Were inedible white grease, dried blood, and dry rendered tankage made from livestock offal subject to Texas sales tax?

Plain-English summary

A seller asked about three products made from livestock offal: inedible choice white grease, dried blood, and inedible unground dry rendered tankage.

The Comptroller said each item was tangible property and was not itself exempt under the Texas Tax Code, so each was subject to sales tax. The letter nevertheless identified transaction-specific ways a sale could be made without collecting tax.

If the buyer purchased an item for resale to a third party, the seller could accept a resale certificate. If the product would become an ingredient of a manufactured product sold by the buyer, the manufacturer could provide an exemption certificate.

What this means for you

The animal origin or inedible character of these products did not create an exemption. Any tax-free treatment depended on the buyer's use and the appropriate resale or exemption certificate.

Common questions

Were the three listed byproducts taxable by default? Yes.

Could a resale transaction be tax-free? Yes, with a resale certificate.

Could use as a manufacturing ingredient qualify? Yes, when the ingredient became part of a manufactured product for resale and the manufacturer issued an exemption certificate.

Citations and references

• 34 Tex. Admin. Code Rules 3.285, 3.287, and 3.300 — enclosed by the Comptroller for the certificate and exemption issues discussed

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9106L1114C01

Original ruling text

June 12, 1991

Dear **:

Thank you for your recent letter requesting the taxability of the
following products produced from livestock offal.

• inedible choice white grease
• dried blood
• inedible dry rendered tankage, unground, medium test

Each of the above items is subject to sales tax simply because
they are tangible property and are not exempted under the Texas
Tax Code. However, that does not mean that these products could
not be exempted on some other basis. For example, if the items
were being sold for resale to a third party, you could accept a
resale certificate in lieu of tax. Or, if the products were sold
to become an ingredient of a manufactured product that would be
resold, the manufacturer could give you an exemption certificate
in lieu of tax. I am enclosing rules 3.285, 3.287, and 3.300 for
your reference.

This opinion is based on the facts you presented. Other facts,
though similar, may yield different results.

If you have questions or need more information, please call or
write. You may reach me by calling toll free, (800) 531-5441.
My direct Line number is (512) 463-4680. The number for FAX
transmissions is (512) 475-0900. You may write to me in care of
Tax Administration Division

Sincerely,

Al Van Allen
Tax Administration Division