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 did Texas treat labor to repair installed wall-to-wall carpet as taxable for commercial and residential buildings?
The letter said on-site repair of carpet in commercial buildings would become taxable January 1, 1988, while on-site repair in residences would remain nontaxable. Repair labor performed at a repair pl…
Could a Texas collection agency buy delinquent accounts and collect them as its own accounts without providing a taxable debt-collection service?
A genuine purchase of a merchant's receivables was not unlawful and let the buyer collect its own accounts, but a merchant buyback obligation for uncollectible accounts would make the arrangement a ta…
Was a membership fee taxable when it included contracted insurance-claims processing for members, and who taxed discount-card purchases?
The monthly fee for Texas members became taxable October 1, 1987 because it included insurance-claims processing. Separate discount-card purchases were taxed by the participating vendors because membe…
Were a property-tax consultant's client-specific research, monitoring, appeal, and appraisal services taxable information services in Texas?
The letter treated information gathered or compiled for a particular client, proprietary to that client, and unavailable for sale to others as nontaxable. Information gathered and offered to the publi…
Were commercial tree relocation, transplanting, post-transplant maintenance, and arboricultural consulting services taxable in Texas?
Yes. The letter treated all four described categories as taxable and made the total service charge subject to tax. It allowed specified materials transferred or incorporated into the work product to b…
Was disposal of salt water and other waste resulting from oil-and-gas exploration, development, or production taxable in Texas?
No. The letter said disposal of waste materials resulting from oil-and-gas exploration, development, or production was exempt from sales tax under historical Rule 3.356(4)(B).
When did Texas treat oil-spill cleanup as taxable or nontaxable based on the spill's location and regulatory setting?
The letter treated well-site and qualifying oil-and-gas production cleanups as nontaxable. It treated in-plant or other land cleanup away from the well site as taxable when performed on property other…
Were charges for mowing acreage and vacant lots for commercial and private clients taxable in Texas?
Yes. The letter said mowing acreage and vacant lots for commercial and private clients became subject to sales tax on October 1, 1987.
Did Texas classify coffee, hot chocolate, and 100% pure juice as soft drinks, and gum and breath mints as candy?
Coffee, hot chocolate, and 100% pure juice were not classified as soft drinks. Gum and breath mints were classified as candy. The body does not state a tax rate or expressly decide the broader sports-…
Were freight charges taxable when a separately operated common-carrier subsidiary billed the construction-material customer directly?
No, under the described facts. The carrier was a separate legal entity operating independently, delivered for its parent and unrelated companies, and billed the customer directly and independently fro…
When did Texas treat computer-assisted work as taxable word processing or data processing rather than nontaxable professional accounting?
Computer word processing, accounts-receivable billing, and payroll-check printing were taxable data processing. Financial reports, printed tax returns, and other work requiring accounting or tax exper…
Were brokerage houses' receipts taxable as data processing when computers were used to give clients the status of their investments?
No, under the described facts. The brokerage houses provided investment services, and computers merely facilitated giving clients investment-status information. The letter applied proposed Rule 3.330(…
Did using a computer make financial statements and tax-return preparation taxable data processing, and which computer services were taxable?
No. Financial statements and printed tax returns requiring accounting and tax expertise were nontaxable professional services even when a computer was used. Word processing, payroll and business-accou…
Was an association's bundled in-home service fee taxable when employees helped elderly or disabled people with cleaning, yard work, cooking, grooming, medication, letters, and bills?
House cleaning and yard work were taxable real-property services, but the described overall in-home service fee was nontaxable if employees were not hired specifically for cleaning or yard work and no…
Were termite-protection plans, prepaid pest-control services, and included structural repairs taxable in Texas?
Pest-control services became taxable October 1, 1987. Certain written contracts entered before July 21, 1987 could remain exempt for their remaining term, but renewals, modifications, and new contract…
Were cemetery foundation fees taxable when a tombstone seller merely collected and passed them through without preparing the ground?
No, if separately stated in the contract or customer bill. The seller collected the cemeteries' fees as a customer service and remitted them to the cemetery, while separately collecting tax on the tom…
Did this Texas letter definitively decide whether attorneys and law-firm staff owed sales tax on debt collection or insurance-claim services?
No definitive tax result appears in the published text. The Comptroller's counsel said an enclosed Attorney General opinion on attorneys' tax-collection services would likely also apply to attorney in…
How did Texas tax a private investigator's security-related work, mixed charges, photographs, expenses, and employee compensation?
Security-connected work and a single charge combining taxable and nontaxable services were fully taxable. Film, processing, fees, and client charges were taxable, with resale treatment if photos and n…
Did a city owe tax on garbage pickup, its 10% late-payment penalty, and a debt-collection company's services?
The city had to collect tax on garbage pickup beginning October 1, 1987. A true 10% late-payment penalty—not loss of an early-payment discount—was nontaxable, while the outside debt-collection service…
Were client-specific financial-planning and investment-advisory information services taxable in Texas?
The letter treated the adviser's client-specific financial-planning information as nontaxable because it was gathered or compiled for a particular client, proprietary to that client, and not available…
How did Texas tax a business that manufactured and installed septic tanks, wastewater treatment plants, and culvert pipe as improvements to real property?
The business was a real-property contractor, not a manufacturer eligible for manufacturing exemptions. On lump-sum contracts it paid tax on incorporated materials; on separated contracts it could buy …
How did Texas tax labor for residential carpet, wall-covering, flooring, and drapery work, and when were installed draperies treated as improvements to realty?
Labor for the listed residential carpet, wall-covering, and flooring work was not taxable, including rental housing. Drapery labor was taxable unless the draperies met one of three stated improvement-…
How did Texas tax alarm-system sales, leases, installation, maintenance, and monitoring, and was fire-alarm monitoring treated as a security service?
Alarm-system sales or leases, installation, and maintenance were taxable, as was Texas-location monitoring generally. Fire-alarm monitoring was not taxable under the security-services rule because fir…
When did a Texas private investigative firm have to tax work performed inside or outside Texas, subcontracted services, expenses, and exempt-customer jobs?
Texas tax applied when investigations were conducted in Texas or for a Texas client, including wholly out-of-state work benefiting a Texas client. Work conducted outside Texas for an out-of-state clie…
How did Texas distinguish residential carpet installation, nonresidential carpet replacement, and carpet installed in new construction after January 1, 1988?
Residential installations and new construction remained under contractor Rule 3.291. Nonresidential carpet replacement became taxable remodeling on the total charge. A mixed remodeling/new-constructio…
Were cargo condition and damage surveys taxable in Texas when performed for importers, exporters, cargo underwriters, and other principals?
Condition surveys were not taxable. An insurance-related damage survey was taxable on its total charge when the examined property was in Texas and the customer did business in Texas; otherwise the cus…
What certifications and records did Texas require for post-August 3, 1987 electricity studies supporting a sales-tax exemption or refund?
The study had to be certified by a registered engineer or qualified engineering graduate, including kilowatts, duty factors, and computations. The exemption package needed original signatures or seal,…
Which Texas surveying services were taxable, which were not, and how did the Comptroller treat a well-location job containing both kinds of work?
Boundary- and property-location work was taxable, while listed control, topographic, tree, pipeline-centerline, and lot-staking work was not. For well jobs, lease-boundary work was taxable but locatin…
How did Texas define residential property, repair, remodeling, and new construction for the January 1, 1988 tax on real-property repair and remodeling?
Repairmen and remodelers generally collected tax on the total sales price, while residential-only work and new construction were treated differently. A new parking lot and added square footage were ne…
When was subcontracted drapery fabrication labor taxable, and how did Texas treat materials and installation when draperies were or were not improvements to realty?
For draperies treated as realty, fabrication alone by an unrelated subcontractor was taxable, but fabrication plus installation was not. Materials were taxed to the seller on lump-sum billing or to th…
Did a Texas contractor have to switch from specific identification to the aggregate method for reporting equipment use, and how could it change methods later?
No. Continuing to use specific identification after the earlier rule change counted as the contractor's election. A later switch to the aggregate method required notice to the Comptroller at least 45 …
Was an annual fee taxable when clients received monthly economic-research reports, telephone answers, and personal presentations from a shared database?
Yes. The Comptroller treated the economic-trends material as a taxable information service because the same general database supported information sold to each client. One fee bundled the reports with…
Which fees earned by a commercial mortgage banker and servicer were taxable, including origination, brokerage, servicing, late, and prepayment fees?
Loan and equity origination, brokerage, late, and prepayment fees were not taxable. Servicing was taxable only when it was taxable debt collection; collecting current mortgage payments and paying real…
Were medical records and reports taxable information services when supplied as part of healthcare or to workers' compensation insurance carriers?
No. The Comptroller's counsel confirmed that providing medical records and reports was not a taxable information service either as part of healthcare services or when supplied to workers' compensation…
Which expedited filing, document retrieval, UCC search, and public-record services were taxable, and could government record fees be excluded?
Expedited filing of client-prepared papers was nontaxable, but retrieving public documents, UCC searches, and obtaining and summarizing public lien or judgment information were taxable. Separately sta…
Did Texas require a new utility predominant-use study every year, and when did operational or equipment changes require a replacement study?
No annual study was required. But a business with taxable and exempt utility use on one meter had to prove predominant exempt use, using 12 consecutive months for continual manufacturing or processing…
Was an engineering scale model taxable when built from client specifications, and did the result change when the provider created the design after consultation?
Yes, a model made from client specifications was taxable on labor and materials. When the provider created the design after consultation, the client charge was a nontaxable professional service; the p…
Did Texas tax the total monthly charge for a commodity-market service supplying continuous quotations, news, weather, and customer monitoring equipment?
Yes. Effective October 1, 1987, the service was taxable as an information service and the provider had to collect tax on the total customer charge, replacing the attached March 1987 telecommunications…
How did Texas apply sales tax to independent claims-adjusting services for self-insureds, attorney work, percentage-based fees, and insurance-company pools?
Services for self-insureds were not taxable, while a fee calculated from premiums remained taxable. Attorney-connected work and the taxpayer's insurance-pool arrangement were not finally decided becau…
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.
Were charges for analyzing, trapping, and removing wild animals taxable in Texas, and what about labor to repair the resulting property damage?
Yes. The Comptroller treated varmint analysis, trapping, and removal as taxable real-property services even without a Structural Pest Control Board license. Repair labor on improvements to realty was …
How could a landscaper recover tax paid on inventory later transferred to customers, and could equipment used to provide landscaping services be bought for resale?
Tax paid on resale inventory could be refunded by the supplier after a resale certificate or credited on the sales-tax return for materials transferred to customers. Equipment used to perform services…
Was freight on a special-order item taxable when a supplier drop-shipped the item to the seller's customer?
It depended on who paid the carrier. Freight billed to the seller and rebilled to the customer was taxable, even on a drop shipment; freight paid directly by the customer to the carrier, never enterin…
How did Texas tax frac-tank cleaning, oilfield waste hauling, drilling-mud transportation and pumping, and trucking-only charges?
Frac-tank cleaning was taxable equipment maintenance, while oil-and-gas waste collection and disposal and trucking-only service were exempt. Mud transportation was taxable if the provider did not pump…
Did a private retail club have to collect Texas sales tax on its $5 annual membership fee when the club existed to sell gasoline to members?
No. The gasoline retail club did not provide entertainment, recreation, sports, dining, or social facilities, so it was outside Rule 3.298's taxable private-club membership category.
Were separately stated delivery charges on taxable equipment sales and mileage charges incidental to equipment repair taxable in Texas?
Yes. Effective October 1, 1987, delivery charges tied to taxable property were taxable regardless of separate billing, carrier, postage, or F.O.B. terms. Rule 3.292(c)(1) also taxed the entire repair …
When was a debt-collection service taxable in Texas, what charge was taxed, and when did an agency report the tax?
The total service charge was taxable when the debtor had a Texas address and the underlying seller was in or doing business in Texas. The agency collected tax from its client; accrual filers reported …
Could a service provider accept an exemption certificate from a federal credit union, and were loss or damage appraisals for insurers taxable when the property was credit-union financed?
A federal credit union was exempt when buying taxable items or services for its own use, and the seller could accept an exemption certificate. But loss or damage appraisals performed for insurance com…
Did federal tax-exempt status make a homeowners association exempt from Texas sales tax, and how were landscaping charges treated when billed to members?
No. A homeowners association generally was not sales-tax exempt unless the Texas Comptroller granted that status. Separately billed landscaping required a permit, resale certificate, and tax collectio…
Was commercial and residential window cleaning taxable in Texas, and how did the Comptroller apply state and city tax to the service?
Yes. The window-cleaning service was taxable. Because the provider's city had no city sales tax, it collected the historical 6% state tax; a customer in a city with a 1% city tax also owed city use ta…
When did a pre-July 21, 1987 trash-collection contract qualify for the prior-contract exemption, and did automatic renewal preserve the exemption?
A pre-July 21, 1987 contract could qualify if it fixed the price, service level, and period. On-request work did not qualify, a 30-day arrangement did not qualify, and exercising an automatic renewal …
Did Anderson County's new half-percent sales tax apply to electricity used by commercial and residential customers?
The county tax followed the state sales-tax treatment: commercial electricity was taxable unless the account qualified for and claimed a state exemption, while residential electricity use was not taxa…
How did Texas tax pagers or beepers rented with telecommunications service compared with equipment sold or rented without service?
A pager rented with telecommunications service used the same tax rate as the service. A beeper or pager sold outright or rented without service was treated as an ordinary sale or rental of tangible pe…
Could a Texas hospital-waste disposal service lease its incinerator tax-free for resale, and was its collection and disposal charge taxable?
No. The service provider used the incinerator and could not give its New Jersey lessor a resale certificate; it paid tax on leased equipment and supplies. Hospital waste collection and disposal was ta…
How did Texas sales tax apply to snapshots supplied while performing services for insurance companies, including the film and developing charges?
The provider's total charge to the insurance-company client for snapshots and services was taxable. The provider paid tax when buying film but could issue a resale certificate instead of paying tax on…
Were an attorney's judgment-collection and other debt-collection charges taxable while Texas awaited an Attorney General opinion on attorney services?
Collecting a judgment was not debt collection when the attorney represented the client in the suit that produced it. The letter gave no final rule for other attorney charges and said the Comptroller w…
Which municipal and commercial garbage-collection contracts qualified for Texas's prior-contract exemption, and did renewals or on-request pickups qualify?
The two fixed-term city contracts qualified only through their stated end dates, and renewals did not. A commercial contract needed a pre-July 21, 1987 date, fixed price, specific service level, and f…
Could stamped invoices from a private bridge security service prove that duty-free merchandise was exported for the Texas sales-tax export exemption?
No. Section 151.307(b) allowed proof only through specified carrier bills of lading, licensed U.S. customs-broker documentation, destination-country import documents, or qualifying freight-forwarder d…
When did Texas exempt a subscription to a quarterly poetry journal from sales tax, and who collected tax when the exemption did not apply?
A magazine subscription was exempt only if sold for a semiannual or longer period and entered as second-class mail. The letter does not say whether the poetry journal met both conditions. When a magaz…
Was a flat monthly charge for testing residential pool water, adding chemicals, and cleaning taxable, and how were chemicals and service equipment purchased?
Yes. The entire charge for materials, labor, transportation, and incidentals was taxable whether lump-sum or separated. Chemicals transferred to customers could be bought for resale, while cylinders, …
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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.