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 separately stated oil-and-gas well gauging and pumping-service charges taxable under Texas Letter Ruling 9204L1166D11?
Gauging was not taxable when it consisted of reading well-production information and reporting the results. Pumping services were taxable because adjusting well instruments that affected production wa…
Were a pressure washer and air compressor exempt farm-maintenance equipment when they were also used on highway vehicles and well casing?
No. Maintenance equipment qualified only if used exclusively on exempt farm equipment. Using the washer on highway vehicles and the compressor on well casing, an improvement to realty, meant both purc…
Could an electric cooperative formed under Article 1528(b) buy taxable items for its own use without paying Texas sales or use tax?
Yes, if it was formed under the Electric Cooperative Corporation Act, Article 1528(b). Such a cooperative was exempt on taxable items bought for its own use and could give vendors properly completed e…
Could a commercial-property tenant obtain a sales-tax refund for natural gas bought by its landlord and passed through at cost?
No for the period at issue. The property owner was the gas purchaser and used it in connection with commercially leasing the property. The tenant's manufacturing activity and reimbursement of the land…
Was a customized, computer-generated diet plan taxable when an independent dealer collected the questionnaire and fee and the diet company sent materials to the client?
Yes. The Comptroller said the custom diet was taxable to the clients. The independent dealer had to collect the tax and report and remit it on quarterly returns.
How did Texas tax soil decontamination, disposal, hauling, and backfill sales by a facility treating petroleum-contaminated soil?
Decontaminating the soil was nontaxable regardless of reimbursement. Disposing of soil after treatment was taxable waste removal; hauling untreated soil could be nontaxable if it was a regulated indus…
Was electricity for condominium common areas exempt as residential use when about 30 of 114 units were rented to the public, usually for fewer than 30 days?
No. Short-term rentals made the common areas serve both residential and commercial use, so the electricity was taxable and the refund was denied. An exemption could apply to separately metered residen…
Did an FDIC or RTC property manager inherit the federal entity's Texas sales-tax exemption, and did a financial institution's tax debt disappear after takeover?
No on both points. A private manager did not become tax-exempt merely by working for FDIC or RTC, though a written purchasing-agency arrangement could change the purchase result. A financial instituti…
How far back could a manufacturer seek a Texas utility-tax exemption refund under the 1991 Rule 3.295 amendments?
Up to four years from the request date. The amendments restored exemptions for manufacturing-area lighting, heating, and cooling retroactive to August 3, 1987, but the four-year limitations period pre…
Was a professionally performed fireworks display a taxable sale of fireworks, and could the provider buy the fireworks tax-free for resale?
No. The display was a nontaxable service because the customer received neither title nor possession of the fireworks. The provider consumed the fireworks and supplies and owed tax when buying them. Vi…
Was a corporation's transfer of equipment to a new limited partnership for a 99% interest exempt as a joint-ownership transfer?
Only if the corporation retained a joint or undivided interest in the equipment after transfer and had paid tax when it acquired the property. If limited-partnership law prevented that ownership, the …
Was a third party's electronic transmission of audio or audiovisual commercials to broadcasting stations subject to Texas sales tax?
It depended on where the transmission originated. The Comptroller classified the transmission as a telecommunications service: a Texas-origin transmission was taxable, while one originating outside Te…
Were the listed cake and cookie decorations taxable as candy under Texas Letter Ruling 9204L1164F10?
No. Although candy was generally taxable, the Comptroller treated confections used exclusively for cooking as nontaxable. Every listed decoration—including nonpareils, crystals, toppers, mixes, candy-…
How were swabbing, pressure testing, paraffin removal, and casing repair taxed when performed with an acidizing job?
The acidizing job was subject to the 2.42% oil-well-service tax, so the related services were not taxed again under limited sales tax. Without acidizing, the total charge would have been sales-taxable…
Could a bicycle prescribed for rehabilitation after knee surgery qualify for Texas' therapeutic-device sales-tax exemption?
Yes. Reversing its earlier answer, the Comptroller said the bicycle could qualify if the buyer gave the seller a doctor's prescription or letter that stated the medical problem and explained how the b…
How could a farm credit bank claim its Texas sales-tax exemption on tangible personal property purchases?
The bank had to give the seller a completed exemption certificate; a bank letter was not enough. The certificate had to cite 12 U.S.C. § 2023, describe the items, and be signed and dated.
Could invoices support an export certificate, and did parts installed on a vehicle before it was driven to Mexico remain tax-exempt exports?
Invoices qualified only if broker-signed, identified on the certificate, and naming the buyer. The submitted invoices failed. Parts installed and used in Texas before the vehicle went to Mexico lost t…
Did an aggregator reselling discounted 800-number long-distance usage have to collect Texas state and local sales tax?
Yes. The aggregator sold long-distance telecommunications service and had to collect Texas sales tax on calls originating in Texas and billed to a Texas telephone number, billing address, or service a…
How did Texas tax coupons, clothing alterations, delivery, property installation and repair, and janitorial services?
Tax applied after either coupon discount; clothing alterations, taxable-goods delivery, seller-connected installation, repairs, and janitorial services were taxable. Independent third-party installati…
When was a manufacturer's waste removal nontaxable as industrial solid waste, and what certificate did the hauler need?
Waste from manufacturing, mining, or agriculture could qualify, but regulated liquid waste and office, shipping, retail, service-industry, or support waste did not. The hauler should tax the service u…
Was a $35 defensive-driving class held at a comedy club subject to Texas sales tax?
No. The fee for the bona fide defensive-driving course was not taxable. Food and drink remained taxable, and a single charge combining them with the class would make the full amount taxable.
Were annual membership fees for a dial-before-you-dig underground-utility database subject to Texas sales tax?
No. Annual fees paid by pipeline owners to list underground pipelines, cables, and wires in the dial-before-you-dig database were not taxable.
When could an optician repair prescription-eyeglass frames without charging Texas sales tax?
Frame repairs were nontaxable if the optician documented the corrective-lens prescription from lens readings and accepted a customer-signed exemption certificate. Lens work still required a doctor's p…
Did a college have to collect Texas sales tax on meals bundled with tuition and dormitory room in one mandatory charge?
Yes, on the meal portion. The college did not have to separately charge for meals, but it had to collect and report sales tax on the part of the bundled fee attributable to meals.
Could a multistate retailer's sale of store assets qualify as an occasional sale when it retained computers, software, and teleconference equipment?
Possibly. Retained general-business equipment could be excluded from the operating assets, but equipment used exclusively to provide the outlet's product or service would defeat the exemption.
Did cutting bulk wire and cable to customer-requested lengths make a Texas seller a manufacturer entitled to tax-free packaging materials?
No. Cutting wire to length did not manufacture a new product because it remained wire. The seller was a repacker and had to pay sales tax on reels and shrink-wrap.
Was a service that gathered information and produced a map or diagram of a client's computer network taxable in Texas?
Yes. The full charge for gathering information and creating the network map or diagram was taxable as a sale of tangible personal property. Consulting or training alone was not taxable.
Were practice charges and tournament entry fees at a Texas remote-controlled-car race track subject to sales tax?
Practice-track charges were taxable amusement services. Tournament entry fees could be nontaxable when they met the letter's contest-use or fee-and-prize conditions.
Could a 501(c)(3) organization building homes for low-income people buy construction materials without Texas sales tax?
Yes. Because building low-income housing was the organization's exempt purpose, it could buy building materials tax free even for a home transferred to a client under a lump-sum contract.
Was a $5,000 license for software developed for one Texas customer exempt as custom programming?
No. The developer retained legal rights and granted a nonexclusive license, so the contract was taxable. Custom programming was exempt only when the client retained all legal rights to the program.
What documentation supported a Texas sales-tax refund for work claimed as new construction rather than nonresidential remodeling?
A city structural inspector verified that the permit covered a new structure, so the Comptroller's credits section would process the refund. Rule 3.357(b)(7) addressed documentation.
When did renovating golf-course lakes, fairways, greens, tees, paths, and systems count as new construction instead of taxable remodeling?
Complete demolition followed by reconstruction was new construction; leaving any part intact made the work repair or remodeling. Expanding an existing lake and spreading seedbed were taxable.
Were resume consultation, original writing, and computer reproduction services subject to Texas sales tax?
Consultation and original resume writing were not taxable, even when performed on a computer or memory typewriter. Reproducing a resume supplied by the client was taxable.
Could a Texas aluminum-can manufacturer buy printing plates and artwork negatives without sales tax?
Yes. The Comptroller allowed exempt purchases of the printing plates used to apply designs to cans and the artwork negatives used to produce those plates.
Did federally mandated accessibility work on a nonresidential Texas business qualify for a sales-tax exemption?
No. The total charge to repair, remodel, or restore nonresidential real property was taxable even when the work was legally mandated rather than voluntary.
Did a third-party installer have to charge Texas sales tax for mounting neon channel-letter signs on a building?
For an existing nonresidential building, the installer could accept a valid resale certificate from the manufacturer. New-construction installation labor was not taxable.
Was labor to repair a lightning-damaged security system exempt under Texas's natural-disaster real-property repair rule?
No. Licensed alarm-system work was a security service, not real-property repair, so the natural-disaster labor exemption in Rule 3.357 did not apply.
Could a nonresident servicemember use Texas's historical new-resident vehicle tax instead of ordinary use tax?
Possibly. Ordinary use tax applied to the out-of-state vehicle's original purchase price with credit for similar state tax paid elsewhere. But a servicemember whose military home of record was outside…
Could a Texas lessee later obtain a refund as Michigan tax continued to be paid on the same out-of-state vehicle lease?
Yes. Texas initially credited only the $97.24 paid to Michigan before the vehicle entered Texas. If Michigan tax continued to be legally due on the lease, Texas would refund its use tax dollar for dol…
Was labor to install a separately purchased, nonpermanent air compressor taxable in Texas?
No, on the stated facts. The installer did not sell the compressor, the compressor was not permanently affixed to realty, and the work was not part of repairing or remodeling other tangible personal p…
When were Texas oil-spill cleanup charges taxable, and how did the Comptroller treat related oilfield construction work?
Well-site cleanup tied to oil and gas activity was not taxable, nor was qualifying waterway cleanup. Cleanup at a plant or elsewhere on land away from the well site was taxable.
Were year-end expense allocations from related stores to a shared accounting and data-processing corporation taxable in Texas?
Yes, for Texas stores. Calling the charges reimbursements or the service company an agent, nonprofit seller, or employee did not exempt the taxable data-processing services.
Could a Texas business buy packaging tax free for computer hardware and duplicated software disks sold to customers?
Yes. Packaging for manufactured computer hardware sold for resale was tax free, and so was packaging for resale disks containing software whose rights the business owned.
Were a country club's $10,000 refundable certificates of ownership subject to Texas sales tax?
No. The certificates qualified as nontaxable refundable initiation fees when the membership agreement or bylaws identified them that way and protected the member's right to a full refund or tax accoun…
Could a shipping business avoid Texas tax on packaging supplies delivered to Texas customers for use in interstate shipments?
No. The Comptroller said the packaging supplies were taxable because they were put to their intended business use when delivered to customers in Texas, rather than merely stored for later shipment out…
When was directional drilling a nontaxable service rather than a taxable equipment rental in Texas?
It was a nontaxable service when the drilling company planned the well, supplied equipment and personnel, and controlled and monitored the work. Supplying tools with only an advisory supervisor was a …
Was a portable building for raising emu chicks exempt from Texas sales tax as agricultural equipment?
The letter did not give a final yes-or-no answer for the building. It said exemption required exclusive qualifying agricultural use and a specialized mechanical design that made the structure equipmen…
Were a directional driller's day-rate tools, operators, standby charges, and separately billed equipment taxable rentals?
No, when the driller planned the well and controlled the equipment as part of its service. Equipment used by someone else was a taxable rental, and tax collected in error had to be refunded to custome…
Were meals sold to retirement-community residents exempt while the residents were evacuated to a hotel?
No. The exemption required meals to be served to permanent residents at the retirement facility itself, and the hotel used during the evacuation was not a retirement facility.
Did a federal service contractor owe Texas tax on equipment and supplies charged to a contract or titled to the U.S. government?
Yes. The contractor owed tax on equipment and consumable supplies used to provide services, even when costs were charged directly to the government or the government took title at acquisition.
Could a well-service company buy consumed supplies and permanently installed guyline anchors tax free for resale?
Not the consumed supplies; the service provider owed tax on them. Permanent guyline anchors were real-property improvements, with materials and customer charges treated differently under separated and…
Did an insulation contractor need a Texas sales tax permit to remodel an exempt organization's nonresidential building?
Yes. Installing insulation in existing nonresidential realty was a taxable repair and remodeling service, so the contractor needed a permit even though the exempt customer could provide an exemption c…
Was the full price charged by contractors to refit a business's owned or leased space taxable in Texas?
Yes, under the letter's assumptions. Refitting was treated as repair or remodeling, and charges for machinery, equipment, or nonresidential real-property work were taxable in full, including labor and…
How did Texas distinguish ordinary use tax from new-resident tax for an incoming vehicle and motor-capable folding boat?
An out-of-state vehicle brought into Texas for highway use faced ordinary use tax with credit for similar tax paid elsewhere, unless the new resident qualified under Rule 3.71 based on prior registrat…
Were structural changes to commercial buildings exempt from Texas sales tax when required by the Americans with Disabilities Act?
No. The Comptroller said Texas law contained no exemption for costs incurred to comply with federal law, so charges for the required commercial-building modifications were taxable.
Were corporate sponsorship fees for a free recycling hotline taxable when sponsors also received callers' messages?
Partly. Institutional advertising was nontaxable, but receiving and relaying callers' electronic messages was a taxable telecommunications service. Without separately stated charges, the entire fee wa…
How could a Texas contractor structure a separated contract for work on an exempt organization's real property?
The binding contract—not the bid or draw format—had to separately state labor and materials under Rule 3.291. Incorporated materials could be bought for resale, then covered by the exempt customer's d…
Were golf-cart shed rental charges taxable at for-profit and nonprofit Texas country clubs?
Yes. The letter said for-profit club charges had been taxable since October 2, 1984, and nonprofit club charges became taxable October 1, 1991, whether or not separately stated.
Was demolition inside an existing commercial building excluded from tax when a contractor rebuilt the space for a new tenant?
No. Because the project stayed within the existing structure, it was taxable remodeling and the entire charge, including demolition, was taxable. Demolition could be excluded only if the old structure…
Did a September 1991 purchase order preserve an exemption for packaging supplies delivered after the Texas law changed?
No. Because the 1991 legislation included no prior-contract protection, packaging supplies sold on or after October 1, 1991, to nonmanufacturers and nonprocessors were taxable despite the earlier purc…
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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.