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 jewelry appraisal taxable in Texas?
It depends on why the appraisal is done. Under Rule 3.355(a)(2), an appraisal is a taxable 'insurance inspection' if it's done to get an insurance floater for replacement value or to support payment o…
Is the gas a rental-equipment company uses for heating its repair area and for steam-cleaning returned machinery exempt from Texas sales tax as a processing/manufacturing use?
Partly. Gas used to heat the specific area where repairs on rental equipment are performed can be exempt as processing, but only for the time that area is actually used for repairs, and it must be all…
Does a technician who installs, services, or repairs gas station pumps, tanks, and related equipment have to charge sales tax on the job?
It depends on whether the equipment is going into a brand-new station or an existing one. New construction: tax the materials/equipment only, not the labor. Work on existing stations (installation, re…
Does Texas sales tax apply to the sale of a prescription drug discount card?
No. The Comptroller ruled that selling a 20% prescription discount card is the sale of an intangible and is not taxable in Texas. The seller instead owes Texas sales or use tax on its own cost of the …
Can a bakery that sells some food for immediate consumption and some for later consumption still give a gas/utility exemption certificate based on a utility study?
Yes, if the combination of the two uses still shows an overall exempt use. Multiply the percentage of gas used for production by the percentage of goods NOT sold for immediate consumption; if that res…
Does Texas sales tax apply to charges for inspecting and testing a commercial fire alarm system?
No, not if the inspection/testing charge is separately stated. The Comptroller ruled that a commercial fire alarm system is an improvement to realty, so separately stated charges for inspecting and te…
An out-of-state retailer ships goods into Texas that the purchaser will later export and use only outside Texas. Is Texas tax due on that shipment?
Use tax (not sales tax) is normally due when an out-of-state retailer ships an item into Texas, but the purchaser can give the retailer an exemption certificate claiming a temporary-storage exclusion …
Can a freight forwarder's bill of lading and receipt serve as proof of export for a Texas sales tax exemption, even if the buyer's name isn't on the bill of lading?
Yes. A copy of the bill of lading together with the freight forwarder's receipt showing the purchaser delivered the items is sufficient proof of export under Rule 3.323(c)(1)(D), and the consignee's n…
ABC CO. imports equipment from out-of-state vendors to its Austin facility, tests or modifies it (sometimes loading software), and then re-exports it within 30 days to a foreign subsidiary — does that testing or modification count as a taxable 'use' in Texas that defeats the export exemption?
Yes. The Comptroller ruled that testing and/or modifying the equipment in Texas before export — even briefly, even within 30 days, and even where title later passes to a resale subsidiary before expor…
COMPANY B bought testing equipment from COMPANY A in Oregon, shipped it to Austin, and tested it for 4-5 days before exporting it to Singapore. Was that Texas testing a taxable 'use' even though the equipment was headed out of state?
Yes. The Comptroller ruled that COMPANY B's purchase from COMPANY A was taxable, because testing the equipment in Austin for 4-5 days to confirm it worked before exporting it to Singapore counted as a…
If a stereo or radio installed in a vehicle exported to Mexico gets a sales-tax refund, is the tax on the installation charge refundable too?
Yes. Because installation charges are only taxable when the underlying item is taxable, once you have proof the stereo or radio was exported and its sales tax refunded, you may refund the sales tax co…
Does an out-of-state manufacturer owe Texas use tax on free sample tobacco products delivered to Texas distributors?
It depends on whether the manufacturer is 'engaged in business' in Texas under Rule 3.286. If so, use tax is due on the manufacturer's cost of the taxable components (not labor) that go into the free …
Does Texas use tax apply to circuit-board prototypes an out-of-state semiconductor manufacturer ships into Texas for a customer to test, and are the customer's separate design-facility and design-library charges taxable too?
Yes for the prototypes: shipping ASIC prototype chips into Texas for a customer to test and approve is a taxable "use" of tangible personal property, and the full contract price (including the manufac…
If a customer's trade-in machine arrives after a new coin-operated machine has already been delivered, can the dealer still use the trade-in to reduce the taxable sales price?
Yes, as long as the trade-in is the same general type of item the dealer ordinarily sells (coin-operated machine for coin-operated machine) and is tied back to a specific sale. The sales order should …
What is a Mexican 'pedimento simplificado de importacion,' and what does the Mexican Trade Commission's background letter about it tell the Comptroller's office?
This isn't a taxpayer ruling -- it's a background letter that the Mexican Trade Commissioner's office in Texas forwarded to the Comptroller's Tax Administration Division, in response to the Division's…
Does a waste collection company owe Texas sales tax on the state solid-waste disposal fee and a city fee for waste containers that it passes on to customers?
Yes. Waste collection or removal is a taxable real property service in Texas, and the sales price on which tax is charged includes the total amount billed, with no deduction for expenses like the stat…
Does Texas sales tax apply to charges for storing a motor vehicle in a general-purpose storage facility?
It depends on what is being stored. Tax Code Section 151.0101(a)(4) taxes motor vehicle parking and storage services, but it does not apply to a general-purpose storage facility where customers can st…
Can a Texas border retailer accept a customs broker's certificate of exportation on an installed car radio or stereo sold to a Mexican customer, and refund the tax?
Yes, generally. The Comptroller told border radio and stereo sellers that customs brokers' certificates of exportation may be accepted on radios and stereos installed in vehicles sold to Mexican custo…
Do I need to charge Texas sales tax on an invoice when I deliver goods to a customs broker or deliver them myself for export into Mexico?
No. If you deliver the item to a customs broker for delivery into Mexico, or deliver it yourself into Mexico, you do not need to add Texas sales tax to the invoice — but you must keep proof of export,…
Can a Texas business discard paper invoices and keep only a summarized electronic 'Transaction Audit Trail' as its sales tax records?
Only if the summary keeps all the information from the original invoices. The Comptroller said records can be kept on other mediums (like microfilm or an electronic summary) as long as they stay exami…
Does a Texas grocery store owe sales tax on the trays, film, and other wrapping supplies its meat department uses to package meat it cuts, trims, or grinds?
No. Under Rule 3.314, a grocery store's meat department is "processing" meat when it cuts, trims, or grinds it, so the department can buy trays, film, meat pads, butcher paper, freezer paper, and simi…
Can a contractor and subcontractor use a private written agreement (a 'Subcontractors Acknowledgment') to shift sales tax responsibility between themselves, and will the Comptroller accept and be bound by that agreement?
No. The Comptroller will not accept or be bound by a private contract clause that shifts sales tax responsibility between a contractor and subcontractor. To determine who owes the tax, the State looks…
Is the removal, cleanup, repair, or replacement of an underground storage tank (UST) taxable in Texas, and how does the tax treatment differ for each step of the job?
It depends on which part of the job you mean. Excavating and removing an old tank is nontaxable demolition of a realty improvement, but hauling the tank away for disposal is a taxable waste removal se…
Does a company that manufactures aluminum tank domes and sometimes installs them keep its manufacturing sales-tax exemption on electricity, and is installing the dome an improvement to real property?
Installing the dome is an improvement to real property (remodeling, not new construction, on existing tanks). Electricity used to manufacture domes sold with no installation stays exempt as manufactur…
Is a computer, software, and adaptive communication equipment exempt from Texas sales tax when purchased on a doctor's prescription and paid for by a state agency's family support program?
The software and adaptive equipment for facilitated communication are exempt from Texas sales tax because they were purchased with a prescription from a licensed practitioner of the healing arts. Howe…
When a Texas manufacturer diverts self-made goods to its own use, is the cost of raw materials that were wasted or damaged during production included in the use-tax base?
It depends on whether the manufacturer can identify actual costs. If the manufacturer can track the actual cost of the raw materials that went into the specific items diverted to its own use, then was…
When did Texas exempt an ambulance or fire truck purchased by a volunteer emergency-services organization?
The exemption applied when a volunteer fire department bought the vehicle, or when an eligible § 501(c)(3) volunteer EMS provider with at least 75% unpaid staff bought it. The vehicle had to be used e…
Are faxed copies of a pedimento or of a Licensed Customs Broker's Export Certification acceptable proof of export for Texas sales tax purposes?
A faxed copy of a pedimento is acceptable proof of export as long as it is clearly legible, but a faxed copy of a Licensed Customs Broker's Export Certification is not acceptable — the original, prope…
Texas Letter Ruling 9303L1228F07 (1993): How do operators of Mexican aircraft document that taxable items carried as cargo were exported, and can a customs broker's certification substitute for that documentation?
Operators of Mexican aircraft can document the export of taxable items carried as cargo (not installed in the aircraft) by obtaining a Pedimento de Importaciones from Mexican customs and requesting a …
Does a company have to collect Texas sales tax on fees it charges retailers for recorded advertising spots played on a pay-per-call lottery-results phone line?
No. The Comptroller told the company that fees charged to retailers for recorded advertising spots played before the lottery numbers are not taxable, because a fee paid for advertising space is not su…
What records does a Texas retailer need to document that merchandise was exported to Mexico, and can the refund be issued as store credit instead of cash?
Attaching cash register tapes showing SKU or UPC codes to a customs broker's export certification satisfies Rule 3.323(e)(4)'s requirement for a detailed, specific description of exported items, as lo…
Does a Texas errand-running or personal-shopping business have to collect sales tax on the items it picks up or buys for customers?
It depends on the type of errand. If the customer already ordered the item and just pays you to pick it up and deliver it, your fee is a nontaxable delivery service. If you buy the item yourself on th…
If a contractor removes an entire existing driving/traffic surface (asphalt, base, and concrete) and rebuilds it, is that new construction or taxable repair/remodeling for Texas sales tax purposes?
It depends on how much of the driving surface is removed. If the complete existing driving/traffic area (asphalt, base, and concrete) is removed and replaced, the Comptroller treats the project as new…
Does a construction contract's two-year warranty period extend the time during which the contract can be renegotiated for tax purposes, and is a signed written contract required to support a tax-exempt sale to a church?
No. The Comptroller's office said a construction contract is complete once the actual construction work is finished, so a two-year warranty period does not extend the window for renegotiating the cont…
Is rodent control (structural pest control) on a farm or ranch a taxable service in Texas, and can rat poison be bought tax-free for agricultural use?
Yes, hiring someone to treat barns or storage facilities for rodents is a taxable structural pest control service in Texas, and no agricultural exemption applies to that labor. But over-the-counter ra…
If a concert venue gives a sponsor a VIP box seat and advertising in exchange for a sponsorship payment, does the venue owe sales tax on the box seat, and how much?
Yes. The Texas Comptroller ruled that a venue giving a sponsor a VIP box seat (worth $10,000, the normal selling price) in exchange for a sponsorship payment must report and remit sales tax on that am…
Does a monument/cemetery contractor owe Texas sales tax on curbing, marble, and concrete work at gravesites, and does it matter whether the work is new construction or repair of an existing site?
It depends on whether the work is new construction or repair of an existing gravesite. Setting curbing and marble right after the vault is installed is new construction, which is untaxed labor; the co…
Does a Texas sorority owe sales tax on meals served to its members, and are its membership fees and dues taxable?
Yes on the meals, no on the dues. The sorority house owes sales tax on the meals it serves to resident and guest members because Rule 3.293 taxes meals sold by boarding houses, and there's no exemptio…
Are Mexican citizens exempt from Texas tax on cable TV service and municipal franchise fees, and do cable companies have to collect tax on those franchise fees?
No. Mexican citizens do not get a special tax break on cable TV service. Cable companies must collect tax on the full bottom-line price of their service, including municipal franchise fees passed thro…
Does a city owe sales tax when it demolishes a structure and removes debris from a landowner's property under its police powers?
Demolishing a structure down to the slab is not a taxable service, but removing the debris is. If one combined charge covers both, the whole charge is tax-free only if the debris-removal portion is 5%…
Is the sale of a membership stock interest in a private Texas country club subject to sales tax?
It depends on who sells it. If an individual member sells his one membership stock interest directly to a new member (not habitually, and not through the club), it qualifies as an exempt occasional sa…
Is filling and plugging an abandoned underground storage tank (UST) in place, including removing residual product and disposing of it, a taxable service in Texas?
No. The Comptroller ruled that filling and plugging underground storage tanks in place, including removing and disposing of leftover product, is the functional equivalent of demolition, which is not a…
Does a business owe Texas sales tax on candy sold through an honor-system box, where customers take a piece and leave payment on their own?
Yes. The Comptroller ruled that honor-system candy sales are subject to Texas sales tax on the total gross receipts, the seller must get a sales tax permit and file quarterly, and because the candy su…
Does a Texas company have to charge sales tax on monitoring fees and installation fees for a personal emergency response (medical alert) system?
No. The Comptroller ruled that the monitoring fee and the one-time installation fee charged to subscribers of an emergency response system are not taxable, because the company was found not required t…
Do sales/use tax and the oil well service tax apply to well tagging, inter-well tracing, and naturally occurring radioactive material (NORM) testing services performed on oil field equipment?
The well tagging and inter-well tracing services themselves are not subject to limited sales or use tax, but the taxpayer must pay sales tax on the materials and equipment (including radioactive isoto…
Do engineering and architectural design firms have to charge Texas sales tax on their professional design services?
Generally no. Texas does not tax engineering and architectural services on their own. A consulting engineer or architect designing the layout of a laboratory or office building does not owe tax on tha…
If a Texas manufacturing plant is sold to a new owner, can the new owner keep using the seller's predominant use utility study to claim a sales tax exemption on utilities?
No. Even if the manufacturing operations at the plant don't change, a change of ownership means the buyer must get its own predominant use engineering study done and secure its own utility exemption c…
If I buy only generic office assets (furniture, computers, office equipment) from a business that has an IRS tax lien against it, paying by a check made out to the IRS, do I become liable for the seller's unpaid Texas sales tax as a 'successor'?
No. The Comptroller's office concluded that buying only miscellaneous, generic office items -- not the whole business or an identifiable segment of it -- does not trigger successor liability under Tax…
Does a certified fraud examiner who is licensed under Texas's Private Security Act owe sales tax on special investigations, fraud auditing, insurance claims work, and expert witness testimony?
Mostly yes. Because the examiner is licensed under the Private Investigators and Private Security Agencies Act, the special investigation, fraud auditing, and insurance claims activities described are…
Does a Texas corporation owe sales or use tax when it distributes its equipment to shareholders as part of dissolving and liquidating the company?
No. The Comptroller ruled that when a corporation distributes its equipment to its shareholders as a liquidating distribution when the company dissolves, no sales or use tax is due, because the shareh…
Does a Colorado-based securities broker-dealer and investment adviser owe Texas sales tax on its securities sales, commissions, and investment advice to Texas clients?
No, not on the securities trades or commissions — those are not taxable transactions at all. Investment advice given for a fee is also generally not taxable, unless the 'advice' is really packaged, co…
Does a printing company owe Texas sales tax on repairs to the paper roll cores used on its printing equipment?
Yes. The Comptroller ruled that repairs to a printing company's paper roll cores are taxable. The cores qualify for the packaging-material exemption only when held by the manufacturer that ships produ…
Does a business that sells computer-generated Lotto number picks based on statistical analysis of past winning numbers have to collect Texas sales tax?
Yes. The Comptroller told this taxpayer that selling computer-generated Lotto number selections, based on analyzing past winning numbers and other statistical factors, is a taxable information service…
Does a Texas seller owe sales tax on 'Passport Books' that give the holder free and discounted rounds of golf at participating courses?
No sales tax applies when the golf Passport Book is sold directly to the golfer who will use it, because the Comptroller treated the sale as a sale of an intangible right, not tangible personal proper…
Can an independent contractor working for a Texas customs broker sign export certifications, and can an export certification just reference an attached invoice instead of listing item descriptions?
No, not yet. Under Rule 3.360 as it stood in 1993, only the licensed customs broker or the broker's own employee (someone under the broker's direct supervision, paid regular wages, with taxes withheld…
Is Texas sales tax refundable when an auction buyer takes possession of the item in Texas before the seller ships it out of state?
No. Once the buyer takes possession of a taxable item in Texas, sales tax is due and is not refundable, even if the seller later ships the item out of state. The interstate-shipment exemption under Ta…
Can the sole shareholder of a dissolved corporation claim a sales tax refund for bad debts on accounts receivable that were assigned to the shareholder as part of the dissolution?
No. The Comptroller denied the refund because the shareholder, not the original dissolved corporation, was trying to claim the bad-debt credit, and Texas law does not treat a corporate dissolution fol…
Which charges on a repossession/debt-collection company's invoice are taxable, and can the company or its creditor-clients use resale certificates for repossession-related expenses?
Most of a repossession company's miscellaneous invoice items (storage fees, long-distance calls, informant fees, key-making) are taxable as part of the taxable debt collection service, except separate…
Does a company owe Texas sales tax when it swaps in identical replacement computer equipment to relocate a customer's data center, then rents back the old equipment during the transition?
Yes. Shipping identical replacement equipment to a customer's new location under a computer 'swap' program is a taxable sale of equipment. If the customer's old equipment is taken as a trade-in, tax i…
Can a broker operate an export certification satellite office inside Mexico instead of within the United States?
No. The Comptroller's office denied the request, explaining that an export certification business must be conducted from a location inside the United States because state regulators cannot freely perf…
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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.