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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Was a charge for handling infectious waste subject to Texas sales tax?
No, provided the infectious waste described by the requester met one of the definitions in Rule 3.356(a)(4)(C) or (D).
Were subscriptions and geological or geophysical surveys exempt when their information came from direct scientific exploration?
Yes, when the information was derived from exploratory testing or experimentation; statistical completion data that merely recorded facts was taxable.
Did a taxpayer need to redo a 1986 utility predominant-use study after Texas began requiring engineer certification?
No. The certification requirement applied to studies performed on or after August 3, 1987, so the taxpayer could retain the 1986 study and update it if operations changed.
Was a fee paid to terminate a computer-equipment lease early subject to Texas sales tax?
Yes. The fee was part of the lease agreement and was not among the deductions allowed from taxable lease receipts, so it was included in the taxable amount.
How did Texas apply sales tax to paging service, long-distance inputs, switching equipment, and related charges?
Paging service was taxable, and integral long-distance calls could be bought for resale. Tax on messages and equipment depended on origin, destination, and installation facts.
Were a college security-training program director's services taxable as security services?
No. The director was not providing a watchman, guard, or patrol service, so the college training-program services were not taxable under the stated licensing provisions.
Was the federal excise tax collected from telecommunications customers included in the Texas sales-tax base?
No. Texas excluded the customer-paid federal excise tax from the sales-tax base for telecommunications services and said the treatment applied retroactively.
Was a separately stated charge for placing a flood-plain designation on a taxable survey itself taxable?
Yes. The flood-stamp charge was taxable when performed with a taxable survey because it was part of the surveying service, even if separately stated.
Were stand-alone inspection and X-ray services on casing or drill pipe taxable, and what changed when they accompanied a repair?
Stand-alone inspection and X-ray charges were not taxable. With a repair they were taxable unless separately stated, and resale treatment was available before the pipe's resale.
How did Texas tax telephone wiring and jack installation in residential, new-construction, and existing commercial property?
Residential and new-construction work followed contractor rules, while existing-commercial repair or remodeling was taxable on the total charge.
Were charges for trips on gambling ships taxable as amusement services?
Yes. The internal Comptroller memo said charges for gambling-ship trips were taxable as amusement services; it did not distinguish trips by duration.
Were charges for lifting and moving large equipment with a crane taxable when no other taxable service was performed?
No. Texas treated the work as nontaxable third-party transportation, regardless of lump-sum or separated billing and regardless of the property's classification.
Were charges associated with layaway included in the sales price used to compute Texas sales tax?
No, under the announced policy change. Texas said layaway-related charges would no longer be part of the sales price for sales-tax computation, prospectively.
Could a retailer use cash-basis accounting for Texas sales-tax reporting while keeping its general books on the accrual basis?
Yes, if sales tax was reported consistently and separate cash-basis sales records supported audit verification. The method could not be used for tax on taxable purchases.
Was a charge to a manufacturer for verifying that service-station equipment was safely and properly installed taxable?
No. The verification charge was not taxable, but the service provider had to pay tax on equipment or materials used to perform the service.
Did a purchaser's written sales-tax refund request to a supplier stop Texas's limitations period?
No. The letter said only a refund request by the person that paid the tax directly to the Comptroller tolled limitations, so part of the requested period was lost.
Were services applying tax-law knowledge to a client's benefit plan taxable as data processing or insurance services?
No. Texas revised its earlier answer and treated the work as nontaxable professional services similar to accounting, whether performed manually or by computer.
Were a theme park's school curriculum program and behind-the-scenes tour taxable amusement services?
The school program was not taxable after additional educational facts were supplied, but the behind-the-scenes program remained a taxable amusement service.
How was an all-day charter taxed when nontaxable business transportation included a guided city tour?
The transportation portion was not taxable if separately stated, but the guide and the bus time used for the tour were taxable amusement charges. Without separation, the total charge was taxable.
Were a state-university library's lost-book charges taxable, and how were online searches and photocopies treated?
Lost-book charges were not taxable because Texas treated them as damages. Online searching and photocopying were taxable services under the letter.
Did Texas's power-of-attorney rule apply to both predominant-use and exclusive-use electricity refund claims, and did a defective form alone expose the utility?
The rule applied to both types of electricity refund. Accepting an apparently valid customer-signed power of attorney that missed the rule's wording did not alone create utility liability.
Which tools and supplies could a surveyor buy for resale, and which were taxable to the surveyor?
Surveying equipment and consumed supplies were taxable to the surveyor. Markers transferred in a taxable survey could be bought for resale, with limited treatment for substitute markers.
If customers bid no-value promotional 'bonus dollars' for merchandise at an auction, are those transactions taxable Texas sales?
The auction bids are not taxable. Because the promotional 'bonus dollars' have no monetary value, exchanging them for merchandise, meals, or services is not a 'sale' under Texas Tax Code § 151.005, so…
Were administrative and computerized billing services for a self-funded insurance plan taxable?
Insurance services for the self-funded or stop-loss plan were not taxable. Computerized billing was taxable data processing if it exceeded 5% of the total administrative-services bill.
When were fishing tools treated as taxable rentals rather than taxable well services, and could the tools be bought for resale?
Tools supplied alone or with a supervisor were rentals eligible for resale purchase; the supervisor charge joined the rental tax base. Tools supplied with an operator were taxable well services.
Could an airline give an exemption certificate for approved improvements to public airport terminals?
Yes under the stated facts. The tax-exempt airport was the ultimate beneficiary, and the approved terminal improvements directly benefited the airport and public.
Which printing and mailing-service charges were taxable, including folding, collating, labels, mailing lists, transportation, and postage?
Folding and collating were taxable parts of printing. Post-production inserting, labeling, and mailing could be nontaxable, while printed labels, mailing lists, and seller-billed delivery were taxable…
Did exchanging promotional 'West Texas Bucks' for auction items create taxable sales, and who owed tax on donated merchandise?
The exchange was not a sale because the promotional currency had no monetary value. Donating retailers owed tax on resale-certificate merchandise used in the promotion.
Were claims-adjusting and insurance-investigation services taxable when provided for municipal coverage?
They were not taxable when provided to a third-party administrator for a self-insured municipality, but were taxable when sold to an insurance carrier insuring a municipality.
Which employees of a licensed customhouse broker could witness goods entering Mexico and certify their export?
Full- or part-time salaried employees could do so if they held power of attorney and had U.S. Customs approval; commission workers could not.
Could a licensed customhouse broker use part-time employees to witness exports to Mexico and complete Texas export certifications?
Yes, if they were salaried, held power of attorney for that purpose, and had U.S. Customs approval. Commission workers still could not certify exports.
Could a private purchasing agent for NASA buy items tax-free, and what happened when the agent used the items itself?
Items transferred by title and possession to the federal government could be bought for resale. Items used by the private agent were taxable, because the agent was not exempt.
Were charges to blade farm or ranch roads and terraces taxable, and how did maintenance or residential use affect the result?
Road and terrace blading was taxable unless it qualified as maintenance. Repairing a road used exclusively from a residence to a public road was not taxable.
Was the described voice-mail service taxable in Texas?
Yes. Texas classified it as taxable telecommunications service and said the described offering could also qualify as data processing.
Was a separately sold site license allowing unlimited copies of general-use software taxable in Texas?
Yes. Texas treated the site license as a taxable license of a computer program under Rule 3.308. STAR also notes that the custom-software distinction was repealed in 1987.
Were charges for temporary workers taxable when they performed general tasks or helped during a busy period?
No for general temporary help. A business that regularly sold a taxable service still had to collect tax, even for a short engagement.
Did a qualifying prior-contract exemption survive when unchanged data-processing contracts passed to a surviving company in a liquidation?
Yes. The exemption remained because the contracts were transferred unchanged and the surviving company was bound by the same terms.
How did Texas treat partner-interest transfers, dissolution distributions, and a later computer-equipment sale involving assumed debt?
Partner-interest sales and dissolution distributions were not taxable. The later debt-assumption transfer was a sale but could qualify as an occasional sale.
Was a nonrefundable $1 admission fee to a self-service auto-wrecking yard taxable as an amusement service?
No. The admission fee was not a taxable amusement service when it was nonrefundable and could not be applied to a purchase.
When was rebuilding a damaged aircraft radome or flight surface taxable manufacturing rather than repair?
Near-complete reconstruction was taxable manufacturing on the total charge. Restoring the original item was repair, with separated labor nontaxable and materials taxable.
What Texas sales-tax duties arose when an out-of-state direct seller used demonstrators to take orders at Texas home parties?
The company had to collect Texas tax on distributor sales. Local sourcing depended on delivery or distributor facts; hostess gifts created tax for the retailer, and handling was taxable.
Could manufacturing tenants claim a utility exemption when gas and electricity accounts remained in the commercial landlord's name?
No. Utilities bought through the landlord's account were treated as the landlord's taxable commercial use and part of rent, even when the tenant paid the utility directly.
Which purchases for a bond-financed air-pollution-control facility were exempt from Texas sales tax?
Materials and equipment incorporated into the facility could be bought tax-free with an exemption certificate; items merely used but not installed were taxable.
Did a guaranteed residual-value rider make the described equipment lease a financing lease under Rule 3.294?
No. Based on the transfer, purchase-option, lease-term, return, and residual-value facts presented, the agreement did not meet Rule 3.294's financing-lease definition and was an operating lease.
Was a property manager's fee for overseeing an owner's commercial remodeling contract taxable?
No. The manager acted as the owner's eyes and ears and did not perform the remodeling or daily construction supervision, so the 5% fee was not taxable.
Was bovine somatotropin used to stimulate dairy-cattle milk production exempt from Texas sales tax?
Yes, as medication or a tonic when used exclusively on a farm or dairy to produce agricultural products for sale and bought with an exemption certificate.
How did Texas tax the sale and installation of tires, batteries, shock absorbers, and mufflers under its revised 1988 policy?
Installation labor was not taxable. On lump-sum repairs the repairman paid tax on the part; on separated bills the customer paid tax on parts but not labor.
When could a seller accept resale certificates from janitorial suppliers or carpet cleaners, and which cleaning products qualified?
Resale treatment covered products transferred to customers, not consumed supplies. The seller needed good-faith acceptance without actual knowledge that the sale was not for resale.
How did Texas tax geophysical-data licenses, transferred media, reproductions, and third-party computer processing?
Exclusive and nonexclusive data licenses were not taxable. Some related media charges were nontaxable, while third-party reproduction and computer processing were taxable.
Could a credit-reporting service use a customer's historical taxable percentage for multistate purchases?
Yes. The customer could use prior-year data for an exemption certificate, but the percentage and certificate had to be updated annually and supported by records.
Were independent contract programmers taxable when creating a program from scratch or modifying software sold by someone else?
No under this 1988 letter. Texas distinguished nontaxable contract programming from sales of completed software, which were taxable.
Did telephone-cooperative patronage allocations retroactively reduce individual sales prices and support sales-tax refunds?
No. Texas treated the allocations as profit sharing rather than renegotiation of specific sales, and cash-flow settlements obscured whose money was credited.
Was a club membership fee taxable when access to trip routing, product prices, and automobile dealer-cost information was a significant benefit?
Yes when bundled. If the information charge was separated from other privileges, only that charge was taxable; as marketed, the entire membership fee was taxable.
Were charges for visiting a customer's home twice daily to feed, water, and walk dogs taxable?
No. Texas treated the described dog-sitting service as nontaxable, but the provider had to pay tax on supplies used to perform it, such as dog food.
Was a separately stated $1 city programming and access fee passed through on cable subscribers' bills subject to sales tax?
Yes. Texas treated the separately stated pass-through fee as part of the cable-television sales price under Rule 3.313(b).
When did a parent's equipment transfer to its wholly owned subsidiary become a taxable sale rather than a nontaxable capital contribution?
No tax applied without consideration, including added stock while ownership stayed at 100%. Assumed debt was consideration and made the transfer a taxable sale unless exempt.
How did Texas tax a manufacturer-installer's permanently affixed airport baggage-handling system?
The system was an improvement to realty and the installer was a contractor. New-construction treatment depended on lump-sum or separated billing; nonresidential remodeling was fully taxable.
Were Texas cellular calls made by visiting out-of-state users taxable when billing went through their home-state cellular provider?
No under the stated facts. The calls were not billed to a Texas telephone number, billing address, or service address, so Texas sales tax did not apply.
Were charges for advertising space on freely distributed laminated message boards taxable as sales of tangible property?
No. Texas treated the business as selling advertising space, while requiring it to pay tax on printing, laminating, or materials used to produce the boards.
What did good-faith acceptance of resale or exemption certificates require from a Texas retailer?
A properly completed certificate protected a seller without requiring an investigation, unless the seller actually knew the claim was invalid or the item could not be resold.
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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.