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Ezel / Tax Rulings / TX
TX 8711L0850F06 Sales and/or Use Tax (State,Local,MTA) 1987-11-16

Did a Texas contractor have to switch from specific identification to the aggregate method for reporting equipment use, and how could it change methods later?

Short answer: No. Continuing to use specific identification after the earlier rule change counted as the contractor's election. A later switch to the aggregate method required notice to the Comptroller at least 45 days before the desired change.

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 about a contractor's specific-identification and aggregate methods of accounting for equipment usage. The appended internal memo mentions a federal job and an earlier audit with no additional tax due, but the operative letter does not decide the federal-job materials issue. The method election, Rule 3.291, and 45-day notice procedure are historical and may have changed substantially; verify current contractor rules before changing methods. STAR documents may no longer represent current policy even when not marked superseded.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 contractor did not have to change from the specific-identification method to the aggregate method for reporting equipment usage. By continuing to use specific identification after the prior year's rule change, the contractor was treated as having elected that method.

If the contractor later wanted to change methods, it had to notify the Comptroller at least 45 days before the requested change.

An internal memo appended to the letter mentions a federal job, a prior contractor-rule change, and an audit that produced no additional tax. The letter itself answers only the equipment-accounting-method question and does not decide the federal-job concern.

What this means for you

The historical letter treated continued use as an election rather than requiring a new affirmative filing. It also required advance notice before a later accounting-method change.

Common questions

Was the contractor required to adopt the aggregate method? No.

How was the specific-identification method elected? By continuing to use it after the earlier rule change.

How much advance notice was required to change methods? At least 45 days.

Did the letter decide tax on materials for the federal job mentioned in the memo? No.

Citations and references

  • 34 Tex. Admin. Code Rule 3.291 (contractors)

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

BOB BULLOCK
Comptroller November 16, 1987

Dear *:

Thank you for your recent letter regarding methods of accounting for
equipment usage.

You don't have to change to the aggregate method unless you want to. As
far
as we are concerned, you elected to use the specific identification
method
simply by continuing to use it after the rule change last year. I'm
enclosing a copy of Rule 3.291 for your reference.

If you decide you'd like to change at some future time, please let us
know at
least 45 days in advance of when you want to make the 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,
Al Van Allen
Tax Policy Division

DATE: November 12, 1987

TO: Bob Bain

FROM: Sharon Ozbun

SUBJECT: **
Sales Tax
TP#: **
Audit Period: 84-01 through 87-07

The taxpayer is a contractor and their sales tax audit
resulted in no additional tax due.

When the auditor called the taxpayer this morning, he
found out that they are involved in a federal job.
Back in 1984, the contractor ruling was changed to
delete the exemption for materials not incorporated in
federal jobs and this is what the taxpayer is concerned
about. ** was not in, so he told me that he
would call her back and discuss this area of the law
with her. The auditor does not know any specifics
about the letter she wrote to Tax Policy, only that it
involves this change in the law.

The audit cover letter was sent to **,
Secretary/Treasurer.

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