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 sawdust used by a meat-packing company to smoke meat taxable?
No. The sawdust was necessary and essential and was consumed in processing the meat. The seller was instructed to obtain a properly completed exemption certificate from the customer instead of collect…
Which pressure-equipment calibration and related charges were taxable?
Customer-equipment calibration and calibration included with rented pressure equipment were taxable. Calibration of the supplier's equipment used by its own personnel was not. Equipment sales and trav…
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…
Were charges for customer time on tanning beds subject to Texas sales tax?
No under this 1985 letter. The Comptroller said charges for time on tanning beds were not taxable, based solely on the new salon's stated facts.
Did an appraisal district collect sales tax on copies of maps, microfiche, and other records?
Not when it furnished only single copies of documents; in that situation, it needed neither a sales tax permit nor tax collection. Sales of multiple copies were taxable.
Did a physician's prescription make the purchase of a waterbed exempt from Texas sales tax?
No. The waterbed remained taxable despite the prescription because the Comptroller said it did not qualify as a therapeutic appliance under Rule 3.284(a)(11).
How was use tax computed when a permit holder withdrew inventory and transferred interests to joint owners?
Taxable value was the transferor's purchase price, not the current market value charged to joint owners. The rate was the one in effect when the item was purchased, and overpaid tax from using the wro…
Did another bowling center's assumption of league contracts end their prior-contract exemption?
No, provided the new center did not change the contracts' rates or lengths. Copies of the old contracts had to be retained with the new contracts.
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…
When were oilfield free-point, back-off, and cutting services taxable?
Removing downhole tubing, rods, or pumps was taxable, while removing drill pipe or casing was not. If formation work or casing repair accompanied an otherwise taxable service, the whole job was nontax…
How were oilfield-pipe cleaning, repair, yard movement, sales, and returns taxed?
Cleaning was taxable maintenance, but the subsidiary's cleaning and repair of the parent's resale inventory was exempt. End-user sales, cleaning, and repairs were taxable; yard movement depended on ti…
Was injected Conray solution exempt, and how were mixed diagnostic kits classified?
Yes. Conray used as a saline medium for radioactive dye injected by a doctor was exempt as a drug or medicine. Past tax could be claimed by amended returns within the stated four-year limit. For singl…
Were computers used by contractors on federal real-property contracts taxable?
Yes for purchases, leases, or rentals effective October 2, 1984, including parts and supplies. A contractor could claim the historical preexisting-contract exemption for a federal contract entered bef…
Was a lump-sum charge to deliver, set up, and operate concert sound equipment taxable?
No under the stated arrangement, if one lump-sum amount covered both equipment and operating personnel. The provider instead paid sales tax on the equipment and supplies used to deliver that nontaxabl…
Which conservation-district items and services were taxable, and which qualified for farm or ranch treatment?
The 1985 letter classified a list item by item. Agricultural-use fertilizer, lime, irrigation systems, grass seed, and some farm equipment were not taxable, while home-use or erosion-control purchases…
How did the October 2, 1984 rate change affect old leases, later leases, purchases, and early payoffs?
Pre-October 2 leases kept the old rate under the historical prior-contract exemption through September 30, 1987. Later leases needed a pre-October bid to qualify. Financing-lease purchases and qualifi…
Were tire repairs taxable on highway motor vehicles and on non-motor-vehicle workover rigs, and where was local tax due?
The 1985 letter said motor-vehicle tire repairs were not taxable, but repairs to workover rigs and other non-motor vehicles were taxable. It sourced local tax to the repairman's place of business; STA…
Were mites sold for fire-ant control exempt when used on a farm or ranch?
Yes under the stated facts, when purchased for exclusive farm or ranch use. The 1985 letter treated the mites as farm or ranch work animals and required an exemption certificate; STAR warns that regis…
How did Texas treat bundled and separately stated postage, handling, and insurance charges?
A single combined postage, handling, and insurance charge was taxable. When separately identified, insurance was not taxable, handling was taxable, and postage was taxable unless the contract passed t…
Were softball-team league fees taxable as admissions to an amusement?
No under the stated facts. The 1985 letter treated the league fees as entry fees, not amusement admissions, because teams paid them to compete, the fees funded the games, and they substantially exceed…
Did the October 2, 1984 sales-tax changes make the two-step Crimp-Kote pipe process taxable?
Yes. The 1985 letter said services that remodel tangible personal property became taxable on October 2, 1984, making the total charge for both Crimp-Kote steps taxable. An attached 1980 letter had rea…
Could a physician's verbal order or a signed health-care referral count as a prescription for exempt therapeutic items?
Yes on the stated facts. After consulting State Board of Pharmacy personnel, the Comptroller treated both the physician's verbal orders and the submitted signed referral forms as prescriptions, so the…
How did Texas treat lump-sum subcontracts, itemized change orders, and freight under separated construction contracts?
The Comptroller examined each subcontract separately. A lump-sum subcontract improving real property made the subcontractor responsible for tax; itemized change orders kept the original lump-sum chara…
Were perennial food-producing plants exempt in the same way as the edible products they produced?
No. The 1985 letter distinguished the food product from the plant: apples, strawberries, and perennial herbs sold as food were exempt, but apple trees, strawberry plants, and perennial herb plants wer…
Were materials incorporated into an eight-ton-or-larger paddlewheel charter boat and restaurant exempt?
Yes under the stated exclusive commercial-use facts and Section 151.329. Component materials and attached items qualified, but personal use would trigger tax on the boat's fair-market rental value.
Was machinery and equipment bought to make wine exempt when the winery was owned and operated by the original grape producer?
Yes under the stated facts. The Comptroller distinguished winemaking from denim manufacturing and said machinery and equipment bought by a winery owned and operated by an original wine-grape producer …
Could a ticket seller give collected sales tax to promoters to report, and who remained accountable if they did not remit it?
Temporarily, the seller could pass collected tax to an accepting promoter while reprogramming, but the Comptroller did not release the seller from liability. Without a written assumption of responsibi…
How did Texas distinguish seller-installed bowling equipment from equipment bought and installed by the bowling center?
Seller-installed automated scoring machines, pin-setting machines, alleys, returns, and related equipment permanently affixed to realty remained real-property improvements. The brochure's taxable-purc…
Who paid and collected tax under lump-sum versus separated home-improvement contracts?
Under a lump-sum contract, the contractor was the consumer: it paid suppliers' tax on materials and did not collect tax from the customer. Under a separated contract, the contractor was a retailer of …
Were admission tickets sold to preregister bidders at an auction taxable as amusement admissions?
No. The 1985 letter said auctions were not amusement services, so selling admission tickets to an auction for bidder preregistration was not taxable.
Were charges for laboratory blood typing and dentists' wax impressions taxable within a child-identification service?
No. The Comptroller said charges for blood typing and wax dental impressions were not taxable, whether the company retained the resulting information or transferred it to clients.
When were delivery charges taxable for fresh water, taxable goods, and a water-KCL mixture?
Delivery of nontaxable fresh water was not taxable, but mixing it with taxable KCL made the mixture taxable. Delivery of taxable goods was taxable unless separately stated and occurring after the sale…
Were charges to haul fresh water to frac tanks at a customer's well location taxable?
No under the stated facts. Section 151.315 exempted the sale of water, and the letter said charges to transport nontaxable items were not taxable.
When were vehicle and equipment leases to federal banks or other governmental organizations exempt from Texas tax?
For motor vehicles, the historical exemption required title in the lessor's name, a lease to a qualifying public agency, and exempt license plates; standard plates made the vehicle taxable, and tax on…
Could a foreign buyer obtain a Texas sales-tax refund by proving promptly that purchased goods cleared U.S. Customs?
Possibly, at each retailer's option. Tax was due when taxable goods were transferred in Texas, but a retailer could refund it and seek reimbursement if the buyer proved the same goods cleared U.S. Cus…
Could an oil-and-gas operator use its own direct-payment permit for purchases made for subsidiary-owned leases?
Only in the stated general-partner arrangement. Otherwise, each qualifying subsidiary needed its own permit; the operator could buy under a subsidiary's permit only when a legal purchasing-agency agre…
When was condominium electricity exempt residential use versus taxable commercial use?
Owner use and tenant stays of 30 days or more were exempt residential use; stays under 30 days were taxable commercial use. The association could claim exemption if it substantiated over 50% qualifyin…
Was the total charge taxable for converting a motor vehicle to LG fuel or dual gasoline/LG fuel?
Yes. The Comptroller classified each described bolt-on conversion as remodeling because it changed the vehicle's form, shape, or style without changing its identity or nature. Both parts and installat…
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 …
Were customer charges for provider-controlled water-conditioning systems taxable equipment rentals or nontaxable services?
They were nontaxable services under the stated arrangements because the provider retained ownership and operating control and performed all maintenance. Billing equipment and service separately did no…
Could seasonal cotton gins claim an electricity exemption on off-season bills that spread processing-period charges across the year?
Yes after reconsideration, if the predominant charge on the off-season bill was attributable to seasonal processing use. The March 14 letter reversed the attached February 22 answer, which had denied …
Could an amusement park collect and remit tax at its own jurisdiction's rate on tickets consigned for same-price resale?
Yes in both confirmed scenarios. The park could collect and remit tax at its own local and state rate when a consignee resold tickets at cost, including when the consignee sold statewide and received …
When were golf or tennis tournament entry fees not taxable under the corrected 1985 answer?
Only when both conditions were met: the entry fee exceeded the usual green or court fee for the same period, and part of the fee funded tournament awards. The letter called this a clerical correction,…
Was dog grooming taxable when performed for cosmetic reasons versus as a necessary part of medical treatment?
Cosmetic dog grooming was taxable regardless of who performed it. Shearing or clipping that was necessary to an actual medical treatment was not taxable.
Which listed truck and equipment repair-labor charges were taxable after the October 2, 1984 change?
Repair labor remained exempt for the listed motor vehicles—garbage, dump, flatbed dump, wrecker-lift, and car-hauler trucks, plus dump trailers—but was taxable for dozers, loaders, backhoe/loader trac…
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…
Was a bulk sale of coupons taxable when customers later exchanged them at the box office for amusement tickets?
No at the coupon-sale stage because the coupons were not themselves amusement admissions. Sales tax was collected from the customer when the coupon was exchanged at the box office for an admission tic…
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…
When did a farm or ranch computer qualify for the agricultural sales-tax exemption?
Only when used exclusively to produce, process, pack, or market agricultural products. Dairy, crop, feeding, and breeding records qualified; household expenses, payroll, and tax reporting did not. STA…
What rate applied to leases signed before October 2, 1984, and how were renewals treated?
The historical prior-contract rule preserved the rate in effect when a pre-October 2 lease was signed, including open-ended contracts, through September 30, 1987. Renewals and renegotiations were new …
Were data-processing leases and sales to the U.S. Government taxable, and did an out-of-state seller need a Texas permit?
The federal government could rent, lease, or buy tangible property for its own use without tax. The Virginia seller needed no Texas permit or collection duty on isolated direct-shipped sales because i…
When could nonprofit volunteer groups sell food and drinks tax free at an annual fundraiser, and were festival T-shirts taxable?
The $6 T-shirts were taxable. Food and drink could qualify only at a no-longer-than-one-week annual fundraiser run exclusively by nonprofit volunteers, with no catering, paid preparation or service, c…
Did a pre-October 2, 1984 software lease qualify for prior-contract relief, and was there an occasional-lease exemption afterward?
The existing software lease remained untaxed until modification, extension, or September 30, 1987, whichever came first. Effective October 2, 1984, no occasional lease or rental provision remained, so…
Were nightclub and bar admission charges taxable when the venue had a dance floor but no live entertainment?
Yes. The February 22 letter corrected the attached January 30 answer and said admission charges to nightclubs and bars with dance floors were taxable even without live entertainment.
Which oilfield heating, cleaning, water, brine, KCL, hauling, testing, and well-killing charges were taxable?
The 16-part answer was operation-specific: testing tubing leaks, produced-water hauling, fresh water, and certain oil-cleaning steps were not taxable; steam cleaning, paraffin removal, sand cleanout, …
Were canoe excursions taxable under Texas's newly enacted tax on amusement services?
Yes. The 1985 letter classified canoe excursions as amusement services and said they were subject to sales tax effective October 2, 1984.
When was tax due on financing and operating leases, and could an equipment-acceptance certificate establish possession?
For financing leases, tax arose at possession or the first payment due, whichever came first; a later balloon payment already included in the base was not taxed again. An acceptance certificate could …
What state, city, and MTA sales taxes applied to tickets for traveling carnival rides?
All ride tickets sold and redeemed were subject to state tax and applicable local tax. City tax followed the ride's operating location, MTA tax applied within the proper authority, and rides in a non-…
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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.