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 debt-collection services taxable when the creditor was in Texas but the debtor resided outside Texas?
No. Texas tax applied only when the debtor's address at placement was in Texas and the creditor was located or doing business in Texas; the debtor here was out of state.
Which printed materials qualified for the historical Texas publication-tax refund, and what documentation was required?
Only books, magazines, and periodicals bought before August 28, 1989 qualified, subject to four years; brochures, advertising items, and printing services did not.
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 could local sales tax be allocated when a retail building straddled the San Antonio and Leon Valley city boundary?
Because both sides had the same rate, the tenant could apportion by each city's share of floor area; if rates differed, the cash-register location controlled.
Was electricity used by a dialysis treatment center exempt from Texas sales tax?
No. The center's electricity was taxable commercial use even though the doctors' services and dialysis treatments were nontaxable and some patient supplies were exempt.
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.
How did Texas tax typesetting, color separations, film, and printed advertising literature distributed in and outside Texas?
Prepress work, film, and negatives were taxable; printed literature depended on resale, delivery, giveaway use, and proof of out-of-state shipment.
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.
Were lighting and HVAC/refrigeration maintenance agreements taxable when they covered both real property and tangible personal property?
The lighting agreement and the single-charge mixed HVAC agreement were fully taxable; separate charges and the share attributable to repairs could change real-property treatment.
Could contractors building the federal Homeport naval facility in Corpus Christi rent equipment and obtain supplies tax-free?
Yes. Although federal-contract equipment rentals were generally taxable, Homeport contractors could give suppliers exemption certificates for qualifying contract inputs.
Were a retailer's forfeited special-order deposits and layaway cancellation fees subject to Texas sales tax?
No. Because the customer received no merchandise after canceling, the Comptroller said no taxable sale occurred.
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.
Which charges for bank software setup, programming, conversion, installation, training, optional programs, and continuing support were taxable?
Data conversion, canned software, seller modifications, installation, and support were taxable; qualifying contract programming and separately stated training were not.
Was natural gas used in a nursing home's separately metered laundry facility residential or taxable commercial use?
It was residential use when the nursing home operated the laundry for its own linens and residents' clothing, but commercial if it served or was run by a third party.
Did a predominant-use utility study completed before August 3, 1987 need later engineer certification or a replacement study?
No. Pre-August 3, 1987 studies needed neither engineer certification nor replacement, though changed utility uses required an update.
Did amended construction-contract language separately stating materials from labor satisfy a prerequisite for Texas enterprise-project tax refunds?
Yes. The Comptroller found the amended agreement clearly separated because it required material charges and invoices to be stated separately from labor and services.
Was installing or upgrading central air conditioning in an existing nonresidential building taxable, and were separate design fees taxable?
The entire installation or upgrade charge was taxable, even in expanded space, but separately stated design and engineering charges were not taxable.
How did Texas tax repair and maintenance contracts for bank vaults, safes, drive-in equipment, cameras, and alarms?
Repairs were fully taxable; qualifying real-property maintenance labor could be nontaxable, while camera and burglar-alarm work was generally taxable security service.
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.
Did a school vending-machine contract signed before July 1, 1990 protect student purchases from the increased Texas sales-tax rate?
No. The vending operator sold to the students, not the school, so their purchases bore the increased rate and the operator collected it from them.
When could a nursery claim a Texas agricultural exemption for electricity used to irrigate pine trees?
Electricity could be exempt if the nursery fostered tree growth as an agricultural operation; mixed-use meters required over 50% exempt use and a certified study.
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.
Who owed Texas state and local use tax when a contractor bought taxable items out of state and had them shipped to Texas for use?
The contractor owed use tax on the purchase price. It paid a permitted supplier or self-reported uncollected state and local tax when the items were first used in Texas.
Was a city's separately stated $1 recycling fee taxable when charged with monthly garbage collection?
Yes. The recycling fee was taxable because collecting recycled items was treated as garbage or waste collection, whether or not the charge was separately stated.
Was remodeling exempt when a private company leased a privately owned building to perform a reimbursed service contract for a Texas agency?
No. The remodeling contract was taxable because it was between private taxable entities, the company leased the building, and its employees used the premises.
Was a fee for picking up cardboard for baling and resale taxable, and how was the later cardboard sale documented?
The pickup fee was taxable garbage collection. On sale to a shingle manufacturer, the recycler had to collect tax or accept a valid exemption certificate.
Were reimbursements between two restaurant corporations for shared employees' wages and payroll taxes subject to Texas sales tax?
It depended on the services performed. Taxable services made the full reimbursement taxable unless an employee-supply or qualifying intercorporate exemption applied.
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.
Could a Texas tax-exempt organization buy health-club memberships without sales tax for children in its program?
Yes, if the organization itself paid for the memberships, they related to its exempt purpose, and it gave the seller a properly completed exemption certificate.
Was a bunker receipt enough to document Texas's sales-tax exemption for fuel consumed by a vessel operating exclusively in foreign or interstate commerce?
No. The fuel could qualify when consumed in a vessel operating exclusively in foreign or interstate commerce, but the purchaser had to give the supplier a valid, complete exemption certificate. The ce…
When were interior-design drawings taxable as graphic arts rather than nontaxable decorating services?
Drawings resulting from decorating services were not taxable; plans created for sale or drawn to another person's specifications were taxable.
Was Texas tax due when a Texas watch-repair seller subcontracted the actual repair work to a business in New York?
Yes. The Texas shop remained the seller to the customer and delivered the repaired watch in Texas, although it could buy the subcontracted repair for resale.
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…
Was providing trailer-mounted searchlights with operators a taxable equipment rental or a nontaxable advertising service?
It was a nontaxable advertising service. The business did not rent units without operators, its staff delivered, set up, adjusted, started, directed, and secured the lights, and customer control did n…
Was a city's charge for slicing waste tires taxable when the city also removed them to a private landfill, and what if customers brought tires directly to a landfill for slicing?
Tire slicing by itself was nontaxable, but slicing performed as part of taxable waste removal made the entire charge taxable. If the slicing machinery were at the landfill and customers simply brought…
Which long-distance telecommunications charges were taxable, and could cable-television companies buy taxable intrastate transmissions for resale?
Interstate and international long-distance transmissions were exempt when they were not both originated from and billed to a Texas number or address. Services originating in Texas and billed to a Texa…
How did Texas tax rented water-conditioning systems, salt used in the service, sold-and-installed systems, and scheduled maintenance in existing nonresidential buildings?
The water-conditioning service was nontaxable, but the provider owed tax when buying all rental equipment and consumable materials, including salt. Selling and installing a permanent system in an exis…
Was a city's environmental protection fee on residential garbage-collection bills subject to Texas sales tax?
Yes, when tied to a separately billed garbage-collection charge; the letter said no tax was due when the city combined it with nontaxable services without itemizing garbage collection.
Which fruit-juice and bottled-water products did Texas treat as exempt, and when did dilution or flavoring make them taxable?
One-hundred-percent fruit juice remained exempt when calcium-fortified or restored from concentrate to original single strength. Juice diluted beyond single strength was taxable. Unflavored water was …
Was Texas tax due when a stock item held in Texas inventory for resale was shipped to an Illinois sales office and given to an Illinois prospect as a sample?
No. The Comptroller treated the item as held for resale before it was shipped out of Texas. The Illinois salesman ordered the normal stock item from inventory, received it at the Illinois office, and …
Were home-dialysis machines and mixed supply kits exempt from Texas sales tax?
Machines and operating supplies were exempt; mixed kits followed the predominant cost, and therapeutic items required a prescription.
How were a city's separately billed new water taps, sewer taps, and driveways taxed, and how did replacement taps and culverts differ at residential and nonresidential locations?
For new improvements under separated billing, incorporated materials were taxable and labor was not. Replacing water or sewer taps, or installing a culvert in an existing nonresidential driveway, was …
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.
Were software development and maintenance receipts taxable when one corporation occasionally hired the software seller's employees as independent subcontractors?
No, under the stated arrangement. The service corporation did not have to collect tax from its customer or pay tax to the independent subcontractor when the hired programmer had developed the program …
Did a local exemption for telecommunications services also exempt equipment sold to customers and repairs to customer-owned equipment?
No. Equipment sold with title transferred to the customer and repairs to customer-owned equipment remained subject to local sales tax even where the local jurisdiction exempted telecommunications serv…
When could a lump-sum vessel repairer buy repair materials tax-free in Texas?
For a vessel of at least eight tons used exclusively and directly in a commercial enterprise, qualifying repair materials were exempt, but tools and equipment were not.
How did Texas distinguish nontaxable industrial-solid-waste collection from taxable office-trash collection in a mixed container?
Industrial waste came from manufacturing, mining, or agriculture; for a mixed container, the customer could document both services and self-pay tax on the taxable share.
What counted as industrial solid waste for Texas waste-removal tax purposes, and how should a customer handle a collector providing both taxable and nontaxable removal?
The letter used the Solid Waste Disposal Act definition: waste from manufacturing, mining, or agriculture, excluding regulated liquid or semiliquid waste and waste from service, retail, or manufacturi…
Was advertising delivered through free public-use machines taxable, and were the machines treated as vending machines?
The service was not taxable and the machines were not vending machines, but the provider owed tax on machines and promotional materials.
Did Texas's agricultural exemption cover a ranch water-softening system used by ranch hands rather than exclusively for livestock watering or crop irrigation?
No. Agricultural equipment had to be used exclusively in qualifying agricultural operations such as watering livestock or irrigating crops for sale. Materials used to build or operate a ranch house an…
Did House Bill 1588 or the Petroleum Storage Tank Remediation Trust Fund exempt taxable items and services used to remove, repair, or replace leaking fuel tanks?
No. The trust fund paid for remediation, but House Bill 1588 did not amend the sales-and-use tax law to exempt tangible personal property or taxable services used in that work. Taxable remediation inp…
Who had Texas sales-tax duties at a flea market held on city property—the vendors, the city promoter, or both?
Vendors had to collect and remit tax. The signed response said the promoter could also be liable for unpermitted vendors, but attached staff memos recorded conflicting enforcement practice.
Was a coupon booklet taxable when it included maps and local descriptions but primarily transferred consumers' rights to merchant discounts?
No. The Comptroller treated the booklet sale as a nontaxable transfer of intangible discount rights because that was its primary purpose. The producer still owed tax on all printing costs incurred to …
Did leases requiring customers to pay taxes imposed during the term qualify for Texas's 1990 prior-contract rate protection?
No. The tax clause allowed the increase to be passed through, so the leases failed the statutory no-change-or-modification condition.
Was the full $275 flat fee taxable when a business bundled a nontaxable three-hour limousine service with a taxable dinner for two?
Yes. Limousine service alone was nontaxable at the time and the dinner was taxable. Because the seller charged one all-inclusive price without separately stating the taxable and nontaxable components,…
Did a sales-tax-exempt anti-drug organization have to collect Texas tax when it sold its own campaign book and a red ribbon?
The book was exempt as a writing, but the red ribbon was taxable. The organization's exempt status protected qualifying purchases for its own use; it did not excuse the organization from collecting ta…
Was a city's landfill dump fee taxable when the city only received waste at the landfill and did not collect or remove it from the customer?
No. A fee solely for receiving waste at the landfill was not taxable. The taxable service was collecting or removing garbage or solid waste; when a provider picked up household trash and carried it to…
Were pressure washers used to clean farm and ranch equipment exempt from Texas sales tax?
Yes, if used exclusively to maintain equipment used exclusively to produce agricultural products for sale; a later registration rule also applies.
Did heating thickened black liquor solely so it could be vacuumed from outdoor storage and moved indoors count as processing in Texas?
No. The Comptroller treated the activity as transportation rather than processing and allowed an exemption certificate stating that purpose.
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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.