🧪 TEST MODE ACTIVE Use test card: 4242 4242 4242 4242
Ezel / Tax Rulings / TX
TX 8602L0706A07 Sales and/or Use Tax (State,Local,MTA) 1986-02-27

Which materials and equipment for a federal-agency hospital construction project were exempt from Texas sales tax?

Short answer: Items incorporated into the federal hospital project were exempt from state, city, and MTA tax; equipment and supplies not incorporated remained taxable.

Apply this to your situation

This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
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 an official 1986 Texas Comptroller taxpayer-response letter based on a new hospital project for a federal agency. It distinguishes items incorporated into the project from equipment and supplies merely used or consumed in performing it. The reproduced body does not state the October 1984–October 1991 date range appearing in STAR's caption. Current contractor, governmental-entity, incorporation, and local-tax rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. Taxpayer-identifying details are redacted. 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

Because the hospital project was for a federal agency exempt from sales and use tax, the Comptroller said materials, supplies, and equipment incorporated into the project were exempt from state, city, and MTA taxes.

The exemption did not cover items that were not incorporated into the project, even if they were consumed while performing the work. The letter's taxable examples included cranes, loaders, form lumber, and “print brushes.”

Common questions

Were materials built into the federal hospital exempt? Yes, under the stated facts.

Was all equipment used on the project exempt? No. Cranes and loaders were listed as taxable because they were not incorporated into the project.

Were consumable supplies automatically exempt? No. The letter said non-incorporated items remained taxable even when consumed in performing the project.

Did the reproduced letter establish the caption's October 2, 1984–October 1, 1991 period? No. That date range appears in STAR's caption but not in the reproduced ruling body.

Citations and references

The reproduced letter cites no numbered statute or rule. It says a contractor rule was enclosed, but the enclosure is not reproduced.

Source

Original ruling text

February 27, 1986

Dear ***:

Thank you for asking for written confirmation on the tax status of the
new construction project for the *** in *****.

The *** is an agency of the Federal Government and is exempt
from the sales and use tax. You are correct in your understanding that
materials, supplies and equipment which is incorporated into the new
hospital project are exempt from the State, City and MTA taxes.

The exemption, however does not extend to any materials, supplies or
equipment which are not incorporated into the project even if the items
are consumed in performing the project. Items which would be taxable
include cranes, loaders and expendable supplies such as form lumber,
print brushes, etc. Enclosed is a rule for contractors.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Administration Division

Get today's answer for your situation

You just read a 1986 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.