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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Were vending-machine food, soft drinks, and candy sold inside a hospital or similar institution exempt in Texas?
Only sales served to qualifying students, residents, patients, or inmates were exempt; machines in public areas serving visitors or employees made taxable sales.
Could a natural-gas marketer making only exempt sales issue a resale certificate without holding a Texas sales-tax permit number?
Yes. A supplier could accept the no-number certificate if the buyer claimed all sales were for resale or exempt customers and the supplier lacked contrary knowledge.
Could a debt collector buy notices for resale, and when was separately purchased software support taxable?
Notices were taxable because the client lacked custody; support from the software seller was taxable, while an unrelated provider's support was not.
How did Texas sales tax apply to clowning, party decorations, giveaways, rentals, cleanup, and out-of-state decorating work?
Clowning alone was nontaxable, but decorating, decoration sales or rentals, and related cleanup were taxable; bundled charges and where goods were used affected the result.
Did an auto-crushing business need a Texas sales-tax permit when buying title-surrendered salvage units and selling crushed vehicles to a steel mill?
Yes. Once the units lost their identity as motor vehicles, purchases and sales involved tangible personal property, with resale certificates on both transactions.
Did an out-of-state seller of television maintenance contracts have Texas nexus and owe tax on contracts, parts, freight, and installation?
Yes. Hiring a Texas repair contractor made the seller subject to Texas permitting and tax duties; maintenance, parts with freight, and installation were taxable.
Were prescribed air-purification systems for allergy patients exempt from Texas sales tax?
Yes, when sold to an individual under the named practitioner's prescription; sales to doctors, hospitals, clinics, nursing homes, and other entities were taxable.
Could an equipment lessor accept a resale certificate from a customer using rented equipment to remodel nonresidential real property?
No. Equipment bought, rented, or leased for use in nonresidential repair or remodeling was taxable to the person using it, so the resale certificate was invalid.
How did Texas apply sales tax to an electrical subcontract containing both taxable remodeling and new construction?
Remodeling charges were taxable but could be resold with valid certificates; new-construction treatment depended on whether the subcontract was separated or lump-sum.
Were a paper distributor's cutting and freight charges taxable when the customer bought the paper for resale and supplied a valid resale certificate?
Cutting and freight were taxable components of the paper's selling price, but the distributor did not collect tax when the customer gave a valid, properly completed resale certificate covering the res…
Could a company use its multistate sales-tax exemption certificate in Texas, and when would it need a Texas sales-tax permit?
The enclosed multistate certificate was not acceptable as either a Texas resale or exemption certificate. The Comptroller could not decide the permit question without more facts, but said a company pe…
Did a seller owe Texas tax when its Missouri customer directed taxable goods to be drop-shipped to a recipient in Texas?
Yes. The seller should charge Texas use tax unless the Missouri customer was reselling the goods and gave a valid resale certificate.
Who owed Texas use tax when an out-of-state buyer directed a seller to drop-ship taxable property to a Texas recipient?
The seller had to collect Texas tax or a valid resale certificate; if the buyer lacked Texas nexus and did not collect, the Texas recipient still owed the use tax.
When were fashion-stylist services, prop rentals, and other photo-shoot charges taxable, and could the agency buy client props for resale?
Stylist work such as location selection, model and prop arranging, dressing models, and set breakdown was nontaxable when separately stated and sold as a service to a photographer or advertiser that b…
Could a restaurant buy toys and theme boxes in Happy Meals tax-free for resale when it collected tax on the meal's total selling price?
Yes. The Comptroller treated both the toy and theme box as resold with the meal, even if the package was discounted. The restaurant could issue resale certificates to its suppliers and had to collect …
Did Texas sales and local taxes apply to automated radio-dispatch and telephone-interconnect services, and could dedicated exchange lines be bought for resale?
The services were taxable telecommunications subject to state sales tax. No local tax applied on the stated facts because the originating tower was outside a local taxing jurisdiction. A local-exchang…
If a moving company damages a customer's furniture and files an insurance casualty claim to cover the repair, is the repair charge still subject to Texas sales tax?
PARTIALLY SUPERSEDED (see note below). As of 1990, repairing personal property (like furniture or drinking glasses) that a moving company damaged during a move was fully TAXABLE, and filing an insuran…
Could a Texas repair or remodeling contractor accept a direct-payment certificate, buy transferred materials for resale, or use the certificate on lump-sum new construction?
A contractor could accept a direct-payment exemption certificate for taxable repairs and remodeling performed for a permit holder and buy materials transferred to the customer for resale. The contract…
How did Texas tax broadcast-receiving equipment, its installation in new or existing buildings, and charges to receive broadcast signals?
The equipment and seller-installed tangible-personal-property installations were taxable. Permanent installation in existing nonresidential realty made the full charge taxable repair or remodeling; ne…
How did Texas tax fundraising products, video yearbooks, and advertising sold through schools and organizations?
Cookies and summer sausage were exempt food, while candy was exempt only in specified circumstances. Schools could buy taxable video yearbooks for resale, with tax due on the student selling price, bu…
When did a Texas structural-steel business act as a contractor rather than a supplier, and how did that affect sales tax?
It was a contractor when it was responsible for erecting the steel itself or through a hired company; under a lump-sum contract it owed tax on the material cost. When it had no erection responsibility…
Could a seller accept a client's direct-payment certificate when taxable items were billed to the client's advertising agency?
No. The advertising agency had to pay tax on taxable items billed to it, even when acting for a direct-pay client. The seller could accept the client's certificate only if it billed the client directl…
Did a service vendor avoid Texas sales tax merely because its customer was a joint venture holding a government contract?
No. The vendor had to charge tax on taxable services sold to the joint venture unless it received a valid resale certificate. The joint venture could issue one only if it directly resold the service t…
Was remote mainframe emulation and software-testing time taxable data processing, and could the software developer claim resale or manufacturing treatment?
The time-sharing and testing service was taxable data processing. But the developer could issue a resale certificate if the service was essential to software sold as tangible property, or a manufactur…
Were typing and secretarial charges taxable when performed with a computer or memory typewriter rather than a manual typewriter?
Yes for computer-based word processing: the provider had to collect tax on typing, copies, and report covers. Manual, non-memory typewriter services were not taxable, and the provider instead paid tax…
Would the proposed standardized certificate qualify as a Texas resale certificate, an exemption certificate, or both?
It qualified as a resale certificate, but not as an exemption certificate because it lacked a space for the exemption reason. Adding a certificate-type checkbox and an exemption-reason field would mak…
Could a restaurant buy toys tax-free for resale when every taxable children's meal included a toy that could not be bought separately?
Yes. The toy was part of the taxable meal sale, even though the meal price increased by only $0.06 while the toy cost about $0.41. The restaurant correctly collected tax on the meal package and could …
How did Texas tax removable lockers leased to nightclubs and then rented by the clubs to patrons?
The nightclubs had to collect tax on patron rentals because the lockers remained tangible personal property. The locker company could receive its share tax-free with a resale certificate, but it still…
Who had to collect Texas sales tax on antique-mall consignment sales, and did the consignor need a permit for the mall location?
It depended on whether the consignor was identified to the buyer. If identified, the consignor was the seller and needed a permit at the mall; otherwise, the mall proprietor was the seller and had to …
Could the insurer buy equipment and telecommunications for resale when hospitals used its automated claims-submission and inquiry system?
Not on the submitted documents. They did not show that the insurer rented equipment, resold telecommunications, or sold a taxable service. A taxable information service or exclusive circuit-line lease…
Were teleconferencing charges and the related long-distance charges taxable, and could the provider buy long-distance service for resale?
Yes. Teleconferencing was a taxable telecommunications service, and the total charge—including qualifying long-distance charges—was taxable. The provider could issue a resale certificate if it made no…
What Texas sales and use tax applied when a cruise-ship retailer sold goods outside U.S. territorial waters and passengers brought them back to Texas?
The retailer owed tax when it withdrew tax-free inventory for resale outside U.S. territory, and passengers still owed Texas use tax when they brought purchases back. The Comptroller encouraged the re…
Could a Texas security-service provider offset its service tax with tax paid to another state on equipment or repairs, or buy those items for resale?
It could not reduce tax on the Texas security service by out-of-state tax paid on equipment or repairs. It could issue a resale certificate only when care, custody, and control of the property passed …
Could a caterer rent reusable tables, chairs, silverware, or china tax-free for resale to catering customers?
No. The caterer's reusable-item rental was an expense of selling meals, not a re-rental to customers, even if separately stated. The caterer owed tax when renting those items.
How were manufacturer and extended-warranty roof repairs taxed when commercial roofing warranties crossed Texas's January 1, 1988 real-property repair-law change?
Manufacturer-warranty repairs on sold roofing material supported resale treatment for third-party repair labor. Extended commercial-roof warranties required period-by-period treatment: pre-1988 repair…
Could a nonresidential sub-repairman issue a resale certificate using the general repairman's sales-tax permit number?
No. Each separate legal entity selling taxable items or services needed its own active permit and valid certificate. A sub-repairman's certificate using another entity's number was invalid; without it…
When could an equipment rental company accept a resale certificate for tents, arches, and food-service equipment rented by caterers, planners, or other rental businesses?
A true rental company could rent items tax-free for re-rental. Caterers were consumers and paid tax on equipment they used. For other customers, a properly completed certificate could be accepted when…
Were pest-control services exempt merely because they were performed at a school district property through another maintenance company?
No. The pest-control provider charged tax unless the maintenance company gave a resale certificate for resale to the district or had a legal agency agreement allowing an exemption certificate. Reimbur…
Could a contractor acting as agent for a direct-payment-permit holder buy construction consumables tax-free with the customer's permit?
No. A private agency agreement could not shift the tax incidence. Rule 3.291 required the contractor to pay tax on consumables, and Rule 3.288 limited the permit to items the holder bought for its own…
Did resale certificates issued to the previous owner of an acquired business remain valid for the new owner?
Generally yes: the purchaser, not the seller, invalidated or revoked a valid resale certificate, so a prior owner's valid certificate carried over to the new owner of an existing business. But the sam…
How did a veterans' post's Texas sales- and franchise-tax exemptions affect its purchases, resale inventory, permit, and taxable sales?
The post owed no franchise-tax report after its exemption cleared the account and could buy items tax-free when they furthered its exempt purpose. It could not use that exemption for beer, soda, cigar…
Could a seller of taxable two-way-radio airtime issue resale certificates for telecommunications services it purchased?
Yes, for purchased telecommunications that could be identified as part of the service resold to a particular customer, such as identifiable long-distance charges. Generally no for basic local exchange…
When did assigning an equipment lease avoid accelerated Texas tax, and did an out-of-state buyer of Texas leases have to collect Texas tax?
Selling both the leased equipment and lessor rights transferred collection responsibility to the buyer and avoided accelerated remittance if the seller obtained a resale certificate. A later title-tra…
Did a coupon-book company pay Texas tax on printing booklets containing postage stamps, and were the supermarkets' stamp sales taxable?
The company owed tax on Texas printing and could not give the printer a resale certificate, while the supermarket's sale of the postage stamps was not taxable. Printing charges for booklets the printe…
Could a purchaser use MTC Exhibit 1100-D in Texas for resale and manufacturing purchases, or did it need a Texas exemption certificate?
Texas accepted Exhibit 1100-D as a resale certificate for items bought for resale, lease, or rental, including manufacturing inputs that became component parts. It could not cover exemption-only purch…
Did a seller making only exempt natural-gas sales need a Texas sales-tax permit, and what certificate proof could suppliers require?
No permit was required solely to report exempt natural-gas sales, but the seller had to give a resale certificate when a supplier requested one. A certificate without a permit number could be accepted…
Did an out-of-state auction avoid Texas sales tax when the equipment stayed in Texas and buyers took possession there?
No. The seller had to collect Texas sales tax because the equipment was in Texas and buyers took possession in Dallas, subject to a valid resale certificate.
Were postage and carrier charges taxable when a check printer mailed taxable checks directly to bank depositors?
Yes. The charges were connected to taxable checks and the depositor was the relevant customer rather than a third-party recipient, whether the bank acted as agent or reseller. A reseller bank needed a…
Were a copy-machine lease, maintenance fee, per-copy click charge, and the business's charge to customers taxable in Texas?
Yes. The lessor had to tax the lease, maintenance, and click charges even when separately stated, and the business had to tax its entire charge for copies, including the passed-through click amount.
Could a Texas seller accept a later-dated resale certificate for an earlier sale and obtain a refund of tax returned to the customer?
Potentially. The customer had to hold a valid sales tax permit when the sale occurred, provide a currently complete resale certificate, confirm it had not and would not claim the same tax as a return …
How did Texas distinguish nontaxable transmission-repair labor from a taxable sale of a rebuilt transmission?
Labor was nontaxable when the shop repaired a transmission or removed and replaced one as part of repairing the customer's vehicle. But when the shop simply sold a rebuilt transmission without repairi…
How did Texas tax computer hardware and software support sold through a subcontractor?
Texas taxed in-state hardware support and software support for software the service company had sold. Software support for software it had not sold was nontaxable. Taxable and nontaxable charges had t…
How did Texas tax magazine production, subscriptions, individual sales, giveaways, and copies included in association dues?
A publisher could give its printer a resale certificate. Six-month-or-longer subscriptions mailed at second-class rates and magazines included in annual trade-association dues were nontaxable; individ…
Could a Texas seller accept a faxed resale certificate with a copied signature?
Yes. A faxed certificate was acceptable if it contained all required information, substantially followed the prescribed form, and was accepted in good faith. The signature did not have to be an origin…
Did the company's custom certificate form satisfy Texas resale and exemption certificate requirements?
No. The Comptroller said the submitted form omitted required information and directed the company to Rule 3.285(a) and (d)(2) for resale certificates and Rule 3.287(a) and (f) for exemption certificat…
Were Texas calligraphy charges taxable, and how were resale work, materials, and donations treated?
Paid calligraphy and camera-ready artwork were taxable, including work on customer-supplied items. A resale certificate shifted collection to the reseller. Donated labor had no taxable consideration, …
Could disposable tray liners provided to food-service customers be bought tax-free for resale?
Yes. Disposable, nonreusable tray liners provided to customers could be purchased with a resale certificate whether they were plain white paper or printed with advertisements.
Could restaurants and caterers buy disposable cheesecloth lemon wraps without Texas sales tax?
Yes, with a valid resale or exemption certificate. Without one, the manufacturer properly collected tax. Buyers that had paid tax in error could later provide a certificate and seek a refund, subject …
Could the redacted party give a resale certificate for remodeling work that added newsstand facilities at an airport?
Yes, under the stated arrangement. Title passed at completion, while the redacted entity received operating rights and a later fair-market-value payment.
Was spraying homeowners' pecan trees taxable when some owners sold the harvested nuts?
Yes. All four spraying jobs were taxable structural pest-control services, including the jobs involving commercially used pecans.
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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.