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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Was a separately stated charge for a technical specialist's future installation advice taxable with the sale of an oil-well packer?
Yes. The specialist's advice was requested with the packer and accompanied its sale, so Texas treated the service as part of the taxable sale even though it was separately stated and performed after t…
Which parts of a credit consultant's work were taxable debt collection, and which were nontaxable consulting services?
Work on actual past-due accounts was taxable debt collection, while general credit procedures, staff training, and advice unrelated to specific delinquent accounts were nontaxable unrelated services. …
Was a boat broker's commission subject to Texas sales tax when the principal's boat sale qualified as an occasional sale?
No. If the business acted as a disclosed broker and the principal was not a seller and qualified for occasional-sale treatment, the boat sale was not taxable and the broker's commission was not subjec…
Could an exempt nonprofit homeowners association buy member services tax-free and recover sales tax it had paid in error?
Yes. The association could issue exemption certificates for purchases related to its exempt function when it did not separately charge members, and it could request supplier refunds for tax paid in er…
Which seller-financed mortgage-servicing activities were taxable in Texas when billed through setup and monthly service fees?
Coupon books, delinquency notices, and computer-produced account or IRS reports were taxable; document storage, payment verification and remittance, and recording a lien release were not. A lump-sum f…
Were sales of microbial odor neutralizers for municipal, industrial, and agricultural wastewater uses subject to Texas sales tax?
Generally yes. The seller had to collect tax unless the customer supplied a valid resale or exemption certificate; cities and utility districts could qualify for exempt-function purchases, some manufa…
Were charges for balancing and changing the stroke of an oilfield pumping unit subject to Texas sales tax?
Yes. Texas treated an oilfield pumping unit as tangible personal property and classified balancing and bore-stroke modification as taxable remodeling, making the entire charge taxable.
Was an extended warranty for repairs to a residential heating and air-conditioning system subject to Texas sales tax?
No. Texas said the residential real-property repair warranty and repair labor were not taxable, while the warrantor or third-party repairer owed tax on the applicable parts, supplies, materials, and e…
Was an approximately $50 fee to use a Galveston bungee-jump concession subject to Texas sales tax?
Yes. The Comptroller treated the per-jump charge as a taxable admission to an amusement service, comparable to taxable admission fees for a golf course or tennis court.
Were an investigator's unarmed process-serving and document-delivery charges taxable Texas security services?
No. The Comptroller treated unarmed service of subpoenas and legal notices and unarmed document delivery as nontaxable unrelated services because the work did not require a private-investigator or sec…
Were the Texas Workers' Compensation Commission's charges for medical fee guidelines, blank forms, rules, and agenda packets subject to sales tax?
No. The Comptroller treated those governmental publications and documents as exempt. STAR now warns that the cited Rule 3.341 was repealed in 2008 and its content moved to Rule 3.322(h)(5) in 2011.
How did Texas tax telecopy, telex, translation, and person-delivered voice-message services between Texas and the Soviet Union?
Translation and person-delivered message charges were not taxable. Long-distance telecopy and telex charges were taxable only when the service originated in Texas and was billed to a Texas telephone n…
Were customer damage repairs, equipment inspections, and freight charges connected with sold or rented equipment taxable in Texas?
Repair services and parts billed to a customer for damaged rental equipment were taxable; inspection-only charges were not. Freight on equipment sold or rented to customers was taxable whether provide…
Was a charge for underground-storage-tank vapor analysis and a confidential leak-detection report subject to Texas sales tax?
No. The report and sample-analysis charge was not taxable, but the provider had to pay sales tax on the tubes, equipment, and other tangible property used to perform the service.
Could an elevator maintenance contract tax only the percentage allocated to repairs and exclude scheduled maintenance and inspection?
Yes. Texas accepted a 72% nontaxable maintenance-and-inspection and 28% taxable repair allocation if credible job-history evidence supported it and both contracting parties agreed, with state and loca…
Was a $25 introductory airplane flight taxable as instruction or as an amusement service?
It depended on the flight. A documented flight conducted as part of an FAA Part 61 or Part 141 instruction course was not taxable; a noninstructional sightseeing or enjoyment flight returning the ride…
Was leasing a permanently affixed above-ground storage tank larger than 500 barrels subject to Texas sales tax?
Generally no, because Texas treated it as real property. But the lease was taxable if its terms made clear that the tank remained tangible personal property, regardless of size.
Could an exempt religious college buy basic local telephone service for student rooms tax-free when included in room and board?
No. The service did not relate to the college's exempt purpose. The college could pay tax and include it in room rent, or buy for resale, separately charge students, and collect tax.
Could a Texas purchaser use wholly electronic purchase orders to claim resale, exemption, or direct-payment treatment?
Not by themselves. A traditional signed resale or exemption certificate had to remain on file with the seller; later written or electronic purchase orders could claim the exemption by referring to tha…
What documents could a Texas purchaser use to prove that multiple items were exported to its Mexican maquiladora?
Texas required specific export proof. The letter identified U.S. Customs certifications, a Mexican Pedimento de Importaciones with detailed supporting manifests or invoices, and a properly completed M…
Were medical case-management and rehabilitation-consulting services supplied to insurance companies taxable in Texas?
Yes. The provider's calls, meetings, medical and vocational assessments, appointment coordination, reports, and recommendations qualified as insurance investigation and claims adjustment or processing…
Did Texas-based independent salespeople require an out-of-state seller to collect tax, and what resale or exemption documents could the seller accept?
Yes. Commissioned independent salespeople created Texas business activity, requiring a permit and tax collection or valid certificates. A permit copy was not a certificate; Texas required separate res…
Could a taxable security-service provider buy customer-controlled equipment for resale when the customer could keep it free or buy it for $1 after the contract?
Yes. Under the 1991 letter, equipment transferred to the customer's care, custody, and control as an integral part of taxable security service could be bought with a resale certificate under either pl…
How did Texas sales tax apply when a contractor filed a damaged-freight claim and transferred the damaged item to the carrier?
Treatment depended on whether the contractor was a seller or consumer. A seller generally excluded tax from the claim if the carrier resold the item. A consumer included previously paid tax in the cla…
Could a property manager make tax-free purchases for assets held in FDIC receivership without registering as an FDIC agent?
Yes, registration with the Comptroller was unnecessary, but the manager needed a written FDIC agency agreement and proof that FDIC held title to the property. With those records, the manager could iss…
What documentation could a service provider accept before stopping sales-tax collection from a manager acting for the RTC?
A completed, signed exemption certificate was enough to protect the service provider if accepted in good faith. The manager could sign as RTC's agent and assert the agency relationship; the manager, n…
Did a customer still owe sales tax on catalog jewelry that was returned but lost in transit before the retailer received it?
Yes. A sale occurred between the customer and the retailer, and the lost return shipment did not erase the tax debt. Under Texas Tax Code § 151.052(a)(1), sales tax was part of the sales price and rem…
Were a sports league's team entry fees and $10 player passes taxable as amusement services or sales of tangible personal property?
No. The $400 team charge was a nontaxable entry fee under Rule 3.298(c), and the $10 pass bought association membership and participation rights—not property or admission to an amusement. The operator…
Was sales tax due up front on all payments under a financing lease even if the lease was later terminated and the equipment sold?
Yes. The contract was a financing lease, so tax applied to the full sales price—including all lease payments—when possession began or the first payment came due, whichever was earlier. Termination, re…
Did a nonprofit trade association have to collect Texas sales tax on correspondence-course tuition or the course binder, test, and certificate?
Tuition or enrollment was not taxable. A separately stated materials charge—including shipping and handling—was taxable, and the association could buy participant materials for resale. If materials we…
Was the Dallas/Fort Worth International Airport Facility Improvement Corporation exempt from Texas sales tax as a political subdivision?
No. After reviewing its articles of incorporation, the Comptroller concluded that FIC was not a political subdivision and denied the sales-tax exemption. The corporation could reapply if it later obta…
Was a Texas seller still responsible for sales tax when its customer refused both to pay $288.83 in tax and to provide a resale certificate?
Yes. The seller had to collect and remit the tax. Under § 151.052, tax became part of the sales price and a legally recoverable debt owed by the purchaser. The seller could also correct an invoice and…
Could a nonprofit corporation sell its own books, magazines, newsletters, and other writings without Texas sales tax?
Only if it qualified under the nonprofit-writings exemption and was not an educational organization. Rule 3.299 specifically excluded schools, colleges, universities, and similar institutions systemat…
Did a railroad's electronic load-cell scale qualify for the Texas exemption for supplies essential to operating trains?
The Comptroller could not decide from the submitted facts. The railroad had to show how the load cells were attached to the bridge and identify the federal or state rule requiring railcars to be weigh…
Was a lessor's reimbursement charge for personal property tax on leased equipment subject to Texas sales tax?
Not when the property-tax reimbursement was separately stated from the equipment lease price. If it was included in the lease price, sales tax applied to the entire charge. The Comptroller pointed to …
Who had to collect and report Texas state and local sales tax on retail sales made by a Utah network-marketing company's independent distributors?
The direct-sales organization, CORP A, was responsible under Rule 3.286(a)(3). Tax reporting depended on whether distributors took customer orders before buying from CORP A or stocked products first, …
Were electricity and natural gas exempt when used to manufacture equipment the company retained and used to provide services to hotels and motels?
No. Utilities used to make equipment for the company's own service activity were taxable commercial use. Direct manufacturing utilities could qualify only for equipment sold, leased, or rented as tang…
Could change orders separate equipment sales from partially completed lump-sum real-property construction contracts for Texas sales-tax purposes?
Yes, if both parties agreed, the addendum separated every equipment purchase, delivery, and installation component, and the equipment invoices became part of the contract by reference. Contractors cou…
Did an auto dealer have to collect Texas sales tax when recovering, filtering, returning, or adding refrigerant during an air-conditioner repair?
Only if the dealer charged for the refrigerant. With no refrigerant charge, the procedure was treated as nontaxable motor-vehicle repair. A charge for refrigerant was taxable whether the gas was new o…
Were charges for customer-controlled computer hardware and on-site or off-site computer data storage taxable in Texas?
Yes. Giving customers total operational control of computer hardware was a taxable rental, and both online and offline computer data storage were taxable data-processing services.
Did Texas require out-of-state circuses and other itinerant vendors operating in the state to register and collect sales tax?
Yes. Texas said itinerant vendors, including out-of-state circuses, had to obtain sales-tax permits and collect tax under Rules 3.374 and 3.424.
Who had to collect Texas tax under a software rent-to-own agreement that let the customer stop paying and return the software?
The software developer did. The agreement was an operating lease, so the developer had to collect sales or use tax on each lease payment as rental income was recognized.
Was a paper-mill capacity project entirely new construction, or did replacing and upgrading existing equipment count as remodeling?
It was both. Adding a new electrical room was new construction, but additions, deletions, and replacements to existing equipment were remodeling under Rule 3.357.
What documentation did a retailer need to sell tax-free to a property manager acting for the FDIC or RTC?
The retailer could accept an exemption certificate alone. The manager had to retain proof of FDIC/RTC title and its written purchasing authority for audit.
Could a retailer accept an FDIC or RTC property manager's exemption certificate without receiving separate ownership and agency documents?
Yes. The manager kept the ownership and agency records for audit, while the retailer could accept the certificate and issue a refund based on it alone.
Could a retailer accept an exemption certificate from a property manager buying for the FDIC or RTC without receiving the title and agency documents?
Yes. The manager or FDIC/RTC could sign the certificate, while the manager kept title-transfer and agency documents for audit instead of giving them to the retailer.
Did a cable company have to refund Texas sales tax when a customer canceled before a prepaid service period ended?
No. The company was not required to refund the tax, but if it chose to do so it also had to refund the unused service fee and follow Rule 3.325.
Could an FDIC or RTC property manager issue an exemption certificate without giving the retailer its title and agency records?
Yes. If the manager retained those records for audit, it could issue the certificate; a retailer accepting a proper certificate in good faith was relieved of tax liability.
When were sales and delivery of dirt, sand, gravel, equipment, and construction services taxable in Texas?
Unprocessed dirt, sand, or gravel and their delivery were not taxable. Processed materials, equipment rentals, and taxable services were taxed with related delivery charges.
Could a business use one store's natural-gas predominant-use study to claim the utility exemption at another store?
Only if the stores and the first study were truly identical and valid. Otherwise each location needed its own study based on actual utility uses and product quantities.
Were monthly water-softener equipment and maintenance services taxable when the provider kept control of the equipment?
No. The managed equipment-and-maintenance service was not taxable, but the provider owed tax on the equipment, salt, and supplies it used. Outright rentals and salt sales were taxable.
Were natural gas and electricity used by restaurants to prepare food for immediate consumption exempt from Texas sales tax?
No. Restaurant utilities used to prepare food for immediate consumption were taxable commercial use, whether customers ate on-site or took the food away.
Were inedible white grease, dried blood, and dry rendered tankage made from livestock offal subject to Texas sales tax?
Yes, as taxable tangible property. A buyer could still claim resale or manufacturing-ingredient treatment by giving the appropriate certificate.
Were Escaid 110, Norpar 13, Paranox 106, and polyacrylic acid A-3 treated as diesel fuel or as sales-taxable materials?
They were subject to sales tax. Although some material might work in a diesel engine, it was not classified and taxed as diesel fuel unless actually used in a motor vehicle.
Could an authorized employee sign a Texas customs-broker certificate showing that goods were exported to Mexico?
Yes. An employee authorized by the customs broker could sign, and omitting 'attorney-in-fact' did not invalidate an otherwise complete certificate accepted in good faith.
Did the exemption for books and periodicals from qualified nonprofit publishers depend on which retailer sold the publication?
No. If the publisher qualified under Rule 3.299, either retailer's sale was exempt; if the publisher did not qualify, either retailer's sale was taxable.
Were fees a cable company paid a utility for permission to attach cable lines to utility poles subject to Texas sales tax?
No. The Comptroller said the described pole-attachment charges were not subject to state or local sales tax, but did not address federal tax.
Were utilities used in a homeowners association's jointly owned, members-only common areas exempt as residential use?
Yes. Utilities for jointly owned common areas intended solely for association members were exempt residential use for billing cycles beginning on or after January 1, 1988.
Was a demurrage charge imposed when a customer returned a gas seller's tank late subject to Texas sales tax?
No. The Comptroller treated the charge as a nontaxable penalty for returning the seller's reusable container after the specified deadline.
Were a contractor's charges to update and correct software developed by someone else subject to Texas sales tax?
No. Rule 3.308(b)(4) made program-modification charges nontaxable when the person performing the modification had not sold the program.
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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.