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 keeping production rooms at Class 100 or better air quality make the janitorial service exempt as necessary to manufacturing?
No. Cleaning rooms where production occurred was taxable because the janitorial service was performed on the physical facility, not directly on the manufactured product. Rule 3.300 supplied no exempti…
Did the 1989 nonprofit-publication exemption cover books, magazines, newsletters, and other writings produced and sold by a chamber of commerce?
No. The new exemption covered writings published and distributed by specified nonprofit religious, philanthropic, charitable, historical, or scientific organizations, but not civic organizations. The …
Could multiple gas suppliers rely on copies of one engineer-sealed predominant-use utility study, or did each exemption certificate need an original seal?
Copies were acceptable only when attached to a new original exemption certificate for the proper supplier and covering the same location and meter as the original study. A different meter needed its o…
Was partial interior demolition of an existing nonresidential building taxable remodeling, and was later refitting the shell taxable?
Yes. Converting a finished existing building into an unfinished shell through interior demolition was taxable nonresidential remodeling, and refitting the shell also was taxable. Only razing a buildin…
Did an out-of-state auction avoid Texas sales tax when the equipment stayed in Texas and buyers took possession there?
No. The seller had to collect Texas sales tax because the equipment was in Texas and buyers took possession in Dallas, subject to a valid resale certificate.
When were services of temporary contract personnel treated as work performed by the customer's own employees rather than a purchased taxable service?
The treatment applied when the work was normally performed by the customer's employees, the customer supplied all equipment and supplies, and the workers were under its direct or general supervision. …
Were a university press's biography sales exempt, and did one weekend of sales in another city require a temporary outlet or return adjustment?
No publication exemption applied because Section 151.312 expressly excluded educational organizations. The letter said Belton and Temple then had the same 7.5% combined rate, and one weekend of Temple…
Were fees to design and administer a Section 125 cafeteria benefit plan taxable as insurance or data-processing services?
No. Designing, presenting, enrolling employees in, and administering the plan were nontaxable insurance services. Preparing account-status documents with a computer was not data processing because the…
Was a subscription service taxable when it listened to radio contests and phoned a subscriber if the subscriber's number was called?
No. The Comptroller said the service did not furnish general or specialized news or other current information under Rule 3.342; it merely told the subscriber whether that subscriber had a winning numb…
Were charges to remove combustible material from electrical cable trays taxable, and could scheduled-periodic maintenance treatment apply?
Yes. Because the cable trays were improvements to realty, removing material from them was taxable janitorial service and waste collection under Rule 3.356(a)(1). Rule 3.357's scheduled-periodic-servic…
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 charges for searching national computer records and providing a person's current address taxable Texas information services?
Yes. The company furnished current information under Rule 3.342(a)(2). The service did not qualify for Rule 3.342(d)(1)'s exemption because the address information was not proprietary and could be sol…
Was scheduled bowling-lane resurfacing a taxable repair, and did per-lane billing change the result?
No. Periodic, scheduled lane resurfacing was nontaxable maintenance, and charging by the lane did not change that status. Work performed only as needed or after something broke was taxable repair, inc…
When were housekeeping services in a private home exempt as temporary employee replacement rather than taxable maid-company service?
A housekeeper from a temporary employment service was exempt when supplementing or replacing the household's own employee who was sick or on vacation. Maid-company service was taxable, as was temporar…
What information did the Comptroller require before processing this direct payment permit application?
The applicant had to clarify its construction contract and building ownership, complete officer and affiliate details, show it met the $800,000 annual taxable-purchase threshold, promise certificates …
Were two-way-radio equipment, installation, and delivery charges taxable when the system served offshore rigs in federal waters?
Onshore equipment and installation were taxable because the radios did not themselves perform mineral exploration or production. Equipment rented and installed on a rig in federal waters was exempt wh…
When were washed, drained, screened, graded, or crushed sand and related delivery charges taxable, and could customers receive refunds?
Washing, sorting, grading, screening, and letting water drain off left sand unprocessed, so the material and delivery were nontaxable. Crushing or mixing was processing, making both material and bille…
Was a city's separately stated $1.10 administration charge taxable as part of a $7.20 garbage-collection bill?
Yes. The total amount charged for garbage collection was taxable, including the $1.10 city administration cost. Separately listing the fee did not remove it from the taxable service charge.
Were postage and carrier charges taxable when a check printer mailed taxable checks directly to bank depositors?
Yes. The charges were connected to taxable checks and the depositor was the relevant customer rather than a third-party recipient, whether the bank acted as agent or reseller. A reseller bank needed a…
Could a manufacturer obtain a sales-tax refund on an inactive electricity account after changing utility suppliers?
Yes, if the electricity qualified for exemption and the manufacturing operations had not changed. The manufacturer had to give the previous utility supplier properly completed exemption certificates a…
Were machinery disassembly, moving, reassembly, loading, unloading, in-plant moves, and export packing taxable?
Moving-related disassembly and reassembly were nontaxable when done only to relocate equipment and not to repair or reconfigure it. Loading, unloading, and in-facility moves were also nontaxable absen…
Could a customer's letter substitute for a properly completed Texas direct-payment exemption certificate?
No. The letter was unacceptable. The seller had to charge the customer tax on taxable items unless the customer issued a properly completed direct-payment exemption certificate in the form accepted un…
Were customer-specific flight plans taxable when prepared for one flight and aircraft and not resold to others?
No. A flight plan that was unique information for a specific client, intended for one-time use, and not resold to others was not taxable.
Were charges to cut, shape, and install insulation in existing nonresidential property taxable?
Yes. A single contractor's entire charge was taxable; with separate contractors, cutting and shaping were taxable fabrication and installation was taxable remodeling.
Were lump-sum charges for billboard advertising space and temporary shape extensions taxable, and what if an outside company performed the alteration?
The billboard company's own advertising-space and extension charges were nontaxable; the extension was treated as additional advertising space rather than remodeling. The company paid tax on its input…
Were charges to test whether storage tanks held properly under EPA, Texas Water Commission, and Railroad Commission standards taxable?
No. Storage-tank testing against those standards was a nontaxable service. The testing company remained responsible for tax on the supplies, materials, and other taxable items used to perform it.
How was Texas sales tax calculated for buy-one-get-one-free promotions and seller-accepted coupons?
Tax applied only to the paid item in a buy-one-get-one-free transaction; the free item was not taxed to the customer. When a coupon reduced the selling price, tax applied to the discounted amount—for …
What did the Comptroller's August 1989 news release say about the new sales-tax exemption for nonprofit publications?
Beginning August 28, charitable, philanthropic, and benevolent groups could sell writings tax-free when they both published and distributed them. The release identified historical societies, Junior Le…
How did the Comptroller's internal memo distinguish nontaxable bowling-lane maintenance from taxable repair?
Scheduled recurring lane resurfacing performed before lanes became unusable—typically every 18 to 24 months—was nontaxable maintenance. Work done to fix something broken was taxable repair.
Which animal feeds and horse health products were exempt, and when did the seller need an agricultural exemption certificate?
Catfish-pond and wild-bird feed were exempt without a certificate. Feed for rabbits raised for food or regular-course sale was exempt with a certificate because pet-rabbit feed was taxable. Horse medi…
Were lump-sum per-use charges for diagnostic-imaging equipment supplied with a technician taxable in Texas?
No. The Comptroller treated the provider as selling a diagnostic scanning service, not renting equipment, because its technician remained with the MRI, CT, ultrasound, or nuclear-medicine equipment. T…
Were lump-sum party, dinner, and overnight yacht-cruise packages taxable when the boat traveled on a border lake?
Yes. The Comptroller treated all three packages as taxable amusement services because the cruises did not travel offshore beyond Texas territorial waters. State tax applied to the entire package, and …
Could a company use a rubber-stamped signature on its Texas sales and use tax returns?
The Comptroller would process a rubber-stamped return, but the stamp still represented the taxpayer's or authorized agent's declaration that the return was true and correct. Processing did not prevent…
Did this computer-equipment contract qualify as a financing lease, and how did Texas tax its payments and purchase option?
No. The Comptroller classified it as an operating lease. The full $2,542.53 monthly payment, including interest, was taxable, and tax also applied if the lessee exercised the option to buy the equipme…
Was a support contract taxable when it covered a hotline and loaner equipment but billed repairs separately?
Yes. Providing replacement equipment while the customer's property was repaired made the support contract taxable, and the separately billed repair charges were also fully taxable.
Were a copy-machine lease, maintenance fee, per-copy click charge, and the business's charge to customers taxable in Texas?
Yes. The lessor had to tax the lease, maintenance, and click charges even when separately stated, and the business had to tax its entire charge for copies, including the passed-through click amount.
Could a Texas seller accept a later-dated resale certificate for an earlier sale and obtain a refund of tax returned to the customer?
Potentially. The customer had to hold a valid sales tax permit when the sale occurred, provide a currently complete resale certificate, confirm it had not and would not claim the same tax as a return …
Was weather information sold by computer link or in hard copy taxable as a Texas information service?
No. Although it was an information service, the weather data was derived from direct scientific observation of physical phenomena and therefore fell within Rule 3.342(d)(2)'s nontaxable-information ca…
Were separately stated charges for inspecting pipe or casing taxable in Texas?
Not when the charge covered inspection only. The Comptroller said the charge became taxable if the work involved repair, remodeling, restoration, or maintenance.
When could a Texas seller treat merchandise shipped out of state as exempt from Texas sales tax?
The sale was exempt when the seller delivered the goods out of Texas through a carrier or its own trucks and kept records—such as bills of lading or trip logs—showing the out-of-state shipment.
How did Texas distinguish nontaxable transmission-repair labor from a taxable sale of a rebuilt transmission?
Labor was nontaxable when the shop repaired a transmission or removed and replaced one as part of repairing the customer's vehicle. But when the shop simply sold a rebuilt transmission without repairi…
Was restoration labor exempt when a building's listing in the National Register of Historic Places was still pending?
No. Because the building was not listed when the work was performed, the contractor had to tax the total charge. If the building was listed later, the customer could give the contractor an exemption c…
How did Texas tax computer hardware and software support sold through a subcontractor?
Texas taxed in-state hardware support and software support for software the service company had sold. Software support for software it had not sold was nontaxable. Taxable and nontaxable charges had t…
Were submeter installation, repair, reading, and tenant-billing services taxable for Texas apartments and condominiums?
Computerized submeter reading and billing for property owners was taxable data processing. Installation and repair treatment depended on whether the meters remained tangible personal property or becam…
Could a grocery business estimate the taxable portion of dishonored-check bad debts using statistical percentages?
Yes, with safeguards. The Comptroller accepted the proposed approach if it used the non-cash complement, recent taxable-sales data by outlet, removed included tax using each outlet's rate, counted all…
When did Texas exempt vessels, vessel components, or equipment used in offshore mineral exploration?
The operator was not exempt as an entity. A vessel over eight tons qualified only when bought from its builder for exclusive commercial use; attached component parts could qualify; and exploration equ…
Was electricity used by country-club pumps to extract well water and move it to fairways and greens exempt?
Yes. The Comptroller said electricity used both to extract water from the earth and to transport the water after extraction was exempt from sales tax.
How did Texas tax industrial tank washing, plant labor, maintenance, demolition, debris removal, and new-tank construction?
Hydro-washing labor to inspect and prepare a tank was nontaxable while consumed materials were taxable. Other labor depended on the work: scheduled realty maintenance and demolition to the slab were n…
How did Texas tax magazine production, subscriptions, individual sales, giveaways, and copies included in association dues?
A publisher could give its printer a resale certificate. Six-month-or-longer subscriptions mailed at second-class rates and magazines included in annual trade-association dues were nontaxable; individ…
Could a Texas seller accept a faxed resale certificate with a copied signature?
Yes. A faxed certificate was acceptable if it contained all required information, substantially followed the prescribed form, and was accepted in good faith. The signature did not have to be an origin…
Did the company's custom certificate form satisfy Texas resale and exemption certificate requirements?
No. The Comptroller said the submitted form omitted required information and directed the company to Rule 3.285(a) and (d)(2) for resale certificates and Rule 3.287(a) and (f) for exemption certificat…
Were Texas calligraphy charges taxable, and how were resale work, materials, and donations treated?
Paid calligraphy and camera-ready artwork were taxable, including work on customer-supplied items. A resale certificate shifted collection to the reseller. Donated labor had no taxable consideration, …
Was electricity for bottling conveyors and plating hoists exempt as manufacturing use?
Only a conveyor built into and powered by the same motor as bottling machinery was treated as manufacturing equipment. Separately powered conveyors and plating hoists were intraplant transportation eq…
Could disposable tray liners provided to food-service customers be bought tax-free for resale?
Yes. Disposable, nonreusable tray liners provided to customers could be purchased with a resale certificate whether they were plain white paper or printed with advertisements.
Did a Texas parachute broker collect tax on parachute sales and periodic airing, inspection, and repacking?
The broker did not collect use tax on out-of-state manufacturers' parachute sales, although Texas purchasers still owed the tax. The broker did collect sales tax on its full parachute-packing charge b…
Were labor, materials, and replacement parts used to repair railroad rolling stock taxable in Texas?
No. Because locomotives and rolling stock were themselves exempt, labor and materials for their repair or maintenance were exempt. The repairer could accept an exemption certificate and buy incorporat…
Could restaurants and caterers buy disposable cheesecloth lemon wraps without Texas sales tax?
Yes, with a valid resale or exemption certificate. Without one, the manufacturer properly collected tax. Buyers that had paid tax in error could later provide a certificate and seek a refund, subject …
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.
What happened when a seller mixed taxable crushed gravel with nontaxable unprocessed gravel?
The entire mixture was taxable. The seller could preserve the nontaxable treatment of unprocessed gravel only by keeping it separate and charging tax solely on sales of processed material.
Was processing insurer-supplied data against a database and returning driver-location reports taxable?
Yes. Processing customer-provided information was taxable data processing, while gathering or compiling information for customers was a taxable information service. The described business appeared to …
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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.