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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How did Texas apply sales tax to lump-sum and separated contracts for drilling and equipping a new water or irrigation well?
For lump-sum work, the contractor paid tax on inputs and charged no tax to the customer; separated contracts taxed materials but not labor, subject to exemption.
Were the seller's various post-surgical support garments exempt from Texas sales tax as braces?
Yes. After examining the submitted product information, Texas said every listed support garment met Rule 3.284's definition of a brace and qualified for exemption.
Could a lessor title vehicles tax-free when leasing them to a qualifying rural electric cooperative?
Yes. The 1991 letter treated qualifying rural electric cooperatives as exempt organizations and allowed vehicles leased to them to be titled in the lessor's name tax-free. Unless the vehicle was sold,…
Did a separately stated federal luxury tax on taxable jewelry or fur become part of the amount subject to Texas sales tax?
No. Texas said the federal luxury tax was excluded from the taxable sales price when separately stated and identified on the customer invoice.
Could an exempt university buy telephone lines for fire-safety hookups in university-owned fraternity houses without paying sales tax?
Yes. Texas said the exempt university could give the telephone company an exemption certificate instead of paying tax on the fire-safety telephone lines.
Were recurring Texas rental charges for returnable gas cylinders taxable when the cylinders were supplied with gas?
No. The later cylinder-rental charges were not taxable, but the gas charge was taxable unless the customer bought the contents for resale.
Were private telecommunications circuits used to control petroleum pipeline pumping stations exempt from Texas sales tax?
No. Texas said pipeline-control telecommunications were taxable, except that long-distance communications originating outside Texas were exempt.
Could a commercial tenant claim a Texas electricity exemption or refund when its landlord bought the utility and billed reimbursement under the lease?
No. Texas treated the landlord as using the utility commercially in leasing property, not reselling electricity to the tenant.
Was physician-prescribed or physician-dispensed methadone exempt, and how were dispensing bottles and prior tax payments treated?
Methadone was exempt when prescribed or dispensed by a physician. Prescription containers sold with it were exempt, while bottles used for drugs not sold were taxable.
Were mini Dopplers exempt therapeutic appliances, or taxable diagnostic devices?
They were taxable diagnostic devices. Texas expressly corrected its December 1990 letter, which had wrongly treated mini Dopplers as exempt therapeutic appliances.
Was a checkout surcharge used to recover junk-automobile waste-handling costs subject to Texas sales tax?
The surcharge followed the item sold: it was taxable on a taxable sale, but not taxable when the underlying sale was exempt as a resale.
Did a high-volume diskette duplicating machine used to copy computer programs qualify for Texas's 1991 manufacturing-equipment refund?
Yes. Because the machine manufactured computer programs sold as tangible personal property, it qualified for the 25% refund available for tax paid on the 1990 purchase.
Were remote-terminal services taxable data processing when the provider's main computer processed client data but output printed at the client's site?
Yes. Both arrangements were taxable data processing, and the Comptroller said their total charges were taxable even though reports printed at the client's site.
Did using 45 titled trailers as collateral for a loan trigger Texas motor vehicle tax?
No. The company borrowed about $125,000 on a three-year payment plan and pledged 45 trailers, but title remained in the company's name. Because the vehicles merely secured a loan and title did not cha…
Did paint and coatings used against corrosion qualify for Texas's manufacturing refund or phase-in exemption?
They qualified on processing machinery or as legally required pollution control, but not on nonqualifying piping or equipment; application labor did not qualify.
Were historical books exempt when a nonprofit society distributed books published by others, and how did Texas tax work on registered historic buildings?
The books were taxable because the society had not both published and distributed them; specified historic-building labor was exempt, but materials were taxable.
How did Texas tax lump-sum vehicle repairs, separated repairs, vehicle remodeling, and work on movable specialized equipment?
Lump-sum vehicle repairs were not taxed to the customer, separated repairs taxed incorporated parts, and all vehicle-remodeling or specialized-equipment charges were taxable.
Did a doctor's prescription make a computer exempt from Texas sales tax as medical equipment?
No. The computer did not qualify as exempt medical equipment even with a doctor's prescription; the Comptroller did not decide the software issue.
Did paving machines qualify for Texas's 25% sales-tax refund for manufacturing equipment when customers used them on roads and parking lots?
No. The machines were contractor equipment used to improve or repair real property, not qualifying manufacturing equipment, so the 25% refund was unavailable.
How did Texas tax a prison construction contract for the Federal Bureau of Prisons on city-owned land leased to the federal government?
Texas treated it as a federal contract: no tax was charged on materials incorporated into the realty, but the contractor owed tax on equipment used to build it.
Were payments taxable when an equipment-financing arrangement was labeled a lease for accounting purposes but operated as a loan?
No. Because the financing party never received or conveyed title or possession, the Comptroller treated the arrangement as a loan, not a taxable lease.
Were charges for an interstate private-line data system subject to Texas state and local sales tax when no channel terminated in Texas?
State sales tax applied, but local city, county, and transit taxes did not apply because the circuit qualified as interstate long-distance service.
When did tenant finish-out work count as new construction rather than taxable remodeling of Texas real property?
Initial finish-out of a true shell was new construction, but changing space after flooring, walls, or a ceiling had been installed was taxable remodeling.
How did Texas sales tax apply to long-distance service, separately stated 911 surcharges, federal excise tax, and municipal franchise fees?
Tax applied to specified long-distance service and municipal franchise fees, but not to separately stated 911 surcharges or federal excise tax.
Was a Texas fee for providing managers who trained and directed a facility's own housekeeping and laundry employees taxable?
No. The management fee was not taxable, but the management company owed sales or use tax on taxable items it used to provide the service.
Were accelerated monitoring-service charges taxable when a burglar-alarm customer terminated the contract early?
Yes. The customer had agreed to pay for the taxable monitoring term even after ending service, and tax timing followed the provider's accounting method.
Were monthly subscriptions and per-lead charges for faxed trade-lead information subject to Texas state and local sales tax?
Yes for Texas customers: both charges were taxable. No Texas tax was collected when the information was faxed to customers outside Texas.
Were guided educational river trips in Texas taxable even when they taught customers about river geology and botany?
Yes. Guided river trips were taxable amusement services; the rule's specific guide-service exemption covered hunting and fishing, not river trips.
Which charges at an indoor fitness and play center were taxable amusement services, and was a tumbling-style class exempt?
Passes, club cards, group trips, parties, games, food, and merchandise were taxable; the creative-movement class was exempt sport instruction.
Did using personal computers and diskettes change whether an advertising agency's preliminary and finished artwork was taxable?
No. The work and client approval controlled: preliminary art was nontaxable, finished art was taxable, and the transfer medium did not decide the result.
Did renting a licensed trailer with an empty water tank trigger Texas motor vehicle rental tax?
Yes, if the contract lasted 180 days or less. The owner had to collect the historical 6% motor vehicle rental tax and obtain a rental tax account. A single contract lasting more than 180 days was trea…
How could a computer lessor recover Texas sales tax paid to the prior owner of a supplier business on computers bought for leasing?
The purchaser could seek a refund or an assignment of the seller's refund right, or claim a return credit; local-tax credits required matching jurisdictions.
Did the 1991 federal luxury tax enter the taxable sales price for Texas motor vehicle tax?
No, when the federal luxury tax was separately stated and identified on the invoice. In that circumstance, the 1991 letter said it did not become part of the vehicle's taxable sales price and was not …
Was an extended service contract sold with a motor vehicle taxable in Texas?
The contract itself was not subject to motor vehicle tax or limited sales and use tax. Repair and replacement parts used under it remained taxable: separately billed parts were taxed to the customer, …
Were refrigeration units bought separately and attached to trailers after the vehicle sale subject to motor-vehicle tax or limited sales and use tax?
They were subject to limited sales and use tax, not motor-vehicle tax, because the accessories were separately purchased and attached after the trailer sale.
Were installation, software, and communication charges taxable when sold with a Texas information service?
Yes. The Comptroller treated all three charges as part of the taxable information service whether billed separately or as one lump sum.
Were charges for guided tours of a choose-and-cut Christmas tree farm subject to Texas sales tax?
Yes. The Comptroller treated the guided tours as taxable because they were not primarily educational, although an exempt organization could buy admission for its members with an exemption certificate.
Could an association obtain a Texas sales-tax refund for monthly publications prepared and mailed to members by an outside publisher?
No. The Comptroller treated the association as the publisher rather than a purchaser of publications, so the referenced court case did not produce a refund.
Did an aircraft modified and used for aerial photography qualify for Texas's manufacturing-equipment exemption?
No. The Comptroller treated the aircraft as support equipment because it was not used directly to manufacture a photograph.
Could a retailer claim a Texas sales-tax bad-debt credit for an estimated loss when it sold installment receivables without recourse?
No. An estimated bad-debt allowance did not identify the customers who would default; relief required a qualifying actual bad debt, such as a recourse account returned after default.
How did Texas local sales taxes apply to residential and commercial natural-gas and electricity use, and to exemption certificates?
Commercial utility use was taxable and residential use was generally exempt for special-purpose districts, but a city could tax residential use if it retained or reimposed that tax.
When were an advertising agency's internal-work commissions and radio or television production charges taxable in Texas?
Commissions tied to taxable in-house finished art were taxable, while preliminary art and third-party acquisition commissions were not; commercial production was generally nontaxable.
How did Texas tax advertising-agency work related to finished art, and how should fixed-price billing adjustments affect collected tax?
Work related to finished art was taxable, including post-approval copywriting; billing records and any client tax adjustment had to match the final taxable charge.
How did Texas tax garbage-collection costs when Houston reimbursed a homeowners association and residents paid the difference?
If residents were billed the unreimbursed difference, tax applied only to that amount; if the association absorbed it, the contractor's entire charge was taxable.
Were Shaved Ice Flavor Packets exempt food products for Texas sales-tax purposes?
No. The Comptroller treated the flavor packets as taxable because packaged soft drinks and diluted juices were excluded from the rule's food-product definition.
Were separately stated port charges on passenger tickets for an entertainment vessel subject to Texas sales tax?
Yes. The port charges were part of the selling price of the taxable amusement service, so tax applied to the total admission price including those charges.
Are reduced campground fees for storing unoccupied camping trailers and recreational vehicles subject to Texas sales tax?
Yes. Texas treated the charges as taxable storage of an unoccupied trailer or recreational vehicle, even when the vehicle remained at a campsite.
When were printed inserts for Texas newspapers or magazines exempt from sales tax?
Newspaper inserts were exempt when delivered by the printer to the newspaper distributor with supporting documentation; magazine inserts were generally taxable.
Were separately listed design, engineering, manufacturing, and performance-testing charges taxable when a manufacturer sold custom equipment?
Yes. Every listed charge was part of producing and selling the custom equipment, so design, engineering, manufacturing, and testing were all taxable.
Must a Texas campground charge sales tax for storing an owner's unoccupied trailer or recreational vehicle?
Yes. The Comptroller said a campground's charge for storing an unoccupied trailer or recreational vehicle was taxable, whether or not water and electricity were connected.
Were a Texas valet-parking company's hourly charges taxable, or did supplying employees qualify as exempt temporary help?
The total charge was taxable motor-vehicle parking service. Supplying valet workers did not qualify as temporary help under the facts described.
Which tax-preparation, electronic-filing, return-review, and refund-anticipation-loan charges were taxable in Texas?
Standalone electronic-filing fees were taxable; return preparation, return review, prepaid interest, and electronic filing provided at no charge were not.
What did the published correction say about whether an acute rehabilitation center's patient facilities were residences for utility-tax purposes?
It corrected the prior letter to say the facilities were not residences, even though patients might be confined for more than 30 days; it did not reproduce the tax conclusion.
Was BARLEYGREEN powder made from barley-leaf juice, brown rice, and kelp exempt from Texas sales and use tax?
Yes. The Comptroller classified BARLEYGREEN as a powdered food product and said Texas sales tax did not need to be collected on its sale.
What publication-refund items did Texas audit guidance allow or disallow after the Texas Monthly case?
The memo allowed qualifying publisher-created tax, reference, and travel publications, but disallowed reproductions, information services, printing, lists, and maps.
Could a debt collector accept a Texas sales-tax exemption certificate from a bank holding notes formerly connected to the FDIC or FSLIC?
No. The bank, not the FDIC, was the debt-collection client, and the letter found the bank was not a tax-exempt governmental entity.
Could a vending-machine operator obtain a refund of Texas sales tax remitted on newly exempt 25-cent bulk-vending sales?
It depended. Tax paid from the operator's own gross receipts could be refunded, but tax collected from customers had to be returned to them first.
Which charges for developing Texas video training seminars, manuals, master tapes, and copies were taxable?
Seminar and manual development was not taxable, but the developer owed tax on its materials and had to tax copies of master tapes, manuals, and other training materials.
Did Texas county sales tax apply to residential use of gas and electricity?
No. The Comptroller said county tax followed the same guidelines as state tax, so county and state tax should not be collected on residential electricity use.
How did Texas sales tax apply to a contractor expanding an underground sprinkler system at an apartment complex?
Labor to improve the residential property was not taxable; material-tax treatment depended on whether the contractor used a lump-sum or separated contract.
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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.