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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Is an implantable cardiac-monitoring device exempt from Texas sales tax as a therapeutic or prosthetic device, and can the manufacturer sell it tax-free to hospitals on a resale certificate?
Split ruling. The device is a therapeutic (not prosthetic) device: it's exempt from Texas sales tax ONLY when sold directly to a patient with a prescription. When the same device is sold to a hospital…
If goods originally purchased for export are stuck in storage at a Texas freight forwarder after the export deal falls through, and a new buyer is found in Texas instead, does the sale lose its tax-exempt export status?
Yes, the Texas sale is allowed. Texas ruled that two mobile power plants originally purchased for export to Venezuela — but stranded at a Texas freight forwarder after U.S. sanctions blocked the expor…
Does providing a certified operator along with rented bypass-pumping equipment turn a taxable equipment lease into a nontaxable service, and does that depend on who keeps "operational control" of the equipment?
It depends on who keeps "operational control." Texas ruled that when a company rents bypass-pumping equipment to a customer without an operator, the customer takes operational control and possession, …
When does a vehicle qualify as a Texas trade-in, how must a dealer document it, and what must a blanket resale certificate show?
A trade-in reduces taxable value only when the dealer accepts it as consideration in the same purchase transaction. The buyer's order, installment contract and Form 130-U should document it. A blanket…
Does a massage therapist who provides lymphatic compressive therapy need a sales tax permit to buy the bandages used in the treatment, and are those bandages tax-exempt?
No exemption, and no resale certificate. Bandages a massage therapist buys and applies while performing lymphatic compressive therapy are taxable purchases — the therapist is the end user/consumer of …
Is a calligrapher's labor charge to address wedding envelopes and fill in marriage certificates -- using materials the customer provides -- subject to Texas sales tax?
Yes. A calligrapher's labor charge to address wedding invitation envelopes or fill in names on marriage certificates is subject to Texas sales and use tax, even when the customer supplies the item bei…
Is a wholesaler of prepaid telephone calling cards required to collect Texas sales tax when selling the cards to a retailer who will resell them?
A wholesaler selling telephone prepaid calling cards is engaged in selling taxable tangible personal property — Tax Code § 151.01032 defines a prepaid calling card (a card, item, or access code repres…
For a direct-mail company, is marked-up postage taxable, does labeling a task 'data processing' on an invoice make it taxable, and do they owe tax on printing they buy and mark up for mass mailings?
A direct-mail company received four answers: (1) a markup on U.S. postage is not subject to Texas sales tax, whether charged at cost or marked up; (2) calling a work activity "data processing" on an i…
If a mailing company subcontracts address-imprinting work to another company that doesn't do the actual mailing, is that imprinting charge taxable — even though direct mail services themselves are nontaxable?
Yes, it's taxable — because the charge depends on who is actually doing the mailing. A company that imprints addresses onto mail pieces for another mailing service, but does not itself mail those piec…
Does a new painting, faux-finishing, and stenciling business need to charge sales tax to customers, and does it matter whether the work is new construction, residential remodeling, or commercial remodeling?
It depends on the job and the contract type. New construction of realty, or repair/remodeling of *residential* realty, is done as a "contractor": under a lump-sum contract you pay tax on your own mate…
Was a Texas highway sweeper taxed as a motor vehicle or as moveable specialized equipment?
It depended on construction. Sweeper equipment mounted on a cab chassis was a motor vehicle. A sweeper manufactured from beginning to end was moveable specialized equipment subject to limited sales an…
Is a company's automated call-processing and reporting service a taxable data processing or telephone answering service in Texas, and can it buy its own telephone service tax-free with a resale certificate?
Yes. A company that uses computers to receive, store, and process incoming customer communications and generate summary reports is performing taxable data processing services (80% of the charge taxabl…
Will Texas accept the Uniform Sales & Use Tax Certificate - Multijurisdiction as a valid resale certificate, and what does a Texas seller need to accept a resale certificate from an out-of-state retailer?
Yes, conditionally. A resale certificate must be substantially in the form of a Texas Sales and Use Tax Resale Certificate or a Border States Uniform Sale for Resale Certificate under Rule 3.285(h) — …
As of 2000, would the Texas Comptroller accept a web-based resale certificate signed with an electronic signature or a digital signature?
As of this 2000 letter, a printable electronic-signature resale/exemption certificate was accepted, but a digitally signed one was not. A business setting up a website to sell to wholesalers and indiv…
Does a business that only distributes flyers (without printing or selling them) need a Texas sales tax permit, and what changes if it starts printing and selling flyers too?
Flyer distribution alone is not a taxable service in Texas, so a business that only distributes flyers it neither prints nor sells does not need a sales tax permit for that activity. Every seller of t…
What Texas resale certificates and tax permits did a wholesale auto dealer need for vehicles and repair parts?
A wholesale dealer selling only to other dealers had no retail motor vehicle tax collection duty. It could use and collect the vehicle resale certificate for dealer sales, document out-of-state dealer…
A distributor complained that Metabolife was still charging sales tax on now-exempt vitamins/supplements, and that the company required a minimum sales volume before letting distributors buy tax-free. Is that correct?
No, on both counts. Metabolife is not required to collect sales tax on any vitamins, minerals, and nutritional supplements for humans sold in Texas on or after April 1, 2000 (the effective date of Sen…
When a company leases construction equipment (with its own employees as operators) from its parent, and uses that equipment to unload, transport, and rough-set heavy generators for a general contractor, who owes Texas sales/use tax at each step — and should equipment bought for this purpose be purchased under a resale certificate or with tax paid up front?
It depends on what the equipment is actually used for. A company that uses leased equipment and its own employees to receive, unload, transport, and rough-set items for a customer is providing a nonta…
If a vendor refuses to accept a properly completed Texas resale certificate, can the buyer still avoid paying sales tax on items it intends to resell?
Yes, indirectly. A vendor is not required to accept a resale certificate even if it is properly completed. If a supplier refuses one, the buyer can reimburse itself for the Texas sales tax it paid on …
Can an architecture firm get a Texas sales and use tax permit to buy computer equipment for a project, and avoid paying tax on that purchase by reselling the equipment to a tax-exempt government customer (a municipal airport)?
Yes. An architecture firm — even one not typically in the business of reselling equipment — can obtain a Texas sales and use tax permit in order to purchase computer equipment that will be resold, and…
When an advertising agency has printed folding advertisement cards made and places them in racks at hotels/motels for tourists to take, and charges restaurant clients a flat fee to be featured on the cards, is the agency selling a nontaxable advertising service or a taxable sale of tangible personal property?
It's a taxable sale of tangible personal property, not a nontaxable advertising service. Rule 3.321(c) treats an advertising agency in this fact pattern as a retailer of the advertising cards it produ…
Can a private boat/yacht club buy the floating drums for its members' boat-slip docks tax-free under a resale certificate, since the club already charges its members sales tax on boat slip rental? And can it buy free-to-use member boats tax-free the same way?
No for the floating docks, yes for the boats transferred to members. A private boat/yacht club cannot buy the floating drums and materials for its members' boat docks tax-free under a resale certifica…
Can an engineering firm doing work for tax-exempt entities (like municipalities) buy surveying/CAD services, software, and testing materials tax-free, on the theory that those items end up transferred to the exempt client as part of the engineer's service?
No — the engineer must pay tax on those items when it buys them, even though they end up transferred to the exempt client after the engineer uses them. Under Tax Code § 151.151, a purchaser may only u…
When a company leases GPS units to golf courses that in turn charge golfers a fee to use them, who owes Texas sales tax — the company leasing to the course, or the course charging the golfer?
The golf course collects the tax, on the rental payment from the golfer — not the leasing company on its lease to the course. The golf course may issue the leasing company a resale certificate for GPS…
Does a waste transportation broker that arranges hauling of both hazardous and non-hazardous waste, and rents out roll-off boxes/tankers/vans as part of the job, need a Texas sales tax permit — and can it buy or rent that equipment tax-free?
Yes, a sales tax permit is needed — the business is a seller of a transportation service (garbage/waste collection). Charges for transporting NONHAZARDOUS waste are taxable under Rule 3.356; roll-off …
Can a retailer buy the shopping bags it hands out to customers tax-free from its bag supplier, treating them as wrapping/packaging supplies purchased for resale?
No. Texas sales tax law does not exempt wrapping and packaging supplies for retailers, and the resale exemption does NOT apply to shopping bags a retailer provides to customers who are buying other it…
Can a jewelry retailer buy the gift boxes it delivers merchandise in tax-free, on the theory the box cost is baked into the item's sales price and the box is effectively purchased for resale?
No. A retailer that buys boxes to deliver jewelry or other items to customers cannot buy those boxes tax-free, even though the box cost is effectively included in the item's sales price. Prior to Octo…
Can a retailer buy decorative wrapping items like colored tissue and ribbon tax-free for resale on the theory that they're 'part of the gift,' and does the same rule apply to the wicker or straw baskets the gift is arranged in?
Decorative wrapping items (colored tissue, ribbon, etc.) may NOT be purchased tax-free for resale — the Tax Code makes no distinction between 'decorative' and 'common' wrapping/packaging supplies, and…
Is landscaping a taxable real property service in Texas, and is hardscape work like retaining walls, ponds, or sprinkler systems taxed the same way?
No, not the same way. Landscaping and lawn/yard maintenance (planting, mowing, pruning, fertilizing) are taxable real property services on which you collect tax from the customer. Hardscape work (reta…
Is a multi-level marketing company required to hold a Texas sales tax permit and collect state and local sales tax on the sales its distributors make, and how should it account for local tax across different jurisdictions?
Yes. A direct sales organization (including a multi-level marketing company) is responsible for collecting and remitting Texas sales and use tax — state and all applicable local taxes — on taxable sal…
Does a company that collects and processes human blood plasma for sale to out-of-state pharmaceutical manufacturers qualify for Texas's manufacturing exemption on its equipment, packaging, and utilities purchases?
Yes. A company that processes human blood plasma for sale to pharmaceutical manufacturers qualifies for Texas's manufacturing exemption (Tax Code § 151.318) on machinery and equipment that physically …
Can a company that manages and coordinates real property surveys for its customers buy the underlying surveying services tax-free for resale, and does it matter that the company itself isn't a licensed surveyor?
No, not to escape tax on resale — the total amount the company charges its customers for coordinating real property surveys is taxable, because it's buying and reselling a taxable real property servic…
Are used auto parts bought from a junkyard subject to sales tax again when resold or incorporated into a repair, even though sales tax was already paid when the part was first sold as new?
Yes. Sales tax applies every time a taxable item is sold for consideration, regardless of whether it's new or used and regardless of whether tax was already paid on an earlier sale of the same item. W…
Are personal and corporate concierge services — like picking up dry cleaning, planning parties, setting up tee times, ordering flowers, or getting car registrations — taxable in Texas?
Generally not taxable, if the concierge is only providing a transportation/delivery or planning service. Charges to plan parties, set up tee times, or get car registrations are not taxable. Picking up…
Can someone buy an aircraft tax-free with a resale certificate if they plan to lease it to both a certificated carrier and, occasionally, private individuals?
Yes, buy the aircraft tax-free with a resale certificate. Leases to a certificated or licensed carrier of persons or property are tax-exempt under Tex. Tax Code § 151.328(a), if the carrier issues an …
When a manufacturer bills a customer separately for the die (mold/tooling) used to make the customer's product, but keeps possession of the die itself, is that a taxable sale of the die?
It depends on whether there's a written agreement making the customer the actual owner of the die. With a written ownership agreement, the die charge is a taxable sale (unless the customer is a manufa…
Is a hotel's separate charge to trade show exhibitors for access to electrical power (outlets and extension cords) taxable, and can the hotel buy the electricity and cords tax-free for resale?
The charge to exhibitors for electrical outlets and extension cords is not subject to sales tax, because it's considered part of the booth or space rental (a real property lease), not a separate taxab…
Can a caterer/event planner buy specialty equipment (like tables, chairs, or a margarita machine) tax-free with a resale certificate if it plans to charge clients a separately stated rental fee for using that equipment?
No. A caterer must pay sales tax when it purchases equipment used to provide its food service, even if it separately bills clients a rental-style charge for using that equipment (tables, chairs, servi…
Is labor to clean and detail a private corporate aircraft taxable, and does it matter if the cleaning includes steam-cleaning the carpet?
No tax is due on labor charges for general cleaning/detailing maintenance of a private aircraft. But carpet cleaning specifically is its own taxable service under Tex. Tax Code § 151.0045 and Rule 3.3…
I personally paid sales tax when I bought a business's inventory in a rush with my own personal funds, then transferred that inventory to a partnership I formed the next day to run the business. Since there was no real change in ownership, can I get that sales tax refunded even though the partnership (not me personally) has the sales tax permit?
No, not without your own permit first. Texas follows the separate legal entity theory — a partner and a partnership, though related, are separate legal entities in fact and in law, and that separatene…
When a company sells vacation packages bundling hotel rooms, meals, amusement services, and incentive certificates, which components does it collect sales tax on, and which does it just pay tax on itself as the purchaser?
The company must collect tax from the customer on any amusement services charge that's separately stated within the travel package (or where surrounding additional costs are inconsequential), per Rule…
A contractor doing improvement-to-realty work for a tax-exempt entity (an airport) rents equipment for the job — is that equipment rental taxable, even though the airport's own purchases would be exempt?
Yes, equipment rented or leased by the contractor for use in performing the contract is taxable — the exempt-purchaser status of the airport doesn't flow through to the contractor's own equipment rent…
When a Texas-permitted seller (Company A) drop-ships an item to a Texas customer (Company C) on behalf of a reseller (Company B), who is responsible for collecting the Texas use tax?
Texas use tax is owed on the sale, but the drop-shipping seller (Company A) doesn't have to collect it as long as it gets a properly completed Texas resale certificate from the reseller (Company B). W…
When a restaurant building is subleased to a franchisee together with a separately billed charge for the restaurant equipment, is sales tax due on the equipment rental charge?
No. Under Rule 3.294(k)(1), if a real property lease/rental contract also includes the lease or rental of tangible personal property (like restaurant furniture or equipment) as part of the same agreem…
A contractor performs actual repairs (not maintenance) to nonresidential real property and buys parts/materials at a hardware store to incorporate into the job. Can the contractor use a resale certificate to buy those materials tax-free, and does it matter whether the bill to the customer separates labor from materials?
Yes — because nonresidential real property repair is itself a taxable service, the contractor may give the hardware store a resale certificate and buy the materials tax-free, since the materials will …
Do I need to periodically renew resale and exemption certificates I've collected from customers, and do I need my customers to show me a copy of their Texas sales tax permit?
No to both. There's no requirement to renew resale or exemption certificates once you have them on file, though it's wise to verify the customer's information (address, phone number, etc.) is still cu…
A company answers four separate sales-tax questions: is electricity/gas used to repair aircraft (including in leased-out hangar space) exempt, who collects tax on catered aircraft meals, is electricity for a helicopter-repair shop taxable, and is electricity used to repair equipment held for resale taxable?
Four separate answers in one letter: (1) electricity/gas used for OFF-WING jet turbine engine repair by a licensed, certificated carrier is exempt under Rule 3.297(d)(4) — but a lessor renting out han…
A company refurbishes and remanufactures old cryogenic tanks and vessels (used by mostly out-of-state customers to store liquid oxygen, nitrogen, and argon), performing complete restoration and repair. Should it collect Texas sales tax on both in-state and out-of-state customers, and how is tax handled on the parts used in the repair?
Refurbishing, restoring, or repairing tangible personal property belonging to another is a taxable service under Rule 3.292, and tax is due on the ENTIRE charge — materials, parts, labor, consumable s…
In a three-party sale-leaseback chain (Company A sells to Company B, which sells to Company C, which leases the equipment back to Company B), who owes Texas sales tax and at which step?
Only one step in the chain is taxable. If Company B and Company C each issue a properly completed resale certificate on their respective purchases, Company A doesn't collect sales tax on the sale to C…
Does a bar have to charge sales tax on its beer sales, or does the alcohol gross receipts tax cover it instead?
It depends on whether the bar has a TABC mixed beverage permit. Without one, the bar must collect and report sales tax on beer sales (and on items like chips and candy) and can buy those goods tax-fre…
Are prepaid paging cards and bundled pager/prepaid-service packages sold through retail stores taxable as tangible personal property or as telecommunications services, and who has to collect the tax?
Both are taxed as telecommunications services, not as TPP. Separately stated prepaid paging card charges are taxable as prepaid telecommunications services when purchased at the retail store, and the …
How did Texas tax an intermediary's services and the vehicle purchases, leases, rentals, and resales in a leasing company's exchange structure?
The intermediary's limited receipt, management, and distribution of purchase and sale funds was not taxable. Retail vehicle sales were taxable, dealer-resale sales were not taxable with a resale certi…
If a school district pays for and owns an education/video system, but part of the equipment is physically located and controlled at a private company's off-site headend facility, does that off-site equipment still qualify for the school district's sales tax exemption? Could the company itself buy that equipment tax-free instead?
Yes to the first: equipment the school district purchased and holds title to remains exempt even when physically located and controlled off-site at the company's facility, per Rule 3.322(f). But the c…
Starting an air duct cleaning business in Texas, is the service taxable, and can equipment/materials be bought tax-free?
Yes, cleaning air ducts is taxable as a real property service under Rule 3.356 — the total charge (trip/service charge, materials, stand-by charges, etc.) is taxable. Equipment you buy to perform the …
Is Texas sales tax due on drill team uniform items (leotards, tights, boots, hats) purchased through group orders for students at a public school?
It depends on who buys them. If the school purchases and pays for the uniforms itself for its own use (like band or sports team uniforms it owns), the purchase is tax-exempt. If individual drill team …
In a sale-leaseback/cash-advance arrangement -- where a customer sells an appliance to a business and then leases it back while receiving a cash advance, backed by a refundable security deposit and a separate rental fee -- which parts of the transaction are subject to Texas sales tax?
The purchase of the appliance from the customer qualifies as a purchase for resale (buyable tax-free with a resale certificate). The refundable security deposit is NOT taxable. But the rental/lease ch…
Can a high-volume home-based independent distributor of a direct sales company (Metabolife International) get their own Texas sales tax permit to streamline exempt out-of-state sales, instead of paying tax up front and waiting for a refund from the company?
Yes, under a specific administrative policy set out in this letter: an independent Metabolife distributor with total sales exceeding $24,000 a quarter may apply for a Texas sales tax permit. Once perm…
A member of an online buying club (SITE ONE) purchases distressed/discounted merchandise from manufacturers using membership access, then resells it. Is the club's membership fee taxable, and what are the member-reseller's own sales tax obligations on the merchandise it resells over the Internet?
The club's membership fee IS taxable -- SITE ONE is selling a taxable information service (price lists, manufacturer information) and should collect tax on the fee from Texas members (effective Octobe…
A commercial monitoring company separately bills clients for security-system monitoring and fire-alarm-system monitoring, subcontracting the actual monitoring to its parent company. Are separately stated charges for monitoring a fire alarm system taxable the same way as security system monitoring charges, and what about the telecommunications lines used to run both?
No -- separately stated charges for monitoring FIRE alarm systems are NOT subject to Texas state and local sales tax, while separately stated charges for monitoring SECURITY systems ARE taxable. On th…
Why can't an independent distributor of a direct sales/multi-level marketing company simply give the company a resale certificate and buy products tax-free, the way an ordinary reseller would?
Because Tax Code Section 151.024 authorizes the Comptroller to treat the direct sales organization itself -- not the individual salesperson/distributor -- as the retailer responsible for the tax, spec…
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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.