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 railroad buy a modified track loader tax-free under the rolling-stock exemption when it would remain aboard connected gondola cars?
Yes. Based on the assurance that the modified loader would remain on the train and move among connected gondola cars to unload material, the railroad could issue an exemption certificate for its purch…
Which investigation, surveillance, expert-testimony, consultation, and process-serving charges were taxable under Texas's security-services rule?
Licensed investigation and surveillance services were taxable, with directly related expenses included. Separately stated expert testimony and pure consultation could be nontaxable, and process servin…
How were franchise-tax auditors to adjust pre-1988 surplus for unbooked employee post-retirement-benefit liabilities supported by actuarial studies?
A taxpayer needed at least one actuarial study. Auditors used or discounted the study liability, allocated group amounts among corporations by employees, applied the report-year employee ratio, and ma…
How were local taxes sourced when mobile-phone equipment was rented with telecommunications service, versus equipment sold or rented by itself?
Bundled equipment and telecom service was sourced as telecommunications at the call's origin, or the billing address if origin was unknown. Equipment sold or rented without service was tangible proper…
Was a charge for the right to fish from banks, piers, a boathouse, stalls, and a fishing barge subject to Texas sales tax?
No. The Comptroller compared the payment to leasing land for hunting rights and treated it as a nontaxable non-amusement service.
Were admissions to a for-profit amusement held at a historic location exempt from Texas sales tax?
Yes, if the place was a Recorded Texas Historic Landmark or was included in the National Register of Historic Places. The exemption turned on the location's designation, not whether the provider was n…
Did a private janitorial contractor avoid Texas tax on equipment and supplies because it served federal facilities and its contract funded those purchases?
No for equipment and consumed supplies. The janitorial service sold to the federal government was exempt, and transferred items could be bought for resale, but the contractor owed tax on equipment and…
Was a pager loss or damage protection fee taxable when it covered lost, stolen, destroyed, or damaged equipment?
Coverage strictly for loss, theft, destruction, or damage beyond repair was not taxable. A fee covering maintenance, repair, or repairable-damage waiver was taxable; a single premium containing damage…
When could a seller reduce the taxable sales price by the value of property accepted as a trade-in?
When the trade-in was of the same nature as the item sold, or was another type of item the seller sold in its regular course of business. A computer seller could offset a computer trade-in, but not a …
Was a physician-prescribed book containing an at-home cardiac rehabilitation program exempt from Texas sales tax as a therapeutic device?
No. The book remained taxable even when sold under a licensed practitioner's written or oral prescription because it did not meet Rule 3.284(a)(11)'s definition of a therapeutic appliance or device.
Was electricity used to repair, renovate, or convert qualifying commercial barges exempt because the vessel materials and labor were exempt?
No. The vessel materials-and-labor exemption did not extend to natural gas or electricity. Utilities used to manufacture property for sale could be exempt, but utilities used later to sell or affix th…
Could a customer claim a residential gas or electricity exemption or refund after the utility account had been closed?
Only after Comptroller review of available evidence because no on-site use study could be performed. The claimant had to explain the account, closure, and utility uses; mixed exempt and nonexempt use …
Were teleconferencing charges and the related long-distance charges taxable, and could the provider buy long-distance service for resale?
Yes. Teleconferencing was a taxable telecommunications service, and the total charge—including qualifying long-distance charges—was taxable. The provider could issue a resale certificate if it made no…
How could an elevator contractor calculate the taxable portion of contracts combining real-property repair and maintenance?
It could apply one taxable percentage based on prior-year aggregate repairs divided by total repair-and-maintenance receipts, supported by time sheets or similar records, and use that percentage on in…
Did selling all operating assets of an identifiable division qualify as an occasional sale if the seller later bought or leased some assets back?
Yes, if the original asset sale and later purchase or leaseback were clearly separate transactions. The whole-division sale remained exempt, but the seller owed tax on the later purchase, rental, or l…
Did forklifts used inside a plant to move raw materials to mixing tanks qualify for Texas's phased-in manufacturing exemption?
No. Moving raw material to mixing tanks was intraplant transportation in preparation for manufacturing, which Tax Code § 151.318(c)(2) and (4) specifically excluded from the exemption.
Could a nursing home claim the residential-use exemption and refunds for natural gas and electricity, and did city tax still apply?
Yes for qualifying billing periods beginning on or after January 1, 1988, if the facility clearly stated the exemption basis. State, county, and transit taxes were exempt, but this city's tax remained…
Which impounded-vehicle charges were taxable: notification, towing, daily storage, or impound fees?
Daily storage and impound or administrative fees were taxable. Notification and towing fees were not taxable under the described limits and purposes.
Was nutritional or science-diet dog food exempt from Texas sales tax when prescribed by a veterinarian?
Yes, when sold under a veterinarian's oral or written prescription. A pet-shop sale without such a prescription was taxable.
Could four nursing homes obtain sales-tax refunds on now-inactive natural gas and electricity accounts?
Yes for qualifying billing periods beginning on or after January 1, 1988, if they gave the utilities properly completed exemption certificates and written refund requests. State, county, and transit t…
Could a vehicle lessor buy repair and replacement parts for rental tractors and trailers tax-free?
Yes. The 1990 letter allowed repair and replacement parts installed on rental or leased tractors and trailers to be purchased tax-free from Texas suppliers with a properly completed resale certificate…
Could a Girl Scout troop treat the $1 it kept from each mandatory $2 calendar payment as a donation rather than part of the taxable sales price?
No. The calendar's sales price was the full $2 because buyers had to pay that amount to receive it. The troop's retained $1 was not a voluntary contribution and therefore could not be separated as a d…
Was annual calibration of tools used to inspect manufactured parts subject to Texas sales tax?
Yes. The described calibration qualified as taxable maintenance or repair of tangible personal property under Rule 3.292, so the total service charge was taxable.
Was booth furniture taxable when rented together with trade-show booth space, and what if a separate furniture company supplied it?
A promoter or facility owner could include tables and chairs with real-property booth or building rental without charging tax. A separate company that did not own or manage the facility had to collect…
How were minor pool repairs included with cleaning taxed, and how did separate repair or remodeling charges differ for residential and nonresidential pools?
Minor repairs performed as part of pool cleaning were taxable. Separate residential repair or remodeling followed contractor rules and depended on lump-sum versus separated billing; all nonresidential…
Were toxicologist or engineering consulting services taxable when used to investigate an insurance claim or loss?
Yes. Consulting used to investigate claims or losses under an insurance policy was taxable insurance service, whether paid by the law firm or insurer. Similar non-litigation policy-payoff consulting w…
Was mowing acreage and vacant lots taxable for individual and commercial customers, and what if the property belonged to an exempt organization?
Mowing acreage and vacant lots was taxable for individuals and commercial clients. The provider did not collect tax when mowing property of an exempt entity such as a church or city.
What Texas sales and use tax applied when a cruise-ship retailer sold goods outside U.S. territorial waters and passengers brought them back to Texas?
The retailer owed tax when it withdrew tax-free inventory for resale outside U.S. territory, and passengers still owed Texas use tax when they brought purchases back. The Comptroller encouraged the re…
Were valet-parking contract charges, mandatory patron fees, and voluntary tips subject to Texas sales tax?
The business customer's contract price and any mandatory patron charge were taxable. A genuinely voluntary gratuity from a patron was not taxable.
Were books, periodicals, newsletters, and other writings published and distributed by a qualifying nonprofit historical society taxable?
No for qualifying publications under the exemption described. The letter's effective-date year conflicts internally—one paragraph says August 28, 1988 and another uses August 28, 1989—so this page doe…
Which cable-system mapping, surveying, blueprint, drafting, and engineering charges were taxable?
Mapping, locating, relocating, and as-built or boundary surveying were taxable real-property services. Separately stated centerline staking and engineering were not taxable; certified original bluepri…
Was an oilfield company's sale and delivery of fresh water taxable, and what if chemicals or a taxable service were included?
Fresh water sold and delivered by itself was not taxable. A combined water-and-chemical charge was fully taxable, and water used in performing a taxable job became part of that job's taxable total cha…
When did a software business's natural gas and electricity qualify for Texas's manufacturing exemption, and could an audit reject its predominant-use study?
Utilities directly used to create software for sale, lease, or license could be exempt; contract programming, customer-software work, time-sharing, and other nonproduction use were not. Each meter and…
Was an apartment manager's office and lobby residential or nonresidential for repair-and-remodeling tax, and was the 5% test applied per building or complex?
The 5% test applied to each building, using square footage. Office and lobby space under 5% of its building was residential; over 5%, or a separate office building, was nonresidential and its repair o…
Were services coordinating medical care and rehabilitation for injured workers subject to Texas sales tax?
Generally no for physical therapy, occupational therapy, health care, and medical rehabilitation. Coordination became taxable only if it met the definition of taxable insurance service or data process…
Could a nonpermitted importer treat the resale of one granite container as an exempt occasional sale?
Yes, only if the seller had sold no more than one other taxable item during the prior 12 months and sold the entire granite container to one purchaser in one transaction, assuming it was not acting as…
Were horse-racing forms taxable when sold in Texas or bought out of state for use in Texas, including from October 1985 through July 1989?
Yes. Racing forms were taxable tangible personal property, not newspapers or magazines. Texas sales tax applied to in-state sales, and use tax applied when forms were bought elsewhere for use in Texas…
Were prescribed myotherapy, passive exercise, stretching, and massage services for pain relief subject to Texas sales tax?
No. Services performed under written prescriptions from licensed doctors, dentists, or chiropractors were nontaxable. The clinic paid tax on its own supplies and needed a permit only if it also sold t…
Could a Texas security-service provider offset its service tax with tax paid to another state on equipment or repairs, or buy those items for resale?
It could not reduce tax on the Texas security service by out-of-state tax paid on equipment or repairs. It could issue a resale certificate only when care, custody, and control of the property passed …
Could a caterer rent reusable tables, chairs, silverware, or china tax-free for resale to catering customers?
No. The caterer's reusable-item rental was an expense of selling meals, not a re-rental to customers, even if separately stated. The caterer owed tax when renting those items.
Was finishing out a shell taxable when the building had previously been occupied, demolished back to shell condition, and then rebuilt?
Yes. Demolishing the previously finished building back to a shell was remodeling, and finishing out that remodeled shell was also taxable nonresidential remodeling rather than initial finish-out work.
When did Texas remove notarization from motor vehicle tax affidavits and related forms?
Effective April 1, 1990, Texas stopped requiring notarized signatures on Form 130-U for tax purposes and planned corresponding changes to Forms 131-U and 132-U. The notice followed H.B. 2020's removal…
Could farmers and ranchers buy parts and repairs tax-free for farm machinery, including highway-licensed vehicles or farm-tagged pickups?
Parts and repairs for machinery used exclusively in producing agricultural products for sale could be exempt. The exemption did not cover highway-licensed motor vehicles, including farm-tagged pickups…
When could a vehicle delivered before the new car count as a trade-in for Texas tax?
The early trade-in qualified only when it was consideration in the same new-vehicle transaction, which a binding purchase order identifying it could document. Cash insurance proceeds did not reduce a …
Could an exempt organization buy meals for weekly meetings without state and city sales tax, and was the hotel's room charge also exempt?
The organization could exempt the qualifying meals with a properly completed exemption certificate. A hotel room-use charge remained subject to hotel occupancy tax because the organization did not qua…
Were an advertising agency's consultation charges taxable when tied to producing a master layout or blueprint for the printer or client?
Yes. Because the consultation related to producing finished art or employee-fabricated property, the consultation charges on all four sample invoices were taxable.
Was electricity used to wash, sort, size, weigh, pack, and market potatoes exempt as agricultural use at the producer's own facility?
Yes, only if the business was the original producer of every potato handled and the facility was operated exclusively for its own products. Other electricity uses were taxable, and buying potatoes fro…
Were platemaking chemicals necessary and essential to printing exempt under the manufacturing rule applied in this 1989 correction?
Yes. The Comptroller corrected an earlier letter and found the platemaking chemicals exempt under § 151.318(a)(2) and Rule 3.300(d)(3)(A), with a refund available. STAR warns that later 1997 and 1999 …
Were charges taxable when a provider supplied a Texas number, received calls in Texas, and retransmitted them to Mexico, and did the billing address matter?
Yes. The service originated in Texas because calls were received and retransmitted there, so Texas tax applied regardless of billing address. A service originating entirely outside Texas was not taxab…
Were nursing-home, personal-care, and congregate-living natural gas and electricity exempt, and could nursing homes obtain refunds?
Yes. Nursing-home utilities were residential and exempt from state, county, and transit tax from January 1, 1988, with city tax depending on local retention. Written refund requests and exemption cert…
When were equipment-installation charges taxable if the manufacturer sold the equipment and a separate subsidiary installed it?
A single manufacturer bill was fully taxable after October 1, 1987. A separately billed subsidiary installation could be nontaxable only for stand-alone installation with no assembly, property sale, o…
Was heat treatment taxable when used to strengthen pipe, molds, dies, or tools, or to restore welded pipe to its original condition?
Yes in both cases. Strengthening was taxable processing labor, while restoring an item to its original condition was taxable repair of tangible personal property.
Was electricity used to make printing plates exempt when the printer separately billed the customer for the plate?
Only when the plate was actually manufactured for sale and a written agreement clearly made the customer its owner. A separate plate charge alone did not establish a sale; electricity for plates retai…
What contract language was required for a building owner to obtain an Enterprise Zone Project refund of tax on construction materials?
The contract had to separately state materials and labor or require later separated billings. A lump-sum contract made the contractor the material consumer, and invoices disclosed after the fact did n…
Was an answering service's charge for patching callers directly through to customers taxable, including labor and equipment portions?
Yes. The total patching charge was taxable, including labor and equipment. If patching was bundled into the live-answering charge rather than separately stated, the entire combined charge was taxable.
Were a 2% credit-card surcharge and a restocking fee on returned merchandise subject to Texas sales tax?
The credit-card surcharge was taxable as part of the selling price. The restocking fee was not taxable because the item was returned and no sale remained; the retailer had to refund all sales tax orig…
Were golf-cart rentals taxable at a municipal golf course even though municipal green and driving-range fees were exempt?
Yes. Golf-cart rental was a taxable rental of tangible personal property, not an exempt municipal amusement service. The city had to collect tax from nonexempt renters.
Did placing precast concrete products into an excavation prepared by someone else make the manufacturer a real-property contractor?
No. Mere placement in a prepared excavation was not an improvement to realty. The seller had to perform some act affixing or incorporating the product into the customer's property; Administrative Hear…
Were nursing-home natural gas and electricity exempt, and could utilities accept certificates and refund tax for prior qualifying periods?
Yes for billing periods beginning on or after January 1, 1988. Nursing-home utilities were exempt from state, county, and transit taxes, while city tax could remain; utilities could accept completed c…
Were cavern admissions exempt because the site was listed as a National Natural Landmark?
No. Rule 3.298 exempted amusement at places in the National Register of Historic Places or designated Recorded Texas Historic Landmarks, not places listed only as National Natural Landmarks.
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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.