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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Could buyers issue Texas resale certificates for magazine inserts, statement enclosures, catalogue inserts, scratch-and-sniff labels, or fragrance slurry?
Advertising inserts, enclosures, and labels were not bought for resale and were taxable based on Texas delivery or control. A printer could issue a resale certificate for slurry incorporated into prin…
Could a Texas industrial processor buy oxygen and similar gases tax-free when the gases were consumed in processing or used in repairs?
Gases consumed while processing an item for resale could be bought with an exemption or resale certificate. Gases used to repair tangible property were taxable supplies.
How did Texas treat repair, painting, parts, tires, and installation costs for heavy equipment and motor vehicles prepared for auction resale?
For property actually sold at public auction, heavy-equipment costs could be supported by resale certificates; motor-vehicle repair and installation labor was nontaxable and parts could be bought for …
How did Texas require a supplier to handle sales tax on prepackaged food sold through mobile vendors?
Food sold ready for immediate consumption from a vehicle was taxable. The supplier was told to collect on its vendor price plus 20%, unless it sold to retailers and obtained resale certificates.
How did Texas distinguish taxable lease assignments, collateral pledges, sales of leased property, and operating versus financing leases?
Rule 3.294 controlled. Selling an operating lease's payment stream generally accelerated tax on remaining payments; a written collateral pledge did not, and selling the lease with the property shifted…
How did Texas tax trading stamps, stamp dispensers, folders and catalogs, and merchandise or cash given when customers redeemed stamps?
The stamps were nontaxable intangibles. Dispensers and printed materials followed resale or use rules, and tax applied to taxable merchandise's value at redemption, but not to cash or nontaxable goods…
Could a completed buyer registration and checkout card serve as a Texas resale certificate, and what audit records were required?
Yes. A fully completed card at each sale could serve as the resale certificate if buyer receipts were attached and grouped by sale; agricultural buyers still needed full exemption certificates.
How did Texas tax a business that remodeled old buses into traveling vehicles and collected progress payments?
The total remodeling charge was taxable. The converter could buy materials for resale, had to separately state and remit tax, and generally reported it as income was recognized unless tax was collecte…
Could purchase-order language serve as a Texas resale or exemption certificate, and when could blanket certificates or direct-payment permits be used?
The submitted purchase orders were insufficient. Certificates had to be recognizable, contain proper language, and have a certificate-specific signature; blanket certificates or a direct-payment permi…
How did Texas tax printed grocery sacks used for advertising, the advertising-space charge, and art setup or plate fees?
The seller paid tax when buying the printed sacks and did not tax advertising space. The $45 art setup and plate fee was taxable, with resale-certificate treatment for outsourced workup.
Could a cable company give resale certificates for converters and their repair when the converters were included in subscriber service?
Yes. The company could buy the converters and their repair tax-free for resale. A separate repair fee billed to a subscriber was taxable; without an added fee, no additional tax was passed to the subs…
Should sales tax have been included in a freight claim when shipped equipment was totally destroyed?
Yes. Tax charged on the original sale became part of the selling price and should have been included in the claim. The carrier's statement was not a valid resale certificate and could not support a ta…
Were charges for cleaning and maintaining pleasure yachts and commercial vessels taxable?
Charges for a noncommercial pleasure vessel were taxable, while the same services on a commercial vessel were not. The provider owed tax on equipment and consumable supplies, with resale treatment lim…
How did sales tax apply when a shared-tenant provider bought telephone service and resold local and intrastate long-distance access to tenants?
If it made no use of the lines, the provider could buy service with a resale certificate and collect tax from tenants on local and intrastate long-distance service. Alternatively, it could claim credi…
How did Texas sales tax apply when a contractor bought mixed-use inventory tax-free, used some materials in lump-sum real-property repairs, and later lost or had materials stolen?
The contractor could buy mixed-use inventory with a resale certificate and accrue tax when items were used in lump-sum jobs. It still owed tax on the purchase price of items lost or stolen after remov…
Which advertising-agency charges were taxable when the agency sold finished art, commissions, placement work, preliminary concepts, royalties, and photographs?
Finished art and related service charges, printing commissions, approved concepts, and photographs were taxable. Placement fees, documented preliminary art, related news-release charges, and royalties…
Was the rental of cable-signal decoders taxable, and could the lessor buy the decoders tax-free for resale?
Yes. The lessor had to collect tax on decoder rental charges and obtain a sales-tax permit. Decoders actually rented to customers could be bought for resale, but equipment kept for the lessor's own us…
Could a software-maintenance provider buy computer dial-up line service tax-free for resale when it used the lines to diagnose and adjust customer systems?
No. The line was a taxable tool consumed in providing taxable maintenance, not a resold telecommunications service. The provider owed tax on the line and charged tax on its total maintenance fee.
Were custom poems taxable when recited as entertainment, sold in written form, or given away as gifts?
A delivered and recited poem was a nontaxable service; a written poem was taxable tangible property. Gifts were not taxed to the recipient, but the poet owed tax on materials used for services and gif…
How did Texas sales tax apply to tanning-bed leases and sales, tanning-clinic membership or session fees, and true customer rentals?
Bed leases and sales to clinics for their own use were taxable. Clinic memberships and on-premises sessions were not taxable, but a true rental giving the customer control and possession of equipment …
When were artists' sketches, layouts, consulting design, creative time, and supplies taxable as finished art rather than nontaxable preliminary work?
Work not delivered as the final product could be nontaxable preliminary art, but completed layouts and consulting designs were taxable finished art. Separately stated thinking time unrelated to the fi…
Who paid and collected sales tax when prime contractors or subcontractors used separated versus lump-sum real-property contracts?
Separated contractors acted as retailers, bought incorporated materials for resale, and taxed the material sales price. Lump-sum contractors were final consumers and paid tax to their suppliers.
How did title passage, export documentation, and storing goods in Texas affect resale certificates and sales-tax refunds for exported property?
A resale certificate depended on title passing in the United States. Texas storage was a taxable use, and no refund was allowed when property remained in Texas more than one month after purchase.
How did Texas tax a 501(c)(4) flying club's hourly aircraft rentals, membership dues, aircraft supplies, and aircraft purchased for rental?
Hourly aircraft rentals were taxable, but monthly membership dues were not. Rental aircraft and their parts could be bought for resale; other use had to relate to the exempt function or trigger tax on…
How was tire-casing repair taxed when performed by the retreader itself versus a separate repair provider?
The retreader's own casing repair was part of the retread process. A separate provider's repair was a taxable service, but the retreader could issue a resale certificate for services on tires it would…
Did transferring title to a freight forwarder before export count as a sale supporting a resale certificate?
Not by itself. The freight forwarder had to act as the actual purchaser's agent under a written agreement. Otherwise, foreign resale required title to reach the customer before export or tax followed …
How should a repair shop handle third-party vehicle-storage fees paid for a customer?
The shop should pay tax on the storage fee, not issue a resale certificate, and bill it as a storage reimbursement without adding tax again.
Were design work, contract blueprints, and separately sold extra blueprint copies taxable in Texas?
Design services and included copies were nontaxable, but extra copies sold above the contract quantity were taxable unless the sale qualified for exemption.
Were queen-bee cups, beekeeping supplies, honey, and bees subject to Texas sales tax?
Queen-bee cups were taxable unless bought for resale or qualifying honey production; honey and listed production supplies were exempt, but clothing was taxable.
Were fees for coupon advertising on cash-register tape and the related design setup charge taxable in Texas?
The periodic advertising-space fee was nontaxable, but employee-fabricated artwork or design was taxable; the provider owed tax on tape and printing costs.
Were equipment sales, rentals, and leases to federal service contractors exempt when title passed immediately to the government?
Not merely because title passed or the contractor acted for the government. Items used by an independent contractor were taxable unless actually sold and transferred to the government.
Could an agent buy property tax-free merely because foreign affiliates intended to export it later?
No. Export intent and purchase orders were insufficient; the agent needed export proof or a qualifying resale structure with title transferring in the United States.
Did immediate federal title under NASA and acquisition regulations make a contractor's equipment purchase exempt from Texas sales tax?
No, not by itself. Items actually sold and transferred to the government could be bought for resale, but contractor-used goods remained taxable.
Could hotels give resale certificates for trunk-line service used both for hotel business and resale to guests?
No. Mixed-use trunk lines did not support a good-faith resale certificate; hotels needed separate business lines or had to pay tax and credit the resold share.
Which telephone-company charges to radio common carriers and cellular providers were taxable in Texas?
Switch connections, transmitter lines, and enhanced services were taxable; administrative basic local exchange service was not, and resale certificates could apply.
Was an automated manufacturing-facility rack system tangible personal property or an improvement to realty in Texas?
It was tangible personal property. The contractor was advised to separate materials from installation and collect tax from the customer on materials.
How were a public Sesquicentennial committee's purchases and sales of medallions and other merchandise taxed in Texas?
Necessary committee purchases were exempt, designated Lone Star Medallions were exempt, but other merchandise sales were taxable and required a permit.
When were oxygen-therapy cylinders, their rentals, and prescribed oxygen exempt from Texas sales tax?
Prescribed therapy cylinders and oxygen were exempt for individuals; resale and oxygen-connected rentals could be exempt, but empty-cylinder purchasers owed tax.
How did Texas tax paging service, pagers furnished with service, pager rentals, and outright pager sales after October 1, 1985?
Pagers furnished with taxable service were state-taxed service inputs bought for resale; outright pager sales also carried applicable city and MTA tax.
Were dedicated trunk lines and DID numbers sold to a mobile-telephone provider taxable, and could the provider use a resale certificate?
Yes. The telephone-company charges were taxable, but the mobile provider could give a resale certificate instead of paying tax.
Were lump-sum artwork restoration, frame-selection advice, and restoration work for charitable entities taxable in Texas?
Artwork repair was taxable on the total charge; frame-selection advice alone was nontaxable, and charitable treatment depended on the entity's approved exemption.
Were separately stated glider rental, tow, and flight-instruction charges taxable in Texas?
The glider rental and tow were taxable, while instruction was nontaxable. The glider itself could be bought for resale but did not qualify for the aircraft exemption.
Did an office-furnishings dealer have to collect tax from a freight carrier for repairing damaged inventory?
No. The dealer could buy repair materials with a resale certificate, collect tax when the restored merchandise was sold, and did not have to collect tax from the carrier.
How should a computer-maintenance company buy and tax repair parts used under old and newly taxable service agreements?
It could keep parts in tax-free resale inventory. Parts used for agreements entered before October 2, 1984 required accrued use tax; the Comptroller agreed with the stated procedure for taxed agreemen…
When did an 800-number parts-locator hotline fee become taxable?
The fee was then nontaxable, but the entire member charge would become taxable October 1 under new intrastate-telecommunications legislation.
When should sales tax be included in freight or insurance claims for damaged goods?
Treatment depended on claimant and salvage facts. Consumer claims included prior tax; seller or resale-inventory claims generally did not, with tax collected on later salvage sales.
Did sending employees or contractors into Texas for computer repairs create taxable representation?
Yes. A repair employee established representation, making repair charges and later property sales taxable; contractor-performed repairs rebilled by the seller were also taxable.
Who remitted tax on event tickets, complimentary tickets, outside-agency sales, and package admissions?
The ticket issuer remitted tax for the event month and could include tax in face value. Responsibility with an outside agency had to be written. Free tickets were untaxed but printing charges were tax…
Which radiator, cooling-system, air-conditioning, and related repair charges were taxable?
Automobile-repair parts were taxable but labor generally was not; complete radiator sales and incoming freight were taxable. Resale-certificate work was exempt. Off-road and other personal-property re…
Was an insurer's settlement for a stolen rental tractor a taxable sale?
No. The payment was indemnity for the dealer's loss, not a sale to the insurer, so the dealer did not report it as a taxable sale or collect tax. A replacement tractor for rental or resale could be bo…
How did Texas treat lump-sum golf tours, included Texas amusement tickets, and separately stated tickets?
The tour operator did not collect tax on a lump-sum tour. For a Texas amusement ticket included in the package, tax was paid to the supplier; if separately stated, the operator could buy it for resale…
What sales-tax treatment applied when drilling tools, their lease, and lessor rights moved through a trust before customer rentals?
The Comptroller treated execution of the lease, the combined lease assignment and equipment transfer, and the trust-to-operator lease as nontaxable resale steps. The operating lessee collected tax on …
When could condensate used as well-treating fluid be sold tax free, and when was tax due?
Condensate was generally taxable. A well operator could give an exemption certificate when treating its own well and the condensate remained in and was sold with the crude; a reseller could give a res…
Who collected and reported tax when amusement parks placed tickets with at-cost distributors versus markup resellers?
For non-ticket sellers distributing tickets at cost or free, the parks could assume collection and liability, and the distributors needed no permits or reports. Markup resellers were admission sellers…
Which gun-club membership fees, contest entry fees, reloading supplies, and club supplies were taxable in Texas?
Annual membership fees were taxable. Qualifying contest entry fees were not taxable as amusements; reloading supplies bought for resale could use a resale certificate, while club-use targets and suppl…
Did a Texas hotel have to collect sales tax on laundry and dry-cleaning services sold to guests?
Yes. The hotel had to collect tax from guests for laundry and dry-cleaning services, but it could give an outside vendor a resale certificate instead of paying tax to that vendor.
When were Texas tournament entry fees nontaxable, and were spectator admissions taxable?
Participant fees were nontaxable when they met the letter's contest-cost or contest-only facility tests. Spectator admissions were taxable, and integral items for taxable tournaments could be bought f…
Could a Texas school buy award jackets tax-free either to present to students or to resell to them?
Yes. A school could use an exemption certificate for jackets presented to students. For jackets sold to students, it used a resale certificate and had to collect and remit tax on the student sales.
Could a Texas school district buy athletic jackets tax-free either as student awards or for resale to students?
Yes. Award jackets could be bought with an exemption certificate. Jackets bought for sale to students required a resale certificate, followed by collection and remittance of tax on the student sale.
Were Texas city-pound, wrecker-service, and body-shop charges for storing impounded vehicles taxable?
Yes. The Comptroller treated the motor-vehicle storage fees as taxable, required the company to pay the tax, and said it could not give the storage providers a resale certificate.
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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.