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 one contract covers both new construction and remodeling, and includes demolition, which charges are taxable in Texas?
When a single contract covers both new construction and remodeling/repair, the taxable and nontaxable portions must be separately stated or the entire project is treated as taxable. Demolition work in…
Is the freight a printer/distributor charges to ship stored business forms to a customer's offices taxable, even when billed separately later?
Yes. Under the revised Rule 3.303, transportation charges billed by the seller to the customer are taxable. A business-forms distributor that stores a customer's forms and later ships portions to the …
Is a refundable country-club or athletic-club initiation fee taxable in Texas, and what about the membership transfer fee?
A refundable initiation fee for membership in a country club or athletic club is not taxable in Texas, but the club's membership transfer fee is taxable. The Comptroller's Tax Policy Committee reached…
Are freight and installation charges taxable in Texas when equipment is sold delivered and given its final assembly at the customer's location?
When equipment is sold to be delivered and installed, and its final assembly happens at the customer's location, the separately stated freight and installation charges are taxable in Texas. The Comptr…
Are powdered drink mixes like Kool-Aid taxable in Texas after the food exemption was repealed?
Powdered drink mixes such as Kool-Aid are taxable in Texas. The exemption that once covered these mixes was repealed effective October 1, 1987, so their sale has been subject to sales tax since that d…
Are rent-to-own contracts taxable operating leases in Texas, or exempt 'prior contracts' or conditional sales?
The Tax Policy Committee determined that the taxpayer's 'rent to own' contracts — which the taxpayer had argued were actually 'conditional sales' — are operating leases, and they do not qualify for ex…
Are hyperbaric oxygenation, colon hygiene, and cranio-sacral therapy sold for a separate fee by a Texas health club taxable?
Three services a health club offers members for a separate fee are all nontaxable in Texas. Hyperbaric oxygenation and a colon-hygiene session are each nontaxable personal services, and cranio-sacral …
Are the fees a shared computer reservation system charges hotel and vehicle-rental affiliates taxable data processing, or a nontaxable information service?
The reservation-system operator (CORP X) is not providing taxable data processing services to the reservation companies (CORP A and CORP B). It is providing information, but information gathered or co…
Are high-sugar snacks like fruit roll-ups, cookies, and sugary cereals taxed as candy in Texas, or exempt as food?
Under the 1988 rules, candy is taxable while food and food products are exempt, and the line between them turns not just on ingredients but on marketing intent and other criteria — chocolate kisses (c…
Are enteral and parenteral feeding systems and their supplies exempt from Texas sales tax as prosthetic devices?
Yes. Enteral and parenteral feeding systems are considered prosthetic devices and are therefore exempt from Texas sales tax under Rule 3.284, because they perform the function of one or more vital org…
Is moving a customer's sign to a new location taxable in Texas, and how are servicing, re-facing, and lettering signs taxed?
Simply moving a customer's own sign from one location to another — where you do nothing to the sign but relocate it — is nontaxable third-party transportation, and the re-installation and hole-digging…
How does Texas tax coupons and deli food sales, and what transition relief applied to grocery retailers?
Texas treats all coupons — manufacturer's or store's — as a price discount that reduces the taxable sales price. The Comptroller gave retailers until October 1, 1988 to comply (time to reprogram scann…
Is testing commercial underground gasoline storage tanks taxable in Texas?
Testing commercial underground gasoline storage tanks is a nontaxable service in Texas. The equipment used to provide that testing service is, however, taxable to the service provider — the provider p…
Does a 'Write Your Own' flood insurance company owe Texas sales tax on claims-processing services it buys, even though the federal government reimburses it?
A 'Write Your Own' (WYO) company in the National Flood Insurance Program must pay Texas sales tax on the claims-processing and claims-adjustment services it buys, even though the federal government re…
Is resurfacing tennis courts and playgrounds — applying colored coatings and coal-tar sealant, and repairing asphalt or concrete — taxable in Texas?
Repairing existing asphalt and concrete areas, applying colored materials to tennis courts and play areas, and applying protective coatings like coal-tar pitch emulsion are all taxable in Texas — unle…
Is stone that a company digs from the earth and cuts to size, then sells uncrushed, taxable in Texas?
Sales tax is due on cut stone. A company that digs stone out of the earth and cuts it to different sizes — selling it without washing, screening, or crushing — has produced tangible personal property,…
How does Texas tax software licensing, customization, installation, and maintenance, and when is related engineering design nontaxable?
Licensing a computer program to a customer is taxable in Texas, and tax is due on the total charge — including customizing, installing, and maintaining it — as is a license to technology conveyed thro…
Is a weather-recording device used to time crop spraying taxable in Texas, or can a farmer buy it under the agricultural exemption?
A device that records weather conditions to determine the best time to spray crops is taxable tangible personal property in Texas, but it qualifies for the agricultural exemption when used on a farm o…
Is testing and balancing air-conditioning and heating systems taxable in Texas, and does separately stating the testing matter?
Balancing air-conditioning and heating systems is not taxable when it is part of new construction or a residential renovation, but the whole lump-sum charge is taxable when done for a non-residential …
Are storage charges taxable in Texas — for fur garments, motor vehicles, and other items?
Storing fur garments and storing motor vehicles are specifically taxable services in Texas. But a charge to store other kinds of items — when it is not connected with the sale, lease, or rental of the…
Is a grease-control service that adds bacteria to a plumbing system to break down grease taxable in Texas?
A grease-control service that introduces grease-digesting bacteria (Mitey-Bac G) into a plumbing system connected to a sewer is not taxable in Texas. It is not taxable garbage or solid-waste collectio…
Is collecting and transporting materials taxable in Texas when the customer keeps control, and does it matter whether the materials are 'waste'?
Whether collecting and transporting materials is taxable in Texas turns on what the materials are. If they are 'waste,' the collection fee is taxable — and it stays taxable even though the customer ke…
For a car wash, fuel, and quick-oil-change business in Texas, which charges are taxable and which are not?
For a combined car wash, fuel, and quick-oil-change business, the Comptroller said not to collect sales tax on car wash receipts, gasoline sales, or lump-sum quick-oil-change and wiper/belt/hose-repla…
Is collecting and disposing of industrial solid waste taxable in Texas after October 1, 1987, and how do customers claim the exemption and get refunds?
Collecting industrial solid waste — as defined by the Texas Solid Waste Disposal Act (Art. 4477-7), except waste that is garbage or municipal solid waste — stopped being taxable in Texas effective Oct…
Is gutting a mall space down to bare walls and slab, then finishing it out, taxable remodeling or nontaxable new construction in Texas?
Stripping a previously occupied mall space down to its bare walls and slab and then finishing it out for a new tenant is taxable remodeling in Texas — not new construction. Remodeling is the replaceme…
Is offshore corrosion-monitoring equipment exempt as drilling equipment in Texas, and when is delivery to a Texas onshore location taxable?
Stray-current corrosion-monitoring systems (the Weld-Alarm and Pola-trak) and the I-Clip storage hardware are taxable in Texas — they are not 'drilling equipment' under Rule 3.332, and they aren't use…
Can a Texas school treat its yearbook sales as its one-day tax-free fundraiser, and what happens to other sales and to delivery timing?
A Texas school or educational organization may elect its yearbook sales as its once-a-year, one-day, tax-free fundraiser — a policy in place since 1984, regardless of the organization's internal order…
Are data-processing services an owner provides to his own S corporations exempt in Texas as transactions between affiliated entities?
Data-processing services that an individual provides to Subchapter S corporations in which he owns more than 50% of the stock are taxable in Texas. The Tax Code § 151.346 exemption for services perfor…
Which surveying services are taxable in Texas, and how should mixed taxable/nontaxable survey jobs be billed?
In Texas, the taxable part of 'surveying' is work that establishes or recovers boundaries; services that don't involve boundaries — such as topographic surveys — are not taxable. Firms doing both must…
Are public-records research, lien searches, and ad valorem tax checks taxable information services in Texas, and is document filing taxable?
Public-records research — title reports, UCC and financing-statement searches, judgment and tax-lien searches, court-suit searches, and ordering certified copies — and checking on payment of ad valore…
Could a fiberglass manufacturer buy glass electrodes exempt from Texas sales and use tax?
Yes. Texas concluded that glass electrodes used to manufacture fiberglass qualified for exemption because the electrodes entered into or became an ingredient or component part of the manufactured fibe…
Were charges to maintain cemetery grounds subject to Texas sales tax as lawn-care services?
No. The Texas Comptroller said cemetery grounds would not be considered lawns, so charges to maintain those grounds were not subject to sales tax. The letter described this as a prior ruling intended …
Were unprocessed sand, dirt, gravel, and their transportation charges subject to Texas sales tax under the Comptroller's 1988 policy?
No. A general Texas Comptroller notice said sales tax was no longer due on unprocessed sand, dirt, gravel, or similar materials, and transportation charges for those materials were also nontaxable. Th…
Does Texas tax an event ticket based on where the ticket is sold or where the amusement event occurs?
Texas treated the event's location as decisive. A Texas sale for a Texas event was subject to sales tax on the ticket's face value and convenience charge; a Texas sale for an out-of-state event was no…
Did a change in Texas's dirt-hauler rule alter a drilling-mud seller's deficiency, and how could partial payments preserve a refund claim?
No. The tax policy committee unanimously concluded that the dirt-hauler rule change did not affect the drilling-mud seller, so the deficiency remained in place. Texas would not hold a refund hearing o…
How should a cash-basis university allocate a partial student payment between taxable meals and nontaxable dorm rent?
Texas required the university to allocate each partial payment proportionally between taxable meals and nontaxable dorm rent, using taxable charges divided by total charges excluding tax. In the lette…
Were newspaper advertising inserts shipped into Texas subject to sales or use tax?
It depended on the shipment. Texas said inserts shipped into the state by the advertiser were taxable regardless of transportation method, without requiring constructive possession. But inserts sent d…
Must a Texas bank or lending institution collect sales tax when it sells repossessed property?
Yes, for repossessed taxable property. Texas told banks and other lending institutions that they could not treat these dispositions as occasional tax-free sales, even when sales tax had been paid on t…
Does a part-time residential house cleaner owe Texas sales tax, or is she treated as the household's employee?
Residential house-cleaning done by an individual who is not an employee of a janitorial service is not taxable in Texas. In this case, a woman who cleans a few homes part-time is treated, for sales-ta…
Are well services taxable in Texas when performed to complete a well into a new, deeper formation rather than to restore existing production?
Well services are not taxable in Texas when they are performed solely to facilitate completing the well-bore into a new, deeper formation — as opposed to restoring production in an existing zone (here…
Could labor to restore, repair, or remodel a building listed in the National Register of Historic Places be purchased tax-free in Texas?
Yes. Texas said a person or organization restoring, repairing, or remodeling a building listed in the National Register of Historic Places could give the contractor an exemption certificate for the la…
Which charges for designing, building, installing, repairing, storing, removing, and reinstalling luminaires were taxable in Texas?
Texas taxed designing and building a luminaire, its first installation, repairs, and travel billed as part of a taxable repair. It treated storage, later installation, removal, operator charges, and r…
Which mobile-phone installation, removal, reprogramming, repair, cleaning, and inspection charges were taxable in Texas?
Texas taxed installation tied to a phone sale or lease, repair-related reinstallation, replacement-unit installation, reprogramming, enhanced services, refurbishing, repairs, parts, and cleaning. Stan…
Is a microfilm billing service taxable in Texas when the film is processed out of state and never returns?
A microfilm billing service's charge to its customer is not taxable in Texas. The business films clients' ledger cards with a portable camera, sends the exposed film to an out-of-state processor, and …
How does Texas tax pipeline painting, repairs, replacement, relocation, land clearing, and material handling charges?
For pipeline contractors, Texas treats the work by category. Pipeline painting and pipeline repairs are presumed taxable — painting can be exempt if it qualifies as maintenance under Rule 3.357(c)(3),…
Did Texas audit policy treat chairs, tables, refrigerators, and similar property in stadium sky boxes as taxable?
No. An internal Texas Comptroller memorandum said chairs, tables, refrigerators, and similar tangible personal property in stadium sky boxes had not been taxed in the audit and were to be treated as e…
Were canteen sales and patient meals at a Texas clinic exempt because an exempt state entity operated the clinic?
No. Texas required tax on taxable canteen items and found no patient-meal exemption for a clinic because clinics were not licensed by the state as institutions for the care of human beings. The letter…
What did the Comptroller's letter on the proposed audiovisual-works rule say about taxing video photographers?
This is not a taxpayer-specific ruling but a June 1988 Comptroller letter responding to industry comments on the proposed sales-tax rule for audiovisual works. It confirms the Comptroller adopted the …
Does a company selling discount membership cards owe Texas sales tax or need a permit, and is its list of participating retailers a taxable information service?
Selling memberships in a discount-card service is not taxable in Texas. If the list of participating retailers is provided to cardholders as part of their membership, the company is not providing a ta…
Were forensic-engineering investigations connected with insurance claims taxable as insurance services in Texas?
Yes. Texas treated forensic-engineering and applied-science services as taxable insurance services when performed for a customer in connection with a claim against an insurance policy, even if the cus…
Which tree-service, land-clearing, stump-grinding, demolition, and debris-hauling charges did Texas treat as taxable?
Texas treated most tree cutting, trimming, stump grinding, and stand-alone debris hauling as taxable, while land clearing for construction-site preparation, complete demolition-and-removal jobs, pastu…
Is a Texas money-order service taxable, and who pays tax on the machines, forms, telephone equipment, and service used to provide it?
The sale of a money order was nontaxable to the customer. But the provider of the nontaxable service had to pay sales or use tax on taxable items and services used to provide it, including dispensing …
Is a service that obtains Texas driving records for insurers taxable, and may the DPS record fee be excluded?
Yes. Texas treated the service of obtaining Department of Public Safety driving records for insurance companies and prospective customers as taxable, including electronic delivery. The DPS charge itse…
How did Texas tax hydrostatic testing and separated repair charges for compressed-gas tube trailers?
Texas treated the tube trailers as motor vehicles. Under the separated repair invoices described, labor to disassemble, test, and repair the trailers was not taxable, while sales tax had to be collect…
Is a charge for copying data from one storage device to another taxable in Texas when the customer supplies the disks or tapes?
Yes. Texas treated the charge for transferring data from one storage device to another as a taxable data-processing service, even though the customer supplied the disks or tapes and the provider did n…
Is return freight charged by an equipment lessor at the end of a rental agreement taxable in Texas?
Yes. Texas treated all transportation charges billed by an equipment lessor as taxable, including separately stated return freight. Tax applied whether the lessor hired a commercial hauler and rebille…
When is auto-upholstery work a nontaxable lump-sum motor-vehicle repair, and when is installing seat covers a taxable sale?
Texas treated work on headliners, vinyl roofs, convertible tops, carpet, and custom permanently installed seat covers as motor-vehicle repair, so the shop did not charge tax on its lump-sum bill after…
Could a taxable landscaping provider buy the city's later removal of collected grass, trees, and organic debris tax-free for resale?
Yes. Because waste removal was included in the landscaper's taxable customer charge, the landscaper could give the city a resale certificate for the city's further debris removal.
Is jewelry bought with hostess credits earned through home-party sales subject to Texas sales tax?
Yes. Texas treated the hostess's jewelry purchase with earned credits as a taxable barter transaction. The credits were based on events, buying guests, and purchase volume, making the hostess similar …
What portion of a Texas payroll-service charge was taxable when the provider also handled employee pay and employer obligations?
The payroll provider's total service fee was taxable. But amounts the employer supplied solely to pay employee salaries, the employer's Social Security share, workers' compensation, and similar obliga…
Browse Texas rulings by topic
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.