equipment and real estate to a joint venture with a commonly-owned corporation, and profits/losses are split, does that create a taxable equipment rental, and is the profit/loss share taxable consideration for using the equipment?
No to both. The Comptroller ruled that no taxable rental of equipment occurs between the commonly owned corporation, the partnership, and the joint venture, provided sales or use tax was already paid …
Is screen writing a taxable service in Texas, and what about related services like word processing and copying?
No — writing original copy (such as screen writing) is not a taxable service. But word processing and making copies are both taxable, and tax is also due when you sell books, brochures, flyers, or oth…
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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.