Were purchases and transactions connected with a private contractor's operation of a federally funded Job Corps Center exempt from Texas sales and use tax?

Plain-English summary

The requester held a U.S. Department of Labor contract to operate a Job Corps Center and asked for exempt status for purchases used in that operation.

The Comptroller said transactions by a private for-profit or nonprofit contractor in connection with operating a Job Corps Center, program, or activity were exempt from state and local sales and use tax. The contractor was not liable to collect or pay that tax on the sale to, or use by, the contractor of property, services, or other items connected with the Job Corps operation.

The letter cited 29 U.S.C.A. Section 1707(c), referred to Title IV-B, Section 684.135 of the Comprehensive Employment and Training Act, and enclosed Rule 3.322 and exemption certificates.

What this means for you

The answer was tied to the contractor's Job Corps operation. A contractor using this historical letter would need to establish that its purchase or transaction was connected with the Center, program, or activity and should confirm the cited federal and Texas provisions remain applicable.

Common questions

Did the exemption cover only nonprofit contractors? No; the letter included private for-profit and nonprofit contractors. Did it include local sales and use tax? Yes. Was every contractor purchase covered? The letter limited the exemption to property, services, and other items connected with operating the Job Corps Center, program, or activity.

Citations and references

• 29 U.S.C.A. Section 1707(c)
• Comprehensive Employment and Training Act, Title IV-B, Section 684.135
• 34 Tex. Admin. Code Rule 3.322

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9201L1144E07

Original ruling text

January 6, 1992

Dear **:

Thank you for your letter regarding a contract your firm has been
awarded by the U.S. Department of Labor for the operation of the
** .

You specifically asked for tax exempt status for purchases made
for the operation of the Center in accordance with Title IV B,
Section 684.135, entitled "State Taxation of Job Corps Contractors"
of the Comprehensive Employment and Training Act (20,CFD 684).

Transactions conducted by a private for-profit contractor or a
non-profit contractor in connection with the contractor's operation
of a Job Corps Center, program, or activity are exempt from state
and local sales/use tax. Such contractors shall not be liable to
collect or pay any sales/use tax imposed upon the sale to or use
by such contracts of any property, service, or other item in
connection with the operation of a Job Corps Center, program, or
activity [29 USCA Section 1707(c)].

I am enclosing Rule 3.322, Exempt Organizations and exemption
certificates, which may be reproduced to meet your needs.

This opinion is based on the facts presented. Different facts,
though similar, might result in different answers.

If you have any questions or need additional information, please
write or call me at 1/800-531-5441, extension 5-0330 or at
512/463-4600.

Sincerely,

Bettie Peterson
Tax Administration Division