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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Could a seller refund tax collected on geologic studies after Texas expanded its exemption for scientifically observed geologic information?
Yes, subject to the letter's historical categories and four-year limit. Texas said post-October 1987 tax on qualifying geologic information services could be refunded.
Did transferring an entire software-licensing business and its inventory to a new subsidiary qualify for Texas sales-tax exemptions?
Yes. The licensing business was an identifiable segment transferred in one transaction, so its operating assets qualified; inventory was separately exempt as a sale for resale.
Could a lease operator receive 100% of a natural-gas-tax refund when an interest owner separately sold 25% of production taken in kind?
Yes, if the in-kind owner assigned its refund claim to the operator and the refund on that owner's gas was otherwise proper, subject to verification of the operator's records.
How did Texas tax jewelry trade-ins, including a customer trading a higher-value ring for a lower-value watch and receiving cash back?
Tax generally applied to the balance after a qualifying like-kind trade-in. When a $9,000 ring was traded for a $7,000 watch with $2,000 returned, no tax resulted.
Were marketing leads sold to insurance agents, home remodelers, and similar customers taxable information services?
Yes. Texas treated the marketing leads as taxable information services because the same information could be sold to multiple customers and therefore was not proprietary to one client.
Were a corporation's lease payments taxable when it leased parking lots to provide free parking for employees or customers?
Yes. Texas said lease payments for parking lots used to provide free employee or customer parking were taxable under Rule 3.315 on motor-vehicle parking and storage.
How did Texas tax financing leases of motor vehicles and a wheeled compressor?
For the two vehicles, lease payments were not separately taxed, but the lessee owed historical vehicle tax on all lease payments plus the buyout when title passed, less tax paid by the lessor at purch…
Could a business donate uniforms, equipment, prepared food, and disposable serving items to tax-exempt organizations without owing sales tax?
Generally yes, with proper exemption treatment and records. Uniforms and equipment bought under a valid exemption certificate could be donated to qualifying exempt organizations, while donated taxable…
What happened when a customer refused to pay sales tax, or the seller initially omitted tax from the invoice?
The seller still had to collect and remit the tax. Tax became part of the sales price and could be recovered like the original price; an omitted tax charge could be back-billed.
How did Texas classify nitrogen and coil-tubing well services between limited sales tax, the 2.42% well-servicing tax, and neither tax?
The job's purpose controlled. A service could fall under limited sales tax, the 2.42% well-servicing tax, or neither—but not both taxes on the same job—and documentation was essential.
Did a seller still owe Texas sales tax when customers paid for taxable asset-location services but refused to reimburse the tax?
Yes. Customer refusal did not relieve the seller of remitting tax. Asset-location investigations required a license and were taxable services under the letter.
Was a scientific golf-swing measurement service taxable, and how were optional slow-motion videotapes treated?
The measurement service was nontaxable. Optional videotape sales were taxable, while the provider paid tax on inputs and could credit supplier tax on tapes later sold.
Was a per-gallon charge for pumping, treating, and permit-discharging residual liquid from removed underground fuel tanks taxable?
No. Texas said the per-gallon charge was not taxable because the permitted industrial discharge was excluded from the rule's definition of garbage or other solid waste.
Was surgical autotransfusion taxable, and could the provider buy disposable supplies tax-free when serving an exempt hospital?
Autotransfusion was a nontaxable medical service, but the provider had to pay tax on disposable and other taxable supplies—even when its customer was an exempt hospital.
Which separately stated health-spa charges were taxable: massages, facials, pedicures, manicures, or hydrotherapy baths?
Only the hydrotherapy-bath charge was taxable. Texas said separately stated charges for massages, facials, pedicures, and manicures were not subject to sales tax.
How did Texas sales tax apply to a nonprofit benefit auction's unique experiences, artwork, and any separately imposed federal luxury tax?
A dinner-with-the-governor experience was not taxable, artwork was taxable like other tangible property, and any federal luxury tax could be excluded when calculating Texas tax.
Which handling of sand, dirt, and gravel counted as processing, and when was delivery nontaxable?
Mixing or crushing was processing; sizing, screening, sorting, washing, or drying was not. Delivery of unprocessed material was nontaxable, while processed material was taxable.
Could a security company exclude a separately stated, dollar-for-dollar employee health-insurance reimbursement from its taxable service charge?
No. The reimbursement was taxable overhead within the security-service price, whether separately stated or marked up; it was not a distinct unrelated service.
Did the offshore-drilling exemption apply when the platform and wellhead were outside Texas waters but the wellbore entered Texas territory?
No. The exemption required exploration or production exclusively outside Texas; equipment used for a well operating inside and outside Texas territory was taxable.
Could a vehicle dealer receive a tax refund when a sale failed after the dealer paid the tax?
Yes, as a historical exception to the usual purchaser-only refund practice. The dealer had to show a dishonored check or draft, provide the original or a copy of the tax receipt, and establish that it…
When was a delivered and installed portable building taxable as personal property rather than treated as an improvement to realty?
The total sale, delivery, and installation charge was taxable unless the building was permanently foundation-affixed with plumbing and electricity appropriate to its use.
How could a purchaser prove goods were exported to Mexico and obtain a refund of Texas sales tax paid to the seller?
The purchaser needed proof of export, such as a Mexican customs pedimento, and had to seek the refund from the seller. A passport and driver's license did not prove export.
When did a direct-payment-permit holder owe use tax on taxable items bought tax-free and stored or used in Texas?
If Texas use was known, tax was due when the items were first stored, used, or consumed. If destination was unknown, the holder could consistently elect storage or withdrawal.
Could a pay-telephone provider give its local-exchange supplier a resale certificate instead of paying tax on the purchased access service?
Yes. Texas said the provider could issue a resale certificate to the supplier for basic local-exchange service purchased to facilitate public pay-telephone service.
Could a private Texas engineering contractor buy equipment and materials tax-free merely because it used them on federal-government contracts?
No. The contractor was the taxable consumer of items used to provide nontaxable engineering services; only items sold directly to the federal government qualified for resale treatment.
Was labor to install a rubber lining in a Texas storage tank taxable as remodeling or exempt as new construction?
It depended on the tank. Labor was nontaxable new construction if installed before the unfinished tank's first use, but taxable remodeling if the tank was finished or used.
When did Texas treat software work as nontaxable programming created from scratch rather than a taxable completed program?
Creating a specific new program for one customer was nontaxable contract programming, but a later sale of that completed program to another customer was taxable.
How did Texas tax window- and door-screen installation on new, residential, and existing nonresidential property?
New and residential installations used contractor rules, while repair or remodeling of existing nonresidential property was taxable on the total charge.
Could a fertilizer company buy replacement tires for free-loan fertilizer applicators under Texas's agricultural exemption?
Yes, only if the applicators were used exclusively on a farm or ranch for the qualifying agricultural production described in the letter.
Could a purchaser obtain a tax refund by getting a seller to separate qualifying repair-part charges after an original lump-sum invoice?
Sometimes. A corrected seller invoice or letter could support a refund when separation did not shift who owed tax; purchaser notes from a phone call were insufficient.
Were Texas-origin audio and video line-feed services sold to commercial broadcast stations taxable telecommunications services?
Yes. Texas treated the line-feed service as taxable, while allowing specified resale-certificate treatment for cable-TV sales and transferred property.
Did permanent disability alone qualify a vehicle purchase for Texas's historical disability exemption?
No. The 1991 letter said the vehicle had to be specially modified for operation by, or transportation of, a person meeting the rule's disability standard and had to be primarily driven by or used to t…
Could farmers claim Texas's agricultural exemption for installed underground irrigation pipe, tanks, or water-well casing?
No. Texas treated underground components as taxable permanent real-property improvements, while qualifying portable and above-ground equipment could be exempt.
Was a truck-driver monitoring program taxable when the provider installed its own device and supplied ongoing calls, reports, and performance materials?
No. Texas treated the arrangement as a nontaxable monitoring service rather than a device rental, but the provider owed tax on the device components and other materials.
Were horoscope readings, 12-month biorhythm charts, lucky numbers, and personal astrology or psychic consultations taxable in Texas?
Yes. Texas classified all of those offerings as taxable amusement services under Rule 3.298(a)(1)(F) and sent the provider a sales-tax permit application.
Did the Texas Historical Commission have to collect sales tax on historical-marker plaques posted beside highways or on buildings?
No. Because the sales-tax law did not define 'writings,' the Comptroller treated the Commission's historical-marker plaques as exempt writings under § 151.312.
Was a bookseller's separately labeled postage-and-handling charge subject to Texas sales tax?
Yes. Texas said the seller properly taxed the full bill, including the P&H charge, because the narrow third-party U.S. postage exclusion did not apply.
Which vehicle services were taxable: inspections, insurance-purpose appraisals, other appraisals, breakdown coverage, or roadside repairs?
Separately stated inspections and noninsurance appraisals were not taxable; insurance-purpose appraisals were taxable. Repair parts were taxable, but repair labor was not.
Could airlines buying Texas debt-collection services claim multistate-purchaser treatment with exemption certificates?
Yes, but the airlines had to issue exemption certificates and accrue the proper Texas tax; the provider's requested refunds required verification first.
Was the 1991 federal automobile luxury tax included in Texas's motor vehicle sales tax base?
No, if the retailer separately stated and identified the federal tax to the customer. The letter also said long-term lease payments were not subject to motor vehicle sales tax, the lessor's vehicle pu…
How did Texas tax laundromat vending sales, coin-operated washers and dryers, drop-off laundry, and vending commissions?
Accessible vending sales and drop-off laundry were taxable; coin-operated washer/dryer receipts and commissions from inaccessible machines were not.
How did Texas source state and local sales tax for conference-calling services and long-distance calling-card calls?
Texas taxed conference bridging performed in Texas regardless of billing address. Calling-card tax depended on actual call origin, destination, and Texas billing or service facts.
Could a utility credit an electricity sales-tax refund to the customer's account instead of paying the refund directly?
Yes, but only with the customer's written consent to apply the sales-tax refund as an account credit rather than issue a refund.
When does a required or suggested donation become a taxable sale or admission charge in Texas?
A mandatory payment normally became taxable when the value received was commensurate with it, although an exemption could still apply to the transaction.
Did assigning a computer purchase to a leasing company remove the customer's Texas sales-tax liability if the customer had already used the computer?
No. If the customer used the computer before assigning the purchase order to the leasing company, the customer owed tax on the computer purchase.
Was the sale of a blood autotransfuser to a Texas hospital taxable when the hospital used it in patient care?
Yes. The hospital was the consumer of taxable patient-care items, so the equipment sale was taxable unless the hospital supplied a valid exemption certificate.
Could a registered engineer's signature and seal replace the purchaser's signature on a predominant-use utility exemption certificate?
No. The engineer certified the study, but the purchaser still had to sign. An agent could sign with specific power of attorney, subject to the utility's acceptance.
Was upholstery labor included in the taxable sales price when a company bought chair frames, hired another company to upholster them, and sold completed chairs?
Yes. Texas said tax applied to the completed chair's full sales price, including upholstery labor whether or not separately stated; resale certificates could cover inputs.
Did Texas treat apartment and nursing-home common areas as residential real property, and was new-construction labor taxable?
Yes, the listed properties and their common-area improvements were residential. Separately stated materials were taxable, but new-construction labor was not.
Did the occasional-sale exemption cover a Texas manufacturer selling an aircraft used for employee transportation and charter activity?
No. Texas said the aircraft was a general-business-purpose asset, and the manufacturer was not selling the business's entire operating assets.
When could restaurants sell meals tax-free to government employees or religious, charitable, and educational organizations?
Only when the exempt entity or its authorized agent made and directly paid for a qualifying purchase with valid documentation. Official travel alone did not exempt an employee's meal.
What documentation did a natural-gas seller need for predominant-use exemptions or gas delivered through a Texas pipeline interconnect for out-of-state use?
The seller needed valid exemption documents or collected tax. For out-of-state transport, pipeline contracts or invoices naming the foreign delivery point could prove export.
Could corporations transfer business assets into a new partnership, or sell an undivided interest for cash, without Texas sales tax?
Potentially. No-consideration contributions were not sales, and joint-ownership transfers could be exempt if prior tax and bona fide-contract conditions were met.
Did transferring land to a contractor count as payment, and did the customer owe sales tax on a lump-sum geodesic-dome construction contract?
The land was consideration equal to the credit received, but the customer owed no tax on the lump-sum new-construction contract; the contractor owed tax on materials.
Did a Texas outdoor-play company have to collect sales tax when it sold vouchers that could later be exchanged for assigned-seat tickets?
No. The vouchers were not admission documents, so tax was collected only when customers exchanged them for actual play tickets.
Was a monthly apartment-locator package taxable when it included updated pricing information, a computer, laser disc, and software?
Yes. Texas taxed the full monthly charge as an information service and allowed the provider to buy customer-controlled equipment and software for resale.
Which charges in a Texas modeling package were taxable when it included photo preparation, a session, a portfolio, and directory placement?
The preparation, photo session, and portfolio package were taxable in full. A separately stated charge for directory placement was not taxable.
Did a January 1990 contract avoid later Texas state and Amarillo sales-tax increases when it passed present and future taxes to the customer?
No. The contract's tax pass-through clause made the customer responsible for present and future taxes, so the prior-contract exemption did not apply.
When a Texas vendor rebuilds a customer's motor-vehicle part and returns that same part, is the full charge taxable?
No. Returning the same rebuilt part to the same customer was a repair: labor was not taxable, while materials followed separated- or lump-sum-contract rules.
Were connection, PBX-capacity, repair, and building-wiring jobs performed for a Texas telecommunications provider taxable?
Yes. All listed functions were taxable, but resold connection service could be covered by a resale certificate; PBX and building work could not.
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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.