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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Did maintenance of legally required environmental or energy-conservation equipment have to be essential to manufacturing to qualify for the Section 151.338 exemption?
No. The equipment did not have to be essential to manufacturing; Section 151.338 covered maintenance and related services required by law to protect the environment or conserve energy.
Were periodontal testing fees and the contents of dental test kits taxable?
The testing fee was nontaxable, but the kit's treatment was unresolved because its contents were unspecified; the provider owed tax on taxable inputs.
Did a customer claiming 100% exempt electricity use need a utility study and engineer certification?
No. A specific exemption certificate was enough for exclusive exempt use; studies and engineer certification applied to predominant-use claims.
Was the Texas Animal Health Commission's $6.25 charge for a book of 25 blank veterinary inspection certificates subject to sales tax?
No. The Comptroller determined that the required $6.25 certificate-book fee was not subject to sales tax.
Was electricity used in separately metered apartment-style patient housing at a drug-rehabilitation or psychiatric center exempt residential use?
No. Texas treated the electricity as taxable commercial use because the 60-day patient housing was not occupied as a home or residence.
Were Comfort Ease, Neuroaid, Respond II, Comfort Wave, and similar therapeutic devices exempt from Texas sales tax?
Only in a prescription sale to an individual. The products qualified as therapeutic devices, but nonprescription sales and sales to medical practitioners or health-service organizations were taxable.
Was a gas-compression agreement a taxable equipment rental or a nontaxable compression service when the provider operated and controlled the compressor?
It was a nontaxable compression service. Although the equipment was substantial, the customer had no control over it and the provider handled installation, operation, repair, and starting and stopping…
Did HMOs' gross-premium tax and franchise-tax exemption also exempt their separate management company from franchise tax or sales tax on taxable services?
No. The management company was a separate taxable corporation, and premium-taxed funds did not exempt it or its HMO clients from sales tax on taxable services.
On what amount did a direct-sales company collect Texas sales tax when it sold through independent consultants and charged shipping?
On the documented retail sales price, including shipping. For the facts reviewed, the company collected tax on $20 because that stated retail price included the 50-cent shipping charge.
Was installing furniture that was not permanently attached to a building a real-property construction contract, and how were mixed contracts classified?
No. Installing furniture that was not permanently affixed was not an improvement to real property; for mixed contracts, the contract had to be viewed as a whole, and incidental real-property work did …
Was a separately stated municipal franchise fee part of the taxable sales price of electricity?
Yes, when the electricity was taxable. The fee was the utility's cost of doing business and remained part of the sales price even when billed separately.
How could a Texas seller document an export when transportation was delayed and the goods had not left the country before an audit?
Use a freight forwarder or customshouse broker. Its receipt could show the goods were being held for export during an audit, followed by the bill of lading or broker certification after shipment.
Could the Comptroller waive a nonprofit mail-order seller's prior Texas tax liability when it volunteered to register and collect tax prospectively?
No. The Comptroller said it had no authority to waive the tax itself, although it would waive penalties and interest; the organization should obtain a use-tax permit and collect tax if doing business …
Were art appraisals taxable when performed for insurance purposes, and did the result change for sale, authenticity, or market-value appraisals?
Insurance-related appraisals were taxable insurance services. Appraisals performed only for a sale, authenticity check, or market-value decision were not taxable.
Which parts of a shopping-mall project were new construction, and how should shared HVAC and mechanical-installation labor be allocated?
New exterior entrances adding footage were new construction; replacement space and storefront expansion within existing floor area were remodeling. Shared equipment labor was allocated by the new cons…
Did an elevator company have to calculate the taxable repair portion of each maintenance contract separately?
No. Revising an earlier contract-by-contract approach, the Comptroller allowed one taxable percentage for all Texas maintenance contracts.
How did Texas tax repair or remodeling of nonresidential and residential real property under the corrected guidance?
Nonresidential repair or remodeling was taxed on the total charge. For residential work, lump-sum contractors paid tax on materials, while separated contracts taxed the materials charge.
Could an elevator maintenance company use one historical taxable-repair percentage for all of its Texas maintenance contracts?
Yes. For simpler recordkeeping, the company could establish one verifiable taxable percentage and apply it across its Texas elevator maintenance contracts.
When did the referenced Texas policy change for sand, gravel, and similar unprocessed materials take effect, and was it retroactive?
The memo gave June 13, 1988 as the effective date and said the policy decision was not retroactive. It did not explain the policy's substantive tax rule.
Were services to clean and treat ventilation systems for soot, mold, or mildew taxable in Texas?
Yes. The Comptroller classified ventilation and duct cleaning as taxable real-property cleaning services under Rule 3.356.
How were pager rentals, repairs, damage waivers, and lost-equipment charges taxed when connected with paging service?
Rented pagers and repairs followed the paging-service tax rate; outright purchases and repairs took the full tangible-property sales-tax rate. Damage waivers were taxable, but lost-equipment replaceme…
Was computer-assisted geophysical data analysis a taxable data-processing service or a nontaxable scientific-analysis service?
Scientific analysis and interpretation were not taxable merely because a computer was used. Mere data input, manipulation, and report production were taxable data processing, and rented computer time …
Was a charge for handling infectious waste subject to Texas sales tax?
No, provided the infectious waste described by the requester met one of the definitions in Rule 3.356(a)(4)(C) or (D).
Were subscriptions and geological or geophysical surveys exempt when their information came from direct scientific exploration?
Yes, when the information was derived from exploratory testing or experimentation; statistical completion data that merely recorded facts was taxable.
Did a taxpayer need to redo a 1986 utility predominant-use study after Texas began requiring engineer certification?
No. The certification requirement applied to studies performed on or after August 3, 1987, so the taxpayer could retain the 1986 study and update it if operations changed.
Was a fee paid to terminate a computer-equipment lease early subject to Texas sales tax?
Yes. The fee was part of the lease agreement and was not among the deductions allowed from taxable lease receipts, so it was included in the taxable amount.
How did Texas apply sales tax to paging service, long-distance inputs, switching equipment, and related charges?
Paging service was taxable, and integral long-distance calls could be bought for resale. Tax on messages and equipment depended on origin, destination, and installation facts.
Were a college security-training program director's services taxable as security services?
No. The director was not providing a watchman, guard, or patrol service, so the college training-program services were not taxable under the stated licensing provisions.
Was the federal excise tax collected from telecommunications customers included in the Texas sales-tax base?
No. Texas excluded the customer-paid federal excise tax from the sales-tax base for telecommunications services and said the treatment applied retroactively.
Was a separately stated charge for placing a flood-plain designation on a taxable survey itself taxable?
Yes. The flood-stamp charge was taxable when performed with a taxable survey because it was part of the surveying service, even if separately stated.
Were stand-alone inspection and X-ray services on casing or drill pipe taxable, and what changed when they accompanied a repair?
Stand-alone inspection and X-ray charges were not taxable. With a repair they were taxable unless separately stated, and resale treatment was available before the pipe's resale.
How did Texas tax telephone wiring and jack installation in residential, new-construction, and existing commercial property?
Residential and new-construction work followed contractor rules, while existing-commercial repair or remodeling was taxable on the total charge.
Were charges for trips on gambling ships taxable as amusement services?
Yes. The internal Comptroller memo said charges for gambling-ship trips were taxable as amusement services; it did not distinguish trips by duration.
Were charges for lifting and moving large equipment with a crane taxable when no other taxable service was performed?
No. Texas treated the work as nontaxable third-party transportation, regardless of lump-sum or separated billing and regardless of the property's classification.
Were charges associated with layaway included in the sales price used to compute Texas sales tax?
No, under the announced policy change. Texas said layaway-related charges would no longer be part of the sales price for sales-tax computation, prospectively.
Could a retailer use cash-basis accounting for Texas sales-tax reporting while keeping its general books on the accrual basis?
Yes, if sales tax was reported consistently and separate cash-basis sales records supported audit verification. The method could not be used for tax on taxable purchases.
Was a charge to a manufacturer for verifying that service-station equipment was safely and properly installed taxable?
No. The verification charge was not taxable, but the service provider had to pay tax on equipment or materials used to perform the service.
Did a purchaser's written sales-tax refund request to a supplier stop Texas's limitations period?
No. The letter said only a refund request by the person that paid the tax directly to the Comptroller tolled limitations, so part of the requested period was lost.
Were services applying tax-law knowledge to a client's benefit plan taxable as data processing or insurance services?
No. Texas revised its earlier answer and treated the work as nontaxable professional services similar to accounting, whether performed manually or by computer.
Were a theme park's school curriculum program and behind-the-scenes tour taxable amusement services?
The school program was not taxable after additional educational facts were supplied, but the behind-the-scenes program remained a taxable amusement service.
How was an all-day charter taxed when nontaxable business transportation included a guided city tour?
The transportation portion was not taxable if separately stated, but the guide and the bus time used for the tour were taxable amusement charges. Without separation, the total charge was taxable.
Were a state-university library's lost-book charges taxable, and how were online searches and photocopies treated?
Lost-book charges were not taxable because Texas treated them as damages. Online searching and photocopying were taxable services under the letter.
Did Texas's power-of-attorney rule apply to both predominant-use and exclusive-use electricity refund claims, and did a defective form alone expose the utility?
The rule applied to both types of electricity refund. Accepting an apparently valid customer-signed power of attorney that missed the rule's wording did not alone create utility liability.
Which tools and supplies could a surveyor buy for resale, and which were taxable to the surveyor?
Surveying equipment and consumed supplies were taxable to the surveyor. Markers transferred in a taxable survey could be bought for resale, with limited treatment for substitute markers.
If customers bid no-value promotional 'bonus dollars' for merchandise at an auction, are those transactions taxable Texas sales?
The auction bids are not taxable. Because the promotional 'bonus dollars' have no monetary value, exchanging them for merchandise, meals, or services is not a 'sale' under Texas Tax Code § 151.005, so…
Were administrative and computerized billing services for a self-funded insurance plan taxable?
Insurance services for the self-funded or stop-loss plan were not taxable. Computerized billing was taxable data processing if it exceeded 5% of the total administrative-services bill.
When were fishing tools treated as taxable rentals rather than taxable well services, and could the tools be bought for resale?
Tools supplied alone or with a supervisor were rentals eligible for resale purchase; the supervisor charge joined the rental tax base. Tools supplied with an operator were taxable well services.
Could an airline give an exemption certificate for approved improvements to public airport terminals?
Yes under the stated facts. The tax-exempt airport was the ultimate beneficiary, and the approved terminal improvements directly benefited the airport and public.
Which printing and mailing-service charges were taxable, including folding, collating, labels, mailing lists, transportation, and postage?
Folding and collating were taxable parts of printing. Post-production inserting, labeling, and mailing could be nontaxable, while printed labels, mailing lists, and seller-billed delivery were taxable…
Did exchanging promotional 'West Texas Bucks' for auction items create taxable sales, and who owed tax on donated merchandise?
The exchange was not a sale because the promotional currency had no monetary value. Donating retailers owed tax on resale-certificate merchandise used in the promotion.
When is a Texas motor vehicle rental to a state agency or an employee on official state business exempt?
A rental directly to a state agency was exempt. STAR partially superseded the letter's denial for employee rentals: an employee on official state business may issue an exemption certificate when the r…
Were claims-adjusting and insurance-investigation services taxable when provided for municipal coverage?
They were not taxable when provided to a third-party administrator for a self-insured municipality, but were taxable when sold to an insurance carrier insuring a municipality.
Which employees of a licensed customhouse broker could witness goods entering Mexico and certify their export?
Full- or part-time salaried employees could do so if they held power of attorney and had U.S. Customs approval; commission workers could not.
Could a licensed customhouse broker use part-time employees to witness exports to Mexico and complete Texas export certifications?
Yes, if they were salaried, held power of attorney for that purpose, and had U.S. Customs approval. Commission workers still could not certify exports.
Could a private purchasing agent for NASA buy items tax-free, and what happened when the agent used the items itself?
Items transferred by title and possession to the federal government could be bought for resale. Items used by the private agent were taxable, because the agent was not exempt.
Could a parent use a later-acquired company's pre-acquisition earnings to support a franchise-tax refund after the acquired company merged into a subsidiary?
No. Forming the subsidiary was not an acquisition, and the later merger eliminated the stated basis for using the acquired company's earnings to offset the investment.
Were charges to blade farm or ranch roads and terraces taxable, and how did maintenance or residential use affect the result?
Road and terrace blading was taxable unless it qualified as maintenance. Repairing a road used exclusively from a residence to a public road was not taxable.
Was the described voice-mail service taxable in Texas?
Yes. Texas classified it as taxable telecommunications service and said the described offering could also qualify as data processing.
Was a separately sold site license allowing unlimited copies of general-use software taxable in Texas?
Yes. Texas treated the site license as a taxable license of a computer program under Rule 3.308. STAR also notes that the custom-software distinction was repealed in 1987.
Were charges for temporary workers taxable when they performed general tasks or helped during a busy period?
No for general temporary help. A business that regularly sold a taxable service still had to collect tax, even for a short engagement.
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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.