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Ezel / Tax Rulings / TX
TX 8608L0751E06 Sales and/or Use Tax (State,Local,MTA) 1986-08-07

Did electricity used to clean, grade, sort, pack, refrigerate, and store produce qualify as electricity used directly in processing?

Short answer: No. Those activities were not treated as processing, so their electricity was not exempt. More than 50% of total electricity had to be used directly in processing produce for sale to qualify.

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 Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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 Comptroller said cleaning, grading, sorting, and packing produce did not constitute processing. Electricity used for those activities was not exempt.

Refrigeration used to cool or store produce before shipment also did not support processing, so that electricity was not exempt either.

To qualify for the electricity exemption, more than 50% of the business's electricity had to be used directly in processing produce for sale. The letter noted that the business's usage study had not been submitted for review.

Common questions

Were cleaning, grading, sorting, and packing treated as processing? No.

Was refrigeration before shipment an exempt processing use? No.

What predominant-use threshold applied? More than 50% of electricity had to be directly used in processing produce for sale.

Source

Original ruling text

August 7, 1986

Dear ***:

Thank you for your letter of July 29, 1986, regarding sales tax exemption
on electricity.

The electricity usage study for your business was not sent to me for
review. This was confirmed by ***.

Be advised that cleaning, grading, sorting and packing produce is not
processing. The electricity for these uses is not exempt. The
refrigeration to cool/store the produce prior to shipment does not
support processing, therefore, the electricity for this use is not exempt.

To qualify for sales tax exemption on electricity, over 50% of the
electricity must be directly used in processing produce for sale.

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. The regular number is
512/463-4600. You may write us at the Tax Administration Division.

Sincerely,

(Mrs.) Jo Ann Dieck
Tax Policy
Tax Administration Division

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