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 Kool-Aid Kool-Pumps, popsicles, snow cones, and individually sold ice cream novelties subject to Texas sales tax?
Yes. The Comptroller ruled that Kool-Aid Kool-Pumps are not a food product and are taxable whether sold individually or in a box of six, and that popsicles, snow cones, and individually sold ice cream…
Do admission charges for amusement events at a venue listed in the National Register of Historic Places owe Texas sales tax, and can collected tax on those tickets be refunded?
No sales tax is due on admission to amusement services held exclusively at a place listed in the National Register of Historic Places, but any tax already collected from patrons on ambiguously-worded …
Is an Ottawa yard tractor (a yard-spotting tractor used to move trailers around a yard) a taxable motor vehicle or is it subject to Texas limited sales and use tax?
An Ottawa yard tractor is subject to Texas limited sales and use tax, not motor vehicle sales tax, because it is not a motor vehicle and not rolling stock. The Comptroller confirmed that yard tractors…
Are multi-part 'bill of lading' shipping forms, sold to a manufacturer's client, exempt from Texas sales/use tax as packaging supplies?
Corrected answer (April 12, 1993): a manufacturer-client may issue an exemption certificate for the bill-of-lading forms, but must then self-assess use tax on the cost of any part(s) of the form that …
Do I have to charge Texas sales tax on drafting or CAD design services, like drawings and blueprints made from a client's specs?
Yes. Texas sales tax is due on drafting delineations and blueprints, including CAD drafting, when the draftsman works from specifications the customer supplies, and on any additional copies of the fin…
If I rent my Texas condo out short-term part of the year and use it as my residence the rest of the year, is repair and remodeling work on it taxable?
Yes. The Comptroller told this condo owner that because the unit was rented on a daily or weekly basis part of the year (taxable under the Hotel Occupancy Tax) and used residentially the rest of the y…
Is a scale used to weigh cattle at a farm or ranch exempt from Texas sales tax as agricultural equipment?
It depends on installation: a free-standing scale used exclusively on a farm or ranch to weigh livestock can qualify for the Texas agricultural exemption as farm equipment, but a scale that becomes pa…
Does a repairman owe Texas sales/use tax on warranty forms and cards bought from an out-of-state retailer, or can the repairman use an exemption certificate instead?
Yes, tax is owed. A repairman must pay sales or use tax on warranty forms and cards because they are consumable supplies used to perform the repair, not parts transferred to the customer, and a repair…
Is a jewelry appraisal taxable in Texas?
It depends on why the appraisal is done. Under Rule 3.355(a)(2), an appraisal is a taxable 'insurance inspection' if it's done to get an insurance floater for replacement value or to support payment o…
Is the gas a rental-equipment company uses for heating its repair area and for steam-cleaning returned machinery exempt from Texas sales tax as a processing/manufacturing use?
Partly. Gas used to heat the specific area where repairs on rental equipment are performed can be exempt as processing, but only for the time that area is actually used for repairs, and it must be all…
Does a technician who installs, services, or repairs gas station pumps, tanks, and related equipment have to charge sales tax on the job?
It depends on whether the equipment is going into a brand-new station or an existing one. New construction: tax the materials/equipment only, not the labor. Work on existing stations (installation, re…
Does Texas sales tax apply to the sale of a prescription drug discount card?
No. The Comptroller ruled that selling a 20% prescription discount card is the sale of an intangible and is not taxable in Texas. The seller instead owes Texas sales or use tax on its own cost of the …
Can a bakery that sells some food for immediate consumption and some for later consumption still give a gas/utility exemption certificate based on a utility study?
Yes, if the combination of the two uses still shows an overall exempt use. Multiply the percentage of gas used for production by the percentage of goods NOT sold for immediate consumption; if that res…
Does Texas sales tax apply to charges for inspecting and testing a commercial fire alarm system?
No, not if the inspection/testing charge is separately stated. The Comptroller ruled that a commercial fire alarm system is an improvement to realty, so separately stated charges for inspecting and te…
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 …
Can a freight forwarder's bill of lading and receipt serve as proof of export for a Texas sales tax exemption, even if the buyer's name isn't on the bill of lading?
Yes. A copy of the bill of lading together with the freight forwarder's receipt showing the purchaser delivered the items is sufficient proof of export under Rule 3.323(c)(1)(D), and the consignee's n…
COMPANY B bought testing equipment from COMPANY A in Oregon, shipped it to Austin, and tested it for 4-5 days before exporting it to Singapore. Was that Texas testing a taxable 'use' even though the equipment was headed out of state?
Yes. The Comptroller ruled that COMPANY B's purchase from COMPANY A was taxable, because testing the equipment in Austin for 4-5 days to confirm it worked before exporting it to Singapore counted as a…
If a stereo or radio installed in a vehicle exported to Mexico gets a sales-tax refund, is the tax on the installation charge refundable too?
Yes. Because installation charges are only taxable when the underlying item is taxable, once you have proof the stereo or radio was exported and its sales tax refunded, you may refund the sales tax co…
If a customer's trade-in machine arrives after a new coin-operated machine has already been delivered, can the dealer still use the trade-in to reduce the taxable sales price?
Yes, as long as the trade-in is the same general type of item the dealer ordinarily sells (coin-operated machine for coin-operated machine) and is tied back to a specific sale. The sales order should …
Does a waste collection company owe Texas sales tax on the state solid-waste disposal fee and a city fee for waste containers that it passes on to customers?
Yes. Waste collection or removal is a taxable real property service in Texas, and the sales price on which tax is charged includes the total amount billed, with no deduction for expenses like the stat…
Does Texas sales tax apply to charges for storing a motor vehicle in a general-purpose storage facility?
It depends on what is being stored. Tax Code Section 151.0101(a)(4) taxes motor vehicle parking and storage services, but it does not apply to a general-purpose storage facility where customers can st…
Does a Texas grocery store owe sales tax on the trays, film, and other wrapping supplies its meat department uses to package meat it cuts, trims, or grinds?
No. Under Rule 3.314, a grocery store's meat department is "processing" meat when it cuts, trims, or grinds it, so the department can buy trays, film, meat pads, butcher paper, freezer paper, and simi…
Is a computer, software, and adaptive communication equipment exempt from Texas sales tax when purchased on a doctor's prescription and paid for by a state agency's family support program?
The software and adaptive equipment for facilitated communication are exempt from Texas sales tax because they were purchased with a prescription from a licensed practitioner of the healing arts. Howe…
Does a company have to collect Texas sales tax on fees it charges retailers for recorded advertising spots played on a pay-per-call lottery-results phone line?
No. The Comptroller told the company that fees charged to retailers for recorded advertising spots played before the lottery numbers are not taxable, because a fee paid for advertising space is not su…
Is rodent control (structural pest control) on a farm or ranch a taxable service in Texas, and can rat poison be bought tax-free for agricultural use?
Yes, hiring someone to treat barns or storage facilities for rodents is a taxable structural pest control service in Texas, and no agricultural exemption applies to that labor. But over-the-counter ra…
If a concert venue gives a sponsor a VIP box seat and advertising in exchange for a sponsorship payment, does the venue owe sales tax on the box seat, and how much?
Yes. The Texas Comptroller ruled that a venue giving a sponsor a VIP box seat (worth $10,000, the normal selling price) in exchange for a sponsorship payment must report and remit sales tax on that am…
Does a monument/cemetery contractor owe Texas sales tax on curbing, marble, and concrete work at gravesites, and does it matter whether the work is new construction or repair of an existing site?
It depends on whether the work is new construction or repair of an existing gravesite. Setting curbing and marble right after the vault is installed is new construction, which is untaxed labor; the co…
Does a Texas sorority owe sales tax on meals served to its members, and are its membership fees and dues taxable?
Yes on the meals, no on the dues. The sorority house owes sales tax on the meals it serves to resident and guest members because Rule 3.293 taxes meals sold by boarding houses, and there's no exemptio…
Is the sale of a membership stock interest in a private Texas country club subject to sales tax?
It depends on who sells it. If an individual member sells his one membership stock interest directly to a new member (not habitually, and not through the club), it qualifies as an exempt occasional sa…
Does a business owe Texas sales tax on candy sold through an honor-system box, where customers take a piece and leave payment on their own?
Yes. The Comptroller ruled that honor-system candy sales are subject to Texas sales tax on the total gross receipts, the seller must get a sales tax permit and file quarterly, and because the candy su…
Does a Texas company have to charge sales tax on monitoring fees and installation fees for a personal emergency response (medical alert) system?
No. The Comptroller ruled that the monitoring fee and the one-time installation fee charged to subscribers of an emergency response system are not taxable, because the company was found not required t…
Do sales/use tax and the oil well service tax apply to well tagging, inter-well tracing, and naturally occurring radioactive material (NORM) testing services performed on oil field equipment?
The well tagging and inter-well tracing services themselves are not subject to limited sales or use tax, but the taxpayer must pay sales tax on the materials and equipment (including radioactive isoto…
Does a Texas seller owe sales tax on 'Passport Books' that give the holder free and discounted rounds of golf at participating courses?
No sales tax applies when the golf Passport Book is sold directly to the golfer who will use it, because the Comptroller treated the sale as a sale of an intangible right, not tangible personal proper…
Is Texas sales tax refundable when an auction buyer takes possession of the item in Texas before the seller ships it out of state?
No. Once the buyer takes possession of a taxable item in Texas, sales tax is due and is not refundable, even if the seller later ships the item out of state. The interstate-shipment exemption under Ta…
Does a company owe Texas sales tax when it swaps in identical replacement computer equipment to relocate a customer's data center, then rents back the old equipment during the transition?
Yes. Shipping identical replacement equipment to a customer's new location under a computer 'swap' program is a taxable sale of equipment. If the customer's old equipment is taken as a trade-in, tax i…
If I default on a layaway purchase and the store resells the item, do I get taxed twice when I finally pay it off?
No. Texas sales tax applies only when title or possession of the item actually transfers, so a layaway sale that falls through before pickup was never a taxable sale in the first place. When the buyer…
As an independent distributor selling tablets for a direct sales/multi-level marketing company in Texas, do I owe tax on the products I buy from the company to resell?
Yes. The Comptroller ruled that the tablets sold through this direct sales organization are taxable in Texas, and as an independent distributor you must pay tax on your purchase of the product from th…
If we sell oil/gas equipment to overseas customers FOB our Texas plant or FOB an export packer, do we owe Texas sales tax, and when do we have to collect it?
Yes, in most cases. Because title to the equipment passes in Texas under "FOB plant" or "FOB export packer" shipping terms, the sale is a taxable Texas sale, and the seller must collect Texas sales ta…
Can a grocery store chain that prints its own newspaper inserts in its own print shop get a refund of the sales tax it paid on the newsprint and ink?
No. The Comptroller ruled that a grocery store chain printing its own newspaper inserts in its own print shop is not entitled to a refund of sales tax paid on the newsprint and ink. The Sec. 151.319(c…
Can a paging company give its phone company a resale certificate for the phone exchange numbers and trunk lines it leases and then passes on to its paging customers?
Yes. The Comptroller confirmed that a paging service provider that purchases or leases phone exchange numbers and trunk lines from the local telephone company, and then assigns those numbers to its ow…
If my business buys promotional giveaway items like calendars, matchbooks, or rain gauges to hand out for advertising, do I owe Texas sales tax on them?
Yes. The Texas Comptroller confirmed that a business buying tangible items such as rain gauges, imprinted calendars, or matchbooks to give away as promotional items must pay sales tax on those purchas…
If a cable company rebuilds and upgrades its existing cable plant (like boosting channel capacity from 36 to 54 channels), is that taxed as new construction or as remodeling of real property?
It's remodeling, not new construction. This internal Comptroller memo concludes that rebuilding or upgrading an existing cable TV plant -- including replacing wire, poles, and house drops, or increasi…
Does the Texas Workers' Compensation Insurance Facility owe sales tax on the debt collection services it buys to recover unpaid premiums?
Yes. The Comptroller ruled on January 26, 1993 that the Facility's purchases of debt collection services used to collect delinquent premiums are taxable. The Facility's statutory exemption (Texas Insu…
Is sales tax due on cleaning products and supplies used to raise emus on a farm?
It depends on the product. The Comptroller ruled that dishwashing crystals, laundry detergent, and two multi-purpose cleaners used exclusively on the farm to sterilize drinking containers, wash beddin…
Can a customs broker's exportation certificate list extra items on the back of the form or on an attached addendum sheet, and will a cash register receipt work as export documentation?
A cash register receipt is not enough by itself — under Comptroller Rule 3.323(d)(4), export documentation must include a detailed, specific description of the items purchased so an auditor can tie it…
A Texas investigation firm did a traffic-accident investigation in Mexico for a California client (and separately does investigations for maquilas in Juarez) — is Texas sales tax due on the investigation service?
No Texas tax is due on an investigation service if both the purchaser and the subject of the investigation are outside Texas, the final report is delivered outside Texas, and the firm obtains an exemp…
Can a contractor building a day-care center on an Indian reservation use the tribe's sales-tax exemption to buy construction materials tax-free?
No. The Comptroller ruled that a contractor building an on-reservation day-care center for a Texas Indian tribe cannot claim the tribe's own tax exemption when buying materials. Instead, if the constr…
Can a general contractor allocate a lump-sum contract between new construction and nonresidential remodeling based on square footage, and what records are needed to back that up?
Yes, but only for labor. A Texas general contractor may use square footage to allocate the labor portion of a contract between taxable nonresidential remodeling and (largely nontaxable) new constructi…
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…
Do I have to charge Texas sales tax for boarding or training dogs at my kennel?
No. The Texas Comptroller ruled that boarding dogs and training dogs are both nontaxable services, so a kennel does not charge its customers sales tax on those charges. However, the kennel owner must …
Can a seller accept a faxed or photocopied Mexican pedimento de importacion as proof of export before issuing a Texas sales tax refund?
Yes. The Comptroller confirmed that a seller may accept a legible fax or photocopy of a pedimento de importacion, rather than requiring the original, as proof that goods were exported to Mexico. A ped…
Is a petroleum additives package sold with a vehicle warranty taxable in Texas, and is the warranty repair labor taxed?
Yes — the sale of the petroleum additives package is taxable as tangible personal property. Whether the warranty repair labor is later taxed depends on billing: a lump-sum labor-and-parts charge is no…
Does a Texas business have to charge sales tax for pumping out grease traps/septic tanks or clearing stoppages in sewer lines?
It depends on what exactly is done and for whom. Removing waste from a septic tank or grease trap that is part of a sewer system is a non-taxable service, but cleaning out a sewer line for a non-resid…
Can a contractor rent equipment tax-free to improve real property on a federal construction project like the Superconducting Super Collider?
No. Since October 2, 1984, when the Texas Legislature repealed the prior exemption, a contractor's rental of equipment used to improve real property on a federal government job is taxable. In this cas…
Does a Texas resume-writing and career counseling service have to charge sales tax on preparing a client's resume?
No, generally not. If you interview a client and write an original resume from that consultation, the charge for consultation and preparing the resume is not taxable, even if produced on a computer or…
Can a creditor or client who hires an automobile repossession company issue a resale certificate instead of paying sales tax on the repossession service?
No. The Comptroller ruled that a client (such as a lender) who hires a company to repossess an automobile cannot issue a resale certificate to avoid sales tax on that repossession service. The service…
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…
Is the labor to dig out and haul away contaminated soil taxable in Texas?
It depends on whether the soil leaves the property. Labor to excavate (dig out) contaminated soil is not taxable if the service provider leaves the soil on the customer's premises. But if that provide…
Does a Texas business have to charge sales tax on data recovery services, like retrieving deleted computer files?
Yes. The Texas Comptroller ruled that charges for labor or services performed to recover or retrieve deleted computer data are taxable as data processing services under Rule 3.330. The provider must c…
Does Texas charge sales or use tax when a company licenses its programming-language source code and specifications to other developers?
No, not automatically. Texas taxes the sale or license of a 'completed computer program,' but licensing raw source code and specifications so a licensee can build its own derived program is not taxabl…
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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.