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Ezel / Tax Rulings / TX
TX 9012L1066E10 Sales and/or Use Tax (State,Local,MTA) 1990-12-13

Did arranging engineering and equipment-installation work in Texas require an Illinois seller to collect Texas tax?

Short answer: Yes. Engineering and installation performed in Texas on the seller's behalf meant it was doing business in Texas and had to obtain a permit and collect applicable state and local tax.

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

An Illinois seller assessed Texas customers' equipment needs, ordered equipment from an Illinois manufacturer, and arranged engineering and installation at each Texas customer location.

The Comptroller said the engineering and installation performed in Texas on the seller's behalf meant the seller was doing business in Texas under Rule 3.286(a)(1)(B). It had to obtain a Texas tax permit and collect and remit applicable state and local sales and use taxes on taxable sales.

After obtaining the permit, the seller could issue a Texas resale certificate for items purchased for resale in Texas.

The letter separately described the rule for a seller that was not doing business in Texas: it could issue a Texas resale certificate with its Illinois tax number, and the Texas purchaser would pay the Texas use tax directly to the state.

What this means for you

An out-of-state seller could not avoid Texas collection duties merely because the equipment came from outside Texas. Work performed in Texas on the seller's behalf supplied the connection identified in this ruling.

Common questions

Did the Illinois seller have to obtain a Texas permit? Yes.

What created the Texas connection? Engineering and installation work performed in Texas on the seller's behalf.

Could the seller buy items for resale without tax? Once permitted, it could issue a Texas resale certificate for items purchased for resale in Texas.

Who would pay use tax if the seller were not doing business in Texas? The letter said the Texas purchaser would pay the Texas use tax directly to the state.

Citations and references

  • 34 Tex. Admin. Code Rule 3.286(a)(1)(B) (seller's and purchaser's responsibilities)
  • 34 Tex. Admin. Code Rule 3.285 (resale certificates)

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

December 13, 1990

Dear **:

We received your letter concerning an Illinois client that sells
equipment to customer's in Texas. Your client assesses the cus-
tomer's needs, orders the appropriate equipment for shipment and
arranges for engineering and installation work for the equipment
at the customer's location in Texas. Your client normally pur-
chases the equipment from an Illinois manufacturer.

Your client is doing business in Texas because of the engineer-
ing and installation work done in Texas on behalf of your client
according to section (a)(1)(B) of the enclosed Rule 3.286 relat-
ing to seller's and purchaser's responsibilities. Your client
should obtain a Texas tax permit and collect and remit the appli-
cable state and local sales and use taxes on its sales of taxable
items. I am sending under separate cover a Texas sales and use
tax permit application.

Once your client has obtained a Texas tax permit, they could is-
sue a Texas resale certificate for items purchased to be resold
in Texas. I have enclosed a copy of Rule 3.285 relating to re-
sale certificates.

If your client was not doing business in Texas, then they would
issue a Texas resale certificate with their Illinois tax number
to the Illinois manufacturer for taxable items purchased and re-
sold in Texas. The Texas purchaser would be responsible for pay-
ing the Texas use tax due on the transaction directly to the
State.

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

If you have any questions you may call or write Tax Correspon-
dence. You may call toll free 1- 800- 252-5555, or our regular
number is 512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence

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