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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When were Texas computer hardware and software service contracts taxable?
Hardware contracts were taxable regardless of who sold the equipment; software contracts were taxable only for software the service provider originally sold, with contract-programming services exempt.
Were cemetery grounds-maintenance labor and the materials used in that work taxable in Texas?
Maintenance labor was excluded from tax under a cemetery-specific policy retroactive to October 1, 1987, but weed killer, mower parts, marble, and other materials remained taxable.
How could a Texas elevator contract combining maintenance and repairs avoid tax on its full price?
The provider could separately tax a documented repair percentage based on prior work orders, or a reasonable estimate for a new contract; otherwise repairs over 5% taxed the full price.
Could a private lessor buy materials and services tax-free for GSA-required improvements to its leased building?
Yes, by exemption certificate for items incorporated for GSA's primary use and benefit; a resale certificate applied only to goods or services separately resold to GSA.
Were fees for taking game animals and receiving guide services on private Texas acreage taxable?
No. Texas treated the animal fee as payment for a private-land right, or profit a prendre, and Rule 3.298 specifically exempted hunting and fishing guide services.
Were catered meals and soft drinks sold to students during the regular Texas school day taxable?
No. Meals, food products, and soft drinks sold at school during the regular school day were exempt, but after-hours sales such as a fundraising supper were taxable.
Was the full $15 Dial 976 charge for merchandise taxable when part was retained as a marketing fee?
Yes. Texas taxed the full $15 selling price without deducting the seller's $5 marketing fee, supplier payment, service fee, or other expenses.
Which Texas taxes applied to residential gas and electricity, and how did a mixed-use meter qualify for exemption?
Residential use was exempt from state and specified local taxes, subject to some city exceptions; a mixed-use meter required an engineer-certified predominant-use study.
Was electricity used for aquaculture and drip-irrigation research exempt from Texas sales tax in this 1990 ruling?
No. Texas treated the research electricity and gas as commercial use because the taxpayer was neither manufacturing goods for sale nor conducting qualifying farm-or-ranch agriculture.
Was a Texas sightseeing tour exempt if it combined registered historic landmarks with other locations?
No. A multi-location tour was fully taxable if it included any place outside the statutory historic-site categories; tours exclusively of qualifying landmarks were exempt.
Did a publisher owe tax on printing and other services used to make free college telephone directories?
Yes. Because it gave the directories to schools rather than selling them, the publisher owed tax on purchased printing, photography, illustration, and similar services.
Were consumable overhead materials used by a contractor on a federal real-property contract exempt when title passed to the government?
No. Rule 3.291 taxed overhead supplies used on federal contracts unless incorporated into the realty, despite the contract's title-passage clause.
Did this 1990 Texas internal memo conclusively exempt feedlot grain-mixing equipment?
No definitive conclusion appears. One passage calls exclusive feedlot mixing equipment exempt, while later notes record conflicting views on whether bought ingredients made the activity taxable proces…
Were single-use drums and containers used for exempt hazardous-waste disposal exempt from Texas sales tax?
No. The disposal service was exempt, but the provider consumed the drums after manufacturing ended, so the containers remained taxable and did not qualify as pollution-control manufacturing materials.
What Texas tax exemptions applied to the Boy Scouts National Council and individual branches or troops?
The National Council had a 501(c)(3) sales-tax exemption, while all branches and troops had educational-organization exemptions covering sales, hotel, and motor-vehicle taxes.
Was a service that photographed personal property and maintained descriptive records for possible insurance claims taxable in Texas?
Yes. The photography charge was taxable, and storing and maintaining the records was taxable data processing; qualifying production inputs could be exempt or bought for resale.
Were a debt collector's fees and the attorney fees it incurred to collect overdue accounts taxable in Texas?
The debt collector's compensation was taxable, but attorney services were not taxable debt collection when the attorney fees were separately stated from other charges.
Could automobile dealers and repairmen buy vehicle glazes tax-free in Texas?
Yes when the glaze was physically incorporated into a vehicle before the dealer's sale or by a repairman under a separated contract, supported by a resale certificate.
Which parts of a computer communication system for hearing-impaired users were exempt from Texas sales tax?
Prescribed adaptive software and telephone-communication peripherals were exempt, but general-purpose computers, screens, printers, and modems remained taxable.
When was electricity for rodeos, livestock auctions, salt-water disposal, water flooding, and exempt organizations exempt from Texas sales tax?
The result depended on the purchaser and use: qualifying exempt organizations and water-flood production qualified, while auction-barn power generally did not.
Were parts and labor used to repair leased marine cargo containers in Texas subject to sales tax?
No. Parts and labor were exempt because the containers were components of qualifying commercial vessels and were used exclusively in interstate and international commerce.
Could an air-show service provider buy souvenir programs tax-free when it supplied them at no direct charge to exempt sponsors or military bases?
No. Exempt sponsors did not exempt the provider's inputs; resale treatment required a separately stated sale, while qualifying direct out-of-state delivery was exempt.
Was a 4% municipal franchise fee included in the taxable sales price of electricity in Texas?
Yes. The entire fee was a utility business expense included in the taxable electricity sales price, whether embedded in the rate or separately billed to customers.
Were improvements made by a private lessor for a federal agency's leased office exempt from Texas sales tax?
Yes. The tailored, required improvements were for the federal agency's primary use and benefit, allowing qualifying materials and services to be purchased for resale.
Did a publisher owe Texas tax when it licensed a hotel-advertising software database to an airline for no charge?
No. The no-charge license created no collection duty; if the publisher later charged, the airline could buy for resale while continuing to tax its software sales or leases to travel agents.
Were amine and the products used to clean recycled amine exempt in a Texas natural-gas processing plant?
Amine was exempt because it directly purified gas held for sale, but filter elements, carbon, and defoamers used only to clean the amine were taxable.
Was restoring sludge-collection ponds exempt because the Texas Water Commission required the environmental work?
No. Texas treated pond cleaning as taxable restoration of nonresidential real property, not garbage removal; only regular employee wages for in-house work were untaxed.
Were pecan-cracking services and sales of smoked turkeys subject to Texas sales tax?
Pecan cracking was not taxable. Smoked turkeys were not taxable unless sold ready for immediate consumption, and resale certificates could apply to resale purchases.
How did Texas tax lump-sum installation of burglar bars on residential and nonresidential buildings?
Burglar bars were real-property improvements. Residential or new-construction lump sums were not taxed to the customer, but existing nonresidential installations were fully taxable.
Which aircraft and automobile upholstery labor was taxable in Texas, and what was required for a refund?
Initial upholstery and most reupholstery were taxable, but aircraft reupholstery and motor-vehicle repair or restoration labor were exempt; collected tax had to be refunded to customers first.
Was rental of heaters and dehumidifiers exempt when the equipment was necessary to apply a coating to structural steel?
No. Temperature and humidity control did not create an exemption, and the letter said neither the federal-contractor facts nor manufacturing use exempted the rental.
Was electricity used to ripen produce exempt from Texas sales tax?
Electricity used to refrigerate produce during a controlled ripening process was exempt, but electricity for later storage, packing, offices, and other nonprocessing uses was not.
How did Texas tax sold coupons and memberships that provided free video rentals?
A sold coupon was a nontaxable intangible right, but the retailer paid tax on printing and use tax on the tape's fair-market rental value during customer use.
Were orthotics, massage rollers, and massage pillows subject to Texas sales tax?
Orthotics were exempt orthopedic appliances. Massage rollers and pillows were exempt therapeutic appliances only when provided to an individual under a practitioner's prescription.
Could a retailer use accrual accounting generally but report Texas sales tax on credit sales using the cash basis?
Yes. A retailer could report sales tax consistently on the cash basis while using accrual accounting, but the change was prospective and required transaction-level records.
How did Texas tax residential and commercial reroofing under lump-sum and separated contracts?
Residential and new-construction treatment depended on contract form, while labor, materials, and other charges for reroofing an existing nonresidential building were fully taxable.
Could a surveyor buy stakes and other supplies tax-free when performing taxable or nontaxable surveys for exempt entities?
For a taxable survey, transferred items could be bought for resale, but the surveyor owed tax on retained inputs. For a nontaxable survey, all taxable inputs were taxable.
Could federal credit union employees and volunteer directors claim Texas tax exemption while traveling on official business?
Only when the credit union paid the purchase directly and supplied a purchase voucher; personal payment followed by reimbursement did not qualify.
Which animal feed, medicines, and supplements were exempt from Texas sales tax?
Feed normally consumed by farm or ranch animals, animals held for sale, and wildlife was exempt; pet feed was generally taxable unless a documented special use qualified.
Were insurance claims-adjusting services taxable, and could an insurance company buy qualifying subcontracted adjusting services for resale?
Yes. Adjusting and claims processing were taxable, but a buyer could issue a resale certificate when the purchased services were essential to its own taxable insurance service.
Were sales of pecan trees taxable in Texas?
Generally yes, but a buyer in the business of raising and regularly selling pecans could buy the trees exempt by giving the seller an exemption certificate.
Did a Texas sales-tax refund assignment have to state the assigned refund amount to be legally effective?
No. The Comptroller would accept an assignment without the amount stated, but the country club had to prove the refund amount and keep supporting evidence.
What receipt did a Texas business need to prove sales tax was paid on company credit-card purchases?
The vendor receipt had to separately state tax or say in writing that the price included tax; a verbal agreement or an unitemized card statement did not protect the purchaser.
Could a Texas nonresidential repairman rent job equipment tax-free for resale or deduct its taxed cost from the customer bill?
No. The repairman consumed the rented equipment and paid tax on the rental, while the entire customer billing remained taxable with no credit for that input tax.
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.
How could customers recover Texas sales tax paid on books and publications during the historical Texas Monthly refund period?
The seller could refund or credit the customer and claim the amount on its return, or assign its refund right to the customer, subject to documentation and limitations.
Did a wholesaler become a manufacturer by using leased equipment to affix legally required tax stamps to finished cigarette packages?
No. Cigarette manufacturing was complete before the wholesaler acquired the packages, and stamping was not processing or manufacturing.
Which charges by a convention coordinator were taxable, including bundled planning services and private bus tours?
The coordinator's single planning charge was not taxable, but sightseeing bus tours generally were taxable amusements; transportation-focused and qualifying historic tours were not.
Which Texas state and local sales taxes applied to residential electricity delivered in several Austin-area cities?
Residential electricity was exempt from state, county, and MTA tax; city tax applied only where the city had retained or validly reimposed it.
Was labor for a scheduled recurring turnaround on functioning real property at a chemical plant taxable?
No. The Tax Policy Committee treated periodic recurring turnaround work on functioning real-property improvements as nontaxable maintenance labor.
Which destination-management charges for transportation, tours, guides, parties, convention trips, and resale goods were taxable?
Transportation and group parties were nontaxable, sightseeing tours and step-on guides were taxable, and historic-site or transportation-focused tours could be exempt.
Which dog food, medicines, equipment, and supplies could a Texas kennel buy tax-free?
Food for breeding dogs whose offspring were held for sale, and for those offspring, was exempt; food for racing or boarded dogs and the listed kennel equipment was taxable.
Could a school sell taxable yearbooks through an exempt organization's once-a-year, 24-hour tax-free sale?
Yes. Tax was avoided when the yearbooks were delivered to the school on one day, even if students ordered and picked up their books over multiple days.
Could a customer that owned a manufacturing aid claim the manufacturer refund when it was not itself engaged in manufacturing for ultimate sale?
No. Ownership under Rule 3.300(b)(3) was insufficient because § 151.318(g) limited the refund to a person actually engaged in manufacturing for ultimate sale.
When was labor to install an internal or external hard drive or memory card taxable, depending on who sold the component and whether it went inside the computer?
Internal installation was taxable repair or remodeling whether the component replaced a defective part or upgraded the computer. Installing an external component bought from another vendor was nontaxa…
Could the sale of 33 drilling rigs and their associated equipment qualify as an exempt occasional sale in Texas?
Yes. Separate income-and-expense records made each rig an identifiable business segment, so each sale could qualify for the occasional-sale exemption.
Was a post-eye-surgery kit containing medical supplies, sunglasses, a video, and a leather bag taxable in Texas?
The whole kit followed its predominant cost: exempt prescribed wipes, tape, and sunglasses made it exempt, while predominant taxable video and bag costs made it taxable.
Were charges to disassemble and reassemble modular office furniture taxable when the work was necessary to move an office?
No, when the purpose was moving and records made that clear. Charges to reconfigure, repair, or add parts to the furniture remained taxable.
Did FDIC or RTC involvement make separately organized operating properties exempt from Texas sales and hotel occupancy taxes?
No. The Comptroller's General Counsel treated the properties as separate private entities that remained responsible for taxes on their continuing operations.
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.
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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.