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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Could a homeowners association use Texas's historical prior-contract exemption for garbage service, and how was its separately stated garbage charge treated?
The letter said qualifying fixed-rate homeowner contracts entered before July 22, 1987 could support the historical exemption, while quoting a statutory note that the exemption had no effect after Jan…
Which radio-dispatch, signal-boosting, and elevator-phone services were taxable telecommunications or telephone-answering services?
Radio signal amplification and retransmission was taxable telecommunications. Dispatching that answered radio calls and routed them to land lines, plus elevator-phone answering, was taxable telephone …
Could a for-profit club buy membership cards, certificates, newsletters, and other printed materials tax-free for resale with taxable dues?
Yes. When the club collected sales tax on membership dues and gave the printed materials to members as part of membership, it could give the printer a resale certificate. Refunds for past tax had to b…
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…
Was a confidential, client-tailored medical literature search a nontaxable proprietary-information service when its source material came from public-access databases?
No. The search was a taxable information service because the client had no enforceable proprietary rights in the public-access source material. Tailoring the search, keeping results confidential, or s…
Were annual and individual sales of a monthly newsletter taxable even though it contained professional articles and was delivered by second-class mail?
Yes. Texas classified both subscription and non-subscription sales as taxable information services because the publication was not a magazine under § 151.320(b) and Rule 3.299(b)(1). The publisher nee…
Was a student scholarship-matching service taxable, and when could its printed personal reports be bought for resale?
The matching service was taxable information service. Personal reports sent to students could be printed for resale, but reports sent to third parties and other business materials remained taxable to …
Was a computer-generated custom diet plan taxable, and were diet cookies sold as meal replacements or supplements taxable?
The custom diet plan was taxable data processing, and the Texas seller could give its out-of-state processor a resale certificate. The diet cookies were not taxable as meal replacements or food supple…
Was chemically injecting trees to prevent oak wilt taxable when the provider performed no tree trimming, removal, or other ancillary landscaping?
Yes. Texas treated identifying or treating tree disease as a taxable arborist and real-property service. The entire service price was taxable, while transferred products and supplies could be bought f…
Was an hourly service that searched for scholarships, grants, student loans, and other financial aid taxable, and which inputs could be bought for resale?
Yes. Texas treated the educational consultant's search as a taxable information service. The consultant paid tax on consumed supplies but could buy transferred property and the search database for res…
Was a computerized service that called patients or clients to remind them of appointments taxable when it sent customers only a list confirming completed calls?
Yes. Texas taxed the entire appointment-reminder charge as a telecommunications service. Printed call lists transferred to customers could be bought for resale, while other supplies and equipment rema…
How did the 1991 guidance say contractors and subcontractors should document separated material and service charges for exempt-entity work?
Contractors needed permits and resale certificates. A subcontractor qualified for exemption when material costs were separated from service costs; the contractor issued a resale certificate to the sub…
Could a waste hauler buy roll-off boxes for resale, and was its total charge for placing, picking up, dumping, and returning the boxes taxable?
Yes to both. The company could buy the roll-off boxes tax-free with a resale certificate and seek a vendor refund for six previously taxed boxes. Its entire customer charge for collecting and removing…
How did Texas's 1991 motor-vehicle-repair change treat separately stated consumable supplies and lump-sum repairs?
A repair shop separately stating parts and labor could buy qualifying consumable repair materials tax-free for resale and collect sales tax on the itemized customer charge. A lump-sum repairer instead…
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 taxable security-service provider buy customer-controlled equipment for resale when the customer could keep it free or buy it for $1 after the contract?
Yes. Under the 1991 letter, equipment transferred to the customer's care, custody, and control as an integral part of taxable security service could be bought with a resale certificate under either pl…
How did Texas sales tax apply when a contractor filed a damaged-freight claim and transferred the damaged item to the carrier?
Treatment depended on whether the contractor was a seller or consumer. A seller generally excluded tax from the claim if the carrier resold the item. A consumer included previously paid tax in the cla…
Did a nonprofit trade association have to collect Texas sales tax on correspondence-course tuition or the course binder, test, and certificate?
Tuition or enrollment was not taxable. A separately stated materials charge—including shipping and handling—was taxable, and the association could buy participant materials for resale. If materials we…
Was a Texas seller still responsible for sales tax when its customer refused both to pay $288.83 in tax and to provide a resale certificate?
Yes. The seller had to collect and remit the tax. Under § 151.052, tax became part of the sales price and a legally recoverable debt owed by the purchaser. The seller could also correct an invoice and…
Could change orders separate equipment sales from partially completed lump-sum real-property construction contracts for Texas sales-tax purposes?
Yes, if both parties agreed, the addendum separated every equipment purchase, delivery, and installation component, and the equipment invoices became part of the contract by reference. Contractors cou…
Could a newsletter publisher buy film, film processing, and desktop publishing services for resale without Texas sales tax?
No. Those inputs were not transferred into the subscribers' care, custody, and control, so they did not qualify as purchases for resale under Rule 3.342(e).
Could a homeowners association use Texas's prior-contract exemption for trash service it purchased and separately billed to members?
No for the separately billed trash service. The HOA was the seller, had to buy for resale, and could not use the prior-contract exemption for that purchase.
Could a cellular provider buy a flat-fee call-forwarding roaming feature tax-free for resale when it bundled the feature into taxable service?
Yes. Because the roaming feature was provided as part of the telecommunications service sold to each customer, the provider could issue a resale certificate.
Was labor to operate another company's machine and perforate that company's vinyl sheeting taxable in Texas?
Yes. The work was taxable processing of tangible personal property, unless the vinyl owner resold the material and issued a valid resale certificate.
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.
Could restaurants buy disposable paper placemats tax-free with a Texas resale certificate?
Yes. Nonreusable placemats furnished to customers could be purchased for resale whether they were plain, decorative, or carried advertising.
When did a yearbook seller or school have to collect Texas sales tax on yearbooks bought for students?
Tax depended on who bought and resold the books. Exempt schools could buy qualifying books tax-free, but student payments and school resales generally were taxable except for the letter's limited one-…
How did Texas tax commercial air-conditioning contracts combining scheduled maintenance, parts, and repairs?
A maintenance-only lump sum was nontaxable, but separately billed repairs were taxable. A mixed lump sum was taxable unless repairs were 5% or less or a documented repair allocation was used.
How did Texas tax sales of recyclable cardboard and a hauler's fee for taking the cardboard to a dealer when the hauler and customer shared sale proceeds?
The cardboard sale was taxable unless supported by a resale or manufacturing exemption certificate, but the $75 hauling fee was nontaxable transportation tied to the property sale.
How did Texas tax motor-vehicle service contracts, repairs performed under them, and customer deductibles?
The vehicle service contract itself was not taxed. Lump-sum covered repairs were nontaxable, while separately stated parts were taxable; a deductible reduced the balance paid by the underwriter.
Was a corporation's software-license transfer to a joint venture tax-free when the venture acquired it solely to relicense it to customers?
Yes. The transfer was a sale for resale, so the venture could issue a resale certificate, but it needed a sales-tax permit and owed tax on software bought for its own use.
Were indoor plant leasing, maintenance, sales, and short-term rentals taxable, and which inputs could the provider buy for resale?
They were taxable under the letter. The provider could buy plants and qualifying transferred inputs for resale, but STAR now directs readers to amended Rule 3.285 for current guidance.
How did Texas tax jewelry trade-ins, including a customer trading a higher-value ring for a lower-value watch and receiving cash back?
Tax generally applied to the balance after a qualifying like-kind trade-in. When a $9,000 ring was traded for a $7,000 watch with $2,000 returned, no tax resulted.
Could a pay-telephone provider give its local-exchange supplier a resale certificate instead of paying tax on the purchased access service?
Yes. Texas said the provider could issue a resale certificate to the supplier for basic local-exchange service purchased to facilitate public pay-telephone service.
Were Texas-origin audio and video line-feed services sold to commercial broadcast stations taxable telecommunications services?
Yes. Texas treated the line-feed service as taxable, while allowing specified resale-certificate treatment for cable-TV sales and transferred property.
How did Texas tax laundromat vending sales, coin-operated washers and dryers, drop-off laundry, and vending commissions?
Accessible vending sales and drop-off laundry were taxable; coin-operated washer/dryer receipts and commissions from inaccessible machines were not.
Was upholstery labor included in the taxable sales price when a company bought chair frames, hired another company to upholster them, and sold completed chairs?
Yes. Texas said tax applied to the completed chair's full sales price, including upholstery labor whether or not separately stated; resale certificates could cover inputs.
Was a monthly apartment-locator package taxable when it included updated pricing information, a computer, laser disc, and software?
Yes. Texas taxed the full monthly charge as an information service and allowed the provider to buy customer-controlled equipment and software for resale.
How did Texas tax garbage-collection costs when Houston reimbursed a homeowners association and residents paid the difference?
If residents were billed the unreimbursed difference, tax applied only to that amount; if the association absorbed it, the contractor's entire charge was taxable.
When were printed inserts for Texas newspapers or magazines exempt from sales tax?
Newspaper inserts were exempt when delivered by the printer to the newspaper distributor with supporting documentation; magazine inserts were generally taxable.
Which charges for developing Texas video training seminars, manuals, master tapes, and copies were taxable?
Seminar and manual development was not taxable, but the developer owed tax on its materials and had to tax copies of master tapes, manuals, and other training materials.
How did Texas tax shared title-plant costs, management services, and information sold to shareholders and nonshareholders?
A jointly owned title plant paid tax on taxable inputs but did not tax shareholder cost reimbursements; taxable information sold to nonshareholders remained taxable.
Did Texas tax equipment sold for use in refurbishing a West Indies refinery?
The seller had to collect Texas tax unless it delivered the items to a carrier or freight forwarder for export; purchaser possession in Texas made tax due, subject to a documented import refund.
Did arranging engineering and equipment-installation work in Texas require an Illinois seller to collect Texas tax?
Yes. Engineering and installation performed in Texas on the seller's behalf meant it was doing business in Texas and had to obtain a permit and collect applicable state and local tax.
Were 12-month subscriptions to monthly or biweekly comic books taxable in Texas?
Yes. The comic books did not qualify as magazines because they lacked stories, articles, and essays by various writers as required by Rule 3.299.
When were charges for slicing and disposing of used tires taxable as garbage collection in Texas?
They were nontaxable when customers brought tires to the same place where they were sliced and buried, but taxable when the company picked them up or hauled them to another disposal site.
How did Texas tax fixed-price residential and commercial repair contracts and insurance reimbursements for cost overruns?
Residential lump-sum customers were not charged tax and the contractor paid tax on materials; commercial billings were taxable, with no extra tax on documented insurance reimbursements.
How did a Texas electronic tax-filing provider tax customers and buy the underlying data transmission?
It could buy transmission for resale, charged no Texas tax to non-Texas customers, and charged state and local tax to Texas customers, with local tax based on its sales office.
Was a nine-year machinery sale-leaseback with a 10%-of-cost purchase option a financing lease for Texas tax?
Yes. The option price was only one-sixth of expected fair market value, making it nominal; Texas taxed the financing lease as a sale rather than an operating lease.
Could a private lessor buy materials and services tax-free for GSA-required improvements to its leased building?
Yes, by exemption certificate for items incorporated for GSA's primary use and benefit; a resale certificate applied only to goods or services separately resold to GSA.
Was a service that photographed personal property and maintained descriptive records for possible insurance claims taxable in Texas?
Yes. The photography charge was taxable, and storing and maintaining the records was taxable data processing; qualifying production inputs could be exempt or bought for resale.
Could automobile dealers and repairmen buy vehicle glazes tax-free in Texas?
Yes when the glaze was physically incorporated into a vehicle before the dealer's sale or by a repairman under a separated contract, supported by a resale certificate.
Were improvements made by a private lessor for a federal agency's leased office exempt from Texas sales tax?
Yes. The tailored, required improvements were for the federal agency's primary use and benefit, allowing qualifying materials and services to be purchased for resale.
Did a publisher owe Texas tax when it licensed a hotel-advertising software database to an airline for no charge?
No. The no-charge license created no collection duty; if the publisher later charged, the airline could buy for resale while continuing to tax its software sales or leases to travel agents.
Were pecan-cracking services and sales of smoked turkeys subject to Texas sales tax?
Pecan cracking was not taxable. Smoked turkeys were not taxable unless sold ready for immediate consumption, and resale certificates could apply to resale purchases.
Which aircraft and automobile upholstery labor was taxable in Texas, and what was required for a refund?
Initial upholstery and most reupholstery were taxable, but aircraft reupholstery and motor-vehicle repair or restoration labor were exempt; collected tax had to be refunded to customers first.
Could a surveyor buy stakes and other supplies tax-free when performing taxable or nontaxable surveys for exempt entities?
For a taxable survey, transferred items could be bought for resale, but the surveyor owed tax on retained inputs. For a nontaxable survey, all taxable inputs were taxable.
Were insurance claims-adjusting services taxable, and could an insurance company buy qualifying subcontracted adjusting services for resale?
Yes. Adjusting and claims processing were taxable, but a buyer could issue a resale certificate when the purchased services were essential to its own taxable insurance service.
Could a Texas nonresidential repairman rent job equipment tax-free for resale or deduct its taxed cost from the customer bill?
No. The repairman consumed the rented equipment and paid tax on the rental, while the entire customer billing remained taxable with no credit for that input tax.
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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.