Could a restaurant seek a refund for qualifying natural gas or electricity use before food-preparation electricity became taxable on October 1, 1987?

Plain-English summary

Electricity used to prepare or store food for immediate consumption became taxable October 1, 1987.

The restaurant described had operated for more than four years and planned to complete a utility study and submit it with an exemption certificate before October 1. The Comptroller said past-use exemption and refund could be requested if the natural gas or electricity qualified and met Rule 3.295's requirements as effective August 3, 1987.

No exemption applied to billing periods beginning on or after October 1, 1987.

What this means for you

The historical refund depended on proving that the earlier utility use qualified under the then-effective rule. Completing a study did not preserve an exemption for billing periods beginning after the law change.

Common questions

Could the restaurant request a refund for past use? Yes, if the natural gas or electricity qualified under Rule 3.295.

What date governed future billing periods? No exemption applied to periods beginning on or after October 1, 1987.

Which version of the rule did the letter reference? Rule 3.295 effective August 3, 1987.

Citations and references

• Texas Comptroller Rule 3.295, effective August 3, 1987, utility exemption and refund requirements referenced by the letter

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8709L0831F13

Original ruling text

September 21, 1987

Dear ***:

Thank you for your letter regarding sales tax refunds oil, natural gas and
electricity for restaurants in light of the sales tax law change effective
October 1, 1987.

Effective October 1, 1987, electricity used in the preparation or storage of
food for immediate consumption is taxable.

You specifically asked about refund availability in the following situation:

A restaurant in business for over four (4) years signed up to have a study
performed between now and October 1, and the study along with the exemption
certificate are submitted prior to October 1.

If the natural gas or electricity qualifies for exemption and meets the
requirements outlined in Rule 3.295 effective August 3, 1987, sales tax
exemption and refund can be requested on past use. No exemption will apply for
billing periods beginning on or after October 1, 1987.

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 free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,

(Mrs.) Jo Ann Dieck
Tax Policy Division