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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What prescription and documentation must a retailer collect to sell massage chairs, hot tubs, and similar therapeutic appliances tax-exempt in Texas, and does a chiropractor's prescription count?
A retailer needs only a written prescription (signed, with the practitioner's name/address/license info, identifying the item) for most therapeutic appliances like massage chairs and adjustable mattre…
Can a wholly-owned LLC subsidiary of a tax-exempt charter school issue sales tax exemption certificates in the school's name when making purchases on the school's behalf?
Yes. The Comptroller ruled that a charter school's wholly-owned LLC subsidiary (a disregarded entity for federal tax purposes) may issue sales tax exemption certificates in the school's name when acti…
When a state university system (the exempt party) is the LANDLORD and a non-exempt LLC is the TENANT building student housing on university land -- the reverse of the usual exempt-tenant/taxable-landlord setup -- does the construction still qualify as an exempt § 151.311 contract, and who can issue the exemption certificates down the contractor chain?
Yes, exempt -- but under a different legal test than the familiar two-prong lease-term test. The Comptroller ruled that a 514-bed student-housing facility built on Texas A&M University System land und…
Can a manufacturer claim a 100%-exempt sales tax refund on steam purchases by citing the "predominant use" test that applies to natural gas and electricity?
No -- wrong exemption theory, though a narrower one may still apply. The "predominant use" test in Rule 3.295/Sec. 151.317(e), which lets a taxpayer claim 100% exemption on natural gas or electricity …
A printer using offset litho (not web offset or rotogravure) asks: does a new 2001 exemption for out-of-state-mailed printed materials apply to its process, and does it change what it must collect on jobs bought from a sister company?
No, offset litho doesn't qualify. The exemption is limited by its terms to printed materials produced by web offset or rotogravure printing processes -- items printed on offset litho don't qualify, so…
A private partnership leases university land, built and operates a student dormitory there for the university's benefit under a tightly restricted ground lease, and title to the building already belongs to the university's governing board -- is mold-remediation and repair work on the dormitory exempt from Texas sales tax?
Exempt. Repair, remodeling, and mold-remediation work on a university dormitory qualifies for the Sec. 151.311 exemption for improvements to realty performed for the direct benefit of an exempt entity…
Does a waste hauler have to charge Texas sales tax on industrial solid waste that's mixed in with regular taxable garbage, and what proof does a customer need to claim the exemption?
Disposing of industrial solid waste (as defined by the Health and Safety Code) is not a taxable waste collection service in Texas, even when it's mixed with taxable garbage or municipal solid waste — …
Is artwork design and printing for a manufacturer's shipping containers exempt from Texas sales tax, including when the container doubles as an in-store display?
Split answer. A manufacturer can use a manufacturer's exemption certificate to buy, tax-free, artwork design and printing for a shipping container -- even if that same container later doubles as a pro…
Does a chiropractor collect sales tax from patients for therapeutic devices used in treatment, and can a practitioner buy prescribed dietary supplements/vitamins tax-free?
A licensed practitioner of the healing arts (like a chiropractor) pays sales tax itself on the purchase price of therapeutic appliances or devices used in treating patients, but does NOT collect sales…
Can a bakery buy proofing cabinets (which provide the heat and humidity that makes bread dough rise) tax-free under the manufacturing exemption?
Yes. Proofing cabinets -- which provide the uniform heat and humidity needed to cause bread dough to rise -- qualify for Texas's manufacturing exemption when purchased by a business in the business of…
Is installing propane piping and equipment for a meat smoker and water heater in a food-processing plant taxable, and does a water heater used for both smoker humidification and equipment wash-down qualify for the manufacturing exemption?
Split answer across two work orders. For the smoker installation: the propane piping, regulators, flex connector, and other materials are taxable, but the LABOR to install this equipment is new constr…
Is artwork and packaging material sold to manufacturers (for their packaging, containers, labels, and displays) exempt from Texas sales tax, and how can a client get a refund for tax already paid?
Split by category, with a refund path. Sellers should accept an exemption certificate in lieu of tax when selling wrapping/packaging materials to manufacturers. A manufacturer that creates its own wra…
Is selling and installing a modular semiconductor cleanroom exempt from Texas sales tax, and what about repairing or remodeling the building around it?
It depends on who the customer is. Selling and installing a modular cleanroom (including installation labor) is exempt only when the customer is a semiconductor manufacturer who gives a properly compl…
Is sales tax due on drilling rigs docked in Texas, and on repairs/maintenance performed on them, while they wait for offshore oil-and-gas contracts?
It depends on how the rigs are used and built. Renting a rig with an operating crew for a single charge is a nontaxable service, not a taxable rental. Separately, purchasing the rigs and repairing/mai…
Can a wedding/portrait photographer buy cameras, flashes, batteries, and similar equipment tax-free using an exemption certificate, or only film and processing supplies?
Yes, more than just film. Photographers are treated as manufacturers under Sec. 151.318, and the 1999 addition of Sec. 151.318(t) lets them give an exemption certificate for cameras (conventional and …
Is labor to repair or remodel a building listed on the National Register of Historic Places exempt from Texas sales tax?
Yes, but only the labor. A contractor may accept an exemption certificate in lieu of collecting Texas sales tax on charges for labor to repair or remodel a building that is listed on the National Regi…
Can an architecture firm use its tax-exempt school client's exemption certificate to buy blueprint copies tax-free from a copy shop, even though the copies are for the school's project?
No, not just because the client is exempt. An architect's or engineer's professional services are themselves nontaxable, so the firm — as the provider of a nontaxable service — must pay sales tax on t…
Will a state-prescribed Texas sales tax exemption certificate that a customer completes electronically, signs with an electronic signature pad, and stores only in electronic form pass muster in a Comptroller audit?
Yes. The Comptroller's audit division accepts certificates with electronic signatures, in addition to certificates that have been scanned, faxed, or microfiched -- so a system that creates a non-alter…
Does a Texas company that performs artificial insemination of cattle on ranches owe sales tax on its semen, insemination labor, and the AI supplies/equipment it uses to perform the service?
No. Charges for semen and insemination labor are not subject to sales tax at all, and Tax Code Section 151.316's farm/ranch exemption covers AI supplies, AI equipment, animal care products, liquid nit…
If an electric cooperative buys items tax-free under a valid exemption certificate but then uses them in a way that isn't actually exempt (divergent use by a for-profit entity), how is the tax calculated -- on the fair market rental value or the original purchase price?
The default is fair market rental value (FMRV): under Rule 3.287(e), tax is due on the ongoing fair market rental value of items purchased under a valid exemption certificate but used in a divergent m…
Can a pilot renting an aircraft to accumulate flight hours toward an Airline Transport Pilot (ATP) rating claim Texas's flight-training aircraft tax exemption, and what proof does the exemption require?
Yes. Tax Code Section 151.328(a)(2)(B) exempts both lessor and lessee from sales/use tax on aircraft use when the renting pilot is using the aircraft in a way designed to lead to an FAA pilot certific…
We electronically scan our resale and exemption certificates instead of keeping paper copies. Does the Comptroller still require us to keep the original hard copies for audit purposes?
Generally yes for signature-bearing records — the Comptroller requires resale/exemption certificates and other documents requiring a signature to be kept in original or microfilmed form so the signatu…
Does a Texas Water Control and Improvement District need a sales tax permit or number to buy things tax-free?
No -- a Water Control and Improvement District is exempt from Texas sales tax on its purchases as a political subdivision of the state, and it does not need a sales tax number to use an exemption cert…
Can a Texas farmer or rancher buy an advertising sign tax-free using a farm exemption certificate?
Yes -- a farmer or rancher can purchase a sign used to market their products (for example, a 'hay for sale' sign) tax-free by giving the seller an agricultural exemption certificate instead of paying …
For an internet service provider selling email, web hosting, CGI access, secure server access, and disk space, which charges are taxable Texas data processing/telecommunications services, and is an out-of-state customer's billing address enough to avoid Texas tax?
It splits by service type. EMAIL is a telecommunications service, and telecommunications services that originate outside Texas are not subject to Texas sales tax. WEB HOSTING, CGI access, secure serve…
Does a motel's hotel occupancy tax reporting (showing how many room-nights were long-term stays) have to match, or can it be used to second-guess, the motel's separate claim that over 50% of its gas/electricity usage is residential for sales tax exemption purposes?
No, the two don't have to match, because they're governed by different statutes measuring different things. Under Tex. Tax Code § 151.054(c), a utility seller is relieved of tax liability if it accept…
Is the fee a wood-products manufacturer charges a land-clearing contractor to remove and process cleared trees/wood taxable, and does it matter whether the land is for new residential construction or where the wood is actually processed?
Generally taxable, with a residential-construction exception. The fee a wood-products manufacturer bills a land-clearing contractor to remove trees/wood materials is taxable as a real property service…
(1) Can a wholesaler accept a manufacturing exemption certificate from a grocery store buying packaging supplies it knows are used only to repackage, not manufacture, products? (2) When taxable and nontaxable items ship together for one delivery charge, how much of that transportation charge is taxable?
Two separate answers. (1) A wholesaler CANNOT accept a manufacturing exemption certificate in good faith from a grocery-store customer if the wholesaler actually knows the packaging supplies are used …
When a manufacturing plant's waste haul-off is 95% or more industrial solid waste (nontaxable) mixed with a small amount of taxable garbage like office trash, does the Comptroller's "five percent rule" exempt the whole haul-off charge from sales tax?
No. The five percent rule does NOT exempt the whole charge just because 95% or more of a manufacturing plant's hauled-off waste is industrial solid waste. Rule 3.356(a)(3)(E) excludes industrial solid…
Can a utility company rely on an exemption certificate from an apartment complex owner or property management company to exempt utility service from sales tax, without checking whether the property actually qualifies?
Yes, in most cases -- a utility company may accept and rely on a complete exemption certificate from an apartment complex owner or property management company without demanding proof that the property…
Is a biotechnology company's purchase of cell, organ, or tissue taken from a cadaver exempt from Texas sales and use tax?
Yes. The Comptroller reversed an earlier determination and ruled that cell, organ, and tissue purchased or sold by a biotechnology company are exempt from Texas sales tax to the extent they are taken …
Is a newsletter sold by subscription or single issue taxable in Texas, and are sales to governmental customers exempt?
Yes, newsletters are taxable. The Comptroller ruled that newsletters are taxed as information services under Rule 3.342, so sales tax is due on both single-issue sales and subscriptions. However, sale…
Can a non-profit water supply corporation use a sales tax exemption certificate on purchases for a project funded by the Texas Water Development Board's Economically Distressed Areas Program (EDAP)?
Yes, but only for purchases tied to Economically Distressed Areas Program (EDAP) projects. Water Code Sec. 17.921(a) specially defines non-profit water supply corporations as "political subdivisions" …
If our medical practice charges patients, insurers, or attorneys for copies of medical records, do we owe Texas sales tax on that charge?
No -- when a medical service provider charges for copies of medical records as part of its professional service (to a patient, an agent, a party in litigation, or an insurance carrier), that charge is…
If a tax-exempt agency like a Private Industry Council or the Texas Rehabilitation Commission pays for a sponsored student's books, tools, and meal tickets at our college bookstore, should we charge sales tax?
It depends on who is actually billed as the purchaser. If the exempt or governmental agency (like a PIC or the Texas Rehabilitation Commission) is invoiced directly and pays the college or bookstore i…
If I'm a developer building streets, roads, or sewer/water lines in a subdivision that I plan to donate to the county, can my contractor buy materials tax-free?
Yes, but only if the dedication and government acceptance happen before construction starts. A developer donating subdivision infrastructure (streets, roads, sewer/water lines, etc.) to a governmental…
Is an elevator or wheelchair lift installed in my home exempt from Texas sales tax if my doctor prescribes it?
Yes -- an elevator or wheelchair lift installed in a home can be exempt from Texas sales tax as a therapeutic device, but only if the doctor provides a written prescription and a signed statement of m…
Does a piece of exercise/fitness equipment sold by a manufacturer qualify for a Texas sales tax exemption as a therapeutic or orthopedic device?
Partly. The product qualifies for exemption as a therapeutic device, but only when it is sold to an individual under a doctor's prescription (Rule 3.284(a)(11) and (c)(8)). It does NOT qualify as an e…
Can an apartment complex give a utility company a residential-use exemption certificate for gas/electricity without first getting a formal utility (predominant use) study done?
Yes, for apartment complexes matching the studied pattern (meters that mix small commercial use, like the manager's office, with residential common-area use, like club rooms, laundry rooms, pool pumps…
Do I have to charge Texas sales tax when I sell to an out-of-state government agency, college, university, or school district?
Generally yes for out-of-state government agencies — Texas doesn't exempt other states' governmental agencies unless a border state (like Louisiana or Oklahoma) has a reciprocal exemption agreement wi…
If I have a contract to improve realty for a tax-exempt entity (like a city), can I buy telecommunications/telephone services for the job site tax-free?
Not automatically. The Comptroller said telecommunications services aren't considered integral to improving realty, but a contractor can still give an exemption certificate for telecom services used a…
Is having tires retreaded, or having alternators, generators, radiators, or transmissions worked on, taxed as a repair of your motor vehicle in Texas?
Usually yes, taxable as repair — but it can be rebutted. The Comptroller's office says that if you have casings retreaded in a number exceeding the tires a vehicle is designed to use, the presumption …
Does a customer owe Texas sales tax on tire retreading (or similarly, on repair of alternators, generators, radiators, and transmissions) when the repaired part goes back on the same vehicle versus into inventory?
It depends on what happens to the part. If a customer's tire casings (or similar motor vehicle components like alternators, generators, radiators, or transmissions) are repaired and go right back onto…
Under Texas Tax Code Section 151.0048, can a contractor or homebuilder buy landscaping and other real property services tax free when building a new home, and does that exemption also cover model homes or subdivision common areas?
Yes for new residential construction, but no for model homes or subdivision common areas. A contractor building a new residential structure can buy landscaping (and other real property services covere…
Does the Texas Comptroller issue sales tax exemption certificates or letters directly to foreign diplomats stationed in Texas?
No. The Comptroller's office does not issue exemption certificates or letters of exemption to foreign diplomats. Instead, diplomats are told to get a Tax Exemption Card from the U.S. Department of Sta…
A seller ships forms into Texas for a customer who will export them to Mexico. The customer's exemption certificate isn't enough to cover the purchase — what are the options for handling the transaction without charging Texas tax?
The certificate the customer sent wasn't sufficient by itself, but the Comptroller described several ways to avoid Texas tax on goods purchased for export to Mexico: the customer can give an exemption…
If a ready-mix concrete company buys a mixer drum and a truck chassis, does it owe motor vehicle tax or sales tax, and does invoicing them separately make the drum exempt?
It depends on the transaction, not the invoice. If the customer buys a complete concrete truck with the mixer drum already attached, the whole thing is treated as the sale of a motor vehicle, even if …
When a company sells blueprints made from customer-supplied drawings, does it owe sales tax on the sale, even if the blueprints end up being used to build a real estate improvement for a tax-exempt entity?
Yes, in most cases. The Comptroller told the seller (Company X) that it must charge sales tax when it sells blueprints to an architectural/engineering firm or to a general contractor, regardless of wh…
Can Booster Clubs buy tax-free as exempt organizations or hold tax-free sale days, can a school issue an exemption certificate for cheerleader uniforms bought through the school, and can a teacher buy classroom supplies tax-free if reimbursed later?
This is an internal Comptroller staff memo (Bettie Peterson to Ron Watkins), titled 'Taxability School Related Organizations,' answering three questions: (1) a Booster Club can only make tax-free purc…
Are feeding tube systems (gastrostomy, jejunostomy, and related enteral/parenteral supplies) and closed tracheal suction system products (TRACH CARE) exempt from Texas sales and use tax as prosthetic devices?
Yes, generally. The Comptroller ruled that nasal gastric and gastrointestinal (enteral and parenteral) feeding-tube devices and related supplies, as well as closed tracheal suction system products (TR…
When Company A sells a mold to Company B under a written agreement, is the sale of the mold taxable, and does it matter whether Company B itself manufactures the end product?
It depends on whether Company B is manufacturing tangible personal property for sale and on whether a written agreement transfers title to the mold. If B uses the mold (directly or through a component…
When a bakery sells some food for immediate consumption (taxable) and some food not for immediate consumption (exempt), how does the Texas Comptroller decide whether a utility (electricity) exemption certificate based on a utility study can be accepted?
An exemption certificate based on a utility study can be accepted if it comes with a statement showing the quantity of goods sold for immediate consumption versus not sold for immediate consumption, a…
Is machinery and equipment that a grower buys to dry, sort, grade and pack its own fruit and vegetables exempt from Texas sales tax as agricultural processing equipment?
Yes. Because Company A owns the fruit and vegetables being processed and is the original producer (grower) of those products, the machinery and equipment it buys to dry, sort, grade and pack them qual…
Can an individual paying with personal funds still buy items tax-exempt for a school district, and can a school district use an identification card instead of an exemption certificate for its purchasers?
An identification card can help identify authorized purchasers, but it cannot replace a written purchase order or exemption certificate — the school district must still give the vendor one of those. I…
Is a waste collection service that picks up used oil and oil filters taxable, and can the service provider buy the collection containers tax-free?
The waste collection service is taxable until the customer gives the provider certification or other documentation that the waste (such as used oil and oil filters) is excluded from the definition of …
Is repair labor exempt from Texas sales tax for property damaged in a disaster area, and are Red Cross voucher purchases taxable?
Yes to both. Texas exempts separately stated labor charges to repair real or personal property damaged by the event that caused an area to be declared a disaster area, though the replacement parts and…
Is Texas sales tax due on information services sold to a newspaper?
No. Under Tax Code Section 151.0038, sales of information services to a newspaper are excluded from Texas sales tax regardless of how the newspaper uses the information, and the seller does not need a…
Is tree care service taxable as a landscaping/real property service in Texas, even for trees in a commercial fruit or nut orchard?
Tree care services are generally taxable as landscaping (a real property service), but caring for trees in a commercial fruit or nut orchard operated by a person who raises the fruit or nuts for sale …
Are parts and labor used to repair or refurbish railroad cars and locomotives exempt from Texas sales tax?
Yes. Locomotives and railcars (complete with the truck) are exempt from Texas sales tax when purchased or sold, and the labor and parts used to repair them are also exempt, with no exemption certifica…
What eye-care supplies (lens cleaners, contact solutions, cases, chains/straps, spectacles) are exempt from Texas sales tax when dispensed by an optometrist or ophthalmologist?
Under Tex. Tax Code § 151.313(6), a range of corrective-lens-related supplies are exempt from Texas sales and use tax when sold or dispensed by an optometrist or ophthalmologist -- including complete …
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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.