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 an airline owe Texas sales or use tax on peanuts, donuts, and disposable cups, stir sticks, and napkins given to passengers?
No tax is owed on the peanuts and donuts because the airline buys them in bulk, and bulk food purchases aren't taxable. The disposable cups, stir sticks, and napkins used for non-complimentary (paid) …
If a customer's credit card payment turns out to be unauthorized or fraudulent and the credit card company charges the sale back to the business, can the business claim a bad debt deduction for sales/use tax purposes?
Yes. This internal Comptroller memo concludes that a charge-back for an unauthorized or fraudulent credit card payment is treated the same as a bad debt from a bad check, and it qualifies for a bad de…
If I dig up caliche and haul it to a customer's job site, do I have to charge Texas sales tax on the hauling/delivery charge?
It depends on whether the caliche is processed. If you simply dig caliche out of the ground and haul it to the customer's site, neither the caliche nor the transportation charge is taxable. But if the…
Can a retailer use SKU codes on cash register tapes (instead of a written item description) to support a Texas sales tax export refund claim?
Yes. The Comptroller's office confirmed that a cash register tape showing only a SKU code, with no separate written description of the merchandise, does not by itself prevent a retailer from getting a…
Does a Texas business that repairs and maintains aircraft for licensed/certificated carriers have to charge sales tax on parts, labor, or the equipment it buys to do the work?
No. In this December 11, 1992 letter, the Comptroller told the requester that repair and maintenance services on aircraft belonging to licensed and certificated carriers are not taxable — no tax on pa…
If I sell equipment to a leasing company and lease it back under an operating lease, is that a nontaxable financing arrangement or a taxable sale?
It depends on whether the leaseback is a true financing lease or an operating lease. In this December 1992 ruling, the Comptroller held that a sale-leaseback where the equipment reverted to the lessor…
Is a scholarship-matching or financial-aid database search service taxable in Texas?
Yes. A service that matches students to scholarships using a database is a taxable information service under Texas Rule 3.342. The provider owes tax on materials, supplies, and equipment used to deliv…
If a fraternity or sorority charges students one combined fee for room and meals, does it owe sales tax on the meal portion even though meals aren't billed separately?
Yes. Even if a fraternity or sorority bills students one lump-sum charge for room and board without breaking out the cost of meals, Texas sales tax must still be collected and reported on the portion …
Is an electric mobility cart (three-wheel scooter) used in place of a wheelchair exempt from Texas sales tax?
Yes. The Texas Comptroller ruled that electric powered carts (three-wheel scooters) used in lieu of a wheelchair qualify for exemption from sales tax, and no prescription is required. Repair parts and…
Is the electricity my sand-mining client uses to dredge, wash, sort, and convey sand exempt from Texas sales tax?
It depends on what the electricity powers. Electricity used to convey or pump sand to, through, and away from the plant is exempt as transporting a material extracted from the earth, regardless of whe…
If the Comptroller's office told us a resale certificate was OK on a mid-lease sublease, but that policy later changed, do we still owe sales tax on the sublease we already signed?
Yes, but only for the sublease already in place. The Comptroller's office honored a resale certificate a lessee issued to its lessor for a mid-lease-term sublease because the lessee had relied on verb…
Is infrared inspection of industrial furnace linings taxable, and is refractory brick sold to repair a kiln exempt from Texas sales tax?
The Comptroller ruled that infrared inspection service to check the condition of refractory (heat-resistant) linings inside boilers, furnaces, and kilns is a nontaxable service. Separately, refractory…
If a vending-machine or amusement-device company gets a monthly credit memo from its distributor for old machines it turns in, and that credit is applied against its account and later offset against new machine purchases, does that count as a tax-free trade-in?
No. This internal Comptroller memo concludes that turning in a used cigarette or video game machine to a distributor for an account credit, later offset against a separate purchase, does not qualify a…
Does a rehabilitation, drug/alcohol treatment, or psychiatric center qualify for Texas's residential exemption on natural gas and electricity sales tax?
No. The Comptroller held that a rehabilitation center (Rio Vista Rehabilitation Center) is not "residential" for purposes of the Texas natural gas and electricity sales tax exemption, because it is a …
If I rent out roll-off garbage containers and charge a $50 setup fee, is the whole charge taxable, and which city's local sales tax applies?
Yes, the entire charge is taxable, including the $50 setup fee to place the roll-off container. If the container comes with garbage collection service, local sales tax is based on where the garbage is…
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 9212685L: Unjust Enrichment/Error Tax — Collected From Customer — Cannot Be Retained By Or Refunded To Retailer/Contractor — Must Be Remitted To State Or Refunded To Customers
If a lump-sum contractor marks a contract 'Inc' in the tax block, the Comptroller treats that as proof tax was collected from the customer, so the contractor cannot keep that money or use it to offset…
Texas Letter Ruling 9211L1211C11: Electronic Bulletin Boards Service — Access To Technical/Shareware Library And Ability To Leave/Retrieve Messages/Chat 'Live'/Trade Goods
Yes. The Texas Comptroller ruled that membership fees charged for access to a computer bulletin board service (BBS) -- letting users chat live, access databases, and download software -- are taxable a…
State Tax Ruling
Yes. Texas allows a taxpayer to file sales tax returns based on a thirteen-period fiscal accounting calendar instead of the standard calendar month, but returns are still due the 20th, two of the fisc…
Texas Letter Ruling 9212L1208G14: Towing Charges — Second Tows Or Transfer Fees In Connection With Repossession Services And Separately Billed Are Part Of Debt Collection Services
It depends on who is towing. Plain towing charges are not taxable unless the towing company is also the repossessor, and towing hired directly by a financial institution to repossess a vehicle is not …
Texas Letter Ruling 9211L1209A07: Are towing charges taxable when a vehicle is repossessed?
It depends on who hires the tow truck. If a repossession company hires a towing company to move a vehicle it just repossessed, the towing company's charge to the repossession company is not taxable, a…
Does a cable TV company owe Texas sales tax when it pre-wires a home for cable TV outlets?
It depends on the contract type: on a lump-sum contract the cable company owes tax on the cost of the wire itself and doesn't collect tax from the customer; on a separated contract the cable company m…
Texas Letter Ruling 9211L1209A14: Disposable/Nonreusable Items (Placemats, Plates, Cups, Tray Liners, Toothpicks) — Food Service Operators' Purchases Under Resale Or Exemption Certificate
Yes. A restaurant chain may issue a resale certificate to a supplier of paper placemats instead of paying tax, because Rule 3.293(f)(4) lets eating establishments buy nonreusable items furnished to cu…
Texas Letter Ruling 9211869L: Lowering Of Temperature/Flash Freezing Product During Processing Vs. Keeping Product At Targeted Temperature — Electricity Used
Exempt. Texas Comptroller Letter Ruling 9211869L holds that electricity used to lower the temperature of food products (like chilling avocados, chickens, and meat, or flash-freezing vegetables) down t…
Texas Letter Ruling 9211L1209G06: Homeowners/Property Owners Association — Taxable Services (Cable Television, Landscaping, Garbage/Trash Pick — Up) And Nontaxable Services Provided To Members — Billings
A Texas property owners association that buys taxable and nontaxable services (like cable TV) for its members and bills a lump-sum periodic fee is treated as the consumer, paying sales tax to its vend…
Is the labor to repair a residential central air conditioner taxable in Texas, and what about the Freon used in the repair?
Only the charge for the Freon (refrigerant) itself is taxable. On a residential central air conditioning repair, the labor-related fees -- reclaimer fee, pump and torch fee, and leak detector fee -- a…
When a bookstore gives customers 'book credits' for traded-in books (minus a 10% handling charge), is tax due when the credit is used on a future purchase, or only at the original trade?
Tax is due on the full purchase price of the future book purchase, not reduced by the credit. A trade-in only avoids tax when the trade-in property is exchanged as consideration in the SAME sale under…
Texas Letter Ruling 9211L1204G13: Auctioneer — Sales Made On Behalf Of Federal Government
It depends on who is legally the seller. If a U.S. government agency consigns items to an auctioneer and the auctioneer collects payment and issues the bill of sale, the auctioneer is the seller and m…
Texas Letter Ruling 9211L1204G11: Is stainless steel polish bought by a janitorial service to clean customers' metal restroom dispensers exempt from tax under a resale certificate?
No. The Comptroller ruled that stainless steel polish bought by a janitorial company to clean customers' metal restroom dispensers is taxable at purchase, because the polish is consumed by rubbing and…
Is lawn mowing and landscaping work on a public highway right-of-way taxable when a private developer, not the government, pays for it?
It depends on who required the work, not who paid for it. Under Texas sales tax rule 3.356(a)(5), lawn maintenance and landscaping on land belonging to a governmental entity is exempt only if the gove…
Texas Letter Ruling 9211579L: Draperies/Curtains — Installation In New Houses/Residences Vs. Existing Houses/Residences
It depends on your role. Draperies are tangible personal property, so selling and installing them is normally taxable in full. But if an interior designer is acting as the contractor on a residential …
Texas Letter Ruling 9211590L: Utility Study — New Study Required If Change Of Ownership
Yes. When a manufacturing business changes ownership, the new owner must have its own predominant use study performed and kept on file to claim the sales tax exemption on electricity purchases, even i…
Texas Letter Ruling 9211L1204G09: Out-of-State Client — Investigation Performed Out-of-State by Texas Firm
No Texas sales tax is due when a Texas-based private investigator conducts an investigation by phone from Texas for an out-of-state client and out-of-state subject, as long as the results are delivere…
Texas Letter Ruling 9211L1203A01: Thirteen Period Accounting Calendar Year
Yes. The Comptroller granted permission for a group of affiliated corporations to keep filing Texas sales tax returns based on their 13-period fiscal accounting calendar instead of standard calendar m…
Texas Letter Ruling 9211L1202G12: Layaway Sales — Tax Increase Or Tax Rate Change Before Customer Obtains Possession Of Tpp
The tax rate in effect when the layaway contract was executed applies to the whole layaway sale, even if a local tax rate increase takes effect before the customer pays off the balance and takes posse…
Texas Letter Ruling 9211L1202G11: Does a carpet installer collect sales tax on materials under a separated contract?
Yes. Under a separated contract for selling and installing carpet in a residence, the dealer is the seller of the incorporated materials, must give a resale certificate to its supplier, and must colle…
Does a Texas carpet dealer collect sales tax on materials only, or on the whole job, when installing carpet in a residence?
It depends on how the invoice is written. Under a separated contract (materials and labor billed separately), the dealer collects tax only on the stated materials charge and gives suppliers a resale c…
Texas Letter Ruling 9211563L: Does a company owe sales tax on temporary security guards hired to supplement its existing security force?
It depends on whether the guards are licensed security personnel or true temporary help. If the guards are licensed by the Board of Private Investigators and Private Security Agencies, the charge is a…
Texas Letter Ruling 9211L1199G12: Hotel — Trunk Lines Purchased For Own Use And For Resale To Guests — Resale Certificate Guidelines
No. A hotel that buys a trunk line for telecommunication service and resells part of that service to guests cannot give its telecom provider a resale certificate for the basic local exchange service. …
Does a Texas pallet manufacturer have to collect sales tax when transportation companies buy replacement pallets, even though the old pallets are returned to distributors?
Yes. The Texas Comptroller ruled that the pallet manufacturer must collect sales tax from the transportation companies buying the replacement pallets. The fact that the removed pallets may later be re…
Is renting out pedal boats, bumper boats, and aqua cycles on a waterway taxable as a rental of tangible personal property in Texas?
Yes. The Texas Comptroller ruled that renting bumper boats, pedal boats, and aqua cycles on public or private waterways is a taxable rental of tangible personal property, both before and after October…
Texas Letter Ruling 9210L1198D01: Caricature Artists/Cartoonists Charges For Drawings At Party/Parties
Yes. Caricature drawing is a sale of taxable tangible personal property (graphic art), so the artist must collect sales tax on the total charge. But if the artist is hired by an amusement-service prov…
Texas Letter Ruling 9210L1205A08: Storage Tank — Above Ground With 500 Barrels Less Or More Capacity — Tpp Vs. Improvement To Realty
Yes, taxable. Each tank in the battery held only 400 barrels, under the 500-barrel line that keeps a tank classified as tangible personal property in Texas. Because it stayed TPP rather than becoming …
Texas Letter Ruling 9210L1198A13: Jail/Prison — Inmates Staying In Facility In Excess Of 30 Days Do Not Meet Definition Of Tenants — Gas And Electricity Is Not Residential Use
No. The Texas Comptroller ruled that a prison is not a building 'occupied as a home or residence,' so natural gas and electricity purchased for use in a prison do not qualify for the residential-use s…
Texas Letter Ruling 9210504L: Satellite Dish — Home/Residential Or Commercial Use — Sale And Installation Vs. Improvement To Realty
Generally no. The Comptroller ruled that satellite systems are tangible personal property, not permanent improvements to realty, so the full charge for both labor and materials to sell and install the…
Texas Letter Ruling 9210L1200G11: Medical Air Services — Membership/Initiation Fee For Emergency Medical Flights, Organ Delivery, Mortal Remains Return
No. The Texas Comptroller ruled that annual dues and a one-time initiation fee paid to a medical emergency association are not taxable, because membership in a medical emergency association is not an …
Texas Letter Ruling 9210L1204F12: Lock Or Locking Cylinder Exchange Service For Storage Facilities — Fee Charged
Yes. The Texas Comptroller ruled that a flat fee charged for organizing and coordinating the exchange of locking cylinders between storage facilities is the taxable sales price of the different lockin…
Texas Letter Ruling 9210L1209F06: Right — Of — Way/Other Infrastructure — Installation Or Repairs Of Tpp Or Improvements To Realty Must Be Dedicated And Accepted To Get Exemption
Yes. The Comptroller confirmed that the same rules used for developers donating streets to exempt entities also apply to donations of other types of real property improvements to exempt entities.
Texas Letter Ruling 9210L1200F06: Representation/Nexus In Texas — Displaying Products And Providing Order Forms At University Bookstore By Oos Seller
Yes. The Comptroller advised that an out-of-state seller displaying its products and providing order forms at a Texas university bookstore is engaged in business in Texas because that display counts a…
Is plastic media blasting to strip paint before repainting real property taxable in Texas?
Yes, in most cases. The Comptroller treated plastic media blasting done to prepare real property for repainting as a taxable restoration or remodeling service under Rule 3.357. The provider must colle…
Texas Letter Ruling 9210L1201A05: Therabite Mobilizer For Jaw Motion Rehabilitation — Orthopedic Device
Yes. The Comptroller ruled that the Therabite Mobilizer, a device that stretches or moves the jaw joint for rehabilitation, qualifies as a tax-exempt orthopedic device under Rule 3.284(a)(9), based on…
Texas Letter Ruling 9210L1200A01: Exempt/Nonprofit Entity And For — Profit Organization Holding Event — Guidelines
Yes, admission tickets can stay exempt from Texas amusement tax even when a nonprofit hires a for-profit sports marketing firm to run the event, as long as the nonprofit is the one that holds itself o…
Does a Texas restaurant have to charge sales tax on meals it gives employees free or for a fee around their shift?
No. The Comptroller ruled that meals a food service operator furnishes to employees immediately before, during, or immediately after a shift, provided for the operator's convenience, are not subject t…
Texas Letter Ruling 9210L1197D11: Vessel — Component Parts — Fishing Net/Long — Line Fishing Gear — Component Of Fishing/Shrimp Boat
Long-line fishing gear, fishing nets and repair twine, stored life preservers, and rigging attached to the vessel are exempt as component parts when sold with a proper exemption certificate for a Texa…
Texas Letter Ruling 9209L1239D03: Tax Refund Check/Warrant — Is A Decision Of The Comptroller And Is Not Equivalent To 'Notice Of Determination'
No. The Texas Comptroller ruled that a refund check or warrant is simply a decision of the Comptroller, not a 'notice of determination' under Tax Code Section 111.104(c)(3). If no notice of determinat…
Texas Letter Ruling 9209L1195D07: Self — Insured Or Self — Funded Plans
No. The Texas Comptroller ruled that a self-funded employee benefit plan owes no sales tax on utilization review (cost-containment) services or on a third-party administrator's fund handling and distr…
Texas Letter Ruling 9209L1195A01: Airlines/Licensed Carrier — Complimentary/Noncomplimentary Alcoholic/Nonalcoholic Beverages Served To Passengers — Nonreusable Items Used (Cups/Stir Sticks/Napkins)
No. The Comptroller ruled that plastic cups, paper napkins, and stir sticks used by an airline to serve alcoholic and non-alcoholic beverages are not exempt from Texas sales/use tax. The exemption for…
Can a Texas construction contract be changed from lump-sum to separated (or vice versa) by an addendum or change order, and how are cost-plus contracts and profit percentages treated for sales tax?
Yes — a contract amendment, addendum, or change order can convert a lump-sum construction contract into a separated contract (or vice versa) for Texas sales tax purposes, but only if it is made before…
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…
Is electricity used to power tanning beds at a tanning salon taxable in Texas?
Yes. The Texas Comptroller ruled that electricity used by a tanning salon to power its tanning beds is taxable. The taxpayer argued it should be exempt by analogy to the exemption for electricity used…
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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.