Can an architecture firm use its tax-exempt school client's exemption certificate to buy blueprint copies tax-free from a copy shop, even though the copies are for the school's project?

Plain-English summary

An architecture firm that designs schools regularly needs multiple copies of blueline prints (drawings it generated) reproduced at local copy shops on behalf of the school it's designing for. The firm had been told by a Comptroller staffer that if its contract with the school specified the school (a tax-exempt entity) directed the firm to have the copies made, the firm's purchase from the copy shop would be tax-exempt — with the firm passing along the school's exemption certificate as a Texas Resale Certificate to the copy vendor. The firm wrote in to confirm this was correct.

The written ruling corrects that informal guidance: the professional services of an architect or engineer are themselves nontaxable, which means the firm, as the provider of a nontaxable service, must pay sales tax on all the materials and supplies (including copies) it purchases to provide that service — regardless of whether its client happens to have exempt status. A client's tax-exempt status does not flow through to the professional's own purchases just because the client benefits from the final work product. The letter enclosed two prior edited rulings (accession numbers 9508L1367F07 and 9406L1313G06) addressing the same issue for reference.

There is a narrow escape: the blueline print copies WOULD be exempt if the exempt school directly purchased them itself (rather than the firm purchasing them and passing along the cost), or if the firm purchased them specifically as the school's agent (a genuine agency relationship, not just a contractual reference to the school "directing" the copies).

What this means for you

Architects, engineers, lawyers, and accountants

Your own purchases of copies, supplies, and materials used to provide your professional services are taxable, even when your client is a tax-exempt entity — a client's exemption certificate cannot cover your own business purchases. If you want copies for an exempt client to be tax-free, either have the client purchase them directly, or set up a genuine agency arrangement (not just a contract clause) where you're purchasing specifically as the client's agent.

Firms currently relying on informal phone guidance from the Comptroller

This letter is a good example of why to get informal advice confirmed in writing: the firm's prior phone conversation with Comptroller staff suggested the copies could be exempt with the right contract language, but the written ruling corrected that to the narrower direct-purchase-or-agency rule.

Common questions

Q: Does a client's tax-exempt status make a professional's own supply purchases exempt?
A: No. Architects, engineers, and similar professionals providing nontaxable services must pay sales tax on their own materials and supplies regardless of the client's exempt status.

Q: Can I use my exempt client's exemption certificate to buy copies tax-free?
A: Not simply because your contract says the client "directs" the copies to be made. The copies are exempt only if the exempt entity directly purchases them, or if you purchase them specifically as the entity's agent.

Q: What's the difference between contractually referencing the client and being their agent?
A: The letter treats these as distinct — a contract clause noting the client directs the work isn't enough; a genuine agency relationship for the specific purchase is required.

Q: Can another architecture or engineering firm rely on this letter?
A: Only the taxpayer who requested it can use it for detrimental reliance, and it's based on the facts presented — but the underlying rule (professionals pay tax on their own supplies regardless of client exemption) reflects the two prior rulings cited in the letter as well.

Citations and references

No specific Tax Code section or Comptroller rule number is quoted in this letter; it references two prior edited letter rulings (accession numbers 9508L1367F07 and 9406L1313G06) addressing the same issue, which were enclosed with the original response but are not reproduced here.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9910839L

Original ruling text

October 28, 1999

Dear **:

This is in response to your request for a ruling on the following fact
situation and question.

I spoke with David Reed, of your Sales Tax & Resale Section, regarding sales
tax exemptions, questions that I asked on behalf of my firm. My company designs
schools and, as such, we often need to have multiple copies of blueline prints
(that we generated) reproduced at various local copy shops on behalf of the
school that we are designing. David explained that, if it is written into our
contract with the school that the school (as a tax exempt entity) directs us to
have these copies made, then our transaction with the copy vendor would be tax
exempt. We would receive a Texas Sales and Use Tax Exemption certification from
the school, and we could give the copy vendor a Texas Resale Certificate for
this exemption.

Response: The professional services of an architect or engineer are not
taxable. As the providers of non-taxable services, architects and engineers
must pay sales tax on all materials and supplies used to provide their non-
taxable service. A sales tax exemption cannot be claimed on these purchases
even though their client may have exempt status from Texas sales tax. I am
enclosing edited copies (#'s 9508L1367F07 and 9406L1313G06) of letter rulings
that address this issue.

The blueline prints would be exempted if directly purchased by the exempt
entity or purchased by your company as an agent for the exempt entity.

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:

Sincerely,

Gilbert Zamora
Tax Policy

cc David Reed