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 Texas sales tax apply to municipal franchise fees passed through on cable TV and garbage collection bills, and to tickets for an amusement event?
**Yes — all three items described in the letter are subject to Texas sales tax.** The Comptroller's letter explains that under Texas Tax Code Sec. 151.007(a)(2), 'sales price' includes the total amoun…
Can a Medicare-related printing/forms contractor buy printed forms, booklets, and publications tax-free with a resale certificate because they're ultimately used for the federal Medicare program?
**Only if the contract with the federal government specifically provides that title to the items passes to the federal government upon receipt, and the items are not used before title passes.** The Co…
Is labor to repair residential property damaged by a fire, flood, or other casualty taxable in Texas?
**No — labor to repair residential improvements to realty is not taxed in Texas, regardless of the cause of the damage.** The Comptroller's letter clarifies that a 1993 legislative update on the disas…
Can a direct payment permit holder accrue local or MTA use tax based on where an item is first used, instead of where it was first stored?
**No.** Under Rule 3.377(c)(5), a direct payment holder cannot accrue local (city, county, MTA/CTD) tax based on the location of first use — the tax is due based on the location where items are first …
Is a charge for licensing a copyrighted photograph or image for publication subject to Texas sales tax?
**No — a charge for licensing photographic images for publication is not subject to Texas sales tax.** However, charges for developing film are subject to sales tax, unless the photographer gives the …
Is seismic surveying for oil and gas exploration (placing explosive charges and geophone receivers) a taxable surveying service in Texas?
**No — the Comptroller ruled this seismic surveying service is not taxable surveying.** The letter explains that laying out source points (explosive charge locations) and receiver points (geophone loc…
Is a breathing monitor that can be used independently of a ventilator exempt from Texas sales tax as a prosthetic device?
No — **the breathing monitors (Monitor LS-75 and VM-90) are taxable when sold to hospitals, clinics, doctors, etc.** The Comptroller ruled that the monitors do not meet the definition of a prosthetic …
Does a general-purpose farm building, like a hog barn, qualify for the Texas agricultural sales tax exemption?
**No — a general-purpose farm or ranch building does not qualify for the agricultural exemption unless it is specifically designed to function as a piece of farm machinery or equipment.** The letter e…
Are materials and labor exempt when contracting to improve real property for a tax-exempt organization, and is disaster-repair labor still exempt after October 1, 1993?
**Materials used in a contract to improve realty for an organization exempt under Tax Code Sections 151.309 or 151.310 are exempt, but only tangible personal property that is necessary and essential t…
Are tracheal ('endo-trach') tubes purchased by hospitals exempt from Texas sales tax as prosthetic devices?
**Yes — tracheal tubes qualify as an exempt prosthetic device, so a hospital, other health care provider, or individual may purchase them tax free under Rule 3.284(c)(1), and no prescription is requir…
Are diagnostic reagents that veterinarians use on blood samples to test dogs and cats for disease exempt from Texas sales tax as drugs and medicines?
**No — the diagnostic reagents are not exempt as drugs and medicines.** The Comptroller explains that to qualify for the drug/medicine exemption, a substance must possess curative or remedial properti…
Are mobile offices/office trailers taxable as tangible personal property in Texas, and can I buy them tax-free for rental to customers?
**Yes — effective October 1, 1993, mobile offices became subject to limited sales and use tax as items of tangible personal property under Chapter 151.** A business that buys mobile offices in order t…
Did the 1993 change to the sales tax law on disaster-area real property repairs affect labor to repair residential property, and when does tax apply to non-residential repair labor for damage that occurred before the law changed?
**No — residential property repair labor remains untaxed; the 1993 law change only affects non-residential property repairs.** The Comptroller confirms the change in the sales tax law regarding real p…
Are environmental site-assessment and safety-consulting services performed by a professionally certified consultant subject to Texas sales tax?
No — the Comptroller ruled these services are **not subject to sales tax**. The consultant's site assessments, spill prevention control and counter-measure (SPCC) plans, Texas Workers' Compensation Ex…
If a cellular phone company gives away a free phone as part of a promotion tied to a customer's donation to a charity, does the company owe use tax on the phone?
**Yes.** The Comptroller ruled that if a cellular phone seller gives a person a cellular phone because that person made a donation to a charity, the seller must pay tax on the acquisition cost of the …
Is a CPA's 'write-up' work of entering, maintaining, and retrieving payroll-check data taxable as data processing in Texas?
**Yes — entering, maintaining, and retrieving information from payroll checks is taxable data processing service in Texas**, even though the client (not the CPA) actually computes and writes the payro…
Does Texas sales tax apply to fees a government agency charges for copies of public records?
**No sales tax is due on the fee for the first copy of a public record that a governmental body is required to furnish under the Open Records Act — but sales tax is due on any additional copies of the…
Does a dental clinic owe sales tax on the electricity it uses for X-rays, making crowns/bridges/appliances, dental lights, and air conditioning for patients?
**Yes — the dental clinic must pay sales tax on its electricity and natural gas.** The Comptroller ruled that a dentist using electricity to take and develop X-rays, manufacture crowns, bridges, and d…
If a cellular phone company gives away a free phone to a customer who donates to charity, does the company owe sales or use tax on that phone?
It depends on who is giving the phone away. **If a cellular phone service provider gives a subscriber a free phone as part of the cellular service because the subscriber donated to a charity, the comp…
Does a company that processes Medicare claims under a federal government contract owe sales tax on the claim forms, checks, and supplies it uses to do that work?
Yes — **the claim forms, checks, and other supplies the company uses to process Medicare claims are taxable to the company**, because those items are not sold or transferred to the federal government.…
Is the exchange of 'trade dollars' between a taxpayer and its vendors subject to Texas sales tax?
**Yes — both sides of the exchange are taxable sales.** The Comptroller ruled that issuing and redeeming 'trade dollars' (five-dollar face-value credits given to vendors in exchange for goods/services…
Is a heart/lung machine used during surgery exempt from Texas sales tax as a prosthetic device?
**Yes — the heart/lung machine qualifies as an exempt prosthetic device under Texas Tax Code Section 151.313(a)(4)** because it performs the function of a vital organ (both heart and lung), whether us…
When separate vendors each do part of an oil and gas well workover, is each vendor's job taxed on its own, or based on the overall well-servicing job?
**Taxability is determined within the context of the overall service, not vendor-by-vendor.** The Comptroller confirmed it will not follow Comptroller's Hearing No. 28,608 (which had looked at each ve…
If a manufacturer is located outside a taxing city's limits but inside a taxing county, does it owe city use tax based on the vendor's location?
It depends on what the certificate covered and how the item was actually used. **The letter gives two possible answers, not one rule:** if the manufacturer's resale or exemption certificate validly co…
Is a video production company a 'manufacturer' for Texas sales tax purposes, and can it rent or lease production equipment tax-free?
**Yes — effective October 1, 1993, producing a motion picture, video, or audio recording (a copy of which is sold, offered for sale, licensed, distributed, broadcast, or otherwise exhibited) counts as…
Are materials used to build new railroad track — rails, ballast, bridges, cross ties, culverts — exempt from Texas sales tax, and how do contractors and material suppliers document that exemption?
**Yes — materials to build railroad road bed, railroad track, and cross ties are exempt from Texas sales tax under Tax Code Section 151.331**, and this exemption applies regardless of whether the cont…
When a corporation transfers its assets to a new company in exchange for less than 100% of that new company's stock, is the transfer taxable in Texas?
**Yes — when multiple companies each contribute assets to a newly formed corporation and no single contributing company receives 100% of the new corporation's stock, the transfers of tangible personal…
Is a fee for acting as an umpire between two arbitrators subject to Texas sales tax?
It depends on the context: **the Comptroller's October 8, 1993 letter says a general charge to act as an umpire between two arbitrators, plus an associated mileage charge, is not subject to tax** — bu…
Did a seller-financing dealer owe tax on unpaid installments when title filing was delayed only by the buyer's missing insurance proof?
No. If missing buyer liability-insurance proof was the only reason the county would not accept the title application, the permitted dealer could keep remitting tax as payments were received rather tha…
If a taxpayer already received a refund for one issue in an audited tax period, can they later claim a refund for a different issue in that same period?
**Yes.** The Comptroller's internal policy memo states that a final refund determination on one issue (one set of transactions) does not bar — under res judicata or otherwise — a later refund claim fo…
Are barricade services and plastic pavement marker tabs used by highway contractors subject to Texas sales tax?
**Yes for barricade service (taxed as equipment rental), but plastic marker tabs can be bought tax-free as consumable supplies.** The letter states that charges for barricade service are treated as a …
Is a microbe air scrubber system (and the microbes used in it) exempt from Texas sales tax, and is monitoring/maintenance of the system taxable?
**The microbe air scrubber system qualifies for the manufacturers' phased-in exemption under Tax Code Section 151.318, and microbes sold together with the system as part of that sale are also covered …
Can a janitorial services company buy its cleaning equipment and supplies tax-free under a resale certificate?
**Generally no for equipment and supplies used up on the job, but yes for items left behind with the customer.** The Comptroller ruled that separately pricing janitorial equipment on a price-per-squar…
Is electronic mail (e-mail) service taxable under Texas sales tax?
**Yes — electronic mail is a taxable telecommunications service in Texas.** The Comptroller's letter states that electronic mail has been subject to sales tax as a telecommunications service since 198…
Does a company owe Texas sales tax on fees charged to songwriters for demo placement and to music publishers for catalog/system access?
**Yes.** The Comptroller ruled that sales of the company's song catalog and system access are subject to Texas sales tax when sold to Texas residents — the company must collect 7.25 percent state sale…
Is an independent contractor who fills in as a temporary secretary/word processor for law firms exempt from sales tax as a 'temporary help service'?
It depends on the facts, not the label. The Comptroller explains that, absent a written contract defining the relationship, Texas has historically applied common-law employer/employee tests — now codi…
Is unprocessed dirt, sand, or gravel taxable, and is digging/backfilling flow line ditches a taxable service in Texas?
**Digging and backfilling flow line ditches is not a taxable service, and the sale or delivery of unprocessed dirt, sand, gravel, or similar materials (merely sorted, sized, screened, washed, and/or d…
Is tangible personal property incorporated into an underground drainage system on a farm exempt from Texas sales tax the same way underground irrigation system components are?
**No.** The Comptroller's letter states that Senate Bill 82 exempts components installed as part of an underground irrigation system on a farm or ranch used to produce agricultural products sold in th…
Does a mailing service or a broker who collects payment for a 900-number telecommunications service have to collect Texas sales tax on those transactions?
**No — in both situations described, the letter holds the taxpayer is not responsible for collecting tax on the underlying sale.** For the mail-order referral business, a mailing service (stuffing/add…
Are vitamin and mineral supplements for horses exempt from Texas sales tax?
**Yes — vitamin and mineral supplements for horses are exempt from Texas sales tax**, according to this Comptroller letter, unless the item is not clearly for horses only, in which case the seller sho…
How did Texas calculate use tax on a vehicle leased outside the state and later brought into Texas?
Texas used the vehicle's original purchase price without a deduction for depreciation or prior out-of-state use. The applicable rate was the rate in effect when the vehicle entered Texas, and similar …
Is the license and service fee a company pays to access training materials (books, videotapes, videodiscs, software) subject to Texas sales tax?
**Yes — the license and service fee for accessing the training materials is taxable, but a separately stated charge for the training itself is not.** When the company (ABC CO.) uses the training mater…
Is electricity used to manufacture signs exempt from Texas sales tax when the company also installs most of the signs it makes?
**It depends on whether the finished sign is sold as tangible personal property or as an improvement to realty.** Electricity used directly in manufacturing a sign qualifies for the sales tax exemptio…
Did modifying a travel trailer qualify it for Texas's historical disability-related motor vehicle tax exemption?
No. The historical exemption covered vehicles modified for operation by or transportation of a person with an orthopedic disability. Because a travel trailer was not designed to transport people, modi…
Is the charge for tattooing a person, including applying a temporary tattoo, subject to Texas sales tax?
**No — the charge for tattooing people, including applying a temporary tattoo, is not taxable**, because it is a service rather than a sale of tangible personal property. The person who applies the ta…
Is a cartoonist or caricature artist's charge for drawings at a catered party taxable under Texas sales tax law?
**Yes — a charge for a cartoonist (caricature artist) is taxable as the sale of graphic art, not as a nontaxable entertainment charge**, and the cartoonist must collect and remit sales tax on charges …
Is equipment rented or leased for making a motion picture, video, or audio recording exempt from Texas sales tax?
**Yes, effective October 1, 1993, a producer may claim an exemption from tax on qualifying machinery or equipment rented or leased for the production of a motion picture or a video or audio recording,…
When must architects, engineers, or contractors in Texas charge sales tax on copies of blueprints or plans, and when do they instead owe tax as the purchaser?
**It depends on whether the copies are provided to the original client under the professional service agreement, or sold separately to someone else.** When an architect or engineer gives copies of ori…
How did Texas require a seller-financing dealer to report a vehicle sale when the dealer paid all tax at title transfer?
The dealer could pay all tax to the county with timely title and registration documents, but still needed a financing-seller permit. Receipts from that sale went into gross receipts, not taxable recei…
Are hospital gowns sold to a hospital or medical center subject to Texas sales tax?
**Yes — hospital gowns are taxable when sold to a hospital or medical center.** Unless the hospital, nursing home, or other institution itself qualifies for an exemption under Tax Code Section 151.310…
Is a business's fee for picking up and collecting used oil, used oil filters, used antifreeze, and used brake fluid for recycling subject to Texas sales tax?
**No — the Comptroller determined that collection services for used oil, used oil filters, used antifreeze, and used brake fluid to be recycled or re-refined are not subject to Texas sales tax.** The …
Can a city exempt residential gas and electricity from local sales tax differently — for example, repealing the tax on one energy source but not the other, or only part of the local tax?
**No.** The Comptroller's letter states the answer to both questions is "no": a municipality cannot repeal only a portion of the local tax as it applies to residential gas and electricity, and it cann…
Can 'Direct' distributors in a direct-sales organization get their own sales tax permits, and how do they handle tax on non-company items like tapes, books, and business tools?
**Yes — the Comptroller's office decided that any 'Direct' distributor may obtain a sales tax permit and report tax on their own sales**, reversing prior denials, effective for procedures implemented …
Does a computer software marketing aid built by an out-of-state vendor for a Texas manufacturer qualify for the 'developed from scratch' exemption, and is it taxable even though the master copy stays out of state?
**No exemption applies here, and the software is taxable.** The Comptroller held the Rule 3.308(b)(4) exemption for software "created from scratch" only applies when the software is built for the cust…
Can a company get a sales tax refund on insurance/actuarial services by prorating the tax based on the ratio of its Texas to out-of-state insurance premiums?
No — the Comptroller denied the refund request. **Prorating insurance service tax based on the ratio of Texas to out-of-state premiums is not a valid method** under Rule 3.355. The letter found the ta…
If a construction contract says the contractor will 'pay all sales taxes,' does that satisfy Texas's tax-included-price rule, and who is liable for the tax?
**No — that contract clause is not enough on its own.** The Comptroller explains that under Rule 3.286(d)(3), a bill, contract, or invoice must either separately state the sales tax amount or contain …
Is a land survey to locate a farm/ranch fence line taxable, even though the fence materials themselves are exempt?
Yes, the survey is taxable. **A land survey to determine or confirm property boundaries is a taxable real property service under Rule 3.356 (Real Property Services), even when the survey is done to lo…
Does a property manager have to collect sales tax on services like security, janitorial, pool, and lawn care that are purchased from independent contractors?
**Yes.** The letter states that taxable services purchased by a property manager from independent contractors are taxable — for example, a pool service, a lawn service, or a janitorial service hired b…
Is a hotel's separate convention center subject to sales tax on room rental, and what happens when meals are served in it?
**Renting the convention center space by itself is not taxable — a rental of real property is not subject to sales tax.** But when meals are served, the analysis splits: charges for meeting rooms wher…
Is a retinal angiographer's x-ray service for ophthalmologists taxable under Texas sales and use tax?
**No — the Comptroller ruled the retinal angiographer is providing a non-taxable health or medical diagnostic service.** Because the service itself is non-taxable, none of the fee (whether for taking …
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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.