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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Did a natural-gas marketer have to collect Texas tax when pipeline title and possession passed outside Texas, and what changed when both passed in Texas?
No collection was required when both title and possession passed outside Texas; any later Texas use-tax duty belonged to the customer. When title and possession passed in Texas, the marketer had to co…
Did an out-of-state software company create Texas tax obligations by sending employees into Texas for customer training, and which software charges were taxable?
Yes. Employee training visits made the company engaged in business in Texas, requiring a permit and use-tax collection. Software, installation, and support were taxable; separately stated training was…
How did Texas tax software delivery, installation, support, programming, and hardware sales when bank customers were located inside or outside Texas?
Texas taxed software and hardware delivered in Texas, installation of the seller's software, and support for Texas customers. Direct out-of-state delivery was not taxed. Contract programming was nonta…
Could a food-service subsidiary buy disposable meal-service items tax-free when it transferred them with taxable prepared meals to its carrier parent?
Yes. The subsidiary was a separate food-service retailer and could use a resale or exemption certificate for nonreusable items transferred with taxable meals. The vendor could refund tax within the fo…
How should a Texas printer tax one invoice covering signs delivered to stores in both Texas and New Mexico, and what records were required for a refund?
Only signs delivered in Texas were taxable, but a lump-sum mixed-state invoice was presumed fully taxable. The printer had to separately state Texas and out-of-state charges and retain shipping record…
When did live operator answering services become taxable in Texas, and were automated answering and voicemail services already taxable?
Live operator answering services were nontaxable when the letter was issued but became taxable October 1, 1991. Automated answering and voicemail were already taxable telecommunications services and r…
Who owed Texas vehicle tax when a financing seller understated the sale price on the county tax receipt?
The seller remained responsible. Documents showed a $5,950 sale and $458.80 collected for tax, title, and license, but only a $595 price and $35.70 tax were reported. Repossession did not remove the s…
Were customer charges for drug testing and drug screening services subject to Texas sales tax?
No. The Comptroller concluded that performing drug tests and drug screening was not a service subject to Texas sales tax on the facts presented.
How did the 1991 guidance say contractors and subcontractors should document separated material and service charges for exempt-entity work?
Contractors needed permits and resale certificates. A subcontractor qualified for exemption when material costs were separated from service costs; the contractor issued a resale certificate to the sub…
Could a waste hauler buy roll-off boxes for resale, and was its total charge for placing, picking up, dumping, and returning the boxes taxable?
Yes to both. The company could buy the roll-off boxes tax-free with a resale certificate and seek a vendor refund for six previously taxed boxes. Its entire customer charge for collecting and removing…
Could a Texas provider of a nontaxable service add a 'Texas Price Adjustment' to recover sales tax paid on consumed items?
Yes. The Comptroller said the adjustment did not violate Rule 3.324(b)(4) because it recovered the provider's own tax cost without representing the amount as sales tax imposed on the customer.
How did Texas's 1991 motor-vehicle-repair change treat separately stated consumable supplies and lump-sum repairs?
A repair shop separately stating parts and labor could buy qualifying consumable repair materials tax-free for resale and collect sales tax on the itemized customer charge. A lump-sum repairer instead…
Were services performed under insurance policies for unauthorized or surplus-lines insurers taxable Texas insurance services?
Yes, when performed in Texas for an insurer doing insurance business in Texas. The Comptroller treated unauthorized insurers engaged in insurance as insurance carriers and required the provider to pre…
Was writing 'Paid by cash' on a customs-broker export certificate and obtaining the customer's signature enough to document a Texas sales-tax refund?
No. The receipt also had to state the cash amount, identify it as a tax refund for specifically exported items, show the refund date, and include the purchaser's name, address, and signature.
Were full-time peace officers acting as independent contractors required to collect Texas sales tax on guard services?
No. The Comptroller said their guard-service charges were not taxable because the statutory security-service definition covered services requiring a license, and full-time peace officers did not need …
Were translation services taxable, and did the tax treatment of a hired typist depend on whether the typist used a word processor or a typewriter?
The described translation services were not taxable. A hired typist's charge was taxable data processing when a word processor was used, but ordinary typing performed with a typewriter was not taxable…
Was a separately stated fuel charge taxable when machinery was supplied with a service, with an operator, or as a bare rental?
It depended on the arrangement. Fuel was taxable as part of a taxable service and as part of an equipment rental with an operator, but a separately stated fuel charge was not taxable when the equipmen…
Did vehicles received instead of foreclosure qualify for Texas's sale-for-resale exemption when they would be used before resale?
No. A vehicle titled for resale could not be driven, and the requester planned to use the vehicles while holding them, so the resale exemption did not apply. The letter said no other exemption covered…
Was a separately stated charge for a technical specialist's future installation advice taxable with the sale of an oil-well packer?
Yes. The specialist's advice was requested with the packer and accompanied its sale, so Texas treated the service as part of the taxable sale even though it was separately stated and performed after t…
Which parts of a credit consultant's work were taxable debt collection, and which were nontaxable consulting services?
Work on actual past-due accounts was taxable debt collection, while general credit procedures, staff training, and advice unrelated to specific delinquent accounts were nontaxable unrelated services. …
Was a boat broker's commission subject to Texas sales tax when the principal's boat sale qualified as an occasional sale?
No. If the business acted as a disclosed broker and the principal was not a seller and qualified for occasional-sale treatment, the boat sale was not taxable and the broker's commission was not subjec…
Could an exempt nonprofit homeowners association buy member services tax-free and recover sales tax it had paid in error?
Yes. The association could issue exemption certificates for purchases related to its exempt function when it did not separately charge members, and it could request supplier refunds for tax paid in er…
Which seller-financed mortgage-servicing activities were taxable in Texas when billed through setup and monthly service fees?
Coupon books, delinquency notices, and computer-produced account or IRS reports were taxable; document storage, payment verification and remittance, and recording a lien release were not. A lump-sum f…
Were sales of microbial odor neutralizers for municipal, industrial, and agricultural wastewater uses subject to Texas sales tax?
Generally yes. The seller had to collect tax unless the customer supplied a valid resale or exemption certificate; cities and utility districts could qualify for exempt-function purchases, some manufa…
Were charges for balancing and changing the stroke of an oilfield pumping unit subject to Texas sales tax?
Yes. Texas treated an oilfield pumping unit as tangible personal property and classified balancing and bore-stroke modification as taxable remodeling, making the entire charge taxable.
Was an extended warranty for repairs to a residential heating and air-conditioning system subject to Texas sales tax?
No. Texas said the residential real-property repair warranty and repair labor were not taxable, while the warrantor or third-party repairer owed tax on the applicable parts, supplies, materials, and e…
Was an approximately $50 fee to use a Galveston bungee-jump concession subject to Texas sales tax?
Yes. The Comptroller treated the per-jump charge as a taxable admission to an amusement service, comparable to taxable admission fees for a golf course or tennis court.
Were an investigator's unarmed process-serving and document-delivery charges taxable Texas security services?
No. The Comptroller treated unarmed service of subpoenas and legal notices and unarmed document delivery as nontaxable unrelated services because the work did not require a private-investigator or sec…
Could a Texas rental or leasing company use vehicles retired more than 18 months earlier for the fair-market-value deduction?
No. The agency applied an 18-month policy requiring the retired vehicle to be offered for sale and claimed against a replacement purchase within 18 months. The appended internal memo acknowledged that…
Were the Texas Workers' Compensation Commission's charges for medical fee guidelines, blank forms, rules, and agenda packets subject to sales tax?
No. The Comptroller treated those governmental publications and documents as exempt. STAR now warns that the cited Rule 3.341 was repealed in 2008 and its content moved to Rule 3.322(h)(5) in 2011.
How did Texas tax telecopy, telex, translation, and person-delivered voice-message services between Texas and the Soviet Union?
Translation and person-delivered message charges were not taxable. Long-distance telecopy and telex charges were taxable only when the service originated in Texas and was billed to a Texas telephone n…
Were customer damage repairs, equipment inspections, and freight charges connected with sold or rented equipment taxable in Texas?
Repair services and parts billed to a customer for damaged rental equipment were taxable; inspection-only charges were not. Freight on equipment sold or rented to customers was taxable whether provide…
Was a charge for underground-storage-tank vapor analysis and a confidential leak-detection report subject to Texas sales tax?
No. The report and sample-analysis charge was not taxable, but the provider had to pay sales tax on the tubes, equipment, and other tangible property used to perform the service.
Could an elevator maintenance contract tax only the percentage allocated to repairs and exclude scheduled maintenance and inspection?
Yes. Texas accepted a 72% nontaxable maintenance-and-inspection and 28% taxable repair allocation if credible job-history evidence supported it and both contracting parties agreed, with state and loca…
Was a $25 introductory airplane flight taxable as instruction or as an amusement service?
It depended on the flight. A documented flight conducted as part of an FAA Part 61 or Part 141 instruction course was not taxable; a noninstructional sightseeing or enjoyment flight returning the ride…
Was leasing a permanently affixed above-ground storage tank larger than 500 barrels subject to Texas sales tax?
Generally no, because Texas treated it as real property. But the lease was taxable if its terms made clear that the tank remained tangible personal property, regardless of size.
How did Texas tax towable dollies, jeeps, stingers, auxiliary axles, and converter gears beginning September 1, 1991?
Texas moved these items into the trailer and semitrailer definitions. In-state purchases and rentals became subject to motor vehicle tax, while units used interstate by interstate motor carriers becam…
Could an exempt religious college buy basic local telephone service for student rooms tax-free when included in room and board?
No. The service did not relate to the college's exempt purpose. The college could pay tax and include it in room rent, or buy for resale, separately charge students, and collect tax.
How did Texas tax towable dollies, jeeps, stingers, auxiliary axles, and converter gears beginning September 1, 1991?
Texas moved them into the trailer and semitrailer definitions, subjecting in-state purchases and rentals to motor vehicle tax and interstate-carrier units to IMC tax instead of limited sales tax.
Could a Texas purchaser use wholly electronic purchase orders to claim resale, exemption, or direct-payment treatment?
Not by themselves. A traditional signed resale or exemption certificate had to remain on file with the seller; later written or electronic purchase orders could claim the exemption by referring to tha…
What documents could a Texas purchaser use to prove that multiple items were exported to its Mexican maquiladora?
Texas required specific export proof. The letter identified U.S. Customs certifications, a Mexican Pedimento de Importaciones with detailed supporting manifests or invoices, and a properly completed M…
Were medical case-management and rehabilitation-consulting services supplied to insurance companies taxable in Texas?
Yes. The provider's calls, meetings, medical and vocational assessments, appointment coordination, reports, and recommendations qualified as insurance investigation and claims adjustment or processing…
When did a crude-oil operator have to report and remit severance tax as oil moved from a lease into a pipeline or storage facility?
The operator had to remit tax on oil removed from the lease and report itself as purchaser. Oil piped only to on-lease storage was not reported until it left the lease, but commingled oil from multipl…
Did Texas-based independent salespeople require an out-of-state seller to collect tax, and what resale or exemption documents could the seller accept?
Yes. Commissioned independent salespeople created Texas business activity, requiring a permit and tax collection or valid certificates. A permit copy was not a certificate; Texas required separate res…
Could a taxable security-service provider buy customer-controlled equipment for resale when the customer could keep it free or buy it for $1 after the contract?
Yes. Under the 1991 letter, equipment transferred to the customer's care, custody, and control as an integral part of taxable security service could be bought with a resale certificate under either pl…
How did Texas sales tax apply when a contractor filed a damaged-freight claim and transferred the damaged item to the carrier?
Treatment depended on whether the contractor was a seller or consumer. A seller generally excluded tax from the claim if the carrier resold the item. A consumer included previously paid tax in the cla…
Could a property manager make tax-free purchases for assets held in FDIC receivership without registering as an FDIC agent?
Yes, registration with the Comptroller was unnecessary, but the manager needed a written FDIC agency agreement and proof that FDIC held title to the property. With those records, the manager could iss…
What documentation could a service provider accept before stopping sales-tax collection from a manager acting for the RTC?
A completed, signed exemption certificate was enough to protect the service provider if accepted in good faith. The manager could sign as RTC's agent and assert the agency relationship; the manager, n…
Did a customer still owe sales tax on catalog jewelry that was returned but lost in transit before the retailer received it?
Yes. A sale occurred between the customer and the retailer, and the lost return shipment did not erase the tax debt. Under Texas Tax Code § 151.052(a)(1), sales tax was part of the sales price and rem…
Were a sports league's team entry fees and $10 player passes taxable as amusement services or sales of tangible personal property?
No. The $400 team charge was a nontaxable entry fee under Rule 3.298(c), and the $10 pass bought association membership and participation rights—not property or admission to an amusement. The operator…
Was sales tax due up front on all payments under a financing lease even if the lease was later terminated and the equipment sold?
Yes. The contract was a financing lease, so tax applied to the full sales price—including all lease payments—when possession began or the first payment came due, whichever was earlier. Termination, re…
Did a nonprofit trade association have to collect Texas sales tax on correspondence-course tuition or the course binder, test, and certificate?
Tuition or enrollment was not taxable. A separately stated materials charge—including shipping and handling—was taxable, and the association could buy participant materials for resale. If materials we…
Was the Dallas/Fort Worth International Airport Facility Improvement Corporation exempt from Texas sales tax as a political subdivision?
No. After reviewing its articles of incorporation, the Comptroller concluded that FIC was not a political subdivision and denied the sales-tax exemption. The corporation could reapply if it later obta…
Was a Texas seller still responsible for sales tax when its customer refused both to pay $288.83 in tax and to provide a resale certificate?
Yes. The seller had to collect and remit the tax. Under § 151.052, tax became part of the sales price and a legally recoverable debt owed by the purchaser. The seller could also correct an invoice and…
Did a vehicle brought into Texas owe motor vehicle use tax or the historical new-resident tax?
It depended on whether the owner qualified as a new resident. The 1991 letter said an out-of-state purchase generally incurred 6% use tax, with credit for another state's vehicle tax, but a vehicle al…
Could a nonprofit corporation sell its own books, magazines, newsletters, and other writings without Texas sales tax?
Only if it qualified under the nonprofit-writings exemption and was not an educational organization. Rule 3.299 specifically excluded schools, colleges, universities, and similar institutions systemat…
Did a railroad's electronic load-cell scale qualify for the Texas exemption for supplies essential to operating trains?
The Comptroller could not decide from the submitted facts. The railroad had to show how the load cells were attached to the bridge and identify the federal or state rule requiring railcars to be weigh…
Was a lessor's reimbursement charge for personal property tax on leased equipment subject to Texas sales tax?
Not when the property-tax reimbursement was separately stated from the equipment lease price. If it was included in the lease price, sales tax applied to the entire charge. The Comptroller pointed to …
Who had to collect and report Texas state and local sales tax on retail sales made by a Utah network-marketing company's independent distributors?
The direct-sales organization, CORP A, was responsible under Rule 3.286(a)(3). Tax reporting depended on whether distributors took customer orders before buying from CORP A or stocked products first, …
Were electricity and natural gas exempt when used to manufacture equipment the company retained and used to provide services to hotels and motels?
No. Utilities used to make equipment for the company's own service activity were taxable commercial use. Direct manufacturing utilities could qualify only for equipment sold, leased, or rented as tang…
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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.