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Ezel / Tax Rulings / TX
TX 8409L0586A01 Sales and/or Use Tax (State,Local,MTA) 1984-09-01

How did Texas instruct federal lump-sum contractors to handle the October 2 tax change while an Attorney General opinion was pending?

Short answer: The change applied only to lump-sum federal contractors; separated contracts kept their existing sales-tax exemption. Permit holders gave suppliers resale certificates and reported the tax, while contractors without permits gave exemption certificates and paid the Comptroller directly. If the Attorney General later found the tax not due, lump-sum contractors could seek refunds.

Apply this to your situation

This page answers the general question as of 1984. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1984
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is general 1984 Texas Comptroller guidance published on STAR, not a taxpayer-specific private letter ruling, and it does not carry letter-ruling reliance protection under Rules 3.1 and 3.10. The body does not identify the statute, Attorney General request, or STAR metadata's 1991 end date. Federal-contract rules may have changed. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The October 2 change applied only to lump-sum federal contractors. Separated contracts kept their old exemption.

Permit holders gave suppliers resale certificates and reported the tax. Contractors without permits gave exemption certificates and paid the Comptroller directly. If the pending Attorney General opinion found no tax due on federal-contract equipment and supplies, lump-sum contractors could apply for refunds.

What this means for you

The guidance imposed interim payment procedures while preserving a possible refund route.

Common questions

Q: Did the change cover separated contracts? A: No.

Q: Was a refund possible? A: Yes, if the Attorney General found the tax not due.

Citations and references

The guidance identifies neither the law nor the requested Attorney General opinion.

Source

Original ruling text

ADDITION TO "OCTOBER 2 TAX CHANGES AFFECT TEXAS CONTRACTORS"

This law affects only contractors with lump sum contracts with the
federal government. Contractors with separated contracts keep their old
exemption from the sales tax. We've asked for an Attorney General's
Opinion on the constitutionality of this law, but until the Attorney
General makes a decision we have to collect the tax as the law directs
us.

Starting October 2, lump sum contractors who have sales tax permits
should give resale certificates to their suppliers and then report and
pay the tax on their sales tax return. Lump sum contractors who don't
have tax permits should give exemption certificates to their suppliers
and then pay the tax directly to the Comptroller. Call us at
1-800-252-5555 toll free in Texas or 512/475-1931 from out of state and
we will send you a sales tax return and instructions for filling it out.

Should the Attorney General rule that the tax is not due on equipment
and supplies needed to carry out contracts with the federal government,
then lump sum contractors will be able to apply for tax refunds and we'll
send them directly to you.

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