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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Does a company that only delivers, assembles, and installs greenhouses (bought separately from the manufacturer) have to collect Texas sales tax on its charges?
It depends on whether the greenhouse becomes part of the real property once installed. If the greenhouse becomes an improvement to realty, the installer's delivery/assembly/installation charges are tr…
Are knives used by meat processors exempt from Texas sales and use tax as manufacturing equipment?
No. Hand-operated knives used by meat processing members are "hand tools," and hand tools are specifically excluded from the Texas manufacturing exemption by Tex. Tax Code Sec. 151.318(c), so they rem…
Is Texas sales tax due on high-pressure washing services for motor vehicles, sidewalks, parking lots, and graffiti removal?
No tax on washing motor vehicles — power washing a motor vehicle is not taxable. But graffiti removal, sidewalk washing, and parking lot washing are taxable, either as restoration/maintenance of tangi…
Is Texas sales tax due on the various oilfield lease-site services a contractor performs for farmers, ranchers, or oil companies — mowing, oil spill clean-up, site clean-off, saltwater disposal land work, dikes, road patching, new well locations, pit digging/filling, flow line repair, and truck pulling?
It depends on the specific job. Mowing/cutting at lease sites is not taxed (it's not a residential or commercial yard/lawn), but mowing a farmer's or rancher's own yard is taxed. Cleaning up oil spill…
Is Texas sales tax due on charges for faxing advertising materials, like coupons and flyers, to a list of recipients?
Yes. Charges for electronically transmitting fax messages are taxable as telecommunications services. Advertising services themselves are not subject to sales tax, but charges for sending advertising …
Is Texas sales tax due on bulldozer and trackhoe work to clear land or dig ponds, and does it matter whether the bulldozer-and-operator charge is billed as one lump sum or broken out into separate labor and equipment charges?
It depends on the job and the billing method. Labor to clear land (including digging a new pond) as part of new construction is not taxable, but clearing underbrush for landscaping is taxable, and dre…
Is Texas sales tax due on billing and collection services that local exchange telephone companies provide to interexchange carriers, including the recording and rating components?
Yes, but only the recording and rating portion. Recording and rating are taxable data processing services because a computer is used to gather information and apply the carrier's rate schedule to each…
Is Texas sales tax due on the food, beverages, and videotaping charges a focus-group coordinator bills to its clients?
Yes. Any separately stated charges for food and beverages and for video tapes (including taping services) are taxable to the customer. If the invoice instead shows only a single lump-sum charge labele…
Does a company that sorts, processes, and mails customer mail (rather than manufacturing a product) qualify for Texas's manufacturing exemption on its equipment and supplies?
No. The Comptroller ruled that a mailing services company performing mail sorting, metering, and bar-code labeling is providing a nontaxable mail-handling service, not manufacturing, processing, or fa…
Can a taxpayer get a predominant use study and utility tax refund on a previous business location's natural gas/electric account after closing that account and moving to a new location?
No. The Comptroller will not allow a predominant use study on a closed utility account. Even though the taxpayer's engineer believed an accurate study could still be performed on the old location, the…
Is Texas sales tax or motor vehicle tax due on motorcycle accessories, and does it matter whether the accessory is attached to the motorcycle or bought separately?
It depends on whether the accessory is attached at the time of purchase. An accessory attached to a street-legal motorcycle when it's bought (like a luggage rack) is taxed along with the motorcycle un…
Can a landlord who buys gas and electricity, sub-meters it, and bills each tenant claim a manufacturing/processing exemption because most tenants are manufacturers who use the utilities predominantly in processing?
No. The Texas Comptroller ruled that a landlord who purchases gas and electricity for an industrial park and bills tenants for their sub-metered usage is making its own taxable commercial use of those…
Is electricity used to cool natural gas, run compressors, and pump water (including salt water) at an underground natural gas storage facility exempt from Texas sales tax?
It depends on what the electricity is used for. Electricity used to run compressors that change gas pressure for transportation is taxable, not exempt as processing. Electricity used to transport natu…
Is tree care service taxable as a landscaping/real property service in Texas, even for trees in a commercial fruit or nut orchard?
Tree care services are generally taxable as landscaping (a real property service), but caring for trees in a commercial fruit or nut orchard operated by a person who raises the fruit or nuts for sale …
What did the 1994 internal Comptroller memo say about which machinery, tools, and equipment used to repair or maintain a certificated/licensed carrier's aircraft qualify for the Section 151.328(d) sales tax exemption?
This is NOT a taxpayer-specific letter ruling — it's an internal September 22, 1994 audit memo from Lindey Osborne, Tax Administration, resolving a specific audited airline taxpayer's question about w…
When a business relocates, which city's local sales tax rate applies to an existing fixed-term equipment lease — the old location's rate or the new one's?
The old location's rate continues to apply. For a fixed-term (e.g., 12-month or 3-year) operating lease or rental that was consummated from the original place of business, the Comptroller taxes it at …
Is Texas sales tax due on fees charged in the mortgage brokering business, such as loan origination fees, brokerage fees, servicing fees, late charges, title policy charges, attorneys' fees, or real property surveying charges?
Mostly not taxable. The Comptroller advised that loan origination fees, equity origination fees, brokerage fees, late charges, prepayment fees, title policy charges, and attorneys' fees are not taxabl…
Is the charge for 'notching' sample pipe to calibrate quality-control equipment taxable under Texas sales and use tax?
Yes. The Comptroller ruled that 'notching' sample pipe to calibrate a lab's quality-control equipment is taxable as remodeling. The manufacturing exemption does not apply because the notching is not q…
Is scanning paper documents onto CDs a taxable service in Texas?
Yes — electronic document scanning/imaging is taxable as a data processing service under Rule 3.330; you must collect sales tax on your total charge to the customer.
Does making floral arrangements count as "processing" for Texas utility sales tax exemption purposes?
Yes. The Comptroller's letter states that the activity of making a floral arrangement is considered processing. The taxpayer had asked about the taxability of natural gas and electricity (utilities) u…
If my company makes and installs fireplace facings or mantles for home builders, is the whole charge (materials, labor, overhead, markup) taxable as a sale of tangible personal property, or is it a nontaxable real property improvement?
It depends on the contract with the home builder. If the facing/mantle is simply sold, or installed without becoming a permanent improvement to the home, the company is a manufacturer selling taxable …
Can a bank charge sales tax on a returned/insufficient-funds check fee?
No — a bank cannot charge sales tax on a fee for a returned (insufficient-funds) check. The Comptroller ruled the charge isn't for a service performed for the customer; it's just a nontaxable overdraf…
Can a company treat the sale of one piece of equipment to a third party as a trade-in credit against its purchase of different equipment from the same seller, when the paperwork for the two deals was written up separately?
No. This internal Comptroller memo concludes that crediting the proceeds from the sale of one piece of equipment (an IBM 3890-AD4 machine sold to a third-party buyer) against the price of a different …
Are purchases made with WIC benefits or food stamps, including for candy or sodas, subject to Texas sales tax — and how does a manufacturer's coupon used alongside them affect the tax?
No tax is due on the WIC- or food-stamp-paid portion of a purchase. Purchases made through the WIC program or with food stamps are not taxable — this includes candy, sodas, or other otherwise-taxable …
Is the removal and disposal of drilling mud by a vacuum truck company taxable in Texas?
It depends on why the drilling mud was generated. If the drilling mud is a waste product resulting from the exploration, development, or production of oil, gas, or geothermal resources, the vacuum tru…
Does a 'Material Reimbursement Charge' (also called a 'Texas Price Adjustment' charge) that a well-services provider adds to its invoices to recover sales tax it paid on materials used in a nontaxable service violate Rule 3.324(b)(3)(4)?
No. The Comptroller confirmed that the taxpayer's 'Material Reimbursement Charge' — a separate line-item charge used to recover additional product costs incurred because the taxpayer paid sales tax on…
If a contractor performs lead-paint abatement (a taxable repair to real property) and also does air monitoring for the same job, is the air monitoring taxable too, and what about the disposal of contaminated materials?
The repair/remodeling work (paint removal, repainting, and related repairs) is a taxable service, but air monitoring is not taxable when it is a stand-alone service involving direct scientific observa…
If a motor vehicle repair shop separately states a charge for shop supplies on a customer's bill, is the shop the 'seller' of those supplies and required to collect sales tax on them?
Yes. This internal Comptroller memo confirms that, effective October 1, 1991, a motor vehicle repair person who separately states a charge for shop supplies (tangible personal property) is a seller of…
If I provide nontaxable mailing/packaging services (boxing, padding, and shipping items for customers) and pay tax on my own packaging supplies, do I have to charge my customers sales tax on the box, packing materials, labor, and shipping charges?
No. Because mailing services are a nontaxable service, the provider (not the customer) owes sales tax on packaging supplies purchased from suppliers under Rule 3.314(c). In both examples given -- one …
Is beaver trapping and dam removal on timberland taxable as a structural pest control service?
No. The Comptroller ruled that beaver trapping and removal services performed to stop beaver dams from flooding East Texas timberland are not taxable as structural pest control services. Structural pe…
Is a glamour photography studio's session fee (covering wardrobe, makeover, and a private photo session) taxable, even if the customer receives no tangible personal property at the session and only orders photographs — if ever — at a later date?
Yes, the session fee is taxable. The Comptroller ruled that the session-fee services (wardrobe, makeover, private photo session) are part of the sale of any photographs, image copies, negatives, or pr…
When a cable TV company adds new cable lines to utility poles, is that remodeling or new construction — and does it matter whose poles the lines are being attached to?
It depends on whose poles are involved. This internal Comptroller memo concludes that when a cable company adds new lines to poles it already owns, that is remodeling, consistent with prior guidance (…
Is dredging dirt, mud, silt, and sand out of a boat slip or waterway taxable as real property repair/remodeling, or exempt as new construction, and is the fee charged for disposing of the dredged material at a spoils facility taxable?
It depends on what is being dredged. Dredging to create a brand-new slip or dock (as part of new construction) is new construction labor and is NOT subject to sales tax. But dredging an existing man-m…
If a manufacturer buys back equipment from a customer under its own satisfaction guarantee (separate from the retailer's original sale), can the retailer refund the sales tax it collected, or can the retailer get that tax refunded from the state?
No. The Comptroller ruled that the doctors were not due a refund of the sales tax paid to the equipment retailer, and if the retailer refunds the tax to the doctors anyway, the Comptroller will not re…
Is a two-hour boat trip to watch dolphins in the wild a taxable amusement service in Texas?
Yes. The Comptroller ruled that a two-hour dolphin-watching boat trip on the Gulf of Mexico (with no food or drinks provided) is a taxable amusement service under Rule 3.298, because the trip does not…
When a Texas repair shop services foreign (Mexican) aircraft — repairing, remodeling, or installing parts and engines — is the labor or the parts subject to Texas sales tax?
Separately stated labor charges to repair, remodel, restore, or maintain aircraft are not subject to Texas sales tax, whether the aircraft is foreign or domestic. Aircraft repair and replacement parts…
Is maid/janitorial service provided by a condominium property management company's own employees exempt from sales tax as an employee-wage exclusion, when the cost of that service is bundled into the management company's overall rental commission rather than billed separately?
Generally no. The Comptroller ruled that the maid service employees provide to condominium owners and guests is a taxable real property service, and the wage-exclusion exemption in Rule 3.356(n)(1) do…
Are fenders used by a lightering workboat to protect tankers during a lightering operation exempt from Texas sales tax as a component part of the vessel, even though the fenders are not physically attached to the boat?
Yes. The Comptroller ruled that the fenders (Yokohama Fenders) are an integral part of the lightering workboat and will be considered a component part of the vessel even though not physically attached…
Is the compensation a receiving racetrack pays a sending racetrack for simulcasting a horse or dog race, for wagering purposes, subject to Texas sales or use tax?
Yes. The compensation (fees or commission) a receiving racetrack pays a sending racetrack for simulcasting a race — the live audio/video transmission of a race from a sending track to a receiving loca…
If a company places copy machines at retailer locations and charges a monthly fee based on the number of copies sold, is that a lease of the copier, and can the retailer buy paper and toner tax-free with a resale certificate?
Yes, it is a lease. The Comptroller confirmed that a company placing copy machines at various business locations and charging a monthly fee based on the number of copies made (here, 5 cents per copy, …
Is soil aeration (core plugging) performed on golf courses and athletic fields by an independent contractor a taxable service in Texas?
Yes. The Comptroller ruled that punching holes in the soil to aerate turf is "lawn maintenance" as defined in Rule 3.356(a)(5), even if the contractor does not fill the holes afterward. Charges for th…
If an air waybill (bill of lading) covering exported merchandise doesn't itself fully describe the goods, can an attached invoice be used to tie the shipment to the purchase for export tax purposes?
Yes, conditionally. The Comptroller will allow an invoice attached to a bill of lading (air waybill) to identify the goods covered under that bill of lading, but only if the notation tying the invoice…
Do sales/use tax exemptions for services performed between affiliated corporations still apply when some of the corporations in the group are non-profit entities that would otherwise be excluded from the federal definition of an affiliated group?
Yes. The Comptroller ruled that a non-profit parent corporation and its subsidiaries are still treated as 'affiliated corporations' under Texas Tax Code Sec. 151.346 and Rule 3.331, even though the pr…
Is natural gas used to fuel boilers at a towel rental (industrial laundry) business exempt from Texas sales and use tax as gas used in processing?
No. The Comptroller ruled the natural gas used to fuel the boilers at a towel rental company was not exempt, because the boilers themselves are not equipment directly used in processing the rental tow…
Can a property management company buy supplies and services tax-free on behalf of FDIC/RTC-owned properties it manages, and can it fix past sales tax it mistakenly paid?
Yes. A property management company acting as agent for the FDIC or RTC can issue a sales tax exemption certificate to its vendors for purchases made for FDIC/RTC-owned properties, as long as it has do…
Is cleaning up an oil spill or remediating contaminated soil at an oil and gas site taxable in Texas?
It depends on location and cause. Cleaning up an oil spill at the well site, or one caused by oil/gas/geothermal exploration, development, or production activity and regulated by the Texas Railroad Co…
Does a Texas health club have to charge sales tax on personal training session fees?
No, not if the training is one-on-one and the trainer actually puts the client through the workout (not just designs a program and shows equipment use). A separately stated charge for that kind of per…
Is the labor to install, connect, and calibrate store refrigeration/freezer display units subject to Texas sales tax?
It depends on how the units are wired together. If several self-contained freezer/refrigeration units are connected to share one compressor, the labor to connect them into that single system is taxabl…
Are hospital gowns, urinary drainage bags, cushions, and benzoin swab sticks exempt from Texas sales tax when purchased by a hospital?
It depends on the item. Hospital gowns are taxable. Urinary drainage bags are exempt. The cushions described were found taxable for lack of qualifying information. Benzoin swab sticks are exempt only …
Does Texas sales tax apply to a dialysis re-use machine and a reverse osmosis water-purification machine used in home dialysis treatment?
It depends on how the equipment is used. The Comptroller told this taxpayer that a Dialysis Re-Use machine (used to clean artificial kidneys after dialysis) and a Reverse Osmosis machine (used to puri…
Does a subcontractor owe Texas sales tax on labor charges for cutting, sawing, coring, or drilling concrete?
It depends on the job. Cutting, sawing, coring, or drilling concrete tangible personal property not yet installed, or existing nonresidential real property, is a taxable service, so the subcontractor …
Does a Texas city owe sales tax on chairs, tents, and other equipment it provides for cemetery funeral services or convention center room rentals?
No. The Comptroller ruled that a city does not have to collect sales tax on equipment (chairs, tents, artificial grass) it provides for graveside funeral services at a city cemetery, because that's tr…
Does a company have to collect Texas sales tax on charges for setting up and supervising a contest?
No. The Comptroller ruled that charges for setting up and supervising a contest are not taxable services, but the company must still collect tax on any materials and prizes it sells to its client.
Can a company that buys and sells a chemical used to clean up oil spills issue or accept a resale/exemption certificate on that chemical, and is the oil-spill clean-up service itself taxable?
A retailer that buys the chemical only to resell it as-is may issue a resale certificate to its supplier. But a company that uses the chemical to perform a clean-up service must pay tax on it, unless …
Is labor to build and attach a metering station to an existing pipeline taxable as remodeling, or exempt as new construction?
Taxable as remodeling. The Comptroller ruled that attaching a metering station to an already-existing pipeline is a modification/upgrade of that pipeline, not new construction, so the labor to build a…
Is a Texas company's 1-800 toll-free telephone service subject to Texas state sales tax on calls that originate outside Texas but are billed to a Texas address?
No. Under this 1993 Texas Comptroller letter, only 1-800 calls that originate within Texas and are billed to a Texas billing address are subject to Texas state sales tax. Calls that originate outside …
Does a beauty salon or aesthetician owe Texas sales tax on shampoo, tonics, and conditioners it buys and uses on customers?
Yes, in part. A beauty salon or aesthetician owes Texas use tax on supplies (like shampoo, tonics, and conditioners) it uses to perform nontaxable services such as facials, and must also collect and r…
Does a property management company owe sales tax on an 'overtime air conditioning' fee it charges tenants?
No. The Comptroller ruled the overtime air conditioning charge is not taxable, because the property management company already paid sales tax to the electric or gas utility and is using the utility se…
Does Texas sales tax apply to food purchased for a guard dog?
No. Texas sales tax does not apply to food for guard dogs, as long as the dog has been professionally trained for guard duty by someone in the business of training guard dogs and is not kept as a pet.
Is electricity used to show a vacant model home or house exempt from Texas sales tax as residential utility use?
No. Electricity a real estate agency buys for a vacant home used to show or demonstrate the property to prospective buyers is taxable as commercial use, not exempt residential use — the same is true f…
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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.