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 recurring motel repainting qualify as scheduled maintenance instead of taxable restoration or remodeling?
A recurring cycle alone was insufficient. The motel needed fixed, regular schedules or work orders showing repainting was planned before paint declined. Repainting faded, damaged, blistered, or peelin…
Did copy machines and supplies used to reproduce customer documents qualify for Texas manufacturing exemptions?
The copying business was treated as a manufacturer. Direct-use copiers with the required useful life qualified for the historical phase-in exemption when purchased in the stated period; financing leas…
Could a Texas provider of taxable services separately state bond and insurance costs and leave them out of the sales-tax base?
No. The November correction revised the attached June letter and said bond and insurance costs connected with selling a taxable service remained taxable even when separately stated.
How did Texas tax unprocessed aggregate and equipment-with-operator charges used in taxable, construction, residential, or nontaxable services?
Unprocessed sand, gravel, dirt, and soil were nontaxable unless included in a taxable service. Equipment-and-operator charges followed the service when combined. For a nontaxable service, separate equ…
Was complimentary valet parking hired by a club, individual, or event group subject to Texas sales tax when guests paid no parking fee?
Yes. The service remained taxable motor-vehicle parking whether the hiring group paid the hourly fee or the vehicle owner paid directly. Operating temporarily on client property, owning no parking lot…
Was a subcontractor that poured tilt-wall panels and other concrete work—but did not physically erect the panels—a manufacturer or a contractor?
It was a contractor. The subcontractor poured the foundation, walls, curbs, sidewalks, plug concrete, patches, and final slab and remained responsible for correct wall placement before payment, even t…
Were one-way or round-trip train tickets taxable admissions when the trip ended in a historic district?
No on the described facts because the trip's primary purpose appeared to be transportation. Admissions to tour trains or buses primarily showing tourist sights along a route were taxable; the Comptrol…
When did Texas sales tax apply to trained drug-detection dogs sold to law-enforcement or investigation agencies?
No Texas tax was collected when the seller delivered the dog outside Texas and retained delivery proof. A customer taking possession in Texas owed tax unless it was a qualifying exempt entity. Other s…
Did taxable data processing qualify for Texas manufacturing exemptions because it produced printed reports or other physical results?
No. Data processing was a taxable service, not manufacturing or processing tangible personal property for sale. The service provider collected tax on the service price but could not claim manufacturin…
How did Texas allocate tax on remodeling a jointly owned power facility between exempt cities and private utilities holding direct-payment permits?
Each owner was treated as the sole owner of its percentage. Cities bought their shares exempt; private utilities used direct-payment certificates and accrued use tax on their shares. The entire nonres…
Could a company rebuilding purchased used core assemblies buy wrapping and packaging supplies tax-free as a manufacturer?
Yes. The company was a manufacturer because it bought used cores, completely disassembled, cleaned, inspected, remachined, rebuilt, tested, and added the finished assemblies to inventory for sale. It …
Was revenue from renting space on installed utility poles subject to Texas sales tax as tangible-personal-property rental?
No. Utility poles installed as part of a utility line were improvements to real property, so renting space on them was not a rental of tangible personal property and the rental revenue was not taxable…
Could a for-profit club buy membership cards, certificates, newsletters, and other printed materials tax-free for resale with taxable dues?
Yes. When the club collected sales tax on membership dues and gave the printed materials to members as part of membership, it could give the printer a resale certificate. Refunds for past tax had to b…
Did cogeneration equipment qualify for Texas's manufacturing-equipment phase-in exemption when the company sold more than half of its electricity?
Yes. The Comptroller applied a more-than-half-for-sale test: equipment qualified when over half of the electricity produced was sold, and the exemption was not lost merely because the same equipment a…
Could an amusement provider and its ticket agent decide by contract which party collected and remitted Texas ticket sales tax?
Yes between themselves, but their agreement did not bind the Comptroller. The amusement provider was ordinarily responsible, while a contract could assign collection and remittance to either party. If…
How did Texas tax stand-alone business consulting, training, business evaluations, separately sold books, and books included in training?
Stand-alone consulting, separately stated training, and the described business-viability evaluation were nontaxable. Consulting tied to a taxable item became taxable. Separately sold books were taxabl…
When did Texas begin taxing human-operated telephone answering services, and what amount and local jurisdiction were taxable?
Human message-receiving and relaying became taxable October 1, 1991; electronic answering had been taxable since October 1, 1985. Providers collected 6.25% state tax plus applicable local tax based on…
How did Texas tax septic-tank pumping and drain-line unstopping for business and residential customers?
Septic pumping alone was nontaxable for both. Business drain unstopping was taxable, and a combined pumping/unstopping charge was fully taxable unless pumping was separated. Residential labor was nont…
How did Texas tax septic pumping and drain-line unstopping for commercial and residential property?
Septic pumping alone was nontaxable. Commercial drain unstopping was taxable, and combined pumping was taxable unless separately stated. Residential labor and lump-sum materials-and-labor work were no…
Was a one-time $25 administrative fee to transfer residential HVAC repair contracts after a company's bankruptcy subject to Texas sales tax?
No. The Comptroller said the one-time $25 fee charged to transfer each repair contract to the replacement service company was not taxable on the stated facts.
Were capital assessments charged to proprietary members of a nonprofit Texas country club subject to sales tax?
Yes. The assessments were part of the taxable sales price of private-club membership because Section 151.007(e) included dues, fees, initiation fees, and other assessments required for membership or a…
How should a seller document tax-free class-ring sales to a university bookstore, and when could it accept the bookstore's claimed university exemption?
A bookstore buying rings for resale had to provide a resale certificate, not a government exemption certificate. A properly completed university exemption certificate could protect a good-faith seller…
Could a church buy telephone service for its pastors' parsonages tax-free when the phones had some personal use?
Yes. The Comptroller said churches could purchase telephone service for parsonages tax-free by giving the telecommunications provider an exemption certificate.
How did Texas tax cathodic corrosion-protection systems installed on existing pipelines, well casings, tangible equipment, or new construction?
Installation on an existing nonresidential pipeline or well casing was taxable real-property repair or remodeling on the total charge. Installation on equipment remaining tangible personal property wa…
Were utilities at fee-simple timeshare condominiums exempt residential use when units were occupied only by owners and never rented to nonowners?
Yes. The October 29 follow-up treated owner-only occupancy as exempt residential use. The attached earlier letter applied a 30-day and per-meter predominant-use test to mixed residential and short-ter…
Were Texas insurance claims adjusting or processing services taxable when performed for a surplus-lines or non-admitted insurer covering a Texas risk?
Generally yes. The provider had to presume the service was taxable when the insured person or property was in Texas. It could avoid collection when the insurer was not conducting insurance business in…
Could a change order executed during construction retroactively convert a lump-sum real-property contract into a separated contract?
Yes. A retroactive amendment changed compensation to reimbursable actual costs plus a fixed fee and required amended and future invoices itemizing incorporated materials and other expenses. That cost-…
Was artwork sold by a graphic artist to an advertising agency taxable when the agency used it only in conceptual ad-campaign development?
Yes. The artist delivered a finished product to the agency, so the sale was taxable. The agency's later use of that artwork as preliminary or conceptual material did not change the finished-art classi…
How did Texas tax underground-tank excavation, tank disposal, contaminated-soil removal, replacement installation, repair, inspection, and mixed charges?
Tank excavation was nontaxable demolition, but tank hauling and disposal were taxable. Qualifying contaminated-soil removal was exempt with a certificate. New installation followed construction rules;…
How did Texas tax underground fuel-storage-tank removal, tank disposal, contaminated-soil disposal, repair or upgrading, and installation of a new tank?
Tank excavation and removal were nontaxable demolition, but hauling and disposing of the tank were taxable waste removal. Qualifying contaminated-soil disposal was nontaxable, repair or remodeling was…
Did a company have to collect Texas sales tax for pumping, hauling away, and disposing of gasoline-contaminated water from underground fuel storage tanks?
No, if the liquid was an industrial discharge regulated by the Texas Water Commission and the provider held the required permit. The provider had to obtain and retain a completed exemption certificate…
Could a software developer buy boxes, wrapping paper, envelopes, tape, and similar supplies tax free when they were used to package computer programs?
Yes. If the corporation produced computer programs as defined by Rule 3.308, it could buy the listed wrapping and packaging supplies tax free by giving its suppliers an exemption certificate instead o…
Were bags supplied to third parties tax-exempt packaging when used for cement the company made versus cement it bought from other manufacturers?
Bags used to package the company's own manufactured cement were exempt even when an unrelated packager did the work. Bags supplied to other manufacturers for cement the company later bought and resold…
Was the S.B. 324 fee charged by a local recording insurance agent for services outside the insurer-paid commission subject to Texas sales or use tax?
No. The authorized fee itself was not subject to sales or use tax. But the agent still had to pay vendors' tax on any taxable property or services acquired for the client, and that tax became part of …
Did the taxpayer's publication qualify as a magazine, and what objective criteria did Texas use to distinguish a magazine from a newsletter?
Yes. The publication qualified because it had paid subscribers, appeared monthly, contained articles by various writers, and used a second-class postal permit. Texas also considered whether a publicat…
Could a taxpayer file monthly Texas sales-and-use-tax returns using a 13-period accounting calendar, and how were period-end dates assigned to returns?
Yes. Periods ending on days 1-10 were reported on the prior month's return due on the 20th of that month; periods ending on days 11 through month-end were reported on that month's return due the next …
Was a monthly fee for access to a computer database of found animals taxable when people reporting found pets supplied information for free?
Yes. The monthly fee paid by owners of lost pets for access to the found-animal database was taxable as an information service under Rule 3.342.
Were automobile hand controls and a vehicle modified for an orthopedically handicapped person exempt from Texas tax?
Yes under the stated conditions. Hand brakes were exempt orthopedic devices when they enabled a person with missing, damaged, or nonfunctioning organs or appendages to drive, and § 152.086 exempted a …
Was a confidential, client-tailored medical literature search a nontaxable proprietary-information service when its source material came from public-access databases?
No. The search was a taxable information service because the client had no enforceable proprietary rights in the public-access source material. Tailoring the search, keeping results confidential, or s…
When were a property manager's repair and maintenance services exempt for permanently assigned employees, related corporations, rental property, and dollar-for-dollar reimbursements?
The employee exclusion required rental property, permanent assignment to one owner's property or properties, and dollar-for-dollar reimbursement. Common ownership alone did not merge separate corporat…
Were a nonprofit club's charges for horse-stall space and feeding taxable when stable access was a membership privilege versus being offered to members and nonmembers alike?
The charge was taxable effective October 1, 1991 if the right to stable a horse was a privilege of club membership. It was not taxable if the stable facilities were available to members and nonmembers…
Did the 1991 removal of the Section 501(c)(7) club exemption make dues and membership fees taxable for fraternities, sororities, scouts, and similar service organizations?
No. The Comptroller's clarification said dues and membership fees paid to fraternities, sororities, scouts, and similar service organizations were not subject to the newly enacted amusement-services t…
Could an amusement provider be designated as solely responsible for sales tax when a ticket agent sold admissions and a successor disputed who had to collect and remit?
No sole designation was given. The parties' contract could assign collection and remittance duties, but it did not bind the Comptroller. If the ticket tax was not reported and paid, Texas would hold b…
Were a nonprofit country club's membership dues exempt when members prepaid them before the October 1, 1991 repeal of the club exemption?
Yes. Dues actually received before October 1, 1991 were exempt with no limit on how far ahead a member could prepay. Later income recognition did not make them taxable, but the club had to keep record…
Was a charge for drug-screening urinalysis taxable, and what happened if the consultation also included licensed background or character investigations?
Urinalysis by itself was not taxable. If the same consultation included background checks, character investigations, or similar work requiring a license under the Private Investigators and Private Sec…
How did the October 1, 1991 effective date apply to a private club's initiation fees, equity component, installment payments, and operations assessment?
The member's joining date controlled. Fees assessed to members joining before October 1 were nontaxable even if paid later; fees for members joining on or after that date were taxable, including the $…
Were natural gas and electricity exempt when a plant manufactured restaurant equipment partly for sale to franchisees and partly for use in company-owned restaurants?
Only the utility used to manufacture equipment sold to franchisees was exempt. Utility used to make equipment for the company's own restaurants was taxable. Because the submitted study did not separat…
Were truck-time and per-gallon charges for disposing of oil and water from a groundwater test well taxable as waste removal?
No, if the waste was an industrial discharge regulated under a Texas Water Commission permit. The provider needed a properly completed exemption certificate; without one, the service was presumed taxa…
Were fees for storing fire- and water-damaged property and the premium for bailee's insurance subject to Texas sales tax?
No. The Comptroller said both the storage fees for fire- and water-damaged items and the bailee's-insurance premium were nontaxable, and allowed continued reliance on the June 1989 Sales Tax Review.
Were recurring club assessments billed in late September for October taxable, and were September amusement services taxable if payment arrived after October 1, 1991?
October assessments billed in advance at the end of September were taxable. By contrast, billings for amusement services actually provided in September were nontaxable even when the club received paym…
Were concession-stand food sales exempt when a school-associated group sold them as a fundraiser and kept all net proceeds for its exclusive use?
Yes. Under the stated facts, the sales were exempt because the group was associated with a public or private elementary or secondary school, the sales were part of its sponsored fundraising drive, and…
Was regularly scheduled cleaning of kitchen vent hoods and exhaust systems nontaxable preventive maintenance or taxable building cleaning?
It was taxable building and grounds cleaning under Rule 3.356. Although the work helped prevent fires and had maintenance features, Texas found it closer to chimney or duct cleaning than to the repair…
How did Texas tax HVAC maintenance and repair contracts for tangible equipment, commercial real-property systems, and residential real-property systems?
Tangible-equipment service was taxable. Scheduled preventive maintenance on commercial realty was nontaxable, but repair charges were taxable and an unallocated lump sum became taxable when repairs ex…
Which supermarket bags and food-packaging supplies were taxable at checkout, produce, bakery, and meat departments?
Checkout and produce bags were taxable. Bakery packaging was exempt only when the store baked its own goods and supplied an exemption certificate. Meat trays, film, pads, and paper were exempt because…
Could a pharmacy buy prescription labels, patient-use information, and bags tax free when pharmacists compounded chemicals and mixed medicinal solutions?
Yes. Texas treated compounding raw chemicals and mixing liquids and solids into medicines as processing, so the prescription labels, patient-use information, and bags used to convey those medicines qu…
Who had to collect Texas tax on sales made through a direct-sales company's local distributors, and how did churches and schools document exemption?
The direct-sales company had to collect and report tax on its distributors' Texas sales. Churches and schools generally needed exemption documentation; a public-school purchase order was sufficient.
Were charges to place and remove Realtor-owned for-sale signs at residential properties taxable when the service provider did not sell, assemble, or erect the signs?
No. Labor to place or remove the Realtor-owned signs was nontaxable installation under the stated facts. The result would change if the provider sold the signs or performed taxable assembly or erectio…
Could a prime contractor act as a direct-payment permit holder's agent and issue direct-payment exemption certificates for construction materials?
Yes, if the agency agreement authorized it. The contractor could buy materials incorporated into the permit holder's realty on its behalf, but not consumable supplies or other taxable contractor items…
When were wrapping and packaging supplies exempt for a business handling self-manufactured goods, purchased inventory, bundled components, assembled products, or third-party packaging?
Packaging for the taxpayer's own manufactured product was exempt. Packaging purchased for acquired inventory, mere bundling, or labeling and instructions was taxable; packaging a newly assembled produ…
Did the carrier exemption cover consumable aircraft-repair supplies, and could a shop servicing both private and licensed-carrier aircraft claim exemption for qualifying tools and equipment?
Consumable repair supplies were not exempt under § 151.328(d). A mixed-use shop was not automatically disqualified, but it needed records separating exempt and taxable uses and could claim exemption f…
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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.