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Ezel / Tax Rulings / TX
TX 9109L1129F08 Sales and/or Use Tax (State,Local,MTA) 1991-09-12

Was a computer-generated custom diet plan taxable, and were diet cookies sold as meal replacements or supplements taxable?

Short answer: The custom diet plan was taxable data processing, and the Texas seller could give its out-of-state processor a resale certificate. The diet cookies were not taxable as meal replacements or food supplements.

Apply this to your situation

This page answers the general question as of 1991. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1991
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Customers selected preferred foods on a form, and an out-of-state computer processed the information into a custom diet plan. The Comptroller treated the plan as a taxable data-processing service under Rule 3.330. The Texas business could issue a resale certificate to the out-of-state processor.

The diet cookies were not taxable when sold as meal replacements or food supplements.

What this means for you

The letter treated the personalized information product and the food product differently: the generated plan was taxable service, while the described cookies were exempt food.

Common questions

Was the custom plan taxable? Yes.

Could the seller buy the processing for resale? Yes, with a valid resale certificate.

Were the diet cookies taxable? No, as described.

Citations and references

  • 34 Tex. Admin. Code Rule 3.330 — data-processing services

Source

Original ruling text

September 12, 1991

Dear **:

Thank you for your recent letter regarding the taxability of a computer
generated custom diet/menu and diet cookies.

You stated in your letter that a customer selects the foods they like
by marking on a form provided by your business. The information provided
by the customer is then processed outside Texas on a high speed
computer, which generates the custom diet plan.

The custom diet plan is taxable to your customers as a data processing
service. See Rule 3.330 on Data Processing Services. Your business
may issue a valid resale certificate to the out-of-state firm.

As a meal replacement or food supplement, the diet cookies are not taxable.

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, you may call me toll
free at 1- 800- 531- 5441, extension 5-0330. The regular number is
512/463-4600, or write Tax Administration Division.

Sincerely,

Bettie U. Peterson
Tax Administration Division

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