Are fuel filters, nozzles, hoses, and lubricants used on farm/ranch equipment and vehicles exempt from Texas sales tax?

Plain-English summary

A taxpayer requested a ruling on several farm/ranch items: (1) fuel filters, nozzles, and hoses used on large fuel storage tanks (250 to 1,000 gallons) supplying fuel for farm or ranch equipment; (2) lubricants for a pickup or other vehicle used only on the farm/ranch; and (3) lubricants for farm/ranch equipment generally.

The Comptroller confirmed all three qualify for the agricultural exemption. The fuel filters, nozzles, and hoses are exempt if used exclusively to fuel farm machinery or motor vehicles not licensed for highway use, with the purchaser issuing an exemption certificate confirming exclusive farm/ranch use. Likewise, the terms "machinery or equipment used on a farm or ranch" include lubricants for farm machinery and for motor vehicles not licensed for highway use — so lubricants for a farm-only pickup and lubricants for farm/ranch equipment are both exempt, again with a proper exemption certificate. The letter also references an enclosed listing of taxable and exempt items for farm/ranch use.

Currency note: STAR flags this document with an ALERT that Texas Tax Code was later amended by H.B. 268 (82nd Legislature, Regular Session, 2011), effective January 1, 2012, which requires anyone claiming this agricultural or timber sales tax exemption to first apply for and hold a Comptroller-issued registration number. This 1997 letter predates that requirement and does not address it.

What this means for you

Farmers and ranchers buying fuel-delivery equipment or lubricants

Fuel filters, nozzles, and hoses for tanks that exclusively fuel your farm equipment or unlicensed farm vehicles are exempt, as are lubricants for farm equipment and for vehicles (like a pickup) used only on the farm or ranch. You'll need to give the seller a proper exemption certificate — and since 2012, you also need a Comptroller-issued agricultural/timber exemption registration number to claim the exemption at all.

Accountants and tax professionals

When citing this or similarly aged agricultural-exemption letters, always layer in the post-2011 registration-number requirement (H.B. 268) — a client can meet every substantive test in a pre-2012 letter and still lose the exemption if they never registered.

Common questions

Q: Are fuel filters, nozzles, and hoses for farm fuel tanks exempt from Texas sales tax?
A: Yes, if used exclusively to fuel farm machinery or vehicles not licensed for highway use, with a proper exemption certificate.

Q: Are lubricants for a farm pickup truck exempt?
A: Yes, as long as the vehicle is used only on the farm or ranch.

Q: Has anything changed since this 1997 letter?
A: Yes — effective January 1, 2012, H.B. 268 (82nd Legislature, 2011) added a requirement that anyone claiming this agricultural/timber exemption first apply for and hold a Comptroller-issued registration number.

Q: Can another farmer or rancher rely on this exact letter?
A: No. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10); confirm your own facts, and your registration status, with a tax professional.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9709839L

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

September 11, 1997

Dear****:

This is in response to your request for a ruling on applicable exemptions for
farm and
ranch use on the following items:

1. Fuel filters, nozzles, hoses (for use on 250--1000 gallon tanks
   containing fuel for use in farm or ranch equipment.)

Response: These items qualify for the farm exemption if used exclusively to
fuel farm machinery or motor vehicles not licensed for highway use. The
purchaser must issue you an exemption certificate to the effect that these
items are for exclusive use on a farm or ranch.

2. Lubricants for use in a pickup or other vehicle used only on the farm
   or ranch.
3. Lubricants for use on farm or ranch equipment

Response to 2 and 3: The terms machinery or equipment used on a farm or ranch
includes lubricants for farm machinery and for motor vehicles not licensed for
highway use. The purchaser must issue you a proper exemption certificate.

I have also included a listing of taxable and exempt items purchased for use on
a farm or ranch.

This opinion is based on the facts presented. Other facts though similar may
provide a different result. I hope this information answers your questions.
If you need additional information, please call me toll-free at 1-800-531-5441,
extension 3-4502. The direct line is 512/463-4502. You may also write to Tax
Policy Division, Comptroller of Public Accounts. You may also e-mail our tax
help section at: [email protected]

Sincerely,

Gilbert Zamora
Tax Policy Division