Could an electric cooperative formed under Article 1528(b) buy taxable items for its own use without paying Texas sales or use tax?

Plain-English summary

An electric cooperative formed under the Electric Cooperative Corporation Act, Article 1528(b), Texas Civil Statutes, was exempt from sales or use tax on taxable items purchased for the cooperative's own use.

The taxpayer said during a telephone conversation that the cooperative had been formed under that article. If that statement was correct, the Comptroller said the cooperative could issue properly completed exemption certificates instead of paying tax on its own-use purchases.

What this means for you

The answer was conditional on the cooperative's legal formation under the cited act and limited to items it purchased for its own use. The letter did not extend the exemption to unrelated purchasers or uses.

Common questions

Which cooperatives qualified under the letter? Electric cooperatives formed under Article 1528(b).

What purchases were covered? Taxable items bought for the cooperative's own use.

What document could the cooperative give the seller? A properly completed exemption certificate.

Was the named cooperative's status independently proved in the letter? No. The conclusion was based on the taxpayer's statement that it was formed under the cited article.

Citations and references

• Electric Cooperative Corporation Act, Article 1528(b), Texas Civil Statutes

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9204L1166G07

Original ruling text

April 20, 1992

Dear *****:

I am responding to the letter submitted by ** requesting a
letter stating the exempt status of the * Electric Cooperative.

Electric cooperatives formed under the Electric Cooperative
Corporation Act, Article 1528 (b), Texas Civil Statutes, are exempt
from paying sales or use tax on taxable items purchased by the
cooperative for the cooperative's own use. The cooperative should
issue a properly completed exemption certificate in lieu of tax
when purchasing taxable items for the cooperative's own use.

You stated in our telephone conversation that the * Electric
Cooperative, is formed under the Article mentioned above. If so,
* Electric Cooperative, may issue properly completed exemption
certificates in lieu of tax on taxable items purchased for its own use.

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

You may also write to Tax Administration Division, Comptroller of
Public Accounts.

Sincerely,

Tax Administration Division