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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If two commonly-owned S corporations merge into one, does that eliminate the sales tax that used to apply when they sold lumber products to each other, and does merging change the manufacturing exemption on the equipment involved?
Merging eliminates the sales tax on the internal transfers, but does not fix the manufacturing exemption problem. Two commonly-owned S corporations — S1 (which cuts raw lumber into pickets and fence p…
Is cleaning commercial sewer and drain lines taxable, and does it matter whether the cleaning is done on a schedule versus only when the line clogs?
It depends on whether the cleaning is reactive or truly scheduled. Cleaning sewer and drain lines for COMMERCIAL real property is a taxable nonresidential real property repair service UNLESS it's perf…
Does metal detection equipment used for food-safety quality control during spice and seasoning processing qualify for Texas's manufacturing exemption?
Yes. A food processor that blends and packages spices, herbs, and seasonings purchased metal detection equipment to screen out physical contaminants like metal fragments as part of its food-safety pro…
Is a registered nurse's consulting service for attorneys — reviewing medical charts for malpractice cases — subject to Texas sales tax?
It depends on who the nurse's client is. A registered nurse's new consulting business — reviewing medical charts for attorneys in malpractice matters — is taxable ONLY if performed on behalf of an ins…
Is a university's share of a per-ticket handling/convenience fee, added on top of a city-run ticket agency's own handling fee, taxable as part of the admission charge?
Yes, all of it is taxable. A university that owns an arena and rents it to promoters allows a city-owned ticket agency to add a convenience/handling fee to each ticket to cover ticketing-system and bo…
How does a highway contractor that blasts and crushes rock from a leased quarry compute its taxable cost of rock used in lump-sum construction contracts, versus rock it sells at retail?
This is a detailed auditor's-confirmation letter covering several linked points for a highway contractor that blasts rock from a leased pit, crushes it, and both uses it on lump-sum contracts and sell…
How does a new swimming pool construction business handle Texas sales tax on installing new pools versus repairing existing ones, at residential versus commercial properties?
Installing a new in-ground swimming pool where none previously existed is new construction, whether the property is residential or nonresidential. For RESIDENTIAL property (repair, remodeling, or new …
When a grocery store accepts a manufacturer's coupon or its own store coupon, is Texas sales tax charged on the full price or the discounted price?
Sales tax is due only on the DISCOUNTED price, not the full price, for both types of coupons. A shopper asked the Comptroller to confirm that Rule 3.301(e) (Promotional Plans, Coupons, Retailer Reimbu…
Will Texas accept the Uniform Sales & Use Tax Certificate - Multijurisdiction as a valid resale certificate, and what does a Texas seller need to accept a resale certificate from an out-of-state retailer?
Yes, conditionally. A resale certificate must be substantially in the form of a Texas Sales and Use Tax Resale Certificate or a Border States Uniform Sale for Resale Certificate under Rule 3.285(h) — …
As of 2000, would the Texas Comptroller accept a web-based resale certificate signed with an electronic signature or a digital signature?
As of this 2000 letter, a printable electronic-signature resale/exemption certificate was accepted, but a digitally signed one was not. A business setting up a website to sell to wholesalers and indiv…
Are a personal trainer's one-on-one training session fees subject to Texas sales tax as an amusement service?
Not taxable, if the training meets a specific two-part test. A registered accountant asked on behalf of a personal-training client, after noticing that two employers billed personal training services …
Is a charge for security services provided by an off-duty peace officer subject to Texas sales tax?
No. A charge by an off-duty peace officer for providing security services is not subject to Texas sales tax. Rule 3.333, 'Security Services,' contains a specific carve-out in section (i)(3) that exemp…
For a manufacturer: are safety apparel, hand tools, and dies/molds used to make products exempt from Texas sales tax, and how does a written agreement affect whether a die charge to a customer is a taxable sale?
Four separate manufacturing-exemption points, confirmed together. (1) Safety apparel and work clothing used during actual manufacturing/processing of goods for ultimate sale is exempt under Tax Code §…
Can a Texas Direct Payment permit holder issue a direct pay exemption certificate to a contractor building a pipeline under a lump-sum contract?
No. On a lump-sum contract, the contractor is treated as the consumer of all materials it incorporates into the customer's property — the contractor pays sales/use tax directly to its suppliers on tho…
Does the manufacturing exemption cover an excavator with grapples used to gather raw material before an organic mulch manufacturing process begins, versus the wood grinder that actually processes it?
It depends on which stage of the operation the equipment is used in. A manufacturer may exempt equipment directly used in the actual manufacturing, processing, or fabrication of goods for ultimate sal…
Does a business that only distributes flyers (without printing or selling them) need a Texas sales tax permit, and what changes if it starts printing and selling flyers too?
Flyer distribution alone is not a taxable service in Texas, so a business that only distributes flyers it neither prints nor sells does not need a sales tax permit for that activity. Every seller of t…
Is a wastewater treatment facility's flat monthly sewer-connection charge to customers taxable, and does a nonprofit water supply corporation owe tax on the chemicals and equipment it buys to run the facility?
The customer-facing charge is not taxable, but the facility's own purchases usually are. There is no sales tax due on flat rate monthly charges billed to customers who connect their sewer lines to a w…
If an outside food service company (not the nursing home itself) contracts to provide meals to nursing home residents, are those meals exempt from Texas sales tax the same way meals from the nursing home's own kitchen would be?
Yes — meals to residents stay exempt even when a third-party contractor, not the nursing home itself, provides them. Rule 3.293(c)(2)(E) and (F) exempts food ready for immediate consumption served to …
Are carbon tanks and chlorine test packets used with a hemodialysis machine exempt from Texas sales tax?
Exempt only for the in-treatment portion of their use. A hemodialysis services company asked whether sales tax was correctly being charged on carbon tanks connected to its dialysis machines (exchanged…
A distributor complained that Metabolife was still charging sales tax on now-exempt vitamins/supplements, and that the company required a minimum sales volume before letting distributors buy tax-free. Is that correct?
No, on both counts. Metabolife is not required to collect sales tax on any vitamins, minerals, and nutritional supplements for humans sold in Texas on or after April 1, 2000 (the effective date of Sen…
Is landscaping a taxable real property service in Texas, and is hardscape work like retaining walls, ponds, or sprinkler systems taxed the same way?
No, not the same way. Landscaping and lawn/yard maintenance (planting, mowing, pruning, fertilizing) are taxable real property services on which you collect tax from the customer. Hardscape work (reta…
Are herbal dietary supplements taken for weight loss or other medicinal purposes exempt from Texas sales tax as over-the-counter drugs and medicines?
Yes. Effective April 1, 2000, Texas exempts over-the-counter drugs and medicines, vitamins, minerals, and nutritional supplements — including herbal dietary supplements taken for weight loss or other …
Is a multi-level marketing company required to hold a Texas sales tax permit and collect state and local sales tax on the sales its distributors make, and how should it account for local tax across different jurisdictions?
Yes. A direct sales organization (including a multi-level marketing company) is responsible for collecting and remitting Texas sales and use tax — state and all applicable local taxes — on taxable sal…
Is a computer vendor's 'price update service' — reformatting a manufacturer's electronic price/part-number data and selling it to dealers on tape or diskette — a taxable data processing service, an information service, or exempt, and does the 20% partial exemption apply?
It's a taxable information service (not data processing), but that distinction doesn't matter here: the update service qualifies for the 20% partial exemption that applies to both data processing and …
When an engineering and design firm creates original plans for a client and also produces a prototype, is the prototype production taxable, and does it matter whether the client later requests identical or altered copies?
It depends on what's being produced. The original prototype tied to the firm's nontaxable engineering/design service (even if separately invoiced) is not taxable — but once the client asks for additio…
When a city secures vacant buildings from unauthorized entry or demolishes them under its police powers (as opposed to hiring an outside security company), does it owe sales tax on those charges?
No. A city's charge for securing vacant buildings from unauthorized entry, exercised under its police powers, is not a taxable security service — the same reasoning that made a city's mowing of vacant…
Are nutritional supplement drinks and dietary products sold to hospitals and nursing homes for their patients exempt from Texas sales tax?
Yes. Texas exempts food products, meals, soft drinks, and candy served to a patient or inmate of a state-licensed hospital or care institution, or to a permanent resident of a retirement facility hous…
If a company leases its employees to an affiliated business partnership through a staff leasing arrangement, are the otherwise-taxable services performed by those leased employees exempt from Texas sales tax — even if the leasing company turns out to be exempt from state licensing because of common ownership?
Yes, either way. Whether the leasing company (Lessor) is licensed as a staff leasing company under Labor Code Chapter 91, or is exempt from that licensing requirement under the Labor Code § 91.001(14)…
Does a company that collects and processes human blood plasma for sale to out-of-state pharmaceutical manufacturers qualify for Texas's manufacturing exemption on its equipment, packaging, and utilities purchases?
Yes. A company that processes human blood plasma for sale to pharmaceutical manufacturers qualifies for Texas's manufacturing exemption (Tax Code § 151.318) on machinery and equipment that physically …
When a Texas racetrack pays a totalisator company to process betting data for simulcast races, is that charge taxable, and does it matter whether the race is hosted in Texas or out of state?
Yes, taxable either way. A Texas guest track owes tax on the service charge a totalisator company assesses for processing wagering data, whether the race is hosted at another Texas track or an out-of-…
Are private sports lesson fees — for example, ice skating, swimming, gymnastics, golf, or tennis instruction — taxable as amusement services in Texas?
No. Lessons and classes are not amusement services under Rule 3.298. Neither private ice skating lessons taught by independent contractors nor group lessons/skating school taught by the rink's own emp…
Is stress testing of metal, plastic, or concrete taxable as an insurance service in Texas, and does it matter whether the client is an insurance company, a policyholder, or an unrelated third party like a law firm?
It depends on whether an insurance policy is involved, not on who hires the tester. Stress testing metal, plastic, or concrete on behalf of an insurance carrier, its insured, or others in connection w…
Can a company that manages and coordinates real property surveys for its customers buy the underlying surveying services tax-free for resale, and does it matter that the company itself isn't a licensed surveyor?
No, not to escape tax on resale — the total amount the company charges its customers for coordinating real property surveys is taxable, because it's buying and reselling a taxable real property servic…
Can a business get a refund of sales tax it paid when buying decontamination trailers and brush chippers that it now rents out to customers, and how does that differ from using the same equipment to provide a service?
Yes, if the equipment is genuinely rented to customers who get operational control (not used by you to perform a service) and doesn't carry a manufactured-home label. A decontamination trailer and a b…
Does a Laryngeal Mask Airway (LMA) — a device inserted through the mouth to keep a patient's airway open during anesthesia — qualify for Texas's sales tax exemption for prosthetic devices?
Yes. The Laryngeal Mask Airway qualifies for exemption as a prosthetic device under Tex. Tax Code § 151.313, because it functions like an endotracheal tube — providing an unobstructed airway from the …
Is a company that brokers advertising space on school buses — finding advertisers, arranging printing/installation, billing advertisers, and paying the school district a revenue share — required to charge sales tax on its charges to advertisers?
No, the broker's charge to advertisers is not subject to sales tax. But the broker must pay sales tax on all the supplies, materials, and equipment used to provide the service — including graphic arts…
Can a web design/Internet development company's consulting charges (client meetings, strategy discussion, marketing research) be sold tax-free and separately from its taxable HTML production and data entry work?
Yes, if the consulting is genuinely separable. Entering information and creating HTML documents are taxable data processing services, but expert/professional consultation (client meetings, strategy di…
Are used auto parts bought from a junkyard subject to sales tax again when resold or incorporated into a repair, even though sales tax was already paid when the part was first sold as new?
Yes. Sales tax applies every time a taxable item is sold for consideration, regardless of whether it's new or used and regardless of whether tax was already paid on an earlier sale of the same item. W…
Are personal and corporate concierge services — like picking up dry cleaning, planning parties, setting up tee times, ordering flowers, or getting car registrations — taxable in Texas?
Generally not taxable, if the concierge is only providing a transportation/delivery or planning service. Charges to plan parties, set up tee times, or get car registrations are not taxable. Picking up…
Are anti-static grounding wristbands and anti-static floor mats/carpeting, used by circuit board manufacturing workers to prevent static electricity damage, exempt from Texas sales tax as manufacturing safety apparel?
Split answer. Grounded anti-static wristbands qualify for the safety apparel/work clothing exemption under Tex. Tax Code § 151.318(a)(9) because the circuit board manufacturing process couldn't happen…
Can someone buy an aircraft tax-free with a resale certificate if they plan to lease it to both a certificated carrier and, occasionally, private individuals?
Yes, buy the aircraft tax-free with a resale certificate. Leases to a certificated or licensed carrier of persons or property are tax-exempt under Tex. Tax Code § 151.328(a), if the carrier issues an …
Is the labor to repair a manufacturing machine — like a threading machine directly used to manufacture products for sale — exempt from Texas sales tax the same way the machine itself is exempt?
Yes. Under Tex. Tax Code § 151.3111(a), a repair service on property that would itself be exempt because of its nature or use is exempt too — so the repair of a threading machine used directly in manu…
Is individual house cleaning or maid service taxable in Texas, and does it matter whether you're an independent solo cleaner, a janitorial company, or hired by a builder for construction cleanup?
It depends on your business structure. A single individual cleaning private residences with no employees is treated as a household employee, not a taxable service provider. But a cleaning business (wi…
Which eyewear and eye-care products are exempt from Texas sales tax when dispensed by an optometrist or ophthalmologist, and does the same exemption apply to opticians?
An eye doctor asked whether frames, lenses, and contact lenses sold in a new optical office are taxable. Under Tex. Tax Code § 151.313, corrective lenses and necessary related supplies dispensed or pr…
Are software royalty payments exempt from Texas sales tax just because they're labeled a 'royalty' rather than a sale, lease, or license fee?
No, not automatically. Tax is due on the sale, lease, or licensing of software under Rule 3.308, and calling the charge a 'royalty' instead of a sale, lease, or license fee doesn't change that. There'…
Are enteral and parenteral feeding systems — nasogastric/gastrostomy tubes and related supplies — exempt from Texas sales tax as prosthetic devices, and what about the liquid food delivered through them?
Yes. Nasogastric and gastrointestinal (enteral and parenteral) feeding devices and their directly related supplies qualify as prosthetic device 'systems' under 34 TAC Rule 3.284, exempt whether or not…
Is moving existing gas or telephone lines to accommodate a building addition treated as a taxable real property service, or as nontaxable relocation?
Not taxable. Moving gas lines and telephone lines to make room for an addition to an existing building is treated as a relocation of the lines, and relocating gas and telephone lines is not taxable.
Is a charge for an asbestos survey to determine whether asbestos is present in a building taxable in Texas?
Generally not taxable. A charge for an asbestos survey (to determine if asbestos is present) is not taxable unless it's performed for an insurance investigation or claim under 34 TAC Rule 3.355 — in w…
Does the equipment that loads scrap metal into a shredder qualify for Texas's manufacturing exemption, or is it excluded as intraplant transportation equipment?
No, it doesn't qualify for the manufacturing exemption. A caterpillar material handler used to put scrap metal into a shredder is intraplant transportation equipment — moving product or raw material i…
When a manufacturer bills a customer separately for the die (mold/tooling) used to make the customer's product, but keeps possession of the die itself, is that a taxable sale of the die?
It depends on whether there's a written agreement making the customer the actual owner of the die. With a written ownership agreement, the die charge is a taxable sale (unless the customer is a manufa…
Does acetone used to flush catalyzed resin out of fiberglass spray equipment (chopper guns) qualify for the sales tax manufacturing exemption?
Yes. A custom fiberglass manufacturer's acetone, used in a built-in flush system to purge catalyzed resins from spray-equipment lines and guns during the manufacturing process, qualifies for exemption…
Is a hotel's separate charge to trade show exhibitors for access to electrical power (outlets and extension cords) taxable, and can the hotel buy the electricity and cords tax-free for resale?
The charge to exhibitors for electrical outlets and extension cords is not subject to sales tax, because it's considered part of the booth or space rental (a real property lease), not a separate taxab…
When a fire sprinkler contractor chemically cleans corroded pipe interiors and treats the water to stop further corrosion, is that taxable real property repair or nontaxable maintenance?
It depends on timing and whether the work is scheduled. Cleaning and treating pipe that has already been attacked by corrosion, done as a one-time or as-needed job, is taxable nonresidential real prop…
Do fast-wearing cutting tools like circular saw blades and drill bits used in a manufacturing operation qualify for the sales tax manufacturing exemption, even though they wear out quickly?
Yes. Circular saw blades and drill bits used in manufacturing qualify for the manufacturing exemption as long as they're used directly in the manufacturing process and cause a chemical or physical cha…
Is labor to sell and install a car stereo system taxable, and does the answer change if the stereo is later repaired or if the installation involves remodeling the vehicle?
Yes, if you're both selling and installing the stereo — the installation labor is taxed along with the stereo as part of one sales price. If you're only installing a stereo the customer already owns, …
If I sell my goods at a cooperative mall where the mall owner collects and remits the sales tax and sends me my proceeds, do I still need my own sales and use tax permit?
It depends on who's identified as the owner of the item before the sale. If you're identified as the owner before the sale, you're the seller and must have your own sales and use tax permit to collect…
If a doctor prescribes an in-ground swimming pool for physical therapy, is building it exempt from Texas sales tax the way a prescribed spa can be?
No. Even with a physician's prescription, an in-ground swimming pool doesn't qualify for the health care supplies/therapeutic device exemption because it's a permanent improvement to realty — neither …
Can a caterer/event planner buy specialty equipment (like tables, chairs, or a margarita machine) tax-free with a resale certificate if it plans to charge clients a separately stated rental fee for using that equipment?
No. A caterer must pay sales tax when it purchases equipment used to provide its food service, even if it separately bills clients a rental-style charge for using that equipment (tables, chairs, servi…
Is labor to clean and detail a private corporate aircraft taxable, and does it matter if the cleaning includes steam-cleaning the carpet?
No tax is due on labor charges for general cleaning/detailing maintenance of a private aircraft. But carpet cleaning specifically is its own taxable service under Tex. Tax Code § 151.0045 and Rule 3.3…
As of April 1, 2000, do retailers need to collect Texas sales tax on vitamins, minerals, and nutritional/herbal dietary supplements (including ones marketed for weight loss)?
No. Effective April 1, 2000, sales of vitamins, minerals, and nutritional supplements for humans — including herbal dietary food supplements marketed for weight loss or other medicinal purposes — are …
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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.