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Ezel / Tax Rulings / TX
TX 8803L0873G13 Sales and/or Use Tax (State,Local,MTA) 1988-03-23

Which grapefruit packing activities counted as processing, and when could the separately metered facility's electricity qualify for exemption?

Short answer: Waxing was processing, but washing, grading, and packing were not. More than 50% of the facility's electricity had to be used in waxing for the electricity to qualify for exemption.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 an official 1988 Texas Comptroller of Public Accounts letter concerning a separately metered grapefruit facility, published on STAR. Its processing classification and more-than-50% electricity-use test are historical; verify current predominant-use study, exemption, and agricultural-processing rules before applying them today. Letters on STAR can support detrimental reliance only for the taxpayer directly issued the letter and may no longer represent current policy. Taxpayer-identifying details 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 requester bought grapefruit on the tree, harvested it, and brought it to a separately metered facility for washing, sizing, grading, waxing, and packing.

The Comptroller classified waxing as processing. Washing, grading, and packing were not processing activities. To qualify the facility's electricity for sales-tax exemption, more than 50% of the electricity had to be used in waxing the fruit.

What this means for you

Under the 1988 guidance, not every packing-house operation counted as processing. The electricity-use calculation had to isolate the qualifying waxing activity and exceed the stated threshold.

Common questions

Was waxing grapefruit processing? Yes.

Were washing, grading, and packing processing? No.

What electricity-use percentage was required? More than 50% used in waxing.

Citations and references

The letter did not cite a rule or statute by number.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 23, 1988

Dear *****:

Thank you for your letter concerning taxability of electricity used in
your
facility.

You stated that you purchase grapefruit on the tree. Your employees
harvest
the fruit and bring it to your facility where it is washed, sized,
graded,
waxed, and packed. The shed facilities where these activities are
performed
is separately metered.

The waxing operation is processing, however, the washing, grading and
packing
are not processing activities. To qualify for sales tax exemption, over
50%
of the electricity must be used in waxing the fruit.

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 our
toll-free
number 1-800-531-5441. 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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