Is electricity used to recharge the batteries of golf carts held for rental exempt from Texas sales tax?

Subject

Electricity To Recharge Rental Golf Cart Batteries Is Exempt As Noncommercial Use

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9308611L

Plain-English Summary

This document is internal Comptroller correspondence, not a letter addressed to a taxpayer. An auditor, Michael Fraser, wrote to Burrell Lankford in the Tax Administration Division on August 3, 1993, asking whether the agency still agreed with a policy set out in a September 28, 1983 letter from Eddie Washington to a company referred to only as "COMPANY." That 1983 letter had exempted electricity used to recharge batteries on electric golf carts held for rental from sales tax.

The auditor explained he had just completed an audit of one of "COMPANY'S" member clubs, whose separately-metered cart-barn electricity usage averaged an amount around ("**") per month, and that he had allowed the exemption but was concerned the 1983 decision, given its age, might no longer be correct. He also questioned the legal basis for the exemption, noting it looked like an "indirect usage" of the electricity rather than a resale or rental of the electricity itself.

Eddie C. Washington of the Tax Administration Division responded on August 17, 1993, confirming the exemption is still good policy. The response states that microfiche document 8308L0526E13 (the 1983 letter) exempts electricity used to recharge batteries on electric golf carts that are held for rental, and that the agency's "long-standing policy regards this usage as a 'noncommercial use' that is exempt." The response confirms this microfiche document "is current and valid."

What This Means For You

Electricity to recharge rental golf cart batteries is treated as exempt. If you operate a golf course, country club, or similar rental-cart operation, this internal confirmation shows the Comptroller's position (as of 1993, reaffirming a 1983 letter) is that the electricity your cart barn uses to recharge batteries on carts you rent out qualifies for exemption from sales tax, characterized as a "noncommercial use."

This is an internal agency memo, not a letter issued to a specific taxpayer. Unlike a private letter ruling or general information letter addressed directly to a requester, this document is Tax Administration Division correspondence confirming, for an auditor's benefit, that an older 1983 letter to a different, redacted taxpayer ("COMPANY") remains valid. The detrimental-reliance protection described in this page's disclaimer applies to the taxpayer who was directly issued a letter — here, that would be the original 1983 letter's recipient, not a general reader of this internal memo.

The underlying legal theory is "noncommercial use," not resale. The auditor specifically raised the question of whether the exemption's basis was that the electricity is being "resold/rented," and flagged that this looks like an "indirect usage" rather than an actual resale or rental of electricity. The Tax Administration Division's response does not resolve that legal-theory question directly — it simply reaffirms the exemption is based on the agency's "long-standing policy" treating this usage as a "noncommercial use."

Documents this old can still be cited as valid, but should be checked for currency. The value of this 1993 memo is that it independently reconfirmed a 1983 letter's continuing validity at that time. As with any older STAR letter, check whether it has since been marked superseded before relying on it today.

Q&A

Q: Is electricity used to recharge batteries on rental golf carts subject to Texas sales tax?
A: According to this document, no — the Comptroller's Tax Administration Division confirmed that this electricity is exempt, based on a 1983 letter and the agency's long-standing policy treating this as a "noncommercial use."

Q: What triggered this confirmation?
A: An auditor, Michael Fraser, asked the Tax Administration Division on August 3, 1993 whether the agency still agreed with a September 28, 1983 letter (to "COMPANY") that had granted this exemption, after he allowed the exemption in a recent audit of one of COMPANY's member clubs but was concerned about the age of the original decision.

Q: What was the auditor's concern about the legal basis for the exemption?
A: He questioned whether the exemption's basis was that the electricity is being resold or rented, noting that recharging golf cart batteries "appears to be an indirect usage of the electricity and not a resale or rental of the electricity."

Q: How much electricity usage was involved in the audit that prompted this question?
A: The auditor stated the cart barn's electricity usage, which was separately metered, averaged approximately a redacted dollar amount per month.

Q: What document originally established this exemption?
A: A letter dated September 28, 1983 from Eddie Washington to "COMPANY," recorded as microfiche document 8308L0526E13.

Q: Is this document itself a private letter ruling or general information letter issued to a taxpayer?
A: No. It is internal correspondence within the Texas Comptroller's Tax Administration Division — an auditor asking whether an older policy letter to a different taxpayer is still valid, and the division confirming that it is.

Original ruling text

DATE: August 17, 1993

TO: Michael Fraser, ** Audit (**)

FROM: Eddie C. Washington, Tax Administration Division (**)

SUBJECT: Taxability of Electricity Used to Recharge Golf Carts

RE: Validity of letter to COMPANY dated September 28, 1983

Microfiche document 8308L0526E13 exempts electricity used to recharge batteries
on electric golf carts that are held for rental. The agency's long-standing
policy regards this usage as a "noncommercial use" that is exempt. This
microfiche document is current and valid.

August 3, 1993

To: Burrell Lankford, Tax Administration

From: Michael Fraser, Auditor, ** Via: Keith Womack, Manager,

Re: Electricity used to recharge golf carts held for rental

I have enclosed a copy of a letter dated September 28, 1983 from Eddie
Washington to COMPANY. Do we still agree with this policy, that the electricity
used to recharge golf carts which are rented qualifies for exemption from sales
tax?

Is the basis for the exemption on the electricity the fact that the electricity
is being resold/rented? This appears to be an indirect usage of the electricity
and not a resale or rental of the electricity.

I recently completed an audit of one of COMPANY'S member clubs. Their
electricity usage for the cart barn (which was separately metered) averaged
approximately $** per month. I allowed the exemption in my recent
audit but was concerned that, considering the age of the decision, that it
might not still be correct.