Could a nursing home claim the residential-use exemption and refunds for natural gas and electricity, and did city tax still apply?

Plain-English summary

The customer submitted a utility exemption certificate stating only "Ruling by Comptroller's Office," and its name did not show whether it was a nursing home.

If the facility was in fact a nursing home, it could claim the residential-use exemption for natural gas and electricity for billing periods beginning on or after January 1, 1988. The exemption reason had to be clearly stated, and any refund request had to be in writing.

Residential utilities were exempt from state, county, and MTA/CTD sales taxes. City tax depended on local action. Here, City A had reimposed its tax on residential use effective July 1, 1980, so city sales tax still applied.

Common questions

Could the nursing home claim the exemption? Yes, if it established its facility type and clearly stated the reason.

How far back could a refund go under this letter? To qualifying billing periods beginning on or after January 1, 1988.

Was city tax also exempt? Not in City A, because the city had reimposed tax on residential use.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9001L0978F01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

January 31, 1990

Dear ****:

Thank you for your letter regarding a sales tax exemption certifi-
cate you received from ***, City A, Texas claiming
sales tax exemption on natural gas and electricity (utilities).

The reason for exemption is stated as "Ruling by Comptroller's
Office". I can only assume that your customer is a nursing home
and is claiming exemption as residential use although the customer
name does not indicate they are a nursing home.

Nursing homes are not included in the definition of residential
use for purposes of exemption from sale tax on natural gas and
electricity. The exemption from sales tax is applicable only for
billing periods beginning on or after January 1, 1988.

Natural gas and electricity for residential use are exempt from
the state, county, an MTA/CTD sales taxes. They are also exempt
from city sales tax unless the city voted to retain the tax or the
city repealed the tax and reimposed it on residential use. Our
records show that the City of City A repealed the city tax on
residential use effective January 1, 1979, and reimposed it effec-
tive July 1, 1980. Therefore, city sales tax for City A applies
to residential use.

If ***** is, in fact, a nursing home, they may
claim tax exemption on natural gas and electricity. The reason
for exemption must be clearly stated on the exemption certificate.
They may also claim a tax refund for billing periods beginning on
or after January 1, 1988, if appropriate. The refund request must
be in writing.

If your customer has any questions about their qualifying for the
above exemption, they should write to this office explaining what
kind of facility/health care service they are.

This opinion is based on the facts presented. If there are addi-
tional or different facts, the opinion may change.

If you have any questions or need additional information, you may
call me toll free at 1-800-252-5555, extension 3-4666, or the
regular number is 512/463-4666. You may write me at Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence