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 a contractor or subcontractor claim the 1987 prior-contract exemption without having its own written contract or bid with suppliers?
Yes, if the owner-general-contractor contract or bid met the pre-January 1, 1987 timing and fixed-price requirements. The contractor did not need separate written supplier contracts.
How did Texas tax the lease-purchase agreement after classifying it as a financing lease?
Tax was due when the lessee took possession or the first payment became due, whichever came first, and it was calculated on the contract value rather than the equipment's original cost.
Was electricity used to operate disposal wells exempt when it transported artificially mixed salt water injected into oil wells?
No. The artificially mixed salt water was not naturally occurring brine or a material extracted from the earth, so electricity used to transport it was not exempt.
Could a customer's letter document a Texas sales-tax exemption for valves intended for offshore use or export?
For the offshore-use exemption, yes if the letter identified Section 151.324(a), described the property, and otherwise formed a valid good-faith certificate. It was not enough under the drilling-equip…
Was a $25 employee per diem recharged to customers part of the Texas sales-tax base for taxable services?
Ordinarily yes, because per diem connected with taxable services was an includable expense. The Comptroller allowed this company to exclude it because the company did not book the amount as income.
Were materials, supplies, and equipment bought by Houston Lighting and Power to support litigation for South Texas Nuclear Power Plant participants exempt from Texas sales tax?
No. The Comptroller found no exemption for Houston Lighting and Power's litigation-support purchases; a contract exemption for incorporated construction materials did not extend to them.
Did a riding mower used to cut grass around commercial greenhouses qualify for Texas's agricultural machinery exemption?
No. The mower maintained the grounds around the greenhouses rather than producing agricultural products for sale, so it did not qualify.
Who had to collect and remit Texas sales tax on property sold by resident and nonresident table holders at a gun show?
Every table holder selling tangible personal property had to collect tax regardless of home state. The promoter could remit for them or require each seller to hold a Texas permit.
Did anchoring, plumbing, and wiring a rented prefabricated building make it real property for Texas tax purposes?
No. The building remained tangible personal property because it was intended as a one- or two-year temporary bank facility and was rented separately from the land.
How would an MTA rate election affect Helotes, could a city withdraw, and what would a city telecommunications-tax ordinance do?
The MTA-wide vote and rate applied throughout the authority, and the full rate funded transit. Rule 3.423(b) provided a withdrawal method; a city telecom ordinance extended local tax without changing …
Which parts of a master equipment lease qualified for Texas's pre-1987 prior-contract exemption, and what later changes ended that treatment?
Only the master lease and schedules signed before January 1, 1987 qualified. Later schedules, subleases, renewals, purchases, upgrades, or renegotiations were new taxable transactions.
Were normally taxable tubing-removal services nontaxable when performed to enable an oil-well acid job?
Yes. Viewed as a whole, the crew's work facilitated the acid job, so the normally taxable down-hole services became nontaxable.
Were liquidated-damage fees paid to a delayed granite fabricator included in the Texas sales-tax price of the granite?
Yes. The fees were part of the granite's sales price. The resale purchase caused no immediate tax, but the contractor owed tax if supplier cost including fees exceeded the customer contract price.
Was the seller's Shippers Export Declaration sufficient proof for a Texas sales-tax exemption on exports to Mexico?
No. It did not meet Rule 3.323(c)(1). The seller had to collect tax when the customer took possession in Texas, then could refund it after receiving proper export documents.
Could a seller use a stamped impression on its invoice as an agricultural exemption certificate, and what information had to appear?
A stamp could work, but the submitted wording did not. It needed purchaser details, item description, a purchaser-written specific exemption reason, and a separate signature and date.
Was drilling mud lost or consumed during a drilling operation taxable when part of the price was paid as a rental charge?
Yes. The mud was a consumable supply sold with deferred compensation, and sales tax was properly billed on the amount consumed rather than returned.
Which equipment and supplies could commercial trawlers buy exempt from Texas sales tax?
Vessels over eight tons could exempt items becoming component parts, such as navigation equipment and rigging. Broader supplies required exclusive interstate or foreign coastwise commerce and Rule 3.2…
Were blend-stock products used as gasoline components subject to Texas motor-fuels tax or sales and use tax?
They were outside the motor-fuels tax law but subject to sales and use tax. A reseller could buy with a resale certificate and then collect tax or take one from its customer.
Could verbal quotations qualify for Texas's 1987 prior-contract exemption?
No. A qualifying real-property contract had to be written and signed by both parties before January 1, 1987, without tax-based change or modification.
When were free-point, pipe-recovery, cutting, and other down-hole oil-well services taxable in Texas?
Tax depended on the overall well job. Ordinarily taxable services became nontaxable when necessary to specified nontaxable work, but the provider needed invoice or operator documentation.
Were fishing-guide and fishing-excursion-boat services subject to Texas sales tax?
No. The Comptroller classified fishing-guide services as personal rather than recreation services, gave them the same exempt treatment as hunting guides, and also excluded fishing excursion boats.
Were hunting and fishing guide services and fishing excursion boat services subject to Texas sales tax?
No. The Comptroller's 1987 letter treated fishing and hunting guide services as nontaxable personal services and also said fishing excursion boat services were not taxable.
Could an export packer buy crating and packaging supplies tax-free, and did that treatment clearly cover sheet lead used as export shielding?
Listed supplies used exclusively for export could be bought with an exemption certificate, which needed no permit number. Sheet lead was not listed, and this record contains no final Comptroller decis…
Was used drilling equipment bought at a Texas auction exempt because its new owner immediately moved it to Mississippi for exclusive use there?
No. Because a prior owner had apparently used the drilling equipment in Texas, it was not built for exclusive out-of-state use; the auctioneer properly charged tax and no refund was due.
What did a May 1987 Texas Comptroller internal memo and approved announcement say about fishing guide services?
The memo called the measure a proposed rule and sought its filing and effective date. Its approved announcement said fishing guides and fishing excursion boats were not taxable.
Were $40 sales of a family-history book taxable when the buyers were only family members and friends?
Yes. Family and friend sales were taxable sales of books. Supplier tax could be recovered for copies actually resold, while copies kept or given away remained taxable to the publisher.
Could an out-of-state buyer obtain a refund of Texas sales tax on auction equipment shipped out by common carrier without Texas use or possession?
Yes, if the buyer made no Texas use, did not take possession in Texas, and documented common-carrier shipment out of state. The auctioneer could refund the tax and claim credit.
Did the medical needles listed in a supplier's product literature qualify for a Texas sales-tax exemption?
Yes. The Comptroller said the nine listed Chiba, myelography, Cournand, Seldinger, angiography, spinal, arterial, and intradiscal needles qualified for exemption.
Were newsletter subscription charges, shipping and handling, and binders taxable in Texas?
Newsletter subscription charges and a $5 shipping-and-handling fee were taxable. Included binders could be bought for resale, but binders given away were taxable to the publisher.
Were film libraries leased by subscription taxable in Texas, including when used by a federal contractor?
Yes. Based on the limited facts, the Comptroller treated the subscription as a lease of taxable tangible personal property; a federal contractor was not exempt for items it used.
Were address cards used by the postal service to deliver a free newspaper exempt wrapping or packaging materials in Texas?
No. The Comptroller said the postal address card was not exempt wrapping or packaging material under Rule 3.314, so the charges associated with producing it were taxable.
Was a charge to a food-booth operator for booth space taxable in Texas when calculated as a flat fee, a percentage of sales, or both?
No. The Comptroller said food-booth space rental was not taxable whether charged as a flat amount, a percentage of the operator's gross sales, or a combination.
Did a Texas health club or physical fitness center have to collect sales tax on customer fees for using its weight-training facilities?
Yes. The Comptroller classified health clubs and physical fitness centers as taxable amusement services under Rule 3.298 and required tax on facility-use fees.
How did Texas tax a modeling agency's promotional package, agency-book listing fee, composite cards, and installment payments?
A separately stated annual agency-book listing fee was nontaxable, but the portfolio package and composite cards were taxable tangible property. Tax could be reported with final payment under stated c…
How did Texas tax casino-party fees and event decorations that were installed, removed, reused, discarded, or taken home by guests?
Casino admissions or per-person chips were taxable, but a lump-sum party service was not. Decoration transactions were taxable sales or rentals, with limited separately stated installation and return-…
Did shop-order envelopes qualify for Texas's manufacturing exemption as short-lived machinery, equipment, accessories, or essential manufacturing materials?
No. The Comptroller said shop-order envelopes were not manufacturing machinery, equipment, or accessories and were neither essential to nor directly used or consumed in manufacturing.
Could a company use Texas's aggregate use-tax reporting method retroactively from September 1, 1985, and how were existing assets and a capitalized repair treated?
No retroactive start was allowed; the method began November 1, 1986. Undepreciated balances and a separately capitalized $24,000 repair were reportable over four years.
Which training-company charges did Texas treat as taxable sales or materials and which seminar, delivery, or consulting fees were nontaxable?
Product sales and training-material charges were taxable; several seminar, delivery, and consulting categories were nontaxable, but the provider sometimes owed tax on materials used in Texas.
Was a turnkey drilling-mud provider selling taxable mud or providing a nontaxable well service, and could charges for consumed mud be treated as loss reimbursement?
The company was a drilling-mud retailer, not a well-service provider. It could buy chemicals for resale but had to tax the full mud price; consumed mud was a sale, not reimbursed loss.
Could a county claim its political-subdivision exemption for Astrodome purchases and real-property improvements benefiting a private lessee?
No. Property bought for the private lessee's use and contracts improving county realty for that private party's benefit were not covered by the county's exemption.
How did Texas treat pager setup and insurance charges, invoice wording for freight, and handwritten sales-tax corrections?
Pager setup and damage insurance were taxable; loss-only insurance was not, while combined coverage was fully taxable. Freight needed contract or bill-of-lading proof, and invoice alterations required…
Which sewing, cleaning, and packaging supplies sold to garment manufacturers did Texas classify as exempt, taxable, or fact-dependent?
Texas exempted listed incorporated, processing, and qualifying nonreturnable packaging items with a certificate; taxed listed equipment and supplies; and required more facts for 14 items.
After Rule 3.295 changed, did a utility need replacement electricity-exemption certificates for customers whose certificates had been accepted before the revision?
No replacement was required for certificates accepted before the revision. Current predominant-use certificates had to state that a valid study supported the actual exempt percentage.
When did a price increase end a Texas prior-contract exemption, and did an outside-factor exception apply when the contract omitted the increase formula?
The exemption lasted through December 31, 1987 or until a price increase. An outside-factor increase could preserve it, but not where the contract omitted the basis for computing the increase.
Could patients buy or rent the described electronic muscle stimulator tax-free as therapeutic equipment in Texas?
Yes, with a doctor's prescription. The Comptroller classified the stimulator as a therapeutic device; nonprescription purchases and practitioner purchases were taxable.
How did Texas tax party entertainment, decorating labor and materials, sales to exempt organizations, and unpaid customer bills?
Client-paid entertainment was nontaxable when no admissions were sold; separately stated decorating labor was nontaxable, materials were taxable, and bundled labor and materials were fully taxable.
Was a $57 fee covering three admissions to an apparel mart and a buyers-guide listing taxable as admission to an amusement service?
No. The Comptroller did not consider the apparel-mart admission an amusement-service admission and said the described $57 charge was not taxable.
Could a multi-location restaurant operator use one electricity-exemption study for multiple locations instead of preparing a separate study for each?
Only for locations proven to be the same, not merely similar, in electricity-relevant respects. Differences in building, equipment, operating hours, or heating and cooling required separate studies.
How did Texas tax a livestock producer's employee uniforms, cattle-auction rentals and refreshments, motel space, pickups, trailers, and farm machinery?
Uniforms and cattle-auction toilet, chair, and table rentals were taxable; other items depended on food, hotel, or vehicle rules, while qualifying farm trailers and machines were exempt.
What Texas sales-tax rule did an internal Comptroller memo identify for complimentary restaurant meals, appetizers, and beverages?
Rule 3.293(e)(3) made free promotional meals and beverages taxable to the restaurant owner only to the extent tax would have been due on the original supplier purchase.
Were cartons of 18 fully cooked, hard-boiled, dyed Easter eggs sold in grocery stores taxable in Texas?
No. The Comptroller found the described sealed cartons of 18 cooked and dyed eggs nontaxable, even though some of the grocery stores had sit-down eating areas.
Could sales tax be refunded or removed from a construction debt when the purchaser never issued an exemption certificate and a bonding company later assumed the debt?
No. Without a properly completed purchaser certificate, tax remained due. The bonding company had assumed the debt and lacked its own exempt-entity contract basis to remove the tax.
Were separately stated rock-and-sand transportation charges exempt when the seller relied on oral FOB-pit terms but lacked a written contract or carrier bill of lading proving pre-shipment title transfer?
No. The final April letter found oral agreements and unsupported FOB terms insufficient, so the transportation charges were taxable without records proving title passed before movement.
Was a handling fee taxable when a company only marketed vacation packages and referred interested clients to a travel agency?
No. Based on the stated limited role, the Comptroller said the handling fee was not connected to a taxable item or taxable service and therefore was not taxable.
When were an advertising agency's art-direction and postage charges taxable depending on whether it acted as a seller or disclosed agent?
Art direction tied to the agency's sale or employee fabrication of property was taxable; disclosed-agent art direction was not. Postage followed whether the underlying negatives were part of a taxable…
Was a pipeline-welder testing company's charge taxable when it prepared pipe coupons, stress-tested the welds, reported results, and transferred samples?
No. The Comptroller treated the welder-testing charge as a nontaxable service even though the customer received the tested coupon; the provider owed tax on taxable inputs it used.
Could a retailer use Texas's purchase-ratio sales-tax reporting method, and what records were required for exempt agricultural sales?
No, because the retailer was outside the eligible seller categories. Exempt sales required detailed invoices and, when exemption depended on use, timely detailed certificates; vague farm-use claims fa…
Were body-wrapping service charges subject to Texas sales tax?
No. After reviewing the submitted materials, the Comptroller said the body-wrapping service charge was not taxable and that the customer could seek a refund from the studio.
How did Texas treat separately invoiced freight for purchased and leased construction forms under a contract signed before October 2, 1984?
FOB-origin freight separately invoiced on purchased forms was not taxable. Freight on leased forms could use the prior-contract exemption, which expired September 30, 1987.
Could a Texas telephone-system seller revise a completed turnkey invoice after the transaction to separate nontaxable labor from materials?
No. The original written contract and billing controlled, so an after-the-fact invoice could not separate labor to change the tax result; sales tax applied to the total charge.
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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.