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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If a contractor performs lead-paint abatement (a taxable repair to real property) and also does air monitoring for the same job, is the air monitoring taxable too, and what about the disposal of contaminated materials?
The repair/remodeling work (paint removal, repainting, and related repairs) is a taxable service, but air monitoring is not taxable when it is a stand-alone service involving direct scientific observa…
If a company places copy machines at retailer locations and charges a monthly fee based on the number of copies sold, is that a lease of the copier, and can the retailer buy paper and toner tax-free with a resale certificate?
Yes, it is a lease. The Comptroller confirmed that a company placing copy machines at various business locations and charging a monthly fee based on the number of copies made (here, 5 cents per copy, …
Do sales/use tax exemptions for services performed between affiliated corporations still apply when some of the corporations in the group are non-profit entities that would otherwise be excluded from the federal definition of an affiliated group?
Yes. The Comptroller ruled that a non-profit parent corporation and its subsidiaries are still treated as 'affiliated corporations' under Texas Tax Code Sec. 151.346 and Rule 3.331, even though the pr…
Is cleaning up an oil spill or remediating contaminated soil at an oil and gas site taxable in Texas?
It depends on location and cause. Cleaning up an oil spill at the well site, or one caused by oil/gas/geothermal exploration, development, or production activity and regulated by the Texas Railroad Co…
Does a bareboat rental (no crew) get taxed differently than a boat charter that comes with a captain?
Yes. Renting a 'bareboat' (just the boat, no crew) is a taxable rental subject to limited sales tax, while chartering a boat WITH a captain is normally a nontaxable transportation service (e.g., a fis…
Can a company that buys and sells a chemical used to clean up oil spills issue or accept a resale/exemption certificate on that chemical, and is the oil-spill clean-up service itself taxable?
A retailer that buys the chemical only to resell it as-is may issue a resale certificate to its supplier. But a company that uses the chemical to perform a clean-up service must pay tax on it, unless …
Does a beauty salon or aesthetician owe Texas sales tax on shampoo, tonics, and conditioners it buys and uses on customers?
Yes, in part. A beauty salon or aesthetician owes Texas use tax on supplies (like shampoo, tonics, and conditioners) it uses to perform nontaxable services such as facials, and must also collect and r…
ABC CO. imports equipment from out-of-state vendors to its Austin facility, tests or modifies it (sometimes loading software), and then re-exports it within 30 days to a foreign subsidiary — does that testing or modification count as a taxable 'use' in Texas that defeats the export exemption?
Yes. The Comptroller ruled that testing and/or modifying the equipment in Texas before export — even briefly, even within 30 days, and even where title later passes to a resale subsidiary before expor…
Does a Texas errand-running or personal-shopping business have to collect sales tax on the items it picks up or buys for customers?
It depends on the type of errand. If the customer already ordered the item and just pays you to pick it up and deliver it, your fee is a nontaxable delivery service. If you buy the item yourself on th…
Does a monument/cemetery contractor owe Texas sales tax on curbing, marble, and concrete work at gravesites, and does it matter whether the work is new construction or repair of an existing site?
It depends on whether the work is new construction or repair of an existing gravesite. Setting curbing and marble right after the vault is installed is new construction, which is untaxed labor; the co…
Which charges on a repossession/debt-collection company's invoice are taxable, and can the company or its creditor-clients use resale certificates for repossession-related expenses?
Most of a repossession company's miscellaneous invoice items (storage fees, long-distance calls, informant fees, key-making) are taxable as part of the taxable debt collection service, except separate…
Can a paging company give its phone company a resale certificate for the phone exchange numbers and trunk lines it leases and then passes on to its paging customers?
Yes. The Comptroller confirmed that a paging service provider that purchases or leases phone exchange numbers and trunk lines from the local telephone company, and then assigns those numbers to its ow…
A Texas investigation firm did a traffic-accident investigation in Mexico for a California client (and separately does investigations for maquilas in Juarez) — is Texas sales tax due on the investigation service?
No Texas tax is due on an investigation service if both the purchaser and the subject of the investigation are outside Texas, the final report is delivered outside Texas, and the firm obtains an exemp…
Can a contractor building a day-care center on an Indian reservation use the tribe's sales-tax exemption to buy construction materials tax-free?
No. The Comptroller ruled that a contractor building an on-reservation day-care center for a Texas Indian tribe cannot claim the tribe's own tax exemption when buying materials. Instead, if the constr…
Is a petroleum additives package sold with a vehicle warranty taxable in Texas, and is the warranty repair labor taxed?
Yes — the sale of the petroleum additives package is taxable as tangible personal property. Whether the warranty repair labor is later taxed depends on billing: a lump-sum labor-and-parts charge is no…
Can a creditor or client who hires an automobile repossession company issue a resale certificate instead of paying sales tax on the repossession service?
No. The Comptroller ruled that a client (such as a lender) who hires a company to repossess an automobile cannot issue a resale certificate to avoid sales tax on that repossession service. The service…
Is converting a plugged oil or gas well into a water well taxable as remodeling under Texas sales tax rules, and how does sales tax apply to water well drilling, equipment, and repairs?
Yes — the Comptroller ruled that converting a plugged oil well into a water well is remodeling, as is plugging an existing water well; cleaning out an existing well is a repair, not remodeling. Whethe…
Does Texas charge sales or use tax when a company licenses its programming-language source code and specifications to other developers?
No, not automatically. Texas taxes the sale or license of a 'completed computer program,' but licensing raw source code and specifications so a licensee can build its own derived program is not taxabl…
If I sell equipment to a leasing company and lease it back under an operating lease, is that a nontaxable financing arrangement or a taxable sale?
It depends on whether the leaseback is a true financing lease or an operating lease. In this December 1992 ruling, the Comptroller held that a sale-leaseback where the equipment reverted to the lessor…
Is a scholarship-matching or financial-aid database search service taxable in Texas?
Yes. A service that matches students to scholarships using a database is a taxable information service under Texas Rule 3.342. The provider owes tax on materials, supplies, and equipment used to deliv…
If the Comptroller's office told us a resale certificate was OK on a mid-lease sublease, but that policy later changed, do we still owe sales tax on the sublease we already signed?
Yes, but only for the sublease already in place. The Comptroller's office honored a resale certificate a lessee issued to its lessor for a mid-lease-term sublease because the lessee had relied on verb…
Texas Letter Ruling 9211L1209A08: Towing/Transport Charges — Part Of Debt Collection/Repossession Services
Yes, if the repossession company itself does the towing. A repossession company's towing charges are taxable as part of its taxable debt collection/repossession service to the financial institution, e…
Texas Letter Ruling 9211L1209A07: Are towing charges taxable when a vehicle is repossessed?
It depends on who hires the tow truck. If a repossession company hires a towing company to move a vehicle it just repossessed, the towing company's charge to the repossession company is not taxable, a…
Does a cable TV company owe Texas sales tax when it pre-wires a home for cable TV outlets?
It depends on the contract type: on a lump-sum contract the cable company owes tax on the cost of the wire itself and doesn't collect tax from the customer; on a separated contract the cable company m…
Texas Letter Ruling 9211L1209A14: Disposable/Nonreusable Items (Placemats, Plates, Cups, Tray Liners, Toothpicks) — Food Service Operators' Purchases Under Resale Or Exemption Certificate
Yes. A restaurant chain may issue a resale certificate to a supplier of paper placemats instead of paying tax, because Rule 3.293(f)(4) lets eating establishments buy nonreusable items furnished to cu…
Texas Letter Ruling 9211L1209G06: Homeowners/Property Owners Association — Taxable Services (Cable Television, Landscaping, Garbage/Trash Pick — Up) And Nontaxable Services Provided To Members — Billings
A Texas property owners association that buys taxable and nontaxable services (like cable TV) for its members and bills a lump-sum periodic fee is treated as the consumer, paying sales tax to its vend…
Texas Letter Ruling 9211L1204G11: Is stainless steel polish bought by a janitorial service to clean customers' metal restroom dispensers exempt from tax under a resale certificate?
No. The Comptroller ruled that stainless steel polish bought by a janitorial company to clean customers' metal restroom dispensers is taxable at purchase, because the polish is consumed by rubbing and…
Texas Letter Ruling 9211L1205F07: Woodworking — Building Bird Houses And Feeders For Sale
Yes, you need a (free) Texas sales tax permit to sell bird houses and feeders, and you must collect state sales tax plus the applicable local rate based on where the sale is made. You can buy your mat…
Texas Letter Ruling 9211L1202G11: Does a carpet installer collect sales tax on materials under a separated contract?
Yes. Under a separated contract for selling and installing carpet in a residence, the dealer is the seller of the incorporated materials, must give a resale certificate to its supplier, and must colle…
Does a Texas carpet dealer collect sales tax on materials only, or on the whole job, when installing carpet in a residence?
It depends on how the invoice is written. Under a separated contract (materials and labor billed separately), the dealer collects tax only on the stated materials charge and gives suppliers a resale c…
Texas Letter Ruling 9210L1198D01: Caricature Artists/Cartoonists Charges For Drawings At Party/Parties
Yes. Caricature drawing is a sale of taxable tangible personal property (graphic art), so the artist must collect sales tax on the total charge. But if the artist is hired by an amusement-service prov…
Texas Letter Ruling 9209L1195G12: Military Base — Federal Contract For Both New Construction And Repair/Remodeling Of Real Property
A contractor on an Air Force base job covering both new construction and repair must pay tax on consumable materials and equipment used for either part of the work. Materials incorporated into the rea…
Texas Letter Ruling 9209434L: Tours — Package Includes Transportation, Catered Meals, Prepaid Fees To Exhibits
It depends on the tour's essence. If the tour is primarily a guided, scenic tour of Texas attractions, the total charge (including transportation) is taxable as an amusement service. If the company is…
Does a Texas auto shop owe sales tax on window tinting, alarm installation/repair, and cellular phone sale/installation/repair for vehicles?
It depends on the activity. Tinting a vehicle's windows and repairing a customer-owned alarm are treated as nontaxable motor-vehicle maintenance/accessory-repair labor. But selling and installing a ce…
Does a shop that adds armor and modifies brakes/suspension on motor vehicles have to charge sales tax on the whole job, and can it buy the armor materials tax-free?
Yes. Texas treats this armor and brake/suspension work as taxable 'remodeling,' so the shop must collect tax on its total charge — materials, skill, and labor combined. The shop can buy incorporated m…
Can a paging company give its local telephone company a resale certificate for the incoming phone lines and numbers it leases and then provides to its paging customers?
Yes. Because the paging company passes the leased telephone numbers and incoming lines through to its paging customers as part of a taxable paging service, it may issue a resale certificate to the loc…
A hotel resells telecommunications services to guests (marking up local and long-distance calls) but also uses the same trunk lines and phone equipment for its own business calls. Can the hotel buy the phone lines and equipment tax-free with a resale certificate, or get a refund of the sales tax it already paid?
No, not in full. A hotel cannot in good faith issue a resale certificate for trunk line service that it also uses for its own business calls — resale certificates may only be issued for lines dedicate…
Which supplies and materials that a restaurant or cafe buys are exempt from Texas sales tax as resale items, and which ones are taxable?
Disposable items a restaurant provides to customers as part of the food service — like paper cups, straws, napkins, to-go containers, foam containers, and food/beverages themselves — can be purchased …
Is a not-for-profit cooperative that provides electronic messaging (store-and-forward and host computer polling) services only to its members exempt from Texas sales tax collection duties, and are those messaging services taxable telecommunications services?
No -- being a not-for-profit cooperative, and running what the member called a 'private network,' does not exempt the Entity from collecting and remitting Texas sales tax. Both store-and-forward messa…
Do magazine subscriptions distributed by first-class mail qualify for Texas's sales tax exemption on newspapers and magazines?
No. Magazine subscriptions distributed by first-class mail do not qualify for Texas's sales tax exemption on newspapers and magazines. Rule 3.299(b)(2) specifically requires that exempt magazine sales…
May a scaffolding rental company buy or rent scaffolding tax-free for resale, and is the labor to erect the scaffolding taxable?
Split ruling: COMPANY A may buy or rent scaffolding tax-free by giving its supplier a resale certificate, since it is reselling (renting) the scaffolding onward to its customer. But the labor to erect…
Can a company holding a Texas Direct Payment Permit use it (instead of a resale certificate) to buy equipment it will resell to a customer, and is welding/repair labor on that equipment taxable?
Split into three answers. A Texas Direct Payment Permit may only be used to buy taxable items tax-free for the permit holder's own use (with tax later accrued on first use), not for items being purcha…
Are culverts sold to farmers, ranchers, homeowners, or contractors exempt from Texas sales tax, and is sand, gravel, or crushed rock taxable?
Culverts are taxable -- they do not qualify as exempt farm equipment or machinery, so no farm-use exemption certificate can be accepted on their sale, even to farmers or ranchers. Culverts sold to hom…
Does a supplier still have to remit tax on sales it makes to mobile vendors, now that many mobile vendors operate independently rather than exclusively under one supplier?
Split answer based on the vendor's relationship to the supplier. If the mobile vendor still operates under the company and is connected to it through leased vehicles, Comptroller Rule 3.293 still appl…
When gas sold through a common-carrier pipeline changes hands at an in-state meter point but is ultimately delivered out of state, is the sale subject to Texas sales tax, and what documentation is needed to prove any exemption?
It depends on who the buyer is, not on where the gas ends up. If title passes in Texas to a broker or reseller (or to an out-of-state utility/reseller) who will resell the gas, the sale can be tax-fre…
Is a breakage/scratch protection guarantee for eyeglasses (and the reduced-fee replacement it provides) taxable under Texas sales tax, and does it matter whether the eyewear is prescription or non-prescription or who sells it?
Split answer that depends on two facts, not one. Repairs and reduced-fee replacements under the breakage protection guarantee are tax-exempt when the eyewear is prescription, as long as the seller kee…
Could a Texas waste-removal company issue a resale certificate for taxable transfer-station services that it resold to customers?
Yes. Because the waste-removal company resold the transfer station's services to customers from whom it collected sales tax, the station could accept a resale certificate instead of tax.
How did Texas tax engineering and real-property surveying services sold to municipalities, and the supplies used to provide them?
Engineering plans were nontaxable, while real-property surveying was taxable. An exempt municipality could give a certificate for taxable surveying, but the provider still owed tax on nontransferred s…
Did assigning a computer purchase to a leasing company remove the customer's Texas sales-tax liability if the customer had already used the computer?
No. If the customer used the computer before assigning the purchase order to the leasing company, the customer owed tax on the computer purchase.
Were connection, PBX-capacity, repair, and building-wiring jobs performed for a Texas telecommunications provider taxable?
Yes. All listed functions were taxable, but resold connection service could be covered by a resale certificate; PBX and building work could not.
Were recurring Texas rental charges for returnable gas cylinders taxable when the cylinders were supplied with gas?
No. The later cylinder-rental charges were not taxable, but the gas charge was taxable unless the customer bought the contents for resale.
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 were air-to-ground telephone calls taxed when they originated in Houston and terminated either in Texas or outside the state?
Both service types were taxable. Calls from Houston to Texas locations were subject to Texas state and Houston city sales tax. Calls from Houston to points outside Texas were subject to state tax only…
Could a vehicle lessor buy repair and replacement parts for rental tractors and trailers tax-free?
Yes. The 1990 letter allowed repair and replacement parts installed on rental or leased tractors and trailers to be purchased tax-free from Texas suppliers with a properly completed resale certificate…
If customers bid no-value promotional 'bonus dollars' for merchandise at an auction, are those transactions taxable Texas sales?
The auction bids are not taxable. Because the promotional 'bonus dollars' have no monetary value, exchanging them for merchandise, meals, or services is not a 'sale' under Texas Tax Code § 151.005, so…
Which dirt, sand, gravel, and limestone products are taxable in Texas, and does washing, sizing, crushing, or mixing make a difference?
Materials sold in their natural state are not taxable, and neither is the transportation charge — this covers sand, fill dirt, and top soil dug from the earth, gravel that has only been washed and scr…
Are claims-adjusting services an insurance agency performs for an insurance carrier taxable in Texas?
Yes. Claims-adjusting services an insurance agency performs for an insurance carrier are taxable insurance services under Rule 3.355. Insurance coverage (for which premiums or sales commissions are pa…
Could a welding-repair provider buy flux tax-free, or was the flux a taxable consumable supply?
It depended on use. Flux physically incorporated into and sold with the customer's property could be bought with a resale certificate. Flux consumed in the repair or used to clean a surface was taxabl…
Was an arborist's consultation or plant-disease diagnosis taxable even when no tree or shrub treatment was performed?
Yes. Correcting an earlier answer, the Comptroller said arborist consultation and disease or infestation diagnosis were taxable landscaping services even without treatment. Tax applied to the total se…
Could a city buy contracted garbage collection for resale without tax, and did it have to tax the amounts billed to residents and businesses?
Yes. The city could issue a resale certificate to the collector, but it had to collect tax on garbage-service charges billed to its customers.
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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.