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Ezel / Tax Rulings / TX
TX 8807L0888C10 Sales and/or Use Tax (State,Local,MTA) 1988-07-26

Is stone that a company digs from the earth and cuts to size, then sells uncrushed, taxable in Texas?

Short answer: Sales tax is due on cut stone. A company that digs stone out of the earth and cuts it to different sizes — selling it without washing, screening, or crushing — has produced tangible personal property, and no exemption applies, so its sales of the cut stone are taxable in Texas.

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 Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

A company that digs stone out of the earth and cuts it to different sizes, then sells it without washing, screening, or crushing, asked whether its sales are taxable. The Comptroller said yes.

By removing stone from real property and cutting it, the company has produced tangible personal property. There is no exemption for this product, so sales tax is due on the company's sales of the cut stone.

What this means for you

Quarries and stone producers

If you extract and process a natural material into a product you sell — here, cutting quarried stone to size — you are selling taxable tangible personal property, and you must collect sales tax on those sales. The fact that the material came out of the ground does not make the finished product exempt.

Minimal processing still counts

Even without washing, screening, or crushing, simply cutting the stone to size was enough for the Comptroller to treat it as produced tangible personal property. Don't assume light processing keeps a natural product outside the tax.

Common questions

Q: Is cut stone taxable in Texas?
A: Yes. The Comptroller held that stone dug from the earth and cut to size is produced tangible personal property, with no applicable exemption, so its sale is taxable.

Q: Does it matter that the stone isn't washed, screened, or crushed?
A: No. The letter specifically notes the stone was sold without those steps and still found the sales taxable.

Q: Is there any exemption for this?
A: The Comptroller stated there are no exemptions from sales tax for this product.

Q: Can I rely on this 1988 letter today?
A: Treat it as guidance only. It is based on the facts presented and can change with different facts; on the STAR system it binds the Comptroller only as to the taxpayer it was issued to and may no longer reflect current policy.

Citations and references

Rules and statutes: The letter concludes that cutting quarried stone produces taxable tangible personal property with no applicable exemption, but does not cite a specific Tax Code section or Comptroller rule by number.

Source

Original ruling text

July 26, 1988

Dear *****:

Thank you for your letter concerning cut stone.

According to your letter, your company digs stone out of the earth and
cuts it to different sizes. The stone is then sold without washing,
screening or crushing.

Your company has produced tangible personal property by the removal of
stone from real property and cutting the stone. There are no exemptions
from sales tax for your product. Sales tax is due on your sales of cut
stone.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

If you have any questions or need more information,you may write
Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence

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