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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Is VasoSeal, a medical device used to stop bleeding from arterial punctures after procedures like coronary angiography and angioplasty, exempt from Texas sales tax?
No. The Texas Comptroller's office ruled that VasoSeal does not qualify for a sales tax exemption because it doesn't meet the definition of an exempt item such as a drug/medicine or a prosthetic devic…
Is all electricity used in an apartment or housing complex exempt from Texas sales tax as 'residential use,' or does it depend on how each part of the complex is actually used?
No, not all of it. The Comptroller's office reaffirmed that the predominant use test applies area-by-area within an apartment or housing complex: electricity used for genuinely residential purposes (u…
Does a Texas healthcare provider owe sales tax on polysomnographic sleep units (equipment used to diagnose and treat sleep disorders and sleep apnea)?
Yes. The Comptroller confirmed the company correctly paid sales tax on its polysomnographic sleep units. Healthcare providers owe sales tax on equipment they buy to provide their services unless a spe…
When a contractor buys materials, supplies, or equipment for a construction or design contract where title passes to an exempt customer, when does the contractor owe Texas sales or use tax instead of claiming a resale exemption?
It depends on timing. Under Day & Zimmerman v. Calvert, a contractor's purchases can be exempt as sales for resale only if title to the property passes to the customer before the contractor makes any …
Are charges for installing, servicing, and monitoring a burglar alarm/security system taxable in Texas, including when the system is installed during new construction of a building or house?
Yes. The Comptroller's office confirmed that charges for installing, servicing, and monitoring burglar alarm/security systems are taxable as 'security services' under Tax Code Section 151.0075, even w…
Does a rental company owe sales tax on the amount it charges a customer for a rented piece of equipment that was stolen during the rental period?
No. The Comptroller ruled that sales tax is not due on a charge by a rental company for a rented item that was lost, misplaced, or stolen, because sales tax applies to the transfer of a taxable item f…
Is the labor to develop a multimedia presentation, desktop-published literature, or graphic art (booth graphics, ads, slides) taxable in Texas when it's delivered to the client on a diskette or as film/output, and can the developer buy reproduction materials tax-free?
Yes, taxable. The Comptroller told this developer that charges (labor and materials) to create a multimedia presentation delivered on diskette are taxable as the sale of a computer program, and that l…
Is a business that prints and mails advertising coupons directly to consumers on behalf of retailers providing a taxable sale, or a nontaxable advertising service, under Texas sales and use tax law?
It's a nontaxable advertising service, not a taxable sale of coupons. The Comptroller told this business that printing coupons out of state and mailing them directly to consumers in specific zip codes…
If a nonprofit hospital system creates a new tax-exempt subsidiary to own its medical office buildings, does that new subsidiary qualify for the same Texas sales and use tax exemption, and can supplies, services, and construction purchases for the buildings be bought tax-free?
Yes, largely. The Comptroller ruled the new nonprofit subsidiary (COMPANY), as a Section 501(c)(3) organization, is eligible for the same exemption under Texas Tax Code Section 151.310(a)(1) and (2) a…
Is a service, estimate, or trip charge taxable if a customer gets an estimate to repair an appliance but decides not to have the repair done?
No. A service, estimate, or trip charge made in connection with the repair of tangible personal property is generally taxable, but there is no taxable charge if an estimate is rendered for a fee and t…
Is painting, patching, and seal coating work on a neglected strip shopping center's walls and parking lot considered nontaxable maintenance, or is it taxable repair/remodeling/restoration?
It's taxable repair, remodeling, and restoration, not nontaxable maintenance. The Comptroller explains that maintenance under Rule 3.357(a)(4) means scheduled, periodic work done to sustain or support…
If a customer paid tax on parking space rent before getting a Texas sales tax permit, and later gets a permit, can the tax already paid be refunded?
Generally no. A customer cannot issue a resale certificate for purchases made before the effective date of its sales tax permit, so tax collected before that date should not be refunded. The only way …
Is an interior decorator's design fee, purchasing fee, administrative charge, freight/move-in charge, or consultation fee taxable under Texas sales and use tax?
It depends on how the charge is billed. A separately stated interior design fee or a stand-alone consultation fee is not taxable. But a design fee folded into a lump-sum charge for taxable property be…
Are vibrating shaker screens used at a sand, gravel, and aggregate processing plant exempt from Texas sales tax as manufacturing equipment?
It depends on where in the process the shaker screens are used. Shaker screens used before the aggregate material undergoes any physical or chemical change (such as crushing) are not part of manufactu…
Is cleaning out debris from an existing farm irrigation canal a taxable service in Texas, and does the agricultural exemption cover it?
Yes, it's taxable. Cleaning debris out of an existing irrigation canal to restore it to near its original working order is nonresidential repair and restoration of real property, which is taxable unde…
When a repair company fixes real-property equipment (like a restaurant refrigeration system) under a manufacturer's warranty, or provides a free 'goodwill' repair afterward, who owes Texas sales/use tax on the labor and parts?
It depends on who is footing the bill and why. When an out-of-state manufacturer's warranty covers the repair and the repair company bills the manufacturer (not the property owner) for labor and parts…
Can a business report sales tax on a modified accounting basis that lets it collect tax from customers but delay remitting that tax to the Comptroller past the statutory due date?
No. The Comptroller denied a company's proposed modified-accrual reporting method (treating invoices dated in one month as the following month's return data) because it would let the company collect t…
Does it matter, for Texas sales tax purposes, whether an insurance agency's risk-management fee is paid out of commissions on premiums or billed directly to the client?
No. The Comptroller ruled that whether a fee is paid from commissions on premiums or billed directly to the client does not change the sales tax result. What matters is whether the specific activity i…
When a company sells blueprints made from customer-supplied drawings, does it owe sales tax on the sale, even if the blueprints end up being used to build a real estate improvement for a tax-exempt entity?
Yes, in most cases. The Comptroller told the seller (Company X) that it must charge sales tax when it sells blueprints to an architectural/engineering firm or to a general contractor, regardless of wh…
Is telephone or on-site technical support for software taxable in Texas, and can a contractor providing that support staff to a company accept a resale certificate instead of charging tax?
Yes, charges for telephone technical support of tangible personal property (including software) are subject to Texas sales and use tax if provided to a recipient in Texas, though the service can be pu…
Is a caregiver referral agency's fee taxable, and are the pre-employment screening services it performs (criminal history, driving records, reference checks) subject to Texas sales tax?
The referral fee itself is not taxable. But the pre-employment screening components — criminal conviction histories, driving records, and reference confirmations — may be taxable if the customer (not …
Can Booster Clubs buy tax-free as exempt organizations or hold tax-free sale days, can a school issue an exemption certificate for cheerleader uniforms bought through the school, and can a teacher buy classroom supplies tax-free if reimbursed later?
This is an internal Comptroller staff memo (Bettie Peterson to Ron Watkins), titled 'Taxability School Related Organizations,' answering three questions: (1) a Booster Club can only make tax-free purc…
Did the Texas Comptroller waive the electronic fund transfer (EFT) filing requirements under Sec. 151.401 of the Sales Tax Law for affected taxpayers?
Yes. In this August 9, 1995 letter, the Comptroller confirmed that it had waived the requirements stipulated in Section 151.401(a)(1) and (2) of the Sales Tax Law for all affected taxpayers. The lette…
Does Texas local sales and use tax apply to conference calling charges when the conference call center or 800 number is located outside Texas but some participants call in from Texas?
It depends on where each leg of the call originates, not on where the conference call center is located. For a 'Dial Out' call, the client owes state (but not local) sales tax on its own call to the o…
For a Texas advertising agency, are charges to write copy and produce, edit, or create a master (audio, video, or film) for a commercial taxable, and how does that differ from charges for copies (dubs)?
No — charges to create a master (including the copywriting used to create it) and charges to edit an existing commercial into a new master are not taxable, and studio time and video stock charged by a…
Is a charge for disassembling a communications tower — including mileage, travel, per diem, loading, hauling, and unloading of the tower materials — subject to Texas sales tax?
No, not when those charges are separate and apart from any taxable work. The Comptroller told this taxpayer that charges for disassembling a ROHN tower — including mileage, travel, per diem, loading, …
Can a company's electronic 'CPC Sales Tax Reporting' system, generated through a corporate procurement card, replace paper vendor invoices as acceptable documentation for Texas sales and use tax compliance?
Yes, with a major condition. The Comptroller ruled that the described procurement card sales tax reporting system will meet the office's data reporting requirements, but only if the vendor actually en…
Is a computerized communications monitoring service for elderly, shut-in people taxable as a 'security service' in Texas if the provider must be licensed as an Alarm Systems Company under the Private Security Act?
Yes. The Comptroller checked with the State Board of Private Investigators and found that the taxpayer's computerized communications service for elderly people required licensure under the Private Sec…
When a distributor for a direct sales/multi-level marketing company buys items for their own personal or business use (not for resale) and gets overcharged sales tax on the retail price instead of the company's wholesale price, how do they get a refund?
The direct sales organization normally collects tax from distributors based on the retail sales price. But for items a distributor buys for their own use (not resale), tax should instead be based on t…
Are feeding tube systems (gastrostomy, jejunostomy, and related enteral/parenteral supplies) and closed tracheal suction system products (TRACH CARE) exempt from Texas sales and use tax as prosthetic devices?
Yes, generally. The Comptroller ruled that nasal gastric and gastrointestinal (enteral and parenteral) feeding-tube devices and related supplies, as well as closed tracheal suction system products (TR…
Is a mail-based reminder service (reminding clients of special dates or events) subject to Texas sales tax, and what about gift baskets sent to Texas recipients as part of that service?
No, charges for reminder services are not taxable when the reminders are sent through the mail rather than by telephone. However, if the service also involves selling and delivering gift baskets to po…
Is the labor to clean a non-residential septic tank or sewer holding tank taxable in Texas?
It depends on whether the cleaning is scheduled. If a non-residential septic tank or sewer holding tank is cleaned on a scheduled, periodic basis, the labor is nontaxable maintenance labor. If it's cl…
Is the sale of a 'seat option' — the right to later buy a season ticket for a specific seat in a stadium being built — subject to Texas sales tax?
No. The Comptroller held that a seat option is not tangible personal property and does not itself provide admission to any amusement service — it only gives the holder the right to later buy a season …
Is the labor to repair and maintain manufacturing machinery and equipment, like owned printing presses or leased photocopy machines, exempt from Texas sales and use tax?
Yes, but only once the equipment itself qualifies for the manufacturing exemption. As of January 1, 1995, when the phased-in manufacturing equipment exemption became fully effective, maintenance on qu…
Are security labels/tags that retailers attach to merchandise to prevent theft taxable, and did the resale/exemption certificates retailers had on file for these labels remain valid after the October 1, 1991 law change?
As of October 1, 1991, security labels sold to retailers for attaching to products at the retail location are taxable (they fall under the wrapping, packing, and packaging materials rule change), and …
Is electricity used to run coolers and cooling rooms that flower shops use to extend the life of cut flowers an exempt manufacturing/processing use, or a taxable use?
Mostly taxable. Electricity used to lower cut flowers to their target (precooling) temperature counts as processing, but that only takes 30 minutes to an hour. Once flowers reach the target temperatur…
Is a company's charge for custom or noncustom training materials on compact disc, or for other training materials like books and video tapes, taxable under Texas sales tax, and can a separately stated training fee avoid tax?
Yes, the charge for the training materials themselves is taxable. The Comptroller ruled that the total charge for each custom or noncustom training project documented on compact disc is taxable, as is…
Is labor to repair, remodel, restore, or renovate a building that is a Recorded Texas Historic Landmark, but not listed in the National Register of Historic Places, exempt from Texas sales tax?
No. Rule 3.357(e)(4) only exempts labor to remodel, restore, or repair buildings that are listed in the National Register of Historic Places. Being a Recorded Texas Historic Landmark (a state designat…
Can a corporation with multiple internal divisions get separate direct payment (direct pay) permits for each division, so each division reports and pays its own Texas sales and use tax?
No. The Comptroller's Tax Administration division denied the request. Only one direct payment permit may be held by the legal entity (the corporation as a whole, referred to in the letter as "CORP A."…
When a shop changes a customer's oil and oil filter, does it charge sales tax on a lump-sum price or does it need to separately state and tax the materials?
Either method is allowed, and the tax treatment differs. If you charge one lump-sum price for the oil change (parts and labor not separated), you do not collect sales tax from the customer, but you mu…
When a Texas customer calls an 800 number to order flowers for delivery through an FTD-type wire-order florist network, is the sale subject to Texas sales tax?
It depends on where the telemarketer who takes the order — the "selling florist" — is located, not on where the flowers are delivered. If the telemarketer-florist is in Texas, the sale is taxable in T…
When a construction contract commingles taxable renovation/remodeling labor with nontaxable new-construction labor and the contract doesn't separately state the two, can a taxpayer's own engineer certify how much labor was new construction in order to claim a tax refund?
Yes. The Comptroller's Tax Policy Division said the customer's construction engineer may certify the split between new-construction labor and renovation/remodeling labor on a commingled job, citing Ru…
If a beverage distributor buys pre-mix or post-mix carbonated drink machines and loans them to restaurant customers as a marketing incentive (in exchange for the customer agreeing to buy that distributor's soft drink products), can the machines be purchased tax-free as manufacturing equipment?
No. Even though pre-mix and post-mix drink machines otherwise qualify as manufacturing equipment under Rule 3.300, loaning them to customers is itself a taxable "use" of the equipment by the distribut…
Are a television, a VCR, and pre-recorded or blank video cassettes sold for use on a maritime vessel exempt from Texas sales and use tax as component parts of the vessel or as sea stores/ships' stores?
A television and/or VCR can qualify as an exempt component part of a vessel if it is bolted or otherwise firmly attached to the vessel, under Rule 3.297(b)(2)(B). A video cassette cannot be attached t…
If a company designs tools, dies, jigs, and fixtures on a computer for manufacturers, is the sale of those designs subject to Texas sales tax?
Yes. The Texas Comptroller ruled that selling a computer-generated design is taxable as the sale of a pattern for use in manufacturing. Selling a design modification for an existing production-line ma…
Is a business's total charge to etch glass items (such as awards or motor vehicle windows), including labor, subject to Texas sales tax?
Yes. The Comptroller held that etching glass items is taxable processing or fabrication of tangible personal property, so the total charge to the customer — including labor — is taxable as graphic art…
Does a company's proposed Multi-Jurisdictional Sales Tax Certificate form comply with Texas resale certificate requirements?
Yes, with one fix needed. The Comptroller found the submitted Multi-Jurisdictional Sales Tax Certificate form met Texas's basic requirements, but flagged one gap: Texas resale certificates may only co…
Is replacing the ground beds/anodes in a cathodic corrosion protection system on an existing pipeline every 7 to 15 years considered nontaxable real property maintenance, or taxable repair and remodeling of real property?
It's taxable repair and remodeling, not maintenance. The Comptroller reaffirmed that adding cathodic protection systems to existing pipelines is taxable repair, restoration, or remodeling of real prop…
Is a Texas insurance underwriter liable for sales and use tax on the risk-inspection services it buys from an outside vendor as part of underwriting a policy, and is the underwriting activity itself taxable?
The underwriting activity itself is not taxable — Tax Code § 151.0039(b) and Rule 3.355(c)(1) exclude insurance coverage for which a premium is paid, or sales commissions paid to insurance agents, fro…
When a business sells tickets to a taxable amusement service in Texas, how much local sales tax must it collect, and can it report the tax on a mixed cash/accrual basis?
The seller of a ticket to a taxable amusement service must collect tax on the full admission price, including any convenience fee, handling charge, service charge, or other amount charged above the pr…
Are separately stated charges for original design work performed by a Certified Kitchen and/or Bath Designer subject to Texas sales tax?
No. The Texas Comptroller's Tax Policy Division confirmed that separately stated charges for original design work performed by a Certified Kitchen and/or Bath Designer are not subject to sales tax.
Is a ripper and the bulldozer that powers it exempt from Texas sales and use tax as manufacturing equipment when they are used to break limestone and shale out of the earth as the first step in making cement?
Yes, with a condition. The Comptroller ruled the ripper qualifies as manufacturing equipment and is exempt from sales and use tax because it is the first stage in producing cement, breaking limestone …
If I sell food, soft drinks, or candy to a jail or prison in Texas, or to inmates there, do I have to charge sales tax?
It depends on who is buying. Sales of food products, meals, soft drinks, and candy to the correctional facility itself (for example, to feed inmates at no charge to them) remain exempt from Texas sale…
Does the Texas Comptroller agree that the industry-published 'Sales Tax Guide for Texas Printers' (June 1995 edition) — covering when printers charge sales tax, what equipment/energy purchases qualify for the manufacturing exemption, and how to claim refunds — reflects current Comptroller policy?
Yes, with the corrections shown in this letter. The Comptroller's Tax Administration Division (Gilbert Zamora) reviewed the trade associations' 'Sales Tax Guide for Texas Printers' line-by-line, marke…
Does a contractor owe Texas sales tax on renting portable toilets for a construction job site when the job is a contract to improve real property for a tax-exempt entity like a public school?
Yes, generally. A contractor owes sales tax on the rental of portable toilets used at a job site improving real property for an exempt entity, even if the contract requires the toilets to be there. Te…
If a retailer of x-ray equipment loans machines free of charge to tax-exempt hospitals and depreciates the equipment on its books, does that count as tax-free demonstration/display use, or does the retailer owe sales tax?
The retailer owes tax. The Comptroller ruled that loaning x-ray machines to hospitals for their free use is not demonstration or display under Rule 3.285(e)(1), because the hospitals have no incentive…
When Company A sells a mold to Company B under a written agreement, is the sale of the mold taxable, and does it matter whether Company B itself manufactures the end product?
It depends on whether Company B is manufacturing tangible personal property for sale and on whether a written agreement transfers title to the mold. If B uses the mold (directly or through a component…
If a company leases drilling tools that are delivered to and picked up in Texas, but then actually used at drilling sites in another state (New Mexico), does the lessee owe Texas sales tax on the lease charges?
Yes, generally. Because the lessee took possession/delivery of the leased tools in Texas (the common carrier's bill of lading showed delivery to Odessa, Texas), the operating lease was executed in Tex…
Are meal-replacement and nutritional supplement products like Extreme Measures and Preferred Whey taxable or exempt under Texas sales tax?
Exempt, in this case. The Comptroller found that Extreme Measures may be used as a meal replacement and is therefore treated as a food product, exempt from tax. Whey itself is classified as a food pro…
How does Texas sales and use tax apply to a company that installs, repairs, and remodels exterior lighting permanently placed in the landscaping and hardscaping of residential and commercial property?
It depends on the type of work and the type of property. The company acts as a contractor (not a taxable-service provider) when it makes original exterior lighting improvements to residential or non-r…
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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.