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Ezel / Tax Rulings / TX
TX 8711L0845F04 Sales and/or Use Tax (State,Local,MTA) 1987-11-05

Could a service provider accept an exemption certificate from a federal credit union, and were loss or damage appraisals for insurers taxable when the property was credit-union financed?

Short answer: A federal credit union was exempt when buying taxable items or services for its own use, and the seller could accept an exemption certificate. But loss or damage appraisals performed for insurance companies remained taxable even when the appraised property was financed by a federal credit union.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
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 a taxpayer-specific November 1987 Texas Comptroller letter distinguishing purchases for a federal credit union's own use from appraisal services performed for insurance companies on credit-union-financed property. It says the opinion may change if the facts differ. Exempt-entity, certificate, insurance-service, and appraisal rules are historical and may have changed substantially; verify current law and who is buying and using the service. STAR documents may no longer represent current policy even when not marked superseded. Identities 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

The Comptroller said federal credit unions were exempt from sales and use tax when purchasing taxable items or services for their own use. A seller could accept an exemption certificate instead of collecting tax.

That exemption did not make every service connected with credit-union-financed property exempt. If the provider performed a loss or damage appraisal for an insurance company, the appraisal service was taxable even though a federal credit union financed the property.

What this means for you

The historical letter focused on the purchaser and use of the service. A federal credit union's own exempt purchase was different from an insurance company's purchase of an appraisal concerning financed property.

Common questions

What documentation could the seller accept from the federal credit union? An exemption certificate.

Were appraisals for insurance companies exempt because a federal credit union financed the property? No. The Comptroller said those services were taxable.

Citations and references

  • 34 Tex. Admin. Code Rule 3.287 (exemption certificates)
  • 34 Tex. Admin. Code Rule 3.355 (insurance services)

Source

Original ruling text

November 5, 1987

Dear ****:

Thank you for your recent letter concerning the exempt status of Federal Credit
Unions.

You state that you have clients who are Federal Credit Unions that say they are
exempt from the new tax law. You ask,

1) "Is this indeed true?"

2) "What do I need from them?"

Answer:

1) Yes, Federal Credit Unions are exempt from sales and use tax on purchases of
taxable items (services) for their own use.

2) You may accept an exemption certificate in lieu of tax.

However, should you make loss or damage appraisals for insurance companies on
property financed by a Federal Credit Union, your service will be taxable. We
have mailed under separate cover Ruler 3.287 Exemption Certificates and 3.355
Insurance Services.

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 Policy Division.

Sincerely,

(Mrs.) Jo Ann Dieck
Tax Policy Division

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