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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Were books, pamphlets, and other writings published and distributed by a charitable nonprofit exempt from Texas sales tax, and could previously collected tax be refunded?
Yes. The charitable nonprofit's own books, pamphlets, and other writings were exempt under a new exemption effective August 28, 1989. Other taxable property it sold, leased, or rented remained taxable…
Was a property manager's payroll reimbursement nontaxable when it included fringe costs and an extra 1% that could become profit, and could prior invoices be refunded?
No. The charge was not a dollar-for-dollar reimbursement because it included an extra 1% the manager could retain, so charges for taxable employee services were taxable. Completed prior invoices could…
Did Texas's intercorporate-services exemption cover landscaping and hardscaping performed for affiliates, and how were separated and lump-sum hardscaping contracts taxed?
The exemption covered labor to plant trees, shrubs, or grass and apply soil or additives for the affiliated customer described. It did not cover hardscaping contractors building sprinklers, ponds, poo…
When did motel electricity and natural gas qualify as exempt residential use, and could the motel claim prospective exemption or past refunds?
Only utilities consumed in rooms rented to the same person for at least 30 consecutive days counted as residential use, and only during that stay. Short-term rooms and common, office, and restaurant a…
Was labor to repair and repave privately owned streets and parking areas in deed-restricted residential subdivisions taxable in Texas?
No. The Comptroller's Policy Committee treated the labor as exempt repairs to residential real property where homeowners associations paid for work on private subdivision roads that had not been dedic…
Could a dealer take title tax-free when federal odometer rules required title to a vehicle held for resale?
Yes, when federal Truth in Mileage Act procedures required the dealer to take title to a vehicle held exclusively for resale and not sold to a Texas retail customer. Tax applied if the titled vehicle …
How did Texas tax a property manager's accounting work, installed replacement light bulbs, and tenant charges for nonresidential remodeling including overhead?
Some accounting work, including accounts-payable checks and accounts-receivable billings, was taxable data processing. The total tenant charge to install a replacement light bulb was taxable. The tota…
Did exclusion from Texas's 2.42% miscellaneous occupation tax make services for converting a production well to a saltwater-disposal well exempt from sales tax?
No automatic sales-tax exemption followed. Conversion activities could be taxable or nontaxable depending on the work. Replacing the production wellhead with disposal-well equipment was a taxable sale…
Was removing and draining an underground fuel tank and replacing it with another tank taxable, and what if the same tank was repaired and reinstalled?
Removing an underground fuel tank, draining it, and replacing it with another tank was nontaxable. Repairing the same tank and placing it back was taxable.
Could a nonprofit business association's payroll processing and other taxable services for member corporations qualify for Texas's affiliated-entity exemption?
Yes, conditionally. If the association and its members were affiliated entities under 26 U.S.C. section 1504 and met the consolidated-return requirements referenced by Tax Code section 151.346, the se…
Was towing a car from the owner's home directly to a repair shop taxable, and what if the wrecker stored the car first?
Direct towing from the home to the repair shop was nontaxable. Towing related to vehicle storage was taxable if the wrecker stored the car before delivery, unless the towing fee was separately stated …
Did wild-game-bird feeders qualify as exempt agricultural machinery or equipment when sold for use on a Texas farm or ranch?
No. The agricultural exemption covered machinery and equipment used exclusively on a farm or ranch to produce agricultural products sold in the regular course of business, and the wild-game-bird feede…
Did gas and electricity used at a container division and brewing operation qualify for Texas's manufacturing-utility exemption under the predominant-use test?
Yes on the submitted usage study. Manufacturing was exempt use, and more than half of utility use measured by each single meter was for exempt purposes, making all use through that meter exempt. Batte…
Did lawyers, CPAs, and other professionals need a Texas sales-tax permit and have to charge tax on photocopies made while providing professional services?
No. The Comptroller did not require professionals such as lawyers and CPAs to hold a sales-tax permit or charge sales tax on photocopies made in the course of providing professional services to client…
Were artwork, typesetting, photographs, and separate image-licensing fees taxable when used to print books, calendars, cards, and posters for sale?
The artwork, typesetting, and photographs qualified as exempt materials necessary and essential to manufacturing printed goods for sale. Separate payments for the right to use an image or illustration…
How did Texas tax demolition, debris removal, site preparation, tank work, and equipment supplied with an operator, and what earlier answer did the Comptroller correct?
Demolition alone was generally nontaxable, while debris removal was taxable and could tax a bundled charge when it exceeded 5%. Site preparation, fill dirt, and excess-dirt hauling tied to new constru…
Was a membership fee taxable when membership entitled customers to merchandise discounts at a retail outlet that also sold to nonmembers?
No. The retail membership, whose purpose was to give members merchandise discounts unavailable to nonmembers shopping at the same store, was not taxable at the time of the letter.
Could multiple vehicles, including destroyed or stolen vehicles, support a fair-market-value deduction?
Multiple vehicles could support deductions against one replacement with no numerical limit, but tax could not become negative. Destroyed or stolen vehicles did not qualify because they were not sold o…
Was a properly completed Mexican Manifesto acceptable proof for a Texas sales-tax refund on exported goods worth less than $1,000?
Yes. A properly completed Manifesto was acceptable proof for goods valued below $1,000 if it specifically described the quantity and merchandise purchased in Texas. The purchaser had to give the selle…
Was a bus excursion that began and ended in Texas but traveled to the East Coast and Canada taxable as an amusement service?
No. Although the excursion included sightseeing, its primary element was transportation between Texas and the East Coast and Canada. The Comptroller treated it as a trip rather than a taxable amusemen…
Were materials for an out-of-state lump-sum construction contract taxable when a Texas seller delivered them to a Texas fabricator that then sent the assembled product out of state by common carrier?
No. The May 1990 letter corrected an earlier answer and held the materials nontaxable when the seller delivered them to a Texas third-party fabricator and the fabricator delivered the assembled produc…
For Texas franchise-tax purposes, could a trust, partnership, association, corporation, or employee stock-plan trust count as one shareholder of a close corporation?
Yes. Each qualifying entity could count as one shareholder if it was not created primarily to hold the close corporation's stock. An employee stock-plan trust generally counted as one shareholder, sub…
Was labor taxable when a cable television operator completely replaced its distribution plant by hanging a new plant and then tearing out the old one?
No. The Comptroller treated the complete cable-plant replacement as new construction, so the installation labor was not taxable, and treated removal of the old plant as nontaxable demolition.
How did Texas tax broadcast-receiving equipment, its installation in new or existing buildings, and charges to receive broadcast signals?
The equipment and seller-installed tangible-personal-property installations were taxable. Permanent installation in existing nonresidential realty made the full charge taxable repair or remodeling; ne…
Were natural gas and electricity exempt when a Texas food business used them to prepare food sold to mobile vendors for resale?
Yes, for utilities directly used to prepare food for resale, because the business was acting as a food processor rather than preparing food for immediate consumption. Utilities for storage, lighting, …
Could a Texas tax-exempt hospital buy tickets to taxable amusement services tax-free for its members, and what happened if it resold the tickets to employees?
The exempt hospital could buy amusement services tax-free for itself or its members, but it had to collect sales tax if it bought taxable tickets and then sold them to employees.
Did Texas's agricultural sales-tax exemption cover equipment used in a commercial crab-fishing operation?
No. Texas treated commercial crabbing as fishing rather than agriculture because the crabs were not animals in captivity, so the operation's equipment did not qualify for the farm-and-ranch equipment …
How did Texas tax fundraising products, video yearbooks, and advertising sold through schools and organizations?
Cookies and summer sausage were exempt food, while candy was exempt only in specified circumstances. Schools could buy taxable video yearbooks for resale, with tax due on the student selling price, bu…
Was labor subject to Texas sales tax when it was performed at a twin plant in Mexico, with or without Maquiladora export documents?
No. Labor performed in Mexico was not subject to Texas sales tax whether billed to a twin plant with valid Maquiladora documents or to a Mexican company without them. When the documents were absent, t…
Were charges taxable when the City of Huntsville operated a central burglar-alarm monitoring facility in its police station?
No. The Comptroller ruled that the city's alarm-monitoring charges were not subject to sales tax because Texas political subdivisions were exempt from licensing under the Private Investigators and Pri…
How did Texas tax heating and air-conditioning repairs to residential and nonresidential mobile homes, RVs, and office trailers?
Residential mobile-home repair labor was exempt but materials were taxable; nonresidential mobile-home repairs were fully taxable. RV and office-trailer repair labor was exempt, while the contract for…
When did a Texas structural-steel business act as a contractor rather than a supplier, and how did that affect sales tax?
It was a contractor when it was responsible for erecting the steel itself or through a hired company; under a lump-sum contract it owed tax on the material cost. When it had no erection responsibility…
Could a Texas dairy farmer buy paper towels tax-free under the agricultural exemption?
Only when the towels were used directly to produce milk for sale, such as cleansing udders. Towels used for the farmer's hands or general washing or drying of a cow were taxable. STAR warns that a 201…
Were charges taxable for moving finished steel within a manufacturer's yard and for separately stated collection and disposal of its industrial waste?
No. Moving finished steel within the manufacturer's yard before sale was not taxable, and separately stated industrial-waste collection and disposal was also exempt. Office rubbish or garbage remained…
How did Texas tax a provider's cross-border telecommunications services between Texas and Mexico?
Charges for calls originating in Texas and routed or retransmitted to Mexico were taxable, while calls originating in Mexico and telecommunications wholly between Mexican points were not. Texas-purcha…
When may a Texas motor vehicle dealer or leasing business deduct the fair market value of a replaced vehicle?
The fair-market-value deduction required a motor vehicle sales, rental, or leasing business to hold Texas title to both vehicles, obtain them for personal or business use, and offer the replaced vehic…
Was MLO Milk and Egg Protein taxable in Texas as a powdered drink mix or therapeutic product?
No. The Comptroller's April 19 letter reversed its February 16 answer and concluded that MLO Milk and Egg Protein qualified as a nontaxable food product.
How did Texas tax a nationwide voice-messaging service's local and long-distance call charges?
The voice-messaging service was taxable telecommunications. Local calls and long-distance calls originating in Texas and billed to a Texas service address were taxable; qualifying out-of-state long-di…
Were payments taxable under an equipment transaction in which the user retained legal title and possession but transferred ownership rights to a financier and leased those rights back?
No. The Comptroller treated the arrangement as financing with the financier acting as a secured creditor, so the payments were not taxable. The equipment user had already paid sales tax or accrued use…
Did exempt aircraft parts lose their Texas sales-and-use-tax exemption while held in inventory before installation on qualifying carrier aircraft?
No. Parts bought to be permanently attached to qualifying common- or contract-carrier aircraft remained exempt while stored for installation as needed, as long as they were not diverted to another pur…
Did excluding an employment and noncompetition agreement from a one-buyer sale of a business's operating assets defeat Texas's occasional-sale exemption?
No. The sale still qualified as an occasional sale of the entire operating assets because the excluded employment and noncompetition agreement was intangible property, and Rule 3.316 excluded intangib…
When was labor taxable for maintenance, modification, or new construction work on Texas petroleum or chemical storage tanks?
Documented scheduled maintenance labor was exempt. Most upgrades to existing tanks were taxable, while qualifying new construction—such as a new dockline, concrete spill pad, or initial finish-out bef…
Were bus trip packages with extensive travel and overnight accommodations taxable Texas amusement services?
No. The Comptroller treated the packages as general travel arrangements rather than taxable scenic bus tours because they included extensive travel and overnight lodging, and agreed to refund the sale…
Were pinstriping, decal application, and mileage or service charges taxable when performed on diesel motor vehicles in Texas?
Yes. The Comptroller ruled that the total charge for pinstriping, applying decals, and mileage or service to the job location was subject to sales tax when the work was performed on diesel rigs.
Was electricity exempt when it powered pumps, crushers, and conveyors at a Texas crushed-stone plant?
Yes. Electricity for the pumps, crushers, and conveyors was exempt. Conveyor power qualified because it transported material extracted from the earth, even though the conveyors themselves were intrapl…
Could the Texas Comptroller pay city and county sales-tax refunds promised through a local enterprise-zone program?
No. The Comptroller lacked authority to pay those local refunds. The person who paid the tax had to file separate claims directly with the city and county that created the refund program, and those lo…
Were foam chemicals and foam-dispensing equipment exempt when customers used them to protect taxable products during shipment?
The foam chemicals could qualify as exempt wrapping or packaging supplies when used to further the sale of taxable items, but the dispensing equipment and foam-in-place system were taxable. A qualifyi…
When was specialized cleaning or waterblasting of Texas storage tanks, cooling towers, buildings, pools, and parking garages taxable?
Ordinary cleaning of residences, commercial buildings, pools, and parking garages was taxable. Specialized cleaning of large storage tanks and refinery or chemical-plant cooling towers was treated as …
Were dental prosthetic appliances and dentist-dispensed or prescribed medicines exempt from Texas sales and use tax?
Yes. Dental devices that remained in a patient's mouth to replace a missing or deficient part were exempt prosthetic appliances, and drugs or medicines dispensed by a dentist or on a dentist's oral or…
Were lump-sum bulldozer charges taxable for digging a new pond, preparing a home site, or clearing land and building roads for a new subdivision?
No. Those activities were treated as new construction or site preparation, so lump-sum charges were not taxable. Landscaping was different: it was a taxable service, and tax applied to the total charg…
Was completely gutting and refinishing previously occupied space in a Texas shopping mall new construction or remodeling?
It was remodeling. The Comptroller applied Rule 3.357(a)(6) to the work in the existing mall space rather than treating the gut-and-refinish project as new construction.
How did Texas tax new pipeline construction, tie-in labor, gas-plant demolition, and debris removal?
New pipeline construction labor was not taxable, but labor tying the new and existing lines together was taxable remodeling unless it stayed below the letter's 5% threshold within the new-construction…
Was a separately stated coin-wrapping charge taxable when a company transported bulk coin to its facility and wrapped it there?
No. Coin wrapping performed by the company's personnel at its facility was not subject to sales tax when the charge was separately stated from charges for taxable services.
Which Texas hydrographic, vessel-positioning, marine-staking, and subseabed surveying services were taxable?
Underwater topographic surveys and vessel positioning based on direct scientific observation were not taxable. Boundary, as-built, and post-construction location surveys were taxable, while centerline…
Did a qualifying Texas group need to submit each future calendar for Comptroller review before treating its sales as exempt writings?
No. The Comptroller concluded that all calendars of this nature sold by groups like the requester were exempt writings under Tax Code § 151.312 and would not distinguish calendars based on content. Th…
Was the total charge taxable when a Texas CAD provider converted customer sketches into enhanced computer drawings and delivered printed hardcopies?
Yes. Sales tax applied to the total charge for the computerized drawings. Materials actually transferred to the customer as part of the service, such as the paper used for the final drawings, could be…
Was labor taxable when a company ran customer-provided computer cables through the ceilings of an existing nonresidential building to workstations?
Yes. The Comptroller treated the cable-running labor as taxable remodeling of nonresidential real property, even though the installer supplied only labor and did not provide the cable.
Were consultations and property-loss bids taxable when a Texas business helped homeowners settle insurance claims, even though it lacked an insurance license?
Yes. Consultations were taxable insurance loss-prevention services, and bids were taxable insurance loss or damage appraisals. The business's lack of a State Board of Insurance license did not change …
Were cooked marinated beef portions and whole chickens taxable when packaged, refrigerated, sold unheated, and provided without utensils?
No. The Comptroller treated the refrigerated beef and chicken as not ready for immediate consumption because they were sold unheated and without utensils.
Did qualifying as a small-power producer or cogenerator automatically exempt the firm's natural-gas or electricity purchases from Texas sales tax?
No. Such firms were excluded from the rule's electric-utility definition, so they did not receive the utility provision automatically and needed a predominant-use study to establish any exemption.
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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.