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 a reading lamp prescribed by an optometrist for vision rehabilitation exempt from Texas sales tax as medical equipment?
**No — the reading lamp does not qualify for the medical equipment exemption.** The Comptroller's response states that the reading lamp described (prescribed by an optometrist, used along with prescri…
If a for-profit company produces a charity booklet and donates all proceeds to an exempt organization, is the sale of the booklet exempt from Texas sales tax?
**No — donating all the proceeds to a nonprofit does not make the sale exempt.** The Comptroller explains that the Section 151.312 exemption for periodicals/writings turns on who publishes or distribu…
Is sales tax due on charges for calls to 900 telephone numbers, and who is responsible for collecting it if the 900 number is sub-leased to another company?
**Sales tax is due on 900-number calls that originate from points within Texas**, and the telecommunications firm that transmits the calls collects the charge — including the tax — from the customer o…
Is finish-out labor on a vacant, never-finished building taxable as remodeling, or exempt as new construction?
**Tenant finish-out labor is taxable as nonresidential remodeling** even on a building that was never finished out before, as long as the building was previously occupied or used in its unfinished (sh…
Is a child identification/registration service (videotape and photo registration in case a child goes missing) taxable under Texas sales/use tax?
**No — the Videotape Registration Service and Photo Registration Service themselves are not taxable**, according to this 1993 Comptroller letter ruling. The company charges $20 for a kit to produce a …
When a developer has a contractor improve realty that will later be sold to a water district, can the contractor buy materials tax-free under Tax Code Section 151.311?
**It depends on who has the contract with the governmental entity.** Effective October 1, 1993, if the water control and improvement district (WCID) itself contracts with the developer for the improve…
If a contractor donates building materials to a tax-exempt airport authority before incorporating them into the building, are the materials and consumable supplies used in the job exempt from Texas sales tax?
**Building materials that a subcontractor purchases under an exemption certificate and donates to the airport before those materials are incorporated into the building are exempt — no tax is owed on t…
Are charges for computer installation, training, troubleshooting, consulting, and network administration taxable in Texas?
It depends on what is being installed and whether you sold it. **Separately stated instruction/training charges are not taxable. Installation of software or external hardware you sold is taxable; if y…
Is the NEEDLYZER needle destroyer device subject to Texas sales tax?
Yes, unless the buyer is exempt. **The NEEDLYZER is taxable unless it is sold to a governmental entity or another organization that qualifies for exemption.** The letter describes the device, per the …
Can a retailer that leases (rather than rents) motor vehicles buy repair and replacement parts for those vehicles under a resale certificate?
Yes. **The Comptroller concluded that Rule 3.294 should be amended to let retailers who lease vehicles purchase repair and replacement parts under a resale certificate, the same treatment already give…
Could a self-financing vehicle dealer pay all Texas sales tax upfront, and would repossession create a refund?
Yes, the dealer could pay all tax at once, but no dealer refund was available if the vehicle was later repossessed. Self-financing dealers still had to register and report, and failure to register the…
Is a consulting and monitoring service that tells a customer when to have their trash compactor emptied subject to Texas sales tax?
No, the consulting and monitoring service itself is not taxable. **Consulting, monitoring, and advising a customer on the fullness of their trash compactor on a stand-alone basis is not taxable**, acc…
Does a bank owe sales tax when it forwards checks, imprinters, or electronic capture machines to customers, or when it charges notary fees?
It depends on the bank's role in the transaction. **If the bank simply forwards a customer's order to a vendor and passes through the exact vendor charge, the bank is acting as the vendor's agent and …
If a contractor builds a new exterior wall (with window openings) around an existing building, and adds four new floors, but the new wall doesn't create any usable space, is that new construction or remodeling for Texas sales tax purposes?
It's remodeling, not new construction. **Because the new brick wall built around the existing three-story structure did not create any usable space, the Comptroller ruled that the construction of the …
Is a computerized 'check-in' calling service — like a wellness check or latch-key-kid monitoring service that automatically calls emergency contacts if someone doesn't respond — subject to Texas sales tax as a security service?
No, not in this case. **The Comptroller ruled this particular computerized monitor calling service is not subject to sales tax.** The service would be taxed as a security service only if a license wer…
Can a company lease marine cargo containers tax free, and are the cleaning of those containers and the equipment used to clean them also tax exempt?
The lease of the marine cargo containers themselves is tax free, and the cleaning service performed on them is also tax free — but the machinery, equipment, and building used to house the cleaning ope…
How many one-day tax-free sales or auctions can a 501(c)(3) organization and its chapters hold each calendar year in Texas?
Two. **Effective August 30, 1993, a 501(c)(3) organization (and each chapter of the organization) may hold two tax-free sales or auctions per calendar year, each lasting no longer than 24 consecutive …
Was Texas motor vehicle tax due when an owner transferred vehicle title to a living trust created for that same owner's benefit?
No. The Tax Administration Division said motor vehicle tax was not due when a person transferred vehicle title into a living trust established for that same person's benefit.
Is an escort service, body guard service, or massage parlor subject to Texas sales tax, and what does someone need to do to legally operate one?
Yes. **Sales tax is due on all services provided by massage parlors, Turkish baths, or escort services**, including on utilities, equipment, towels, and machinery used to perform the personal services…
Does a directional drilling company have to collect Texas sales tax on its services to well owners?
No, not if it plans and performs the drilling engineering, provides its own equipment and personnel, controls when specialized equipment is attached to the drill pipe, and monitors the drilling to ens…
Is a company that assembles custom sterile and non-sterile medical/dental/first-aid packs a 'manufacturer' for Texas sales tax purposes, and how is tax figured on the packs themselves?
It depends — the company is a manufacturer only for the sterile packs, not the non-sterile ones. The Comptroller ruled that the taxpayer is considered a manufacturer of the custom-designed sterile pac…
Is a school's yearbook sale exempt from Texas sales tax if it is designated as the school's one-day tax-free sale?
Yes. **A public or nonprofit private school that qualifies as a tax-exempt organization can designate its yearbook sale as its one-day tax-free sale, and if it does, the sale is tax-free — even if ord…
Is the fee for filing a lien on a delinquent debt a taxable debt collection service in Texas?
Yes. **Filing a lien for a delinquent debt is a taxable debt collection service under 151.0036 of the Texas Tax Code**, whether it is billed alone or together with other debt collection services, and …
Is a company's fee for helping a long-term disability insurance claimant apply for Social Security disability benefits a taxable insurance service in Texas?
No. The Comptroller ruled that assisting an insured in applying for Social Security disability benefits is **not taxable as an insurance service**. The company in this letter contracts with long-term …
Is picking up used oil and oil filters from public collection centers for recycling a taxable waste collection service in Texas?
No. **The Comptroller ruled that picking up used oil and oil filters from public collection centers for recycling is not a taxable waste collection service.** The letter explains that the rule coverin…
Is the rental fee for a cryogenic gas vessel that is rented to a customer and refilled at the customer's site taxable, or is the vessel a tax-exempt 'returnable container'?
The rental fee is NOT taxable. In this internal reconsideration memo, the Comptroller's Tax Administration Division agreed that the taxpayer's cryogenic vessels should continue to be treated as tax-ex…
Is a private contractor exempt from sales tax on materials used to build city-owned airport facilities that the contractor then leases back from the city for 15 years?
No, the materials are taxable. **Even though the city immediately owns the airport terminals, hangars, and similar facilities the contractor builds, the contractor is not exempt from sales tax on the …
Is installing a vapor recovery system on an existing underground fuel tank taxable as remodeling, or exempt as new construction?
It depends on timing. **If the vapor recovery system is attached to an existing underground fuel tank, the job is taxable remodeling of nonresidential real property, and tax is due on the entire sales…
Is electricity used to recharge the batteries of golf carts held for rental exempt from Texas sales tax?
Yes, that electricity is exempt. **The Comptroller's Tax Administration Division confirmed that electricity used to recharge batteries on electric golf carts held for rental is exempt, treating it as …
Can a company treat the sale of one piece of equipment to a third party as a trade-in credit against its purchase of different equipment from the same seller, when the paperwork for the two deals was written up separately?
No. This internal Comptroller memo concludes that crediting the proceeds from the sale of one piece of equipment (an IBM 3890-AD4 machine sold to a third-party buyer) against the price of a different …
Did Texas include a vehicle's unit property-tax value in the motor vehicle sales-tax base under Senate Bill 878?
No. Comptroller John Sharp said he would interpret Senate Bill 878 according to the stated legislative intent and would not require a vehicle's unit property-tax value to be included in its sales pric…
Does Texas sales tax apply when a cellular phone dealer sells discounted phones bundled with a service contract, or gives away free-service coupons obtained at no cost from carriers?
It depends on price and cost. **If a dealer sells a cellular phone for 25% or more of its acquisition cost, the transfer is a taxable sale; if sold for less than 25% of acquisition cost bundled with a…
Is a veterinarian's purchase of canine heart worm diagnostic test kits subject to Texas sales tax?
Yes. The distributor was correct to start charging tax on the diagnostic test kits (Assure/CH canine heart worm test kits). The letter states this is not a change in policy — the kits were not previou…
Can an oilfield well-servicing company issue a resale certificate for the liquid micro-organisms (bacteria) it pumps downhole to remove paraffin and scale build-up, or uses in oil-spill clean-up?
No, in both cases the company must pay sales tax on the micro-organisms itself. **Micro-organisms pumped into a well bore to remove paraffin, scale build-up, and corrosion do not become a part of the …
Is labor to fabricate and remodel scaffolding used to repair, remodel, and maintain licensed and certificated aircraft taxable in Texas?
No, it's exempt. **Charges to fabricate and remodel scaffolding used to repair, remodel, and maintain aircraft that are licensed and certificated carriers are exempt under Tax Code Section 151.328(d).…
Can a service provider (like a caterer or wedding consultant) rent tangible personal property tax-free using a resale certificate, and what happens if a customer wrongly issues one to avoid tax?
No — a person who provides a service, rather than making a rental, must pay sales tax on the tangible personal property they rent to perform that service; they cannot buy or rent it tax-free with a re…
Is Texas sales tax due on fees for recovering or removing freon/refrigerant gas from air conditioners, refrigerators, and vehicles?
No, in the situations described. **The Comptroller ruled that a $5 fee for removing refrigerant gas from a dropped-off appliance is not taxable, and none of the described refrigerant recovery labor ch…
Is a charge for the use of a transportable miniature golf course taxable as an amusement service, or as a rental of equipment?
It's taxable, but as a rental, not as an amusement service. **The total charge for a transportable miniature golf course is subject to sales tax under Rule 3.294(b) as the lease or rental of tangible …
What motor vehicle tax changes did Texas announce in 1993 for seller-financed sales, EMS vehicles, and mobile offices?
The notice required self-financing dealers to obtain permits and collect tax as payments arrived beginning October 1, 1993; expanded the EMS-vehicle exemption beginning September 1; and moved office, …
Can a business that charges sales tax on gift-wrapping issue a resale certificate to buy its gift-wrap paper, ribbons, and boxes tax-free?
No. **Sales tax is due on the purchase price of gift-wrapping supplies (paper, ribbons, boxes) bought by a business that provides gift-wrapping services, even though that business separately collects …
Is removing or replacing an underground storage tank (UST) taxable in Texas, and how are the related excavation, hauling, disposal, and installation charges taxed?
It depends on which service is being performed. Excavating and removing a UST (to dispose of it or replace it) is nontaxable demolition of an improvement to real property, but hauling away and disposi…
When are Texas motor vehicle rentals to public agencies or government employees exempt, and what state-employee rule was later clarified?
Direct rentals to a public agency were exempt. STAR later replaced the letter's blanket denial for state employees: an employee on official business may use an exemption certificate for a rental under…
How does the change to Sec. 151.311, Tex. Tax Code, affect materials and supplies purchased under construction contracts entered into before and after October 1, 1993?
It depends on when the contract was signed and when the item was purchased. **The Comptroller approved the taxpayer's revised contract language referencing Sec. 151.311, Tex. Tax Code, for contracts e…
Does a bill of lading alone count as proof that goods were exported for a Texas sales tax export exemption?
No, not by itself. **A bill of lading that lacks sufficient detail does not prove the goods were exported, and the Comptroller will not accept a sworn statement made after the fact as a substitute.** …
Is cleaning acoustical tile ceilings a taxable service in Texas, and does the cleaning company owe tax on the cleaner it buys?
Yes to both. **Cleaning acoustical tile ceilings is a taxable building cleaning service, and the company is correct to charge its customers sales tax on the service.** The letter also confirms the com…
Is electricity used to dig a flood-drainage tunnel and haul the dirt and rock to the surface exempt from Texas sales/use tax under the gas-and-electricity extraction exemption?
No. The Comptroller's Taxability Response Committee ruled that a contractor building a flood-drainage tunnel is not entitled to the Sec. 151.317(c)(2)(A)(ii) gas-and-electricity exemption on the elect…
How does the October 1, 1993 change to Tax Code Section 151.311 affect sales tax on contracts for construction of public roads and highways?
Effective October 1, 1993, contractors on public road and highway construction contracts go back to being taxed the way they were before October 1, 1991, regardless of whether the contract separately …
Are transportation or mileage charges billed in connection with repairing a motor vehicle, its components, or accessories subject to Texas sales tax?
It depends on what's being repaired or sold. **Transportation charges tied to repairing a motor vehicle (including its components or accessories) are not taxable, and towing is not taxable, regardless…
Is the membership fee for an auto club roadside assistance plan (towing, out of gas, flat tire, lockout, travel expense reimbursement) subject to Texas sales tax?
No. **The Comptroller responded that the membership fees for this auto club's roadside assistance plan are not taxable.** The letter told the auto club that if it had been collecting tax from members …
If a direct pay permit holder buys items and has them shipped straight through a central receiving point to plants in other cities without storing them, which city's local use tax is due?
City use tax is due to the city where the items are actually used or consumed after transportation, not the city where they passed through a central receiving point. **If items are purchased and recei…
Are purchases made with WIC benefits or food stamps, including for candy or sodas, subject to Texas sales tax — and how does a manufacturer's coupon used alongside them affect the tax?
No tax is due on the WIC- or food-stamp-paid portion of a purchase. Purchases made through the WIC program or with food stamps are not taxable — this includes candy, sodas, or other otherwise-taxable …
Are charges by caricature artists for drawings made at parties or events subject to Texas sales tax?
Yes. **Caricature artists create and sell tangible personal property, the same as other artists or photographers, so their charges are taxable** — even if the charge is figured on an hourly rate or so…
Is the removal and disposal of drilling mud by a vacuum truck company taxable in Texas?
It depends on why the drilling mud was generated. If the drilling mud is a waste product resulting from the exploration, development, or production of oil, gas, or geothermal resources, the vacuum tru…
Does a temporary staffing agency that places lawyers, paralegals, legal secretaries, file clerks, and data processors with law firms need a sales tax permit?
It depends on what the temporary workers do. The letter explains that charges for lawyers and paralegals are not taxable, and legal secretaries and file clerks performing general clerical or secretari…
Which charges by a moving company for relocating household goods (transportation, packing, boxes, storage, disassembly/reassembly) are taxable in Texas, and which are not?
It depends on the specific charge. Interstate transportation charges are exempt, and intrastate transportation charges are nontaxable. Carrier-supplied boxes/containers are taxable tangible personal p…
Is a marketing/information service that gathers leads from public sources and sells them to a specific client exempt as proprietary information?
No, it is taxable. **Marketing leads or research prepared for and sold to a specific client are a taxable information service, even if the provider agrees to sell only to that one client.** The letter…
When a kit or package combines taxable and exempt medical items, how is sales tax figured on the kit as a whole?
It depends on which items cost more. **When a kit or package of medical items is sold, the composite cost of the kit's items determines the taxability of the whole kit: if the cost of the taxable item…
Is a dockside grain processing terminal project exempt from Texas sales and use tax?
Partly. The Comptroller ruled that materials used to build the dock extension and warehouse are exempt under Sec. 151.311, Tex. Tax Code (once the property becomes the ports' property, after October 1…
Does a Texas restaurant owe sales tax on a one-dollar fee charged to customers who bring in their own food?
No. **A restaurant does not owe Texas sales tax on a flat fee charged to customers who bring their own food, because no sale of tangible personal property occurs with regard to that fee.** The letter …
Is a charge to inspect used oil-well casing pipe (checking threads and drift) taxable if it isn't tied to a sale of the pipe?
No, it's not taxable. **A charge for inspecting tangible personal property — like used casing pipe for a new oil well — is not taxable as long as the inspection is not related to the sale of that prop…
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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.