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 labor charges for aircraft inspection estimates, resulting work, general service, repair, or remodeling taxable?
No. Texas said the aircraft labor charges were not taxable, while materials used in repair, remodeling, maintenance, or restoration were taxable.
How did Texas tax electronic transmission of income-tax returns to the IRS and monthly bookkeeping or profit-and-loss preparation?
Electronic filing was taxable telecommunications, with local tax based on origin. Franchise transmissions were resale transactions; monthly bookkeeping and P&L work were not taxable.
How did Texas tax contract gauging, written reports, greasing, maintenance, and repair when billed separately or together?
Gauge reading and reports were not taxable; greasing, maintenance, and repairs were taxable. A lump-sum combination was fully taxable unless nontaxable work was separated.
Was teleprompting taxable as data processing or equipment rental when the provider supervised the equipment?
No. Texas found teleprompting was not data processing, and provider-supervised equipment meant the customer received a nontaxable service rather than a rental.
Were enteral and parenteral feeding systems and their related supplies exempt as prosthetic devices?
Yes for the systems and supplies directly related to and integral to them. The exemption applied without a prescription but required a specific exemption certificate.
Was a water district's charge for measuring and reporting landowners' water depletion taxable as an information service?
No. Texas said the described water-depletion information was not taxable as an information service under Rule 3.342(d)(2).
How did Texas tax advertising on free driving-guide maps, gift certificates accepted for ads, and later sales of the maps?
Advertising charges were not taxable, but the publisher paid tax on production. Gift certificates were taxed when redeemed for taxable items, and map sales were taxable.
When was seismic data delivered on tape nontaxable information versus a taxable sale of copy tapes?
A tape carrying newly furnished nontaxable seismic information was not taxable. Copy tapes of information the customer already owned were taxable tangible property.
Were short-lived vacuum cleaners used to remove oil and metal chips from manufacturing machinery exempt production equipment?
No. Even though they lasted under six months, the vacuum cleaners were taxable because they were not used in the actual manufacturing process.
Was the annual fee for the described preferred vision-care plan subject to Texas sales tax?
No. Texas said the annual fee charged for the preferred vision-care plan was not taxable under the facts submitted.
How did Texas tax an advertising agency's outsourced audio masters, tape copies, shipping, print production, commissions, and agent purchases?
Client-specific master creation was not taxable, but tape copies and related Texas delivery were taxable. Agent status determined whether the agency paid suppliers or bought for resale.
Which pipeline surveying, drafting, staking, permit, easement, and right-of-way charges were taxable when separately stated?
As-built and boundary-related surveys were taxable. Certain drafting, contractor drawings, centerline staking, permit drawings, and right-of-way negotiation could be nontaxable if separated.
How did Texas tax a provider's hotel calling-card service, purchased transmission time, customer billing, and installed equipment?
The provider could buy transmission for resale, while billing phone companies remitted customer tax. Provider-owned hotel equipment and other Texas property were taxable to the provider.
Was electricity used by one subsidiary to process seismic data gathered by another subsidiary exempt as exploration?
No. Because the processing subsidiary did not gather the data, Texas found it was not itself engaged in exploration and taxed the computer electricity.
When were hotel housekeepers supplied by a staffing company nontaxable temporary help, and were permanent-placement fees taxable?
Fill-in or peak-period housekeepers were not taxable; an ongoing contracted housekeeping staff was taxable. Permanent professional-placement fees were not taxable.
Did Texas grant governmental sales-tax exemption to a state-authorized transportation association?
Yes. The association could buy, lease, or rent taxable items tax-free for its exempt function with a certificate and seek refunds of tax paid on those items.
Were Myotrac biofeedback units exempt therapeutic devices when sold to an individual under a practitioner's prescription?
Yes. Texas treated Myotrac units as therapeutic devices exempt for prescribed sales, leases, or rentals to individuals, but taxable when sold to providers or institutions.
Was a fee for a discount-service membership card taxable, and who collected tax on members' discounted purchases?
The membership fee was not taxable or an amusement charge. Participating merchants collected tax when members bought taxable items at the discounted price.
How did Texas tax installed erosion-control systems, nonresidential repair, related real-property services, and products sold for customer installation?
Permanently installed systems followed contractor rules. Nonresidential repair was fully taxable, related real-property services were taxable, and direct product sales were taxable.
How did Texas's 48-month aggregate method treat equipment sold, traded in, scrapped, or abandoned, and did one rock crusher qualify as an occasional sale?
Sold equipment left the formula at sale; traded, scrapped, or abandoned equipment stayed for 48 months. The single rock crusher was not an occasional sale of a business segment.
How did Texas tax hot-tapping labor on plant transmission lines and other pipe, tanks, or pressurized vessels?
Plant-line hot taps were nonresidential real-property repair or remodeling, with labor taxable from January 1, 1988. Tangible-property repair labor was already taxable.
Is the pay to a part-time worker in my department subject to Texas sales tax, and when does hiring outside help become taxable?
The part-time worker's pay is not taxable. Because she works on an hourly basis under your direction, using your supplies and equipment, she is acting as your employee for sales-tax purposes, so her s…
Is custom contract programming taxable in Texas, and what about the compilers, languages, and library modules a programmer uses?
Custom contract programming — designing and building a system specifically for a client 'from scratch' — is not taxable, and the programming languages, compilers, and other software the programmer use…
Which fees, sales, and services at a private hunting and fishing club are subject to Texas sales tax?
Memberships, annual dues, hunting and fishing fees, guide services, dog boarding and training, and cleaning members' game are not taxable. Taxable items include shotgun shells, logo hats and merchandi…
Is hydraulic dredging of dirt, mud, silt, and sand from channels, rivers, ponds, and boat slips a taxable service in Texas?
Yes, generally. The hydraulic dredging service described in the taxpayer's brochure is a taxable real property service under Rule 3.356, which treats solid waste removal as a taxable service. However,…
Does a private corporation that remodels and operates a detention facility for a city owe Texas sales tax on its purchases and on the remodeling work?
Yes on its inputs, even though the service itself is not taxable. A private corporation that operates a detention facility for a city is providing a nontaxable service to the city, and the city in tur…
Was a multiple-sample blood-collection needle and vacuum container exempt as a hypodermic needle or syringe?
No. Although Texas exempted medical hypodermic needles and syringes, it treated the combined multiple-sample needle and vacuum collection container as taxable.
Did a golf cart modified to transport a totally disabled person qualify for Texas's prosthetic-device exemption?
No. Texas said the golf cart was not prosthetic medical equipment even after modification, so the purchaser was not entitled to a tax refund.
Were fees for combining advertisers' videos and playing copies in malls and airport lounges taxable?
No. Texas treated the display service as nontaxable, but the provider had to pay tax on monitors, dubbing equipment, blank tapes, and other inputs.
Were advertising charges in a home-shopping publication taxable, and who paid tax on its production?
The advertising charges were not taxable. The publisher paid tax on production materials and supplies and on outside printing charges.
Can a provider of taxable amusement services buy the gas and electricity it uses tax-free in Texas?
No. Utilities used to provide taxable amusement services are themselves taxable — the Legislature chose not to exempt utilities used to provide amusement services, and gave no utility exemption to any…
Was a 10% handling charge added to a third party's taxable seismic-tape copying cost itself taxable?
No. The geophysical provider correctly paid tax to the copying vendor, but its 10% handling add-on was part of its nontaxable service.
Did a manufacturer rebate received after buying a battery reduce the taxable sales price?
No. The full price remained taxable because the rebate came later. Cash discounts, coupons, or store rebates reduced tax only when taken at the time of sale.
When does adding square footage or finishing out space in an existing Texas structure count as 'new construction'?
The work is treated as new construction. New construction includes all new improvements to real property, including finish-out work done at any time before an area is first occupied (for example, fini…
Are services a parent corporation provides to its subsidiaries — and services one subsidiary provides to a joint venture — subject to Texas sales tax?
The parent corporation's services to its two subsidiaries are not taxable, but only if all the entities report to the IRS on a single consolidated income tax return for the tax year the transactions o…
Which charges for surveying and drafting to locate a pipeline right-of-way are subject to Texas sales tax, and which are not?
Charges to establish a pipeline right-of-way are taxable surveying of real property, because the work determines the boundaries of the right-of-way and of the land the pipeline crosses. Taxable work a…
Is the electricity used in timeshare condominiums that are occupied for less than 30 days at a time taxable in Texas?
Tax is due. Electricity used in the timeshare condos does not qualify as exempt residential use under Rule 3.295 when a unit is occupied for periods of less than 30 days, so the electricity consumptio…
Does Texas sales tax apply to the sale and hauling of dirt, sand, caliche and rock, and does it matter whether the material has been processed?
As of June 13, 1988, Texas no longer taxes the sale or transportation of unprocessed materials such as sand, dirt, and gravel. Materials that have been processed — crushed, mixed, or subjected to any …
Can a Direct Payment Permit holder get a refund of only the local (city) sales tax it paid a seller, using an exemption certificate?
No. A buyer that holds a Direct Payment Permit cannot obtain a refund of only the local sales tax it paid to a seller; the exemption certificate it issued for that purpose is not valid, and the local …
Are the data-processing services a jointly owned title plant buys taxable, and are the shareholders' cost-share reimbursements taxable too?
The data-processing services are taxable to the title plant when it purchases them. When the jointly owned title plant later charges its title-insurance shareholders for their share of those costs, th…
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…
Is a tour that is primarily transportation to and from a destination a taxable amusement service in Texas?
No. Where a tour is primarily transportation to and from a destination — here, a ranch to which customers buy their own admission tickets and pay tax on those tickets separately — the tour is not an a…
Are charges for boat lift and boat ramp services — used to launch and reload boats — taxable amusement services in Texas?
No. Charges for a boat lift — a hoist operated by the business to lift customers' boats for launching and re-loading — and for boat ramp services that let customers use the ramp to launch and load the…
Is the transportation charge to return a repaired trailer taxable, and does it matter whether the repaired item is a motor vehicle?
The transportation charge to return a repaired trailer is not taxable. Because a tube trailer is a motor vehicle, its repair labor is nontaxable and the separately stated parts are taxable — and the c…
When a contractor assembles or installs lockers, racks, and similar items, which charges are subject to Texas sales tax?
It turns on assembly versus installation. If you assemble tangible personal property — such as bolting together locker parts, building a wire cage, or hooking together pallet/drive-in racks — the tota…
Is the merchandise a security company buys during secret (mystery) shopping taxable, and how should it be billed alongside the taxable security service?
The merchandise itself is not taxed if it is bought and then returned to the client for a refund — that is treated as a return of merchandise, separate from the taxable surveillance and polygraph serv…
Does Texas sales tax apply to frac tank rentals and the set-up, transportation, and related charges billed with them?
Frac tank rentals are taxable in Texas, and so are the set-up charges (mobilizing, transporting, testing, connecting, and disconnecting the tanks) because those are services connected with the rental.…
Is the labor to install parts like batteries, shocks, and mufflers during a motor vehicle repair subject to Texas sales tax?
No, under the rule change described in this September 1988 policy letter. The Deputy Comptroller said batteries, shock absorbers, mufflers, and similar items sold as part of an automobile repair, toge…
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…
Are freight charges billed directly by a third-party carrier to the buyer part of the taxable sales price in Texas?
No. The Comptroller agreed that transportation charges a third-party carrier bills directly to the purchaser are not included in the taxable 'sales price' — so no sales or use tax is due on them — whe…
In a nonresidential remodeling job, which installation, freight, and service charges are taxable, and which stand-alone services can be excluded?
In a nonresidential remodeling job (here, a hotel renovation), the renovator charges tax on the total contract price, including installation, warehousing of construction materials, and freight — minus…
Is the sale of sand, dirt, and gravel taxable in Texas, and does washing, sorting, or mixing change the answer?
The sale of unprocessed sand, dirt, and gravel is exempt from Texas sales and use tax. Washing and sorting these materials is not considered processing, so they stay exempt. But crushing, mixing, or c…
Is repair work on a pleasure yacht taxable in Texas, and when does the commercial-vessel exemption apply?
Yes — repairing a pleasure yacht is taxable. Pleasure yachts are tangible personal property under Rule 3.292, so a repairman is a retailer who must hold a tax permit and collect tax on the entire char…
Is the rental of equipment like a sand and gravel plant taxable, and does leasing it together with real property change the answer?
Renting tangible personal property such as a sand and gravel plant is taxable. But the lease is not taxable if the same contract also includes the lease of real property — for example, leasing the pla…
Do professionals like lawyers, engineers, and architects have to charge Texas sales tax on extra copies of documents they give clients?
No. In this internal Comptroller policy memo, the agency states it will not require professionals — such as lawyers, engineers, and architects — to hold a sales tax permit and charge tax on additional…
How does Texas decide whether sand, gravel, and similar materials — and the charge to deliver them — are taxable?
Materials that are only washed or sorted count as unprocessed — the material and its delivery charge are not taxable, however billed and whether the customer picks it up or the seller delivers it. Any…
Does Texas tax charges to access a foreign company's electronic mailbox, and does the company owe Texas franchise and sales tax?
Charges to access a foreign company's electronic mailbox are a telecommunications service, and Texas sales tax applies when the accessing call is placed from a point within Texas — regardless of where…
Is a hospital's purchase of an infant incubator exempt from Texas sales tax?
Yes. A hospital's purchase of an infant incubator is not subject to Texas sales tax because the incubator qualifies as a prosthetic device under Comptroller's Rule 3.284. The incubator maintains an in…
Does a telemarketing charge trigger Texas sales tax, and does soliciting Texas clients from out of state create nexus for those clients?
An out-of-state company's charge to clients for marketing their goods and services by telephone is not itself taxable, so the telemarketer does not need a Texas sales tax permit to solicit accounts. S…
Are transaction-processing services that reformat a customer's own data into reports taxable data processing or a nontaxable information service in Texas?
Reformatting a Texas customer's own transactions into reports that only that customer can use is a taxable data processing service under Rule 3.330(a) — not a nontaxable information service. But a 'lo…
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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.