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 customer obtain a Texas sales-tax refund for a refrigerator exported to Israel almost two years after it was delivered to the customer's Texas residence?
No. The export exemption required the refrigerator to leave Texas before any in-state use, and storage counted as use. Property remaining in Texas more than 30 days was presumed stored; the nearly two…
Were Alcoholics Anonymous writings and pamphlets sold by an Intergroup subject to Texas sales tax?
Its own qualifying publications were exempt, but public sales of other publications were taxable unless a separate exemption applied.
Were salt, sodium bisulfate, and ice used by commercial fishing boats exempt from Texas sales tax?
Common table salt and qualifying ice were exempt; sodium bisulfate was taxable, and other salts required a separate exemption basis.
Who owed Texas use tax when an out-of-state buyer directed a seller to drop-ship taxable property to a Texas recipient?
The seller had to collect Texas tax or a valid resale certificate; if the buyer lacked Texas nexus and did not collect, the Texas recipient still owed the use tax.
When were gas and electricity used by a Texas laundry or dry cleaner exempt rather than taxable commercial utilities?
Utilities for cleaning the business's own rental items were exempt processing use; utilities for cleaning customer-owned items were taxable service use.
Was a paid college scholarship and financial-aid matching service taxable when it generated student information from a computer database in California?
Yes. The Comptroller treated the scholarship and grant matching as a taxable information service under Rule 3.342. If the company was engaged in business in Texas under Rule 3.286, it had to collect a…
Were separately billed aviation-fuel charges taxable when a flying club rented aircraft by the hour?
No. Separately billed aviation fuel sold to the flying club's customers was not subject to tax under the letter. The hourly aircraft-rental charge itself was taxable.
Did colored paint sprayed on steel coils qualify for a Texas manufacturing exemption as a label or as an ingredient or component of the product sold?
The letter did not reach a final exemption holding. It said the paint did not clearly meet Rule 3.314's definition of a label, but might qualify under Rule 3.300(d)(2) if it became an ingredient or co…
Were fulfillment-house charges for gluing or constructing displays and posters taxable, and were sorting, stuffing, and metering mailing services taxable?
Gluing or constructing displays and posters was taxable fabrication labor whether the printer or fulfillment house billed it. Actual mailing services such as sorting, stuffing, and metering were nonta…
Did electricity used for color-corrected lighting in a print-shop pressroom count as exempt use when calculating the predominant use of electricity?
Yes. The Comptroller concluded that color-corrected pressroom lighting used to process color was necessary and essential to that printing process, so the electricity powering it qualified as exempt us…
Was sales tax owed by an insolvent savings and loan a legally enforceable purchaser debt that the Resolution Trust Corporation receiver should pay to the seller?
Yes. Section 151.052 made sales tax added by the seller part of the sales price and a debt recoverable from the purchaser like the original price. The Comptroller told the receiver that the institutio…
Did gas used in afterburners and electricity used by fans in regulator-required air-cleaning equipment attached to a printing press qualify as exempt utility use?
Yes. Required pollution-control equipment connected with the printing process was treated as necessary and essential manufacturing equipment and qualified for the phased-in exemption if purchased on o…
Which gas and electricity uses qualified for Texas's manufacturing exemption when powering required pollution-control devices or cleaning water for pollution control and manufacturing?
Gas and electricity powering regulator-required pollution-control equipment qualified as exempt utility use because the equipment was treated as necessary and essential to manufacturing. Electricity c…
Did a mail-order seller of boat service contracts have Texas collection duties when it had no office, employee, agent, or advertising in Texas but may have shared a name with a Texas business associate?
The Comptroller could not decide without knowing the legal relationship. If the out-of-state seller and Texas associate operated under the same trade name, the seller would be engaged in business in T…
Could two drilling rigs sold by an out-of-state company and shipped from Louisiana to Texas qualify as occasional sales exempt from Texas use tax?
Yes, under the stated facts. The seller was not engaged in activity requiring a Texas permit and had made no other taxable sale, lease, or rental during the preceding 12 months, so the rig sales appea…
Did electricity used for refrigeration during produce ripening count as exempt processing use, and did refrigeration used after ripening for storage qualify?
Electricity for refrigeration used to ripen bananas, tomatoes, and other produce qualified as exempt processing use. Refrigeration used only to store already ripened produce was taxable use. The claim…
Were a child-care provider's periodic referral-list fee and newsletter taxable when families received free referrals and some providers got the newsletter at no added charge?
The $10 referral-list fee was nontaxable. The provider did not collect tax on newsletters distributed at no extra charge, because both recipient groups paid the same service fee whether or not they re…
Were a caterer's sales of raw meat and unprepared fruit and vegetables taxable, and what happened when the caterer prepared the food?
Raw, unprepared food sold by the caterer was not taxable. If the caterer prepared the food, the entire customer charge was taxable.
Did automatically renewing 30-day contracts qualify for Texas's prior-contract exemption from the 0.25% state sales-tax rate increase effective July 1, 1990?
No. The contracts lacked the definite ending date required by Rule 3.319(c)(3) and renewed as new 30-day contracts each month. An annual seasonal calendar, projected annual cost, and planned color cha…
Could a direct-pay permit holder retroactively issue its certificate two years after buying pipe and recover state or Houston local tax it had elected to pay the supplier?
No. A direct-pay permit holder had an election at purchase: issue the certificate or pay the applicable tax to the supplier. Because the client chose to pay tax that was due, it could not later claim …
Was a required $15 hospital contribution taxable when the contributor received a photograph worth an amount commensurate with the required payment?
Yes. Although the objective was to raise money for a hospital, the payment was mandatory and the photograph's value was commensurate with it. The Comptroller therefore treated the transaction as a tax…
How did a city's Development Corporation tax apply to taxable items bought inside the city or bought elsewhere and then used, stored, or consumed in the city?
A taxable item purchased in the Development Corporation city was subject to its sales tax. An item purchased from a place of business outside the taxing city but used, stored, or consumed inside it wa…
When did an apprehended vehicle count as doing business in Texas for motor vehicle tax?
The letter said an apprehended vehicle was taxable if it was doing business in Texas. Examples included Texas-to-Texas transport, maintaining Texas facilities, having a Texas representative, deliverin…
Did Texas limited sales and use tax or motor-vehicle tax apply to off-road vehicles?
Off-road vehicles were subject to limited sales and use tax plus applicable local tax. If an off-road vehicle was titled, the title documents should claim the motor-vehicle-tax exemption as “designed …
When did Texas treat an underground pipeline on easements as real property, and when was an oilfield flow line tangible personal property?
A pipeline was real property when it was permanently affixed, the parties intended permanent affixation, and the attachment enabled its intended use. Transmission lines generally met that classificati…
Could a Texas farm operator buy fertilizer for Bermuda grass in a livestock area and feed for pond fish without sales tax?
Yes. Fertilizer used on Bermuda grass in the livestock area qualified for the agricultural exemption, with an exemption certificate. Feed for catfish, bass, and bream used to control pond insects and …
Did a prescribed reclining chair with built-in massage rollers qualify for Texas's therapeutic-appliance sales-tax exemption?
Yes. The chair's built-in massage rollers stretched and relaxed muscles, so the Comptroller treated it as a therapeutic appliance or device. The seller had to retain the doctor's prescription as proof…
Could a business keep purchase orders and other records on optical or laser disks instead of paper for Texas audit purposes?
Yes. The Comptroller and Audit Division accepted optical or laser-disk recordkeeping if the business maintained backup copies and supplied sufficient equipment for auditors to examine the records on r…
How were air-to-ground telephone calls taxed when they originated in Houston and terminated either in Texas or outside the state?
Both service types were taxable. Calls from Houston to Texas locations were subject to Texas state and Houston city sales tax. Calls from Houston to points outside Texas were subject to state tax only…
Were charges for reclaiming nonhazardous petroleum-contaminated soil taxable when the soil was removed for treatment with the intent to return it to the customer?
No. The soil retained its identity as real property when removed temporarily for decontamination and return, and reclamation was neither waste disposal nor repair of an improvement. Charges by the hot…
Was excavation and installation of sloped concrete or treated supports beneath an existing building nontaxable maintenance when intended to prevent soil-heave damage?
No. The work was not scheduled periodic maintenance performed before repair was needed. Whether it repaired existing damage or prevented future heave damage, the excavation and permanent-void work was…
When were fashion-stylist services, prop rentals, and other photo-shoot charges taxable, and could the agency buy client props for resale?
Stylist work such as location selection, model and prop arranging, dressing models, and set breakdown was nontaxable when separately stated and sold as a service to a photographer or advertiser that b…
Did affiliated-entity treatment exempt security services supplied by a property manager's wholly owned subsidiary and rebilled to an unaffiliated shopping-mall owner?
No. The subsidiary's workers were employees of a separate legal entity, not the property manager or mall. The manager bought a taxable service from nonemployees and had to collect tax when charging th…
Were government and federal-court records exempt, was a reseller's markup taxable, and did an investigator include reimbursed expenses in its taxable sales price?
Government documents required under the Texas Open Records Act and federal-court documents were exempt at their original sale. A reseller's markup was taxable, and other document sales were taxable, t…
Could Louisiana parish tax reduce the Texas state or local use tax due when repaired items were delivered into Texas?
No. Repaired items delivered into Texas for Texas use were subject to state use tax, and seller representation in a Texas local jurisdiction could require local use-tax collection. Louisiana parish ta…
Was a seller a lump-sum real-property contractor when it installed permanent on-ground pools, and did merely supervising customer installation receive the same treatment?
Actual installation made the seller a lump-sum contractor: it owed tax on incorporated taxable items and collected no tax from the customer. Supervision alone was not installation. When the customer i…
Could a retailer credit a customer's account for sales tax paid in error without written consent, and when could the retailer take the matching credit on its return?
No. Rule 3.325 required the customer's written consent before an account credit, though an outright cash refund did not require that consent. The retailer could take the corresponding credit on its sa…
Could a restaurant buy toys and theme boxes in Happy Meals tax-free for resale when it collected tax on the meal's total selling price?
Yes. The Comptroller treated both the toy and theme box as resold with the meal, even if the package was discounted. The restaurant could issue resale certificates to its suppliers and had to collect …
Did a Texan owe use tax on a pickup and fifth-wheel trailer bought and taxed in other states?
Texas use tax applied when the vehicles were brought into the state for highway use, but Texas credited similar tax legally paid to other states. The owner was told to bring proof of those payments wh…
How did Texas tax installation of security systems and stand-alone fire alarms during new construction and remodeling?
Licensed security-system selling, installation, monitoring, and maintenance were taxable security services whether performed during new construction or remodeling. A combined security and fire-alarm s…
Were estate beneficiaries' auction purchases exempt as joint-ownership transfers when they had no common ownership with the estate before or after each sale?
No. Section 151.306 required the transferee to own a joint or undivided interest with the transferor before or after the transfer. The beneficiaries had no such common ownership and no qualifying bona…
Was applying a protective sealcoat to deteriorating asphalt taxable restoration or nontaxable scheduled maintenance, and could a signed exemption certificate protect the contractor?
The Comptroller classified the sealcoating as taxable restoration because the product materials described stages of asphalt deterioration and steps to restore it. Calling the proposal “parking lot mai…
Did a corporation's sale and leaseback of a telecommunications switch through a limited partnership in which it owned 1% qualify as joint-ownership transfers?
Yes, under the stated facts. Both the sale to the limited partnership and the leaseback appeared to qualify as joint-ownership transfers. The corporation therefore paid tax when it originally bought t…
How did Texas tax inherently exempt medical equipment, prescribed therapeutic appliances, institutional purchases, and kits containing both taxable and exempt medical items?
Some medical equipment was exempt by its nature without regard to purchaser or prescription. Therapeutic appliances were exempt when sold or rented to individuals under a licensed practitioner's presc…
Did Texas sales and local taxes apply to automated radio-dispatch and telephone-interconnect services, and could dedicated exchange lines be bought for resale?
The services were taxable telecommunications subject to state sales tax. No local tax applied on the stated facts because the originating tower was outside a local taxing jurisdiction. A local-exchang…
If a moving company damages a customer's furniture and files an insurance casualty claim to cover the repair, is the repair charge still subject to Texas sales tax?
PARTIALLY SUPERSEDED (see note below). As of 1990, repairing personal property (like furniture or drinking glasses) that a moving company damaged during a move was fully TAXABLE, and filing an insuran…
Were a continuous passive motion machine and the Hot Ice Dual Function Equipment exempt therapeutic devices in Texas?
Yes, subject to the buyer and prescription conditions. Both machines qualified as therapeutic devices. They and related supplies were exempt when sold, rented, or leased to an individual under a licen…
Could an out-of-state printer accept an exemption certificate for direct mail sent into Texas for a customer with no Texas presence, and what if the customer was in Texas?
Yes for the no-presence customer if the certificate stated that fact and that the materials entered interstate commerce through U.S. mail in Mississippi. For a Texas customer, the printer had to colle…
When were Texas computer consulting, resulting reports, software support, and data-processing services taxable?
Stand-alone computer consulting and resulting reports were nontaxable. Consulting connected with the consultant's sale of hardware or software made the entire charge taxable. Support for software sold…
Did a computer remain exempt as an export when testing, software installation, foreign customs problems, and site preparation delayed its shipment from Texas?
Yes. The Comptroller accepted the computer purchase as an exempt export on the documented facts. The system was configured for Algeria, staged and tested in Houston, never used there to process seismi…
Could a direct-sales distributor claim a Texas refund for tax paid to a company manager on products bought for resale or sold below suggested retail price?
Not automatically. Managers collected tax from distributors on suggested retail price, and distributors were reimbursed as products were sold. Personal-use purchases or below-suggested-price sales req…
Could a Texas repair or remodeling contractor accept a direct-payment certificate, buy transferred materials for resale, or use the certificate on lump-sum new construction?
A contractor could accept a direct-payment exemption certificate for taxable repairs and remodeling performed for a permit holder and buy materials transferred to the customer for resale. The contract…
Did a security-services contract qualify for Texas's prior-contract exemption when the seller submitted its bid before July 21, 1987, but the parties signed later?
Yes. A seller's bid submitted on or before July 21, 1987, qualified when the resulting contract was based on that bid, regardless of the later signing date. The one-year security-services contract was…
How did Texas tax installed overhead cranes and conveyor systems when they became real-property improvements, remodeled an existing building, or remained removable equipment?
Classification controlled. A realty improvement installed in new construction followed contractor rules: separated-contract materials were bought for resale, while a lump-sum contractor paid tax on in…
Was a prescribed compressor-nebulizer exempt from Texas sales tax when sold or rented to an individual, hospital, nursing home, or home health agency?
It was exempt as a therapeutic device when sold, leased, or rented to an individual under a licensed healing-arts practitioner's prescription. The device and related supplies were taxable to hospitals…
Were stand-alone fitness evaluations, individualized nutrition programs, grocery-store instruction, and appointment-only personal training taxable Texas amusement services?
No under the clarified facts in the May 23 letter. The stand-alone evaluation was instructional, both nutrition components were nontaxable personal services, and appointment-only one-on-one training w…
Was rebuilding a pedestrian area on the same site new construction or remodeling when the existing area was completely demolished and some dirt removed?
It was new construction. The existing pedestrian area between two buildings would be completely demolished, including removal of some dirt, and a new pedestrian area would be built on the same site. T…
Who had to collect Texas tax on taxable property and services sold through 900-number calls, and were the carrier's separately stated telecom charges to sponsors taxable?
The 900 sponsors had Texas nexus through the carrier's sales and collection role, and tax was due on their taxable property and service sales. Because the carrier billed and collected from Texas custo…
Were on-site waste processing and sales of the microorganisms, nutrients, and aerator systems used in that process taxable in Texas?
The on-site waste-processing charge was nontaxable because no waste was removed, but the service provider owed tax on its equipment and inputs. Separate sales of microorganisms, nutrients, and aerator…
Were charges taxable when a firm processed hazardous waste until it became nonhazardous and hired a third party to dispose of the remaining ashes?
No. The firm's customer charges for processing and removing hazardous waste were nontaxable. The third-party contractor's charge for disposing of the resulting nonhazardous ashes was also nontaxable b…
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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.