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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How did Texas allocate the forfeited value of unused credit reports between taxable Texas reports and nontaxable out-of-state reports?
The Comptroller approved multiplying the unused or forfeited contract amount by the ratio of Texas reports actually ordered to total reports actually ordered. That percentage determined the taxable sh…
Was job-site electricity exempt when used directly to power tools and welding equipment on wastewater-treatment projects for exempt customers?
Yes. Electricity used directly in construction for the listed exempt customers was exempt when the contractor gave the utility a certificate identifying the entity and project.
Were services helping employers install and administer qualified retirement plans subject to Texas sales tax?
No. Based on the stated facts, including that the firm did not provide specialized news or current-information bulletins, Texas found the service nontaxable.
Was tax due on pre-October 1987 advance payments for later trash service, and when did a small quarterly filer report and pay the tax?
Tax applied to later service unless a written customer contract predated July 21, 1987. Quarterly returns were due the following month's 20th day.
Were premium-audit services taxable when an independent firm reviewed policyholder records so an insurer could calculate final property or casualty premiums?
Yes. Reviewing policyholder financial records and reporting the premium basis was taxable insurance service because Rule 3.355 covered insurance inspections and analysis connected with calculating pre…
When were Texas real-estate appraisals taxable for loans, property sales, tax purposes, insurance coverage, or insurance claims?
Loan, sale, and tax appraisals were not taxable. Insurance appraisals were taxable, except lender-required appraisals primarily obtained for financing.
When a customer pays partly with food stamps and partly with cash, how should the food stamps be applied for Texas sales-tax purposes?
Apply the food stamps first to taxable eligible items. Collect sales tax on taxable items remaining in the portion paid with cash.
Were appraisals of art, antiques, furnishings, and personal property taxable when done for general value or for insurance purposes?
General value appraisals were not taxable, but appraisals for insurance loss, damage, or coverage valuation were taxable insurance services.
Were off-duty security services performed by full-time peace officers taxable, and did the answer change when a security company employed them?
Direct services by full-time peace officers were not taxable, but their time was taxable when included in a security company's charges.
Did a city have to collect Texas sales tax on garbage collection and a separate alley-maintenance fee when it contracted with a private collector?
Yes. The city had to tax garbage services beginning October 1, 1987 and also tax the alley-maintenance fee; it could give the collector a resale certificate.
When did Texas begin taxing real-property surveying, and did written contracts signed before July 21, 1987 qualify for a prior-contract exemption?
Real-property surveying became taxable October 1, 1987. Written contracts made before July 21, 1987 qualified for the prior-contract exemption.
Could a credit-reporting provider buy monthly microfiche credit information for resale, and were its credit-reporting charges taxable?
Yes. The provider could issue a resale certificate for information transferred as part of its credit reports, and its credit-reporting charges were taxable.
Were charges for administering a polygraph examination subject to Texas sales tax?
A stand-alone polygraph examination was not taxable. If it was billed as part of a taxable investigation service, the entire investigation charge was taxable.
Could a seller accept a hotel's resale certificate for linens when the permit number was invalid and hotels ordinarily used rather than re-rented linens?
No. The certificate lacked a valid Texas permit number, and the seller had to consider whether the hotel's ordinary business supported a good-faith claim that the linens were for resale.
How did Texas apply the new insurance-services tax to independent adjusters working in Texas for in-state and out-of-state insurance companies?
Texas confirmed the adjusters' six-point collection plan, including tax on total service charges, but clarified that work for an out-of-state company had to be performed in Texas.
Were charges for collecting and transporting salt water from well sites to disposal wells or disposal areas subject to Texas sales tax?
No. The letter said collecting or transporting salt water from a well site was not a taxable service under Rule 3.356(a)(3)(B).
Did repossessing improved equipment create a taxable sale, and how would Texas measure use tax on the improvements?
Repossession itself was not a sale. The seller owed use tax on the improvements based on the consideration it gave, but the letter lacked enough facts to determine that amount.
Were armored payroll delivery, vault storage, helicopter delivery, and security-guard services for commercial vessels taxable in Texas?
Yes, except security services performed exclusively offshore and outside Texas territorial waters were not taxable under the letter.
Could a restaurant obtain a refund of sales tax paid on electricity bought before October 1, 1987, when food-preparation electricity became taxable?
Yes, if the prior electricity use was predominantly exempt based on the preceding 12 months and Rule 3.295's requirements were met.
Were accident reinvestigation, consulting, and information-compilation charges to insurers and attorneys taxable as claims services?
Yes. The described services were taxable as insurance-claims adjustment or claims processing, including charges to insurers and attorneys.
Which janitorial supplies could be bought tax-free, and could a janitorial company issue resale certificates to taxable-service subcontractors?
Transferred supplies such as trash containers and floor wax could be bought tax-free; consumed cleaners could not. Taxable subcontracted services could be bought for resale.
Were pager-service fees taxable when the provider supplied equipment or the customer used its own, and how was the equipment purchase treated?
Pager-service fees were taxable either way. Equipment transferred with the service could be bought for resale; retained equipment could not.
Did a Texas motor-vehicle repairer charge customers tax on lump-sum bodywork, painting, rustproofing, or undercoating, and how were decorative painting charges treated?
No tax was billed on lump-sum repairs; the repairer paid tax on materials. Murals, pinstriping, and signs were taxable on the total charge.
When were plant maintenance, plant leasing with maintenance, and landscaping taxable, and could an older written contract delay tax?
The services were taxable on the dates stated in the letter, but a qualifying contract signed by July 21, 1987 temporarily delayed tax.
Was the total charge for installing leased electrical capacitors on existing commercial systems subject to Texas sales tax?
Yes. The capacitors remained tangible personal property under the lease, so their sale and installation were taxable; the financing lease was treated as a sale with tax due at the time of sale.
What interim Texas sales-tax methods could credit reporting companies use, and when were screening reports taxable?
Texas accepted two interim reporting methods. Screening reports delivered to a Texas customer were taxable, while reports delivered outside Texas were not.
Was a real-estate multiple-listing information service taxable, and how were the printed listing-book materials treated?
The service was taxable for Texas customers after October 1, 1987 and nontaxable for out-of-state customers. Material treatment depended on when purchased and transfer of the books.
Were the recipient's delivery, courier, or messenger services taxable under the 1987 Texas sales-tax change?
No. The described services were not taxable; only courier services requiring a license under the cited private-security law were taxable.
Did a Texas taxpayer owe tax on the full invoice for Ohio work adding a truck body and accessories to a cab and chassis?
Yes. The work was remodeling or the final stage of manufacturing, a taxable service, so tax accrued on the total invoice price.
Could a buyer's self-assessment letter or combined purchase-order certificate protect a supplier that did not collect Texas sales tax?
No. Without a properly completed resale or exemption certificate, the supplier remained exposed to tax, penalty, and interest; the buyer needed a direct payment permit to self-accrue tax.
Did Texas decide whether attorneys had to collect sales tax on debt-collection services before a pending Attorney General opinion was issued?
No. The Comptroller said the issue was unresolved and would not require attorneys to collect tax until the Attorney General opinion was issued.
Were gun-club membership dues subject to Texas sales tax when members received access to recreational or sports facilities such as a firing range?
Yes. The letter said membership dues were taxable when the club provided recreation or sports facilities, including a firing range.
Who owed Texas sales tax when operating-lease payment rights were assigned without a written debt instrument and resold to investors?
The original lessor owed tax on all remaining lease payments when it assigned the lease paper. The factor and its investors had no tax liability under the described arrangement.
Was a custodial staffing arrangement taxable when the provider remained the workers' employer but the customer trained and supervised them?
Yes. Texas treated that arrangement as a taxable real property service. It did not decide the second arrangement, where the customer employed the workers and the provider processed payroll.
Could an insurance adjuster issue a resale certificate when another adjuster worked a loss, and how should the rebilled service be taxed?
The adjuster could issue a resale certificate to the subcontracted adjuster but had to charge sales tax when rebilling the service to its customer.
Did Texas decide whether bookkeeping services would be taxable as data processing services?
No. The Comptroller declined to answer while a proposed data-processing rule was being written and said the rule was expected to take effect January 1, 1988.
Was a monthly association fee included in taxable credit-reporting charges, and was collecting overdue city water bills taxable?
The monthly fee was taxable as part of the credit-reporting service. Although debt collection was generally taxable, collecting overdue water bills for the city was not.
When did Texas treat installed draperies or curtains as taxable personal property rather than an improvement to realty?
Usually they were taxable personal property. They were treated as improvements to realty when permanently integrated or installed by a contractor as part of construction or remodeling.
Were the sale and leaseback payments for a heavily anchored 80-megawatt cogeneration plant subject to Texas sales tax when the agreements called it personal property?
No. Texas treated the plant as real property based on its construction, so neither the sale to the trustee nor the operator's later lease payments were subject to sales tax.
Was Texas sales tax due on soft drinks, chips, novelty ice cream, or other items bought with food stamps, including mixed-payment purchases?
No tax was due on items bought with food stamps. For mixed purchases, food stamps were applied first to taxable items and then to nontaxable food.
Did a Texas maid-service business have to collect sales tax beginning October 1, 1987?
Yes. The letter required the maid service to charge customers 7.5% tax on the service price beginning October 1, 1987.
Could a purchaser's unsigned purchase order qualify for Texas's prior-contract exemption, and were later change-order additions covered?
No. The reviewed order did not qualify, and added taxable items, labor, or services were excluded even if the original agreement qualified.
Was liquid petroleum gas exempt from Texas limited sales tax, and could an itemized fuel expense still be taxed as part of a taxable service?
The gas itself was exempt, but an itemized fuel expense incurred in performing a taxable service was subject to limited sales tax.
Could Texas sales tax apply to a cigarette price that already included federal and state cigarette taxes paid earlier in the distribution chain?
Yes. The letter treated the cigarette taxes as supplier or seller expenses included in the taxable sales price passed to the consumer.
Could a retailer treat an installed home satellite system as a lump-sum improvement to realty and avoid collecting Texas sales tax from the consumer?
No. Texas treated the satellite system as tangible personal property, so the retailer had to collect tax on the equipment and, after October 1, 1987, the installation charge.
Which parts of a camping or outdoor-experience fee were taxable when the provider supplied recreation, meals, and transportation?
The amusement-service and meal portions were taxable; transportation was not. A single unseparated lump sum was fully taxable.
What Texas tax rates applied in 1987 to pager sales, airtime, leases, connection fees, voice retrieval, protection, repairs, and maintenance?
The letter listed 7.5% for an outright pager purchase and 7% for each described service, lease, protection, repair, or maintenance charge.
Were sales of cement kiln dust subject to Texas limited sales tax even though cement production tax was not paid on the kiln dust?
Yes. Sales tax applied unless the buyer provided a properly completed exemption, resale, or direct-payment exemption certificate.
Did Texas require a bond from a political subdivision or municipality acting as a tax collector for the first time?
No. The Comptroller said political subdivisions and municipalities would not be required to post a bond when they were first-time collectors.
Were throwaway vials taxable when sold empty to a business that filled them with antigens and distributed the contents and container together?
No. Texas treated the throwaway vials as nonreturnable containers sold to a person who filled and transferred them with their contents.
When were craft-show sales by senior citizens or nonprofit organizations exempt, and when did an individual seller need a Texas sales-tax permit?
The senior-group exemption required all four statutory conditions. Otherwise sales were taxable unless the narrow occasional-sale rule applied.
Did a renewed Houston garbage-collection contract qualify for Texas's prior-contract sales-tax exemption?
No. The relevant city contract renewed after the July 21, 1987 cutoff, so the requester had to add tax to members' bills for garbage collected on or after October 1, 1987.
Was turf-irrigation installation treated as landscaping, and what happened when it was part of a landscaping job?
Installation was excluded from landscaping, but its charge had to be separately stated when included in a landscaping job or the entire charge was taxable.
Were postage charges taxable when a retailer mailed a taxable item and billed the customer for mailing?
Yes. Tax applied to the total seller charge, including postage, regardless of whether the fulfillment house was in Texas; postage alone remained nontaxable when the item was not sold or was nontaxable…
Were supervised child care, day camps, and sports instruction taxable as amusement services in Texas?
No at the time of the letter. Child-care facilities, day camps, gymnastics, and swimming instruction were not treated as taxable amusement services.
Which listed agricultural software programs qualified for Texas sales-tax exemption as production, processing, packing, or marketing aids?
Four listed programs qualified; six recordkeeping programs did not. Buyers claiming exemption had to provide a completed exemption certificate.
Did Texas's October 1987 expansion of taxable services make inspections of building components taxable?
No. The Comptroller said real-estate inspections of structural components such as plumbing, wiring, HVAC units, and roofs would not be taxable under the new law changes.
When did Texas begin taxing credit-reporting and information services, and what did credit reporting include?
October 1, 1987. Credit reporting included compilations about credit history, worthiness, standing, insurability, reputation, and specified personal information.
Did Texas's 1987 tax-law changes make lump-sum septic installation or septic cleaning taxable?
No. Charges for lump-sum septic-tank sales and installation and for septic cleaning remained nontaxable after the stated 1987 changes.
Which refuse-collection billing cycle first became taxable when Texas began taxing the service on October 1, 1987?
The first billing cycle beginning on or after October 1 was taxable. A September 15 cycle was not; an October 15 cycle was.
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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.