Did a customer's blanket purchase order qualify sales for exemption from Texas's 1987 state sales-tax rate increase?

Plain-English summary

The Texas Comptroller said the submitted blanket-purchase-order documents did not qualify sales for a prior-contract exemption from the 1987 state tax-rate increase.

Qualification required either a written contract signed by both parties before January 1, 1987 or a written bid issued by the seller before that date. The seller and purchaser also had to be bound by a fixed price, or the price had to depend on criteria outside the parties' control.

What this means for you

A blanket purchase order was not enough by itself. The documents had to satisfy both the timing and binding-price requirements, and the records reviewed in this letter did not.

Common questions

Did the submitted blanket purchase order qualify? No.

What timing was required? A contract signed by both parties before January 1, 1987 or a seller's written bid issued before then.

What pricing condition applied? A fixed price or pricing criteria not controlled by the parties.

Citations and references

• The letter cited no numbered statute or Comptroller rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8702L0799C08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 26, 1987

Dear ***:

Thank you for your recent letter regarding the blanket purchase order
from
your customer and whether the items sold under it would qualify for a
prior
contract exemption from the 1 1/8% state tax increase.

In order to qualify for a prior contract exemption, the items must be
covered
by either a written contract signed by both parties prior to January 1,
1987
or a written bid issued by the seller before that date. In addition,
both
the seller and the purchaser must be bound by a fixed price, or the price
must be based on criteria not controlled by parties to the contract.

The documents submitted for review do not qualify under these criteria.

At your request, I have forwarded a copy of this letter to ***
of
UTILITY CO. A.

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 me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Sandi Skaggs
Tax Policy Section
Tax Administration Division