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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Are separately stated charges for original design work performed by a Certified Kitchen and/or Bath Designer subject to Texas sales tax?
No. The Texas Comptroller's Tax Policy Division confirmed that separately stated charges for original design work performed by a Certified Kitchen and/or Bath Designer are not subject to sales tax.
Is a ripper and the bulldozer that powers it exempt from Texas sales and use tax as manufacturing equipment when they are used to break limestone and shale out of the earth as the first step in making cement?
Yes, with a condition. The Comptroller ruled the ripper qualifies as manufacturing equipment and is exempt from sales and use tax because it is the first stage in producing cement, breaking limestone …
If I sell food, soft drinks, or candy to a jail or prison in Texas, or to inmates there, do I have to charge sales tax?
It depends on who is buying. Sales of food products, meals, soft drinks, and candy to the correctional facility itself (for example, to feed inmates at no charge to them) remain exempt from Texas sale…
Does the Texas Comptroller agree that the industry-published 'Sales Tax Guide for Texas Printers' (June 1995 edition) — covering when printers charge sales tax, what equipment/energy purchases qualify for the manufacturing exemption, and how to claim refunds — reflects current Comptroller policy?
Yes, with the corrections shown in this letter. The Comptroller's Tax Administration Division (Gilbert Zamora) reviewed the trade associations' 'Sales Tax Guide for Texas Printers' line-by-line, marke…
Does a contractor owe Texas sales tax on renting portable toilets for a construction job site when the job is a contract to improve real property for a tax-exempt entity like a public school?
Yes, generally. A contractor owes sales tax on the rental of portable toilets used at a job site improving real property for an exempt entity, even if the contract requires the toilets to be there. Te…
If a retailer of x-ray equipment loans machines free of charge to tax-exempt hospitals and depreciates the equipment on its books, does that count as tax-free demonstration/display use, or does the retailer owe sales tax?
The retailer owes tax. The Comptroller ruled that loaning x-ray machines to hospitals for their free use is not demonstration or display under Rule 3.285(e)(1), because the hospitals have no incentive…
When Company A sells a mold to Company B under a written agreement, is the sale of the mold taxable, and does it matter whether Company B itself manufactures the end product?
It depends on whether Company B is manufacturing tangible personal property for sale and on whether a written agreement transfers title to the mold. If B uses the mold (directly or through a component…
If a company leases drilling tools that are delivered to and picked up in Texas, but then actually used at drilling sites in another state (New Mexico), does the lessee owe Texas sales tax on the lease charges?
Yes, generally. Because the lessee took possession/delivery of the leased tools in Texas (the common carrier's bill of lading showed delivery to Odessa, Texas), the operating lease was executed in Tex…
Are meal-replacement and nutritional supplement products like Extreme Measures and Preferred Whey taxable or exempt under Texas sales tax?
Exempt, in this case. The Comptroller found that Extreme Measures may be used as a meal replacement and is therefore treated as a food product, exempt from tax. Whey itself is classified as a food pro…
How does Texas sales and use tax apply to a company that installs, repairs, and remodels exterior lighting permanently placed in the landscaping and hardscaping of residential and commercial property?
It depends on the type of work and the type of property. The company acts as a contractor (not a taxable-service provider) when it makes original exterior lighting improvements to residential or non-r…
Is electricity used to recool ferns after they arrive in Texas from Mexico, and again after further processing, exempt from Texas sales tax as an exempt use in processing?
Yes, in this case. The Comptroller held that because a processing step (removing bacteria and deepening the ferns' color) occurred before each recooling, the recooling was itself part of processing, s…
For a Dallas-based mobile radio repeater service whose customers are located throughout the Dallas area and suburbs, should local sales tax be charged at the Dallas rate or at the various suburban rates based on each customer's location?
The Dallas rate. Local sales tax on mobile radio repeater services is based on where the telecommunications device (the repeater) that originates the amplified signal is located, not on the customer's…
Is a scrap metal processing service — cutting, chopping, and separating aluminum and copper conductors for electric utilities and co-ops — taxable, and does the machinery used qualify for the Texas manufacturing exemption?
The processing service itself is taxable, but the utility company can give the processor a resale or exemption certificate stating the service is purchased to further processing of property that will …
When a country club charges members a separate capital assessment to pay for remodeling the club, and the club itself already pays sales tax to the contractors doing the remodeling, is the members' assessment also taxable, or does that create impermissible double taxation?
Both charges are taxable — this isn't double taxation on the same transaction. The remodeling contractors must collect tax from the country club on the total charge for remodeling the nonresidential r…
How does Texas sales and use tax apply to the packing supplies, equipment, and moving vans a moving company uses for local, intrastate, interstate, and international moves?
It depends on how the mover bought the supplies and how it bills the move. If the mover pays tax when it buys supplies, no further tax is due on interstate, intrastate, and local moves (the customer's…
Is the Instituto Panamericano De Geografia E Historia (an organ of the Organization of American States) exempt from Texas sales tax on its purchases because of the OAS treaty?
No. The Comptroller ruled that the Instituto Panamericano De Geografia E Historia is not exempt from Texas sales tax because of the OAS Treaty. The 1948 treaty creating the OAS included a reservation …
Is a manufacturer's post-warranty travel-expense charge, travel extension contract, and extended service contract for repairing equipment taxable in Texas, and does bringing replacement parts into Texas under a warranty or service contract create a use tax liability?
Yes, the charges are taxable, but the parts generally are not use-taxed. The Comptroller held that a manufacturer's lump-sum "On-Site Expenses" charge for post-warranty travel (meals, lodging), a sepa…
As a customs broker, what date should I use as the 'date of export' when a proof of export covers multiple invoices grouped together, and how far back can those invoices go?
Under the Comptroller's rules, a single proof of export may cover multiple purchases from multiple vendors, but only if those purchases were made within the 30 days before the goods are certified as e…
Is a hospital's charge for an outside company's inspection and certification of hospital electrical and biomedical equipment (to meet federal or state safety regulations required for licensing) subject to Texas sales or use tax?
No. The Comptroller ruled that this inspection and certification service is a nontaxable service. It is not the repair or maintenance of tangible personal property, not the repair of nonresidential re…
Do cotton gins in Texas need to have a utility study performed before they can buy gas and electricity tax-exempt for processing?
No. The Comptroller reviewed utility studies of large and small cotton gins showing that gas usage was 98 percent exempt (processing) and electricity usage was over 91 percent exempt, even counting of…
Are the poles that an electric utility uses to support step-down transformers (and the transmission lines running along them) exempt from Texas sales and use tax as equipment necessary to the manufacturing of electricity?
No. The Comptroller concluded the poles are not exempt. Even though step-down transformers themselves are treated as part of the manufacturing process, the poles supporting them also carry transmissio…
Is a newspaper's charge for a caller voice mailbox — where people can call in and respond to a classified/advertisement — subject to Texas sales tax?
Yes. The Comptroller held that the charge for the caller mail box is taxable as a telecommunications service under 34 Tex. Admin. Code Rule 3.344. Because the newspaper charges advertisers a single co…
Is the electricity a company uses to chrome-plate aircraft engine parts exempt as 'processing,' or taxable because it's really 'repair and remodeling' of the engines back to their original specifications?
Taxable, on these facts. Even assuming some of the chrome-plating applications reprocessed the engines (by adding new specification options not originally on the parts), the Comptroller's Assistant Di…
When a bakery sells some food for immediate consumption (taxable) and some food not for immediate consumption (exempt), how does the Texas Comptroller decide whether a utility (electricity) exemption certificate based on a utility study can be accepted?
An exemption certificate based on a utility study can be accepted if it comes with a statement showing the quantity of goods sold for immediate consumption versus not sold for immediate consumption, a…
When a fleet company's damaged tires are adjusted and replaced under a manufacturer's or dealer's warranty, and the tires were originally sold on open account, how is Texas sales tax figured on the replacement or credit?
It depends on timing. Under Tax Code Section 151.007(c)(5), the sales price subject to tax does not include the separately identified value of property taken by the seller in trade as part of the cons…
Is a company's charge for maintaining and calibrating the tools it uses to repair aircraft owned by a certificated or licensed carrier subject to Texas sales tax?
No. Charges to maintain, calibrate, and repair tools used exclusively to repair, remodel, or maintain aircraft, aircraft engines, or aircraft component parts for a certificated or licensed carrier of …
Which construction consumables, supplies, and equipment used by a road construction contractor are taxable versus exempt — LP gas, slings and cables, safety stickers, safety chains, safety flags, rope and twine, marking paint, caulk and putty, sponges, tape, razor blades, snap ties, and various safety wear?
It depends on the item: LP gas used off-road is exempt from sales tax, and several consumable-type supplies (marking paint, caulk and putty, sponges/rubbing bricks used once, duct and electrical tape,…
Is removing waste from a restaurant's grease trap taxable, and what about cleaning the sewer line it's connected to?
Removing wastes from a grease trap that is part of a sewer system is a non-taxable service, but cleaning out the sewer line itself is taxable when done for a non-residential customer such as a restaur…
Is machinery and equipment that a grower buys to dry, sort, grade and pack its own fruit and vegetables exempt from Texas sales tax as agricultural processing equipment?
Yes. Because Company A owns the fruit and vegetables being processed and is the original producer (grower) of those products, the machinery and equipment it buys to dry, sort, grade and pack them qual…
Are Juice Plus+ nutritional energy/protein bars subject to Texas sales tax, or are they treated as an exempt food product?
They are exempt from Texas sales tax. The Comptroller's Tax Administration staff reviewed samples and the label/brochure for the Juice Plus+ Bars and concluded the bars are a food product, and food pr…
Can Texas require the federal government (such as the U.S. Department of Defense running retail surplus stores) to pay Texas sales tax?
No. The Comptroller explains that Texas sales tax is legally imposed on the vendor's gross receipts, not on the buyer, so requiring the federal government to pay it as a purchaser would amount to Texa…
Are Juice Plus capsules — made only of dried fruit and vegetable juices — exempt from Texas sales tax as food products, and what about the related Juice Plus Bars?
Yes, the Juice Plus capsules are exempt food products because they contain only dried fruit and vegetable juices and are not advertised as anything else; that exemption applies to this distributor fro…
Are flash-dried fruit and vegetable juice capsules exempt from Texas sales tax as food products?
Yes. The Texas Comptroller confirmed the capsules — which contain only dried fruit and vegetable juices and nothing more — are exempt from sales tax as food products, consistent with a prior ruling is…
How should a direct sales (multi-level marketing) organization collect and remit Texas sales and use tax on sales its independent distributors make in Texas?
The direct sales organization itself — not each individual distributor — is responsible for collecting and remitting Texas state and local sales and use tax on the taxable sales its distributors make …
Is caring for indoor plants a taxable service in Texas, and do I owe sales tax on the supplies (stakes, fertilizer, leaf cleaner, containers) I use to provide that service?
Yes, indoor plant maintenance is a taxable service in Texas, and whether you owe tax on your supplies depends on whether they're transferred to the customer: items like plant stakes that stay with the…
Is the lease of aerial-application tracking equipment to a crop duster exempt from Texas sales tax when the equipment is used for aerial spraying of insecticide and fertilizer on farms and ranches?
Yes, the lease can be exempt from sales tax if the aircraft is FAA-licensed for aerial application of fertilizers and insecticides and is used exclusively for aerial spraying on farms and ranches to p…
Can a manufacturer issue an exemption certificate for the part of its garbage collection service that removes waste from its manufacturing process, and how is 'industrial solid waste' defined?
Yes, but only for the manufacturing-related portion. The Comptroller told a poly bag manufacturer that it could give its waste removal service provider an exemption certificate for the part of the ser…
Is a remote computer data backup service, where a client's data is copied over phone lines by modem and temporarily stored (not manipulated), subject to Texas sales tax?
Yes. The Comptroller ruled that a remote backup service — where a client's computer data is copied daily over phone lines by modem and temporarily stored for security purposes — is a taxable data proc…
Is an indoor plant care and maintenance business subject to Texas sales tax, and does taxing an existing service contract violate the Constitution's ban on impairing contracts?
Yes, the service is taxable. The Comptroller told an indoor plant care provider that maintaining tangible property (like indoor plants) has been taxable since the Legislature imposed the tax in 1984, …
Is a business that programs customers' own cellular phones by selecting preset options built in by the manufacturer required to collect Texas sales tax on that service?
No. The Comptroller's Tax Policy Division held that this cellular phone programming service is not subject to Texas sales tax, because the business does not sell or repair any tangible personal proper…
Is the radioactive wafer used in nondestructive X-ray testing a taxable purchase of tangible personal property, even though what the tester actually wants is the radioactivity it emits?
Yes. The Comptroller ruled that the wafer containing radium 192 is the sale of tangible personal property, so sales or use tax is owed on its purchase even though the buyer's real interest is in the r…
Is converting a purchased warehouse into a manufacturing facility — by adding electrical wiring, HVAC, interior structure, processing piping, floor specs, and reinforcements — taxable remodeling or non-taxable new construction under Texas sales tax rules?
It is taxable remodeling, not new construction. The Comptroller told the taxpayer that even though the warehouse-to-manufacturing conversion was extensive — adding electrical wiring, heating and air c…
Is the film used to create a template for burning circuit boards exempt from Texas sales tax, and are fees paid to programmers for custom software taxable?
Both are tax-favorable for the taxpayer: the film qualifies for the manufacturing exemption under Tax Code Section 151.318 because it is used by a third-party custom manufacturer to produce circuit bo…
Is selling pooled telephone survey data taxable in Texas, and does modifying that data for a specific client change the answer?
Yes, it's taxable either way. The Comptroller ruled that selling pooled telephone survey information to a specific client without modification is a taxable transaction, that modifying the pooled infor…
When a company reorganizes its subsidiaries and transfers assets between them, does the timing of the transfer (during business hours vs. after hours) affect whether the occasional sale exemption applies?
Yes — the timing matters. The Comptroller advised that if the assets of subsidiaries A and B are transferred to new subsidiaries D and E during business hours, when the transferred segment has both in…
Is cement — Portland or Masonry, including white cement — exempt from Texas sales tax, and what about concrete made from it?
Cement, whether Portland or Masonry (including white cement), is exempt from Texas sales tax under the specific exemption in Texas Tax Code Sec. 151.308(a)(4), so no sales tax should be collected on s…
Does a company owe sales tax when it just removes software from one computer and installs it on another, and does exempt-program modification also cover editing that computer's autoexec.bat and config.sys files?
No tax is owed. The Comptroller's Tax Policy Division advised that simply removing software from one computer and installing it on another does not constitute remodeling of tangible personal property,…
If a motor vehicle repair shop charges one lump-sum price for an oil and filter change (with no separate charge for the oil and filter), does it owe sales tax on that charge to the customer?
No. Labor to repair or maintain a motor vehicle is not taxable, and a shop that charges a single lump-sum price for an oil and oil filter change (with no separately stated materials charge) is a lump-…
What did the 1995 internal Comptroller memo say about whether inventory counting services are taxable data processing services?
This is NOT a taxpayer-specific letter ruling — it's an internal February 23, 1995 audit memo from Ledford Kelly (via Harold Lee, Audit Headquarters) telling all managers, supervisors, and auditors th…
Can an aircraft engine and components/accessories overhaul company claim the sales tax electricity exemption for processors, or is what it does considered repair instead?
No — the company cannot claim the electricity exemption, because the Comptroller determined it is a repairer, not a processor. The company restores existing turbine engines and components to as close …
Is a lump-sum charge to repair a motor vehicle tire, such as fixing a flat or retreading a customer's own tire casing, subject to Texas sales tax?
No. A lump-sum charge to repair a motor vehicle — including a flat tire repair or retreading a customer's own tire casing — is not taxable; the repair person instead owes tax on the materials and supp…
Is translating documents (assembly instructions, labels, tags, price lists, and legal documents) from English to Spanish a taxable service in Texas?
No. The Comptroller's Tax Policy Division ruled that translation services — translating assembly instructions, labels, tags, price lists, and legal documents from English to Spanish — are not taxable,…
For an interior designer/decorator in the Houston area, what local sales tax rate applies, and how is tax collected on wallpaper, drapery/blinds, carpet, delivery charges, and painting labor depending on whether the work is new construction, residential repair/remodeling, or nonresidential repair/remodeling, and whether the invoice is lump-sum or separately stated?
The Comptroller confirmed the local tax rates for Houston (8.25%), Katy (8.25%), and Sugar Land (7.75%), explained that interstate deliveries are exempt from Texas tax, and then walked through eight s…
Is a company taxable on its services when it acts as an intermediary reviewing medical bills and charges submitted by health care providers to insurance companies?
Yes, it is taxable. The Comptroller confirmed that when a company is contacted by insurance companies or health plan administrators to act as an intermediary reviewing and clarifying charges and codin…
Can a software manufacturer use resale/exemption certificates for manual production costs, software localization, and licensed fonts/tools/clip art, and do programmers' computers count as manufacturing equipment?
Mostly yes, with one question left open. The Comptroller ruled that a software manufacturer's charges for typesetting, desktop publishing, artwork, translation/localization, and packaging graphics qua…
Are non-dairy milk-substitute drinks (soy and rice beverages) taxable or exempt under Texas sales tax?
They are nontaxable. The Comptroller reviewed labels for nine specific non-dairy soy and rice beverage products marketed as milk substitutes and found all nine nontaxable, because they qualify as, and…
During a scheduled refinery turnaround, is replacing machinery and equipment that was still working taxable 'restoration,' or nontaxable 'maintenance'?
It counts as nontaxable maintenance. The Comptroller ruled that, during a scheduled and periodic refinery turnaround only, replacing functioning and operable machinery or equipment that is attached as…
Is proof coil chain used to lower and dip raw materials into cleansing and galvanizing vats exempt from Texas sales/use tax as manufacturing equipment, or is it taxable intraplant transportation equipment?
It is taxable. The Comptroller ruled that proof coil chain used to lower and dip raw material into chemical cleansing and galvanizing vats is excluded from the manufacturing exemption as intraplant tr…
Is electricity used to power a telephone on a farm or ranch exempt from Texas sales tax under the farm/ranch exemption?
No. The Texas Comptroller ruled that while Tax Code Section 151.316 exempts a variety of items used on a farm or ranch from sales tax, telecommunications services do not qualify for that exemption, so…
Is Texas sales tax due on satellite telecommunications services — including rental of outbound/inbound frequencies, hub monitoring services, and hardware/software maintenance — and if so, how is local sales tax apportioned across remote locations?
Yes, but the rules differ by component. Texas sales tax applies to the 5 outbound satellite frequencies, with local tax apportioned by time (or, if unavailable, by count) of Texas remote locations ver…
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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.