Texas State Tax Rulings
Free plain-English summaries of state tax letter rulings and advisory opinions issued in Texas, with full citations and the original source on every page.
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Can a Texas business scan invoices and resale/exemption certificates and store them electronically instead of keeping paper copies?
Yes, with two conditions: the business must keep back-up hard copies of resale/exemption certificates specifically, and it must provide the Comptroller's auditors with sufficient equipment to examine …
An out-of-state retailer ships goods into Texas that the purchaser will later export and use only outside Texas. Is Texas tax due on that shipment?
Use tax (not sales tax) is normally due when an out-of-state retailer ships an item into Texas, but the purchaser can give the retailer an exemption certificate claiming a temporary-storage exclusion …
Does a construction contract's two-year warranty period extend the time during which the contract can be renegotiated for tax purposes, and is a signed written contract required to support a tax-exempt sale to a church?
No. The Comptroller's office said a construction contract is complete once the actual construction work is finished, so a two-year warranty period does not extend the window for renegotiating the cont…
Is a forensic engineer's accident-investigation work for insurance companies and attorneys taxable as an 'insurance service' under Texas sales tax law, even though attorney legal fees themselves are not taxable?
Yes. Under Rule 3.355, a professional engineer's work investigating accidents to help determine whether an insurance claim should be paid is a taxable 'insurance service,' regardless of the engineer's…
If my advertising agency's invoice lumps taxable and nontaxable charges together, can I still use my direct payment permit to self-accrue the tax?
No. Under Rule 3.288(h), a direct payment permit holder can only issue a valid direct payment exemption certificate to a vendor that separately states its taxable and nontaxable charges. If an adverti…
Texas Letter Ruling 9212L1211A13: Contact Lens Care Products
Prescription contact lenses are exempt from Texas sales tax and need no exemption certificate. Lens solutions and carrying cases are taxable, except that a disinfective solution sold as part of a soft…
Texas Letter Ruling 9209467L: Chamber Of Commerce — Contract From 10/1/91 — 10/1/93 To Build Building To Be Donated To City
A Chamber of Commerce that qualifies as a tax-exempt organization can issue an exemption certificate to its prime contractors, who can in turn issue resale certificates to subcontractors and suppliers…
After Texas amended its rule on construction contracts, do change orders on contracts signed before the amendment have to be redone under the new rule?
No. This internal Comptroller memo confirms that Texas's amended rule on how change orders are taxed applies only prospectively — to contracts executed on and after July 23, 1992. Change orders on con…
Is dog food, fertilizer, and other feed-store merchandise taxable in Texas, and when is feed for dogs and cats exempt from sales tax?
Generally taxable. Feed and supplies at a feed and grain store are exempt from Texas sales tax only when used exclusively on a farm or ranch for agricultural production, or for animals held for sale i…
Can a farmer or rancher file a single agricultural/farm-purposes exemption certificate with a retailer and then just sign later invoices marked 'Exempt agricultural purposes,' instead of filing a new certificate for every purchase?
Yes. A farmer or rancher can file one properly completed exemption certificate with the retailer, who keeps it on file, and afterward the purchaser can simply sign subsequent invoices stamped 'Exempt …
A taxpayer sought a refund of Texas sales tax paid on a VCR that was allegedly exported to Canada, but the formal Canadian customs entry document listed a video camera instead of a VCR. Can an affidavit or statement from the purchaser take the place of the formal export document to prove the export and support a refund?
No. Affidavits, statements, or exemption certificates given by purchasers are not acceptable proof of export. The only acceptable proof is the formal entry document from the foreign country (here, Can…
Is a 'continuous passive motion' (CPM) device an exempt orthopedic device or a taxable therapeutic appliance under Texas sales tax rules, and when is it exempt when sold, leased, or rented?
The Comptroller reclassified the CPM device from a therapeutic appliance to an orthopedic device under Rule 3.284(a)(9) after new facts showed it works on joints (not muscles) and doesn't function as …
Are materials used to build a railroad loading and containment facility exempt from Texas sales and use tax as railroad track materials?
Split answer: materials actually incorporated into the railroad track itself (rails, cross ties, etc.) qualify for exemption from Texas sales and use tax. But materials used to build the loading and c…
Could a nonexempt club use the Knights of Columbus sales-tax exemption to buy equipment for facilities used by the Knights, and could it avoid tax on items bought for resale?
The club could not claim an exemption for its own purchases because it was not exempt. But the Knights of Columbus could buy qualifying equipment tax-free with its own funds, and the club could act as…
Did a riding mower qualify for Texas' agricultural sales-tax exemption when it was used in pastures and in a garden?
No on the facts described. Mowing pasture weeds for production could qualify, but aesthetic mowing and mowing nonproduction areas did not. Garden use qualified only if the food was sold in the regular…
Could an electric cooperative formed under Article 1528(b) buy taxable items for its own use without paying Texas sales or use tax?
Yes, if it was formed under the Electric Cooperative Corporation Act, Article 1528(b). Such a cooperative was exempt on taxable items bought for its own use and could give vendors properly completed e…
How could a farm credit bank claim its Texas sales-tax exemption on tangible personal property purchases?
The bank had to give the seller a completed exemption certificate; a bank letter was not enough. The certificate had to cite 12 U.S.C. § 2023, describe the items, and be signed and dated.
When was a manufacturer's waste removal nontaxable as industrial solid waste, and what certificate did the hauler need?
Waste from manufacturing, mining, or agriculture could qualify, but regulated liquid waste and office, shipping, retail, service-industry, or support waste did not. The hauler should tax the service u…
When could an optician repair prescription-eyeglass frames without charging Texas sales tax?
Frame repairs were nontaxable if the optician documented the corrective-lens prescription from lens readings and accepted a customer-signed exemption certificate. Lens work still required a doctor's p…
Were an insurance company's separately contracted workplace-safety and loss-prevention consulting services taxable in Texas?
Generally yes when the services pertained to insurance policies. The provider had to presume taxability unless the client supplied a valid exemption certificate, such as one documenting self-insured s…
Which parking-lot, street, debris-scraping, and ice-control cleaning services were taxable in Texas?
Parking-lot sweeping, power washing, and periodic cleaning were taxable from December 6, 1991. Public-road cleaning and debris scraping, plus salt or sand spread for icy driveways or sidewalks, were n…
What documentation made a municipal construction contract separated, and did a Texas city need to issue exemption certificates with progress payments?
The signed separated contract itself proved sales of incorporated materials to the exempt municipality, so no municipal exemption certificate was required. Unit-price bid documents needed binding tax …
Which farm and ranch software programs qualified for Texas's agricultural sales-tax exemption?
Five listed livestock and meat-management programs were exempt when bought by original producers for their own products. Bookkeeping, recordkeeping, accounting, mixed-use programs, and sales to nonpro…
Could a pallet seller accept an exemption certificate when manufacturers bought wooden pallets to ship their manufactured products?
Yes. A manufacturer could give the seller an exemption certificate for pallets used to ship its manufactured products, including pallets sent directly to a third-party distribution center. The exempti…
Was mesquite wood purchased by a restaurant for cooking food for sale exempt from Texas sales tax?
Yes. Wood used to cook food for sale qualified for exemption, provided the seller obtained a properly completed exemption certificate from the purchaser instead of collecting tax.
How did Texas tax railroad-track materials and labor for new construction versus repair, remodeling, or renovation?
Rails, ballast, bridges, trestles, ties, and other essential track materials were exempt; depot and nonessential construction materials were taxable. New-construction labor was not taxable, while exis…
Could a company rebuilding purchased used core assemblies buy wrapping and packaging supplies tax-free as a manufacturer?
Yes. The company was a manufacturer because it bought used cores, completely disassembled, cleaned, inspected, remachined, rebuilt, tested, and added the finished assemblies to inventory for sale. It …
How should a seller document tax-free class-ring sales to a university bookstore, and when could it accept the bookstore's claimed university exemption?
A bookstore buying rings for resale had to provide a resale certificate, not a government exemption certificate. A properly completed university exemption certificate could protect a good-faith seller…
Could a church buy telephone service for its pastors' parsonages tax-free when the phones had some personal use?
Yes. The Comptroller said churches could purchase telephone service for parsonages tax-free by giving the telecommunications provider an exemption certificate.
Were Texas insurance claims adjusting or processing services taxable when performed for a surplus-lines or non-admitted insurer covering a Texas risk?
Generally yes. The provider had to presume the service was taxable when the insured person or property was in Texas. It could avoid collection when the insurer was not conducting insurance business in…
Did a company have to collect Texas sales tax for pumping, hauling away, and disposing of gasoline-contaminated water from underground fuel storage tanks?
No, if the liquid was an industrial discharge regulated by the Texas Water Commission and the provider held the required permit. The provider had to obtain and retain a completed exemption certificate…
Could a software developer buy boxes, wrapping paper, envelopes, tape, and similar supplies tax free when they were used to package computer programs?
Yes. If the corporation produced computer programs as defined by Rule 3.308, it could buy the listed wrapping and packaging supplies tax free by giving its suppliers an exemption certificate instead o…
Were automobile hand controls and a vehicle modified for an orthopedically handicapped person exempt from Texas tax?
Yes under the stated conditions. Hand brakes were exempt orthopedic devices when they enabled a person with missing, damaged, or nonfunctioning organs or appendages to drive, and § 152.086 exempted a …
Were truck-time and per-gallon charges for disposing of oil and water from a groundwater test well taxable as waste removal?
No, if the waste was an industrial discharge regulated under a Texas Water Commission permit. The provider needed a properly completed exemption certificate; without one, the service was presumed taxa…
Which supermarket bags and food-packaging supplies were taxable at checkout, produce, bakery, and meat departments?
Checkout and produce bags were taxable. Bakery packaging was exempt only when the store baked its own goods and supplied an exemption certificate. Meat trays, film, pads, and paper were exempt because…
Did rebuilding and sometimes enhancing used telecommunications equipment qualify the business as a remanufacturer entitled to exempt packaging supplies?
Yes. Texas treated the business as a remanufacturer, so it could buy wrapping and packaging supplies for the rebuilt equipment tax free by giving suppliers an exemption certificate.
Which electricity used by a mobile-home park's water system was exempt, and how did Texas treat a meter serving both exempt and nonexempt uses?
Electricity used to extract water, move it to holding tanks, and process it was exempt; electricity used to transport processed water was not. A mixed-use meter required the predominant-use analysis i…
Which purchases by commercial vessels were tax-exempt, and did sales to individual seamen, foreign passengers, or resellers qualify automatically?
Only specified vessel purchases qualified with a complete exemption certificate. Commercial vessels over eight tons could exempt repair and component items, and qualifying interstate or foreign vessel…
Could a hotel manager make tax-free purchases for Resolution Trust Corporation property by showing vendors only the RTC's general tax-exemption form letter?
No. The RTC form letter alone was insufficient. The manager needed proof that title to the hotel transferred to the RTC and a written agreement appointing the manager as RTC's purchasing agent before …
Were services performed under insurance policies for unauthorized or surplus-lines insurers taxable Texas insurance services?
Yes, when performed in Texas for an insurer doing insurance business in Texas. The Comptroller treated unauthorized insurers engaged in insurance as insurance carriers and required the provider to pre…
Could an exempt nonprofit homeowners association buy member services tax-free and recover sales tax it had paid in error?
Yes. The association could issue exemption certificates for purchases related to its exempt function when it did not separately charge members, and it could request supplier refunds for tax paid in er…
Could a Texas purchaser use wholly electronic purchase orders to claim resale, exemption, or direct-payment treatment?
Not by themselves. A traditional signed resale or exemption certificate had to remain on file with the seller; later written or electronic purchase orders could claim the exemption by referring to tha…
Did Texas-based independent salespeople require an out-of-state seller to collect tax, and what resale or exemption documents could the seller accept?
Yes. Commissioned independent salespeople created Texas business activity, requiring a permit and tax collection or valid certificates. A permit copy was not a certificate; Texas required separate res…
Could a property manager make tax-free purchases for assets held in FDIC receivership without registering as an FDIC agent?
Yes, registration with the Comptroller was unnecessary, but the manager needed a written FDIC agency agreement and proof that FDIC held title to the property. With those records, the manager could iss…
What documentation could a service provider accept before stopping sales-tax collection from a manager acting for the RTC?
A completed, signed exemption certificate was enough to protect the service provider if accepted in good faith. The manager could sign as RTC's agent and assert the agency relationship; the manager, n…
What documentation did a retailer need to sell tax-free to a property manager acting for the FDIC or RTC?
The retailer could accept an exemption certificate alone. The manager had to retain proof of FDIC/RTC title and its written purchasing authority for audit.
Could a retailer accept an FDIC or RTC property manager's exemption certificate without receiving separate ownership and agency documents?
Yes. The manager kept the ownership and agency records for audit, while the retailer could accept the certificate and issue a refund based on it alone.
Could a retailer accept an exemption certificate from a property manager buying for the FDIC or RTC without receiving the title and agency documents?
Yes. The manager or FDIC/RTC could sign the certificate, while the manager kept title-transfer and agency documents for audit instead of giving them to the retailer.
Could an FDIC or RTC property manager issue an exemption certificate without giving the retailer its title and agency records?
Yes. If the manager retained those records for audit, it could issue the certificate; a retailer accepting a proper certificate in good faith was relieved of tax liability.
Were utilities used in a homeowners association's jointly owned, members-only common areas exempt as residential use?
Yes. Utilities for jointly owned common areas intended solely for association members were exempt residential use for billing cycles beginning on or after January 1, 1988.
Was equipment temporarily assembled in Texas before shipment for use solely in Oklahoma subject to Texas sales or use tax?
It depended on origin. Out-of-state equipment could qualify for the temporary-storage use-tax exclusion, but equipment shipped from within Texas remained subject to sales tax.
When could a Texas seller accept a resale or exemption certificate in good faith, and could the purchaser invoke good faith when issuing it?
The purchaser could not invoke good faith. A seller needed a timely, facially valid certificate and no knowledge that the claimed resale or exemption was improper.
Did a Texas seller need a separate exemption certificate when a government agency supplied an official purchase order or state voucher?
No separate certificate was required when the official purchase order or state voucher supplied the necessary exemption information, but the seller still had to keep supporting documentation.
Could a Mexican farmer use Texas's agricultural exemption certificate to buy qualifying veterinary supplies tax-free?
Yes. The letter applied the same qualifying agricultural-item exemption to Mexican and Texas farmers; taxable purchases could instead use the export-and-refund procedure.
Was labor for an annual acid wash of a large vessel treated as nontaxable real-property maintenance?
Yes, if the wash kept the real property in good working order and was performed on a documented scheduled, periodic basis. The provider still owed tax on items used.
Could a direct-payment permit holder choose which purchases and suppliers its certificate covered, and how were uncovered taxes handled?
Yes. The holder could use blanket, item-specific, or supplier-specific certificates, but had to pay or accrue all state and applicable local tax on other purchases.
Could a business donate uniforms, equipment, prepared food, and disposable serving items to tax-exempt organizations without owing sales tax?
Generally yes, with proper exemption treatment and records. Uniforms and equipment bought under a valid exemption certificate could be donated to qualifying exempt organizations, while donated taxable…
Did the offshore-drilling exemption apply when the platform and wellhead were outside Texas waters but the wellbore entered Texas territory?
No. The exemption required exploration or production exclusively outside Texas; equipment used for a well operating inside and outside Texas territory was taxable.
When did a direct-payment-permit holder owe use tax on taxable items bought tax-free and stored or used in Texas?
If Texas use was known, tax was due when the items were first stored, used, or consumed. If destination was unknown, the holder could consistently elect storage or withdrawal.
Could a fertilizer company buy replacement tires for free-loan fertilizer applicators under Texas's agricultural exemption?
Yes, only if the applicators were used exclusively on a farm or ranch for the qualifying agricultural production described in the letter.
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These are official tax letter rulings and advisory opinions issued by Texas's revenue authority in response to questions from specific taxpayers about how the tax law applies to their facts. A ruling is binding on the department only for the taxpayer who requested it and cannot be relied on by anyone else, but it is strong evidence of how the state reads the law. Every ruling above has a plain-English question and short answer, plus a link to the full original source.