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 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.
When did Texas treat computer software used by ranchers and other original agricultural producers as exempt?
Software designed specifically to aid an original producer's production, processing, packing, or marketing qualified; forecasting, marketing surveys, and other analytical uses did not.
Was Puerto Rico Marine Management entitled to Texas's sales-tax exemption for the United States government, and could other carrier exemptions apply?
No federal-government exemption applied. The Comptroller said specific purchases might instead qualify under interstate-shipment and common-carrier rules if supported by exemption certificates.
Could a Texas company claim exemption from city sales tax for taxable sales and deliveries at a terminal facility inside the city limits?
No. Because the terminal facility was within the city limits, taxable sales made there and taxable items delivered there remained subject to city tax unless the area was de-annexed and the Comptroller…
Was advertising space in a free periodical taxable, and who owed sales or use tax on the periodical's materials, printing, and publisher charges?
Advertising-space sales were not taxable, but the periodical operator owed tax on production inputs and the full publisher charge, through seller collection or direct use-tax remittance.
Was Ayds Appetite Suppressant Candy subject to Texas sales tax?
Yes. The Texas Comptroller stated that Ayds Appetite Suppressant Candy was subject to sales tax.
Were a Texas beekeeper's sales of honey, hive-based pollination services, and sideline bee equipment subject to sales tax?
Honey sales and pollination services furnished by moving beehives were not taxable, but sales of sideline bee equipment were taxable and required a sales-tax permit.
How did Texas tax a service that made written and photographic records of customers' property for future fire or theft claims?
The photograph charge was taxable. A separately stated written-record charge was not taxable, but the overall transaction was not treated as a wholly nontaxable information service.
When a Texas nonprofit festival sells tickets that attendees redeem with food vendors, are the ticket and food sales taxable, and who must collect the tax?
The tickets were not taxable, but the food and drink sales were taxable unless a stated nonprofit-sale exemption applied. Vendors had to hold permits and remit the tax, or the sponsoring organization …
Were LactAid tablets subject to Texas sales tax when they performed the same function and were marketed the same way as exempt LactAid drops?
No. Because the tablets performed the same function and were marketed the same way as LactAid drops that Texas had previously exempted, the tablets were also exempt.
Were separately billed cylinder charges taxable when a Texas gas reseller passed supplier-owned cylinders to customers and returned the empties?
No. The Comptroller said the supplier's and reseller's cylinder charges were not true rentals and were not taxable, but any tax already collected had to be remitted or refunded.
Could a business claim a Texas sales-tax exemption or refund for electricity used to make products it installed as real-property improvements?
No. When installing its products into realty, the business was treated as a contractor rather than a manufacturer, and electricity was a taxable consumable supply.
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…
Were meals served to residents, visitors, and employees of Texas-licensed residential-care homes subject to sales tax?
Resident meals were exempt because the homes were state-licensed institutions caring for people. Meals served to visitors or employees were taxable.
Did a customer's blanket purchase order qualify sales for exemption from Texas's 1987 state sales-tax rate increase?
No. The submitted documents did not show the required pre-1987 signed contract or seller bid plus a fixed price or price criteria outside the parties' control.
How did Texas tax repairs and damage charges for oilfield tools rented with or without operators and used offshore?
For operated tools, repair inputs were taxable to the service company and customer damage reimbursements were not taxed. For bare rentals, repair charges were taxable unless certified for qualifying o…
Was a manufacturer's federal superfund tax passed through to its Texas customer included in the sales-tax base?
Yes. The Comptroller treated the passed-through superfund tax as part of the cost of the goods and found no sales-tax-law exclusion for the customer charge.
How did Texas tax bare fishing-tool rentals, operated fishing services, and drill-pipe inspections at oil and gas wells?
Bare tool rentals were taxable. Operated fishing was taxable when removing tubing, rods, or pumps but nontaxable for drill pipe or casing, with additional combined-job and inspection rules.
How did Texas apply its 1984 and 1987 tax-rate increases to a master equipment lease, later schedules, and renewals?
Qualifying pre-increase lease schedules kept the old rate only for the original term and statutory period. Renewals were new contracts, and later-added schedules used the newer rate.
Who had to pay or collect Texas use tax when a non-Texas lessor leased helicopters to a Texas company and the aircraft entered Texas?
If the lessee picked up the helicopters outside Texas, the lessee owed the use tax and the lessor did not collect it. If the lessor delivered into Texas, the lessor had to collect and remit.
Under Texas's aggregate reporting method, what happened when equipment was sold, traded in, or scrapped before the 48-month period ended?
Sold equipment left the asset formula as of the sale date. Traded-in or scrapped equipment stayed in the formula for the rest of the four-year period.
Which purchases by a Texas-exempt 501(c)(4) club were tax-free, including meals, office supplies, plaques, member gifts, and door prizes?
The club could buy operating supplies and club-paid meals tax-free. Individual-paid meals, plaques for former officers, member gifts, and door prizes were taxable.
Were admission fees, boat and equipment rentals, and food sales at a 501(c)(4) association's Texas lake project taxable?
Lake-admission fees were exempt. Boat, umbrella, game-equipment, and similar rentals were taxable, as were food and drink sales from stands, pushcarts, or vehicles.
When was a television-repair estimate fee or deposit subject to Texas sales tax?
An estimate charge was not taxable if no repair was done. If the fee or deposit was applied to or added to a completed repair bill, it became taxable as part of the total repair charge.
What documentation could a Texas catalog seller use to allocate in-state and out-of-state mailings through a forwarding agent?
A signed statement on the forwarding agent's letterhead could show catalog counts and destinations if totals matched delivery. Out-of-state shipments were not taxed, but related charges entered the ta…
Did a vending company's fixed-price contract with a building owner exempt consumer vending-machine sales from Texas's January 1987 tax-rate increase?
No. The vending company had no fixed-price contracts with the consumers buying products, so those sales were subject to the increased rate after January 1, 1987.
Were charges for a Texas 'Knowledge Engineering' business-management consulting service taxable when taxable items could be used or transferred?
The consulting charge was not taxable because the transaction's essence was business-management consulting, but the provider had to pay tax on taxable items used or transferred with the service.
Did an advertising agency's sample documents establish an agency relationship with clients for Texas sales-tax purposes?
Yes. The submitted documents proved an agency relationship, but the agency could not act as the client's agent for finished art or other taxable items produced by its own employees.
When were an architect's programs, blueprints, specifications, renderings, bid sets, work copies, and as-built drawings taxable in Texas?
Deliverables under the original owner-architect agreement were generally nontaxable services. Stand-alone art, stock plans, custom copies, and bid sets sold for a fee were taxable property.
How did Texas tax hand-held electrocardiographic monitors and the related signal analysis and physician reports?
Sales, leases, and rentals of the hand-held monitors were taxable. Analysis of patient signals and the resulting reports to physicians were nontaxable medical services.
Were total charges for wig styling, cleaning, and repair subject to Texas sales tax?
Yes. The Comptroller said the total charge for wig styling, cleaning, and repair became taxable effective October 2, 1984.
Did a private company operating a city-owned public transit system qualify as the city's tax-exempt agent for its purchases?
No. After reviewing the management contract, the Comptroller said the private operator was not the city's exempt agent and had to pay tax on taxable goods it purchased.
Were materials for a general-purpose building exempt from Texas sales tax because the building was on a ranch and stored farm products or machinery?
No. General-purpose building materials were taxable even for farmers and ranchers because buildings were not qualifying agricultural machinery or equipment.
Did feed troughs used at a Texas public sale barn qualify for the agricultural sales-tax exemption?
Generally no. Feed troughs were taxable unless used on a farm or ranch or at a marketing facility operated by a farmer or rancher selling animals raised in the regular course of business.
How long did Texas's prior-contract rate exemption apply to pre-1987 rent-to-own agreements, and did later-added items qualify?
Written rental-purchase contracts for specific items used the signing-date rate until the original contract ended or September 30, 1989, whichever came first. Later-added items did not qualify.
Did calculators, security equipment, and office furniture shipped to Indonesia qualify as drilling or offshore mineral-exploration equipment?
No. The listed items were not drilling equipment or property exclusively used in qualifying offshore exploration or production, though proper export documentation could support export treatment.
Could a lessee receive Texas credit or a refund for legally imposed vehicle tax paid to Tennessee on lease payments?
Yes, but only for legally imposed similar tax actually paid. Texas credited Tennessee tax paid before or alongside Texas use tax; it would not credit future Tennessee payments before they occurred. If…
How did Texas tax barge rentals, tug and crew charges, crane charges, transportation, and marine oilfield services across six invoice scenarios?
Barge rentals and connected transport or services were generally taxable. Unrelated tug work or post-rental transport could be nontaxable if clearly separated, while well services were taxed on the to…
Were fees for performing plays or musicals, ticket admissions, and optional audience donations subject to Texas sales tax?
The performance fee charged to a sponsoring group was not taxable. Tickets were generally taxable unless sold by a nonprofit or exempt group, while truly optional donations were not taxable.
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.
Who had to claim a Texas sales-tax refund when the purchaser paid tax to the seller, and what limitations period did the letter state?
The purchaser had to obtain the refund from the seller, which could then claim from Texas. Private 21-day procedures did not bind the state; the stated period was four years from when tax was due and …
Could Texas decide a pre-1987 contract's rate exemption without seeing the contract, and how long did qualifying contracts remain protected?
No taxpayer-specific decision was possible without the contract copy. Generally, qualifying written contracts or bids for specific items lasted until contract end, renegotiation or renewal, or Septemb…
What general rule did Texas state for written contracts or bids signed before January 1, 1987 when no contract copy was supplied?
The Comptroller could not decide the unnamed contract without a copy. Generally, a pre-1987 written contract or bid for specific items qualified until it ended, was renegotiated or renewed, or Septemb…
Were cardiac electrodes sold to Texas hospitals, nursing homes, HMOs, doctors' offices, and clinics subject to sales tax?
Yes. The Texas Comptroller said cardiac electrodes were taxable when sold to the listed health-care providers.
Which charges at a Texas chili-cookoff fair were taxable, including food, drinks, admissions, rides, souvenirs, booths, and contest entries?
Food, most drinks, admissions absent exempt status, rides, and souvenirs were taxable. Booth rent and qualifying competitor entry fees were not; mixed-beverage permit holders used different reporting …
Were labor and material charges for repairing, painting, or lining railcars subject to Texas sales tax?
No. Texas said railcar repairing, painting, and interior lining were nontaxable, including both labor and materials, whether the work occurred inside or outside Texas.
Could a Texas electricity customer exempt only the percentage used in processing, or did predominant use make all electricity taxable or exempt?
Percentage exemption was not allowed. With only 6.7% exempt use, all electricity was taxable; if more than 50% was used for processing, all purchases would be exempt.
How did Texas divide sales tax and hotel occupancy tax on lodging packages with meals, instructional programs, and health-club or spa access?
Meals bundled with taxable lodging followed hotel occupancy tax. Instructional charges were not sales-taxable, while health-club or spa charges were; long-term lodging shifted meals to sales tax.
Which Texas sales-tax rate applied to utility billing periods that began before or after January 1, 1987?
The increased rate applied to billing periods beginning on or after January 1, 1987. A period that began before January 1 used the old rate.
Did work chaps used strictly for farm and ranch jobs qualify for Texas's agricultural sales-tax exemption?
No. The Comptroller treated work chaps as taxable despite their livestock and ranch use and said the seller could back-bill customers for the tax.
Did a 1986 special order delivered in 1987 use the old Texas sales-tax rate when the customer paid a nonrefundable deposit?
Yes, if the original order had a set price, the customer signed it, and the customer paid the nonrefundable deposit.
Which purchase orders and contracts qualified for the Texas sales-tax rate in effect before the January 1, 1987 increase?
Pre-1987 actual orders for specific items and binding contracts with a definite price or pricing criteria outside the parties' control used the pre-increase tax rate.
Did Texas assess tax on liquor and mixer ingredients lost when restaurant employees or customers spilled drinks or broke bottles?
Employee spillage and breakage were not assessed, but ingredients in a replacement for a customer-spilled drink were taxable like a complimentary drink. Records had to prove who caused each loss.
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…
Was a lump-sum charge taxable when a business computer-printed standardized real-estate advertising postcards and mailed them for customers?
Yes. Texas treated the business as producing tangible personal property—standardized advertising postcards—and taxed the total lump-sum charge.
What information did a Texas utility need on exemption certificates from religious, 501(c), nonprofit, or other exempt-entity customers?
Certificates identifying a qualifying exemption type could be accepted. A certificate saying only 'nonprofit' or 'exempt' required verification; liability relief also required a complete certificate a…
Was a sign company's charge for hanging a tenant-owned sign on the sign company's pole subject to Texas sales tax?
No. Under the stated facts, Texas did not require the sign company to charge tax on its fee for hanging the customer's sign on the company's pole.
Did equipment used by Texas farmers and ranchers to control predators qualify for a sales-tax exemption?
No. The Comptroller stated that no exemption was available for equipment farmers and ranchers used to control predators.
How did Texas apply the January 1987 rate increase to advance-billed telephone service, dated calls, and bulk-billed items without service dates?
Advance bills spanning January were apportioned and dated calls used the rate for their date. A correction gave undated bulk-billed items a grace period, applying the higher rate when billed on or aft…
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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.