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 tax rental of a semitrailer with a permanently attached CAT scanner and related services?
A contract over 180 days was a lease, so no tax was due on monthly charges if vehicle tax had already been paid on the trailer and all attached equipment. A shorter contract was a taxable rental requi…
How did Texas apply sales and use tax to demolition, site preparation, equipment, freight, and contracts for a new manufacturing project?
The treatment varied: complete demolition and new-construction labor were generally nontaxable, while debris removal, taxable materials, equipment, and some installation charges were taxable.
Which purchases could a property manager make tax-free in Fannie Mae's name under the reviewed Texas management contract?
Items bought in Fannie Mae's name and incorporated into or used on the managed property could qualify; the manager's own phone, office supplies, and equipment did not.
Did transferring accounts receivable under a federal bankruptcy-court order accelerate unpaid Texas sales tax?
No. The Comptroller declined to accelerate the remaining tax under Rule 3.302(c), and the court-authorized collector could continue cash-basis reporting.
Was an optional, nonrefundable damage-waiver fee on a Texas tuxedo rental taxable?
Yes. The Comptroller treated the waiver fee as a prepayment toward taxable restoration or repair services, so the rental business had to tax it.
Was feed for a rancher's cow dog exempt from Texas sales tax when the dog was not used exclusively on the farm or ranch?
No. Feed for a working cattle dog was exempt only if the dog was used exclusively on the farm or ranch; this dog's off-farm use made its food taxable.
How did Texas tax shared title-plant costs, management services, and information sold to shareholders and nonshareholders?
A jointly owned title plant paid tax on taxable inputs but did not tax shareholder cost reimbursements; taxable information sold to nonshareholders remained taxable.
Were separately stated insurance charges for goods shipped to customers taxable in Texas?
Yes. Insurance charges on shipped goods were taxable even when separately stated because the Comptroller treated them as part of the sales price.
Could a Texas direct-payment-permit holder use its certificate and seek an Enterprise Zone Project tax refund on construction purchases?
Yes for a separated contract, but not a lump-sum contract. The permit holder could accrue tax on materials and seek a refund for qualifying purchases and new jobs.
Were Texas repair charges for exempt medical equipment and prescribed therapeutic appliances taxable?
No. Repairs to exempt medical equipment were exempt, and therapeutic-device repairs were exempt when the individual used the item under a practitioner's prescription.
Were other states and their political subdivisions exempt from Texas sales and use tax on purchases made in Texas?
No. The Texas governmental exemption did not cover other states or their political subdivisions, so they owed state and applicable local tax.
Did the Texas Monthly publication-refund decision entitle an online database provider's customers to refunds of tax on search services?
No. The company sold taxable information services, not periodicals or other publications covered by the Texas Monthly refund treatment.
Could a trade-in titled to someone other than the new-vehicle buyer reduce Texas motor vehicle tax?
Yes. The 1990 letter said the traded vehicle did not have to be titled in the purchaser's name. A vehicle traded to the seller reduced the amount subject to motor vehicle tax even when another person …
Could moving a floor-mounted dimmer switch to hand access satisfy Texas's historical modified-vehicle exemption?
Yes. The 1990 letter said a vehicle modified for operation by, or transportation of, a person meeting the historical disability standard was exempt. Moving a floor-mounted dimmer switch so it could be…
Which electricity used by a Texas ship repairer and machine shop qualified for the manufacturing exemption?
Electricity directly used to manufacture parts and fabricated items for sale was exempt; electricity used to install or repair customer property was taxable commercial use.
Did Texas tax equipment sold for use in refurbishing a West Indies refinery?
The seller had to collect Texas tax unless it delivered the items to a carrier or freight forwarder for export; purchaser possession in Texas made tax due, subject to a documented import refund.
How did Texas tax merchant credit-card processing, purchased data processing, setup packages, and card-authorization services?
Merchant processing and authorization were nontaxable, but purchased data processing was taxable unless it benefited the processor's own out-of-state location.
Did arranging engineering and equipment-installation work in Texas require an Illinois seller to collect Texas tax?
Yes. Engineering and installation performed in Texas on the seller's behalf meant it was doing business in Texas and had to obtain a permit and collect applicable state and local tax.
Did Texas tax software delivered to an affiliated company outside Texas or data-processing access sold to its Texas affiliate?
Out-of-state software delivery and related out-of-state services were not taxable; intercompany data processing was exempt only if the affiliates qualified under § 151.346.
Was a Texas periodical-subscription agency the taxable seller of magazines it ordered for libraries and corporate customers?
No. The agency provided a nontaxable service and never owned or possessed the periodicals; the publisher sold the subscription to the customer.
Did Comptroller's Decision No. 22,974 concern cylinder charges imposed on industrial-gas customers?
No. It concerned the taxpayer's own lease payments for cylinders it acquired, and the Comptroller said a published CCH summary incorrectly described those payments as customer charges.
Was the federal luxury tax included in the amount subject to Texas sales or use tax on jewelry and furs?
No, when separately stated and identified on the invoice. Texas sales tax still applied to the full retail sales price before the federal luxury tax.
Could a Texas seller's clearing-house agent file sales-tax returns and remit tax under the agent's permit number?
No. An agent could bill customers and collect funds, but the seller remained responsible for filing returns, remitting tax, and keeping sales records.
Was removing a cement plug from existing well casing to reenter a plugged and abandoned Texas well subject to sales tax?
No. Texas treated drilling cement out of existing casing to reenter a plugged well as a nontaxable well service.
Did an aircraft used in a Texas aerial-photography business qualify as manufacturing equipment?
No. Although necessary and essential to producing aerial photographs, the aircraft was not used directly in manufacturing them.
Were 12-month subscriptions to monthly or biweekly comic books taxable in Texas?
Yes. The comic books did not qualify as magazines because they lacked stories, articles, and essays by various writers as required by Rule 3.299.
Which cookbook, book, and museum-meal sales by a qualifying Texas nonprofit organization were taxable?
Its own published cookbook was exempt, but books it did not publish—including exclusive reprints—and meals sold at its museum were taxable.
When were charges for slicing and disposing of used tires taxable as garbage collection in Texas?
They were nontaxable when customers brought tires to the same place where they were sliced and buried, but taxable when the company picked them up or hauled them to another disposal site.
How could publishers return and recover Texas sales tax on qualifying pre-August 28, 1989 publication sales after Texas Monthly?
Publishers could refund customers and claim a credit or amend returns, or assign the refund right to customers with the required invoices and schedules.
How did Texas tax fixed-price residential and commercial repair contracts and insurance reimbursements for cost overruns?
Residential lump-sum customers were not charged tax and the contractor paid tax on materials; commercial billings were taxable, with no extra tax on documented insurance reimbursements.
When were lump-sum HVAC filter and preventive-maintenance contracts taxable in Texas?
Maintenance-only plans were nontaxable; a plan including repairs stayed nontaxable only while repair charges were 5% or less of the total, with parts treated separately.
Were separately stated telephone-directory listing charges taxable in Texas?
No. Directory listings were not taxable items when separately stated, but a lump-sum charge combining a listing with taxable basic local exchange service was fully taxable.
Did steam generators and distribution lines used for tertiary oil recovery become improvements to Texas real property?
No. The generators and lines remained tangible personal property because they retained their identity and could be removed without extensive damage; attached support arms might differ.
Did a Texas electronic tax-return filing service have to collect tax from out-of-state customers?
No for the described non-Texas customers. Electronic filing was treated as telecommunications, and long-distance service was exempt unless both originated from and was billed to Texas.
How did a Texas electronic tax-filing provider tax customers and buy the underlying data transmission?
It could buy transmission for resale, charged no Texas tax to non-Texas customers, and charged state and local tax to Texas customers, with local tax based on its sales office.
Did an after-the-fact statement that tax was included in a lump-sum repair invoice protect the customer from Texas tax liability?
Not by itself. The customer needed specific proof of the taxable price, state and local tax amounts and rates, and the reporting period in which the vendor remitted the tax.
Was monthly microbial treatment that prevented paraffin buildup in oil-well equipment taxable in Texas?
Yes. Texas classified the treatment as taxable maintenance of tangible personal property because it limited deterioration of tubing, rods, and flow lines.
Were labor and materials for restoring Texas historic buildings exempt from sales tax?
Labor was exempt only for property in the National Register of Historic Places; a Recorded Texas Historic Landmark alone did not qualify, and materials remained taxable unless another exemption applie…
Was destructive testing of computer chips for manufacturers a taxable Texas service?
No. The chip-testing service was not taxable, and destroying sample chips during testing did not make the work processing or part of manufacturing.
Were nitrogen and carbon dioxide taxable when injected into a formation to maintain pressure during natural-gas production?
Yes. The gases served no identified exempt function and were not resold, so Texas treated both nitrogen and carbon dioxide as taxable in the described use.
Was a nine-year machinery sale-leaseback with a 10%-of-cost purchase option a financing lease for Texas tax?
Yes. The option price was only one-sixth of expected fair market value, making it nominal; Texas taxed the financing lease as a sale rather than an operating lease.
Were food, drinks, gratuities, and ceremony charges for a church-sponsored wedding taxable in Texas?
Church-prepared food and cake were exempt, but a caterer's food, cake, alcohol, and gratuity charges were taxable; separately stated ceremony charges were not taxable.
Did Texas utilities need exemption certificates for electricity accounts coded as agricultural irrigation?
Yes. Power used to irrigate farm or ranch products for sale was exempt, but the utility still needed a certificate showing exclusive or predominant qualifying use.
Was licensed collection and hauling of special or infectious medical waste for the Texas prison system taxable?
No. The collection service was nontaxable, but the hauler owed tax on containers, air-conditioning units, and all other items used to store, collect, and transport the waste.
When were Texas computer hardware and software service contracts taxable?
Hardware contracts were taxable regardless of who sold the equipment; software contracts were taxable only for software the service provider originally sold, with contract-programming services exempt.
Were cemetery grounds-maintenance labor and the materials used in that work taxable in Texas?
Maintenance labor was excluded from tax under a cemetery-specific policy retroactive to October 1, 1987, but weed killer, mower parts, marble, and other materials remained taxable.
How could a Texas elevator contract combining maintenance and repairs avoid tax on its full price?
The provider could separately tax a documented repair percentage based on prior work orders, or a reasonable estimate for a new contract; otherwise repairs over 5% taxed the full price.
Could a private lessor buy materials and services tax-free for GSA-required improvements to its leased building?
Yes, by exemption certificate for items incorporated for GSA's primary use and benefit; a resale certificate applied only to goods or services separately resold to GSA.
Were fees for taking game animals and receiving guide services on private Texas acreage taxable?
No. Texas treated the animal fee as payment for a private-land right, or profit a prendre, and Rule 3.298 specifically exempted hunting and fishing guide services.
Were catered meals and soft drinks sold to students during the regular Texas school day taxable?
No. Meals, food products, and soft drinks sold at school during the regular school day were exempt, but after-hours sales such as a fundraising supper were taxable.
Was the full $15 Dial 976 charge for merchandise taxable when part was retained as a marketing fee?
Yes. Texas taxed the full $15 selling price without deducting the seller's $5 marketing fee, supplier payment, service fee, or other expenses.
Which Texas taxes applied to residential gas and electricity, and how did a mixed-use meter qualify for exemption?
Residential use was exempt from state and specified local taxes, subject to some city exceptions; a mixed-use meter required an engineer-certified predominant-use study.
Was electricity used for aquaculture and drip-irrigation research exempt from Texas sales tax in this 1990 ruling?
No. Texas treated the research electricity and gas as commercial use because the taxpayer was neither manufacturing goods for sale nor conducting qualifying farm-or-ranch agriculture.
Was a Texas sightseeing tour exempt if it combined registered historic landmarks with other locations?
No. A multi-location tour was fully taxable if it included any place outside the statutory historic-site categories; tours exclusively of qualifying landmarks were exempt.
Did a publisher owe tax on printing and other services used to make free college telephone directories?
Yes. Because it gave the directories to schools rather than selling them, the publisher owed tax on purchased printing, photography, illustration, and similar services.
Could cash insurance proceeds for a stolen vehicle reduce the taxable price of its replacement?
No. A cash payment from the insurer could not be deducted from the replacement vehicle's purchase price. The letter's example taxed the full $20,000 price of a new vehicle regardless of the amount rec…
Were consumable overhead materials used by a contractor on a federal real-property contract exempt when title passed to the government?
No. Rule 3.291 taxed overhead supplies used on federal contracts unless incorporated into the realty, despite the contract's title-passage clause.
Did this 1990 Texas internal memo conclusively exempt feedlot grain-mixing equipment?
No definitive conclusion appears. One passage calls exclusive feedlot mixing equipment exempt, while later notes record conflicting views on whether bought ingredients made the activity taxable proces…
Were single-use drums and containers used for exempt hazardous-waste disposal exempt from Texas sales tax?
No. The disposal service was exempt, but the provider consumed the drums after manufacturing ended, so the containers remained taxable and did not qualify as pollution-control manufacturing materials.
What Texas tax exemptions applied to the Boy Scouts National Council and individual branches or troops?
The National Council had a 501(c)(3) sales-tax exemption, while all branches and troops had educational-organization exemptions covering sales, hotel, and motor-vehicle taxes.
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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.