🧪 TEST MODE ACTIVE Use test card: 4242 4242 4242 4242
Ezel / Tax Rulings / TX
TX 8712L0852C13 Sales and/or Use Tax (State,Local,MTA) 1987-12-11

Did an exemption from Texas's January 1, 1987 tax increase automatically cover the separate October 1, 1987 increase?

Short answer: No. A customer needed a new exemption certificate for the October 1, 1987 increase. That exemption applied to qualifying bids and contracts entered on or before July 21, 1987 and lasted until the original contract ended or June 30, 1990, whichever came first.

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 December 1987 Texas Comptroller letter addressing exemptions from two historical state tax-rate increases. It says the opinion may change if the facts differ. Every date, deadline, certificate requirement, and Rule 3.310 reference on this page concerns the 1987 increases and is historical, not a statement of current rates or contract relief; verify current law. STAR documents may no longer represent current policy even when not marked superseded.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 explained that a prior-contract exemption was available for the state tax-rate increase effective October 1, 1987. It applied to qualifying bids and contracts entered into on or before July 21, 1987 and continued until the original contract ended or June 30, 1990, whichever came first.

A customer's exemption from the separate January 1, 1987 increase did not automatically cover the October increase. The customer had to issue a new exemption certificate for the later increase. The earlier exemption expired September 30, 1989.

What this means for you

The historical letter treated the two 1987 rate increases as separate events with separate exemption documentation and expiration rules. An exemption certificate for the first increase did not carry over to the second.

Common questions

What contracts could qualify for the October 1987 exemption? Qualified bids and contracts entered into on or before July 21, 1987.

How long did that exemption last? Until the original contract ended or June 30, 1990, whichever occurred first.

Did an earlier exemption certificate automatically apply? No. A new certificate was required for the October 1, 1987 increase.

When did the January 1987 prior-contract exemption expire? September 30, 1989.

Citations and references

  • 34 Tex. Admin. Code Rule 3.310 — historical prior-contract exemption rule enclosed with the letter.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 11, 1987

Dear ***:

Thank you for your inquiry regarding prior contract exemptions.

A prior contract exemption is provided for the state tax rate increase
that
went into effect October 1, 1987. It applies to qualified bids and
contracts
entered into on or before July 21, 1987, and is effective until the
original
contract ends or through June 30, 1990, whichever comes first.

The fact that your customers had a prior contract exemption for the
January
1, 1987 tax increase does not automatically exempt the customer from the
October 1, 1987 increase. Your customers will have to issue a new
exemption
certificate covering the latest tax increase. Rule 3.310 is enclosed for
your reference.

The prior contract exemption from the January 1, 1987 state tax increase
expires September 30, 1989.

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 iii 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

Get today's answer for your situation

You just read a 1987 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.