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 a record-storage facility's charges for document pickup, storage, and certified shredding taxable, and what about its garbage-company charge?
The facility's pickup, storage, and shredding charges were not taxable. The facility had to pay sales tax on the garbage collection company's charge for hauling away the shredded material.
Were charges for storing and destroying documents and microfiche taxable after the Comptroller revised an earlier 1988 answer?
No. The Comptroller's April 19 revision said the client's document-storage and destruction charge was not taxable, replacing the February 2 answer that had treated destruction and disposal as taxable.
Was a lump-sum charge combining electronic tax-return transmission and a bank loan fee taxable in Texas?
Yes. Although return preparation itself was not taxable, the unseparated transmission and bank-fee charge was fully taxable. The franchise taking the transmission order had to report the tax.
Were rent-to-own agreements true leases or contingent sales for Texas's historical prior-contract exemption?
Texas treated the agreements as true leases, not contingent sales. Only renewal periods already in effect before July 21, 1987 qualified for the historical prior-contract exemption.
Did Texas's $25 sales-tax permit fee or state and local sales and use taxes apply to the National Railroad Passenger Corporation?
No. The letter said the permit fee did not apply and that the National Railroad Passenger Corporation was exempt from state and local sales and use tax under the cited federal provision.
How did Texas distinguish nontaxable insurance premiums and commissions from taxable insurance-service fees and mixed insurance packages?
Premiums and agent commissions for obtaining coverage were not taxable, but loss prevention, claims adjustment, and other defined insurance-service fees were. Mixed packages were presumed fully taxabl…
Which supplies could a Texas word-processing business buy tax-free for resale, and which items were taxable business-use purchases?
Paper, mailing labels, and report covers transferred to clients could be bought for resale. Printer ribbons, computer hardware, and software used by the business were taxable when purchased.
Were fees an insurance carrier paid to third-party administrators exempt as insurance premiums when used to buy taxable insurance services?
No. The administrator fees were taxable payments for insurance services, not premiums for insurance protection, even when the carrier funded them from premium revenue.
Were a seller's meat products, sandwiches, and other food ready for immediate consumption taxable in Texas?
The meat products were not taxable, but sandwiches and any other food ready for immediate consumption were taxable. The letter did not separately analyze whether smoking changed the result.
Did out-of-state testing prevent Texas tax on aircraft components installed before the customer took possession of the aircraft in Texas?
No. Texas tax was due on the components because the customer took possession of the aircraft in Texas, even though the aircraft then went out of state for required testing.
Could a Texas remodeler exclude separately stated engineering, drafting, architectural, and related postage charges from its taxable remodeling price?
Yes. Separately stated professional-service charges and their postage were nontaxable, but telephone, equipment, and extra-copy costs directly related to remodeling stayed in the tax base.
Was tenant showroom finish-out in a decades-old warehouse converted into a design center taxable remodeling or nontaxable new construction?
It was taxable remodeling under Rule 3.357(a)(6). The total charge to the tenant was taxable, and tenants who had not paid tax were told to pay the remodeler or the state.
Could a security company exclude separately stated insurance, patrol-vehicle, polygraph, or administrative costs from its taxable service charge?
No. All were taxable as costs directly related to the security service, even when separately stated. A polygraph examination performed apart from security service was not taxable.
When were sales, installation, and repair of blinds, drapes, or shades taxable under Texas's 1988 rules?
Selling and installing them was taxable on residential or commercial property, as were sales alone and repairs. Installation was not taxable when the installer did not sell the items.
Was a medical billing and practice-management company's percentage fee taxable merely because it used outside computer services?
No. Its basic management and billing fee was not data processing, but separately billed claims preparation or debt collection was taxable, and bundled taxable services over 5% made the whole charge ta…
When did repair work make a real-property maintenance contract taxable, and what records and historical prior-contract rules applied?
Repairs at 5% or less did not change the nontaxable contract. Above 5%, the whole contract was taxable unless repairs were separately stated, and inadequate records caused full taxation.
When did Texas presume an 800-line call originated in Texas for sales-tax purposes?
If station-message records did not establish that the call originated outside Texas, the call was presumed to originate in Texas and Texas sales tax was due.
Did Texas classify oil-and-gas flowlines as tangible personal property whether they were above or below ground?
Yes. The Comptroller retained its industry-wide position that flowlines above and below ground were tangible personal property and declined to change it in 1988.
Was mesquite, hickory, or pecan wood used by restaurants to cook food for sale exempt from Texas sales tax?
Yes. Wood used to cook food for sale qualified for exemption, provided the seller obtained a properly completed exemption certificate from the purchaser.
Which grapefruit packing activities counted as processing, and when could the separately metered facility's electricity qualify for exemption?
Waxing was processing, but washing, grading, and packing were not. More than 50% of the facility's electricity had to be used in waxing for the electricity to qualify for exemption.
Was the proposed Texas electricity sales-tax exemption certificate acceptable, and what was missing when a nonregistered engineer certified the study?
The certificate was otherwise acceptable, but it needed the owner's certification when the study was certified by an engineer who was not registered. Identifying the engineering college was suggested.
How did Texas's 1988 state, city, county, and transit sales taxes apply to residential and nonresidential electricity?
Residential electricity was exempt from state, county, and transit tax and usually city tax. Nonresidential electricity owed adopted half-percent city and county taxes on 1988 service billings.
After Texas revised its answer, were the described typing service and additional résumé copies taxable?
The March 22 response said the typing service was not taxable data processing, reversing the February 1 answer. Additional résumé copies remained taxable, and printing bought for resale could use a re…
How did Texas tax title-company charges for government certificates, joint-plant reimbursements, copies, delivery, and tax-search information?
Government pass-throughs and joint-plant reimbursements could be nontaxable, while added title-company fees, plant copies, taxable-item delivery, and purchased tax-search information were taxable.
Were a forensic engineer's accident, fire, or loss investigations taxable insurance services, and was separately stated court testimony taxable?
The investigative engineering services were taxable claims adjustment or processing under Rule 3.355(a)(5). Separately stated charges for testifying in court were not taxable.
Did a law firm's separately stated reimbursement of taxable electronic legal-research costs create another taxable information-service sale to its client?
No. The database charge was the law firm's taxable expense. It could seek an equal, separately stated client reimbursement without additional tax and label the tax portion 'Sales Tax Reimbursement.'
What distinguished real-property maintenance from repair or remodeling under Texas Rule 3.357?
Maintenance preserved functioning property on a regular schedule; work that restored, enhanced, or improved a quality was repair. Scheduling or documenting a repair did not turn it into maintenance.
Were a toxicologist's consulting services for insurance claims taxable when subcontracted by an attorney or performed directly for an insurer?
Yes. Claims-investigation consulting was taxable in litigation and non-litigation settings. The attorney's legal service was nontaxable but could not buy the toxicologist's work for resale.
How did Texas tax custom millwork installed in original construction, incorporated into an existing nonresidential building, or supplied without installation?
For separated original construction, materials and finish work were taxable but the installer's labor was not. Existing-building remodeling and supply-only sales were taxable on the total charge.
Was a truck stop's $5 fee for weighing a truck a taxable service in Texas?
No. The Comptroller said the described $5 truck-weighing fee was not a taxable service.
How did Texas tax HVAC new construction, commercial remodeling, residential work, and window-unit sales and service under different contract types?
New construction and residential real-property work followed contractor rules based on contract type; commercial repair or remodeling was taxable in full, as were window-unit sales and service.
Were receipts from coin-operated breath analyzers taxable, and did the operator owe tax when buying the machines?
The receipts were not subject to sales tax, but sales tax was due when the operator purchased the breath-analyzer machines.
Were compensated risk-management services taxable insurance inspection services in Texas?
Yes. Risk managers' evaluation and risk-reduction advice fell within taxable insurance inspection under Rule 3.355(a)(2), so they needed a sales-tax permit and had to collect tax.
How did Texas tax billboard-face rotation, painting steel billboard structures, other sign repairs, transferred materials, and mowing around signs?
Billboard-face rotation and steel-structure painting were taxable real-property work. Other sign repair was taxable as personal-property service, and most mowing around signs was taxable.
Were post-completion punch-list charges for fixing scratches and dents or moving plugs taxable under Texas's 1988 real-property rules?
Yes. Once original construction was complete, charges to fix scratches or dents or move plugs were taxable. On repair or remodeling contracts, labor performed after December 31, 1987 was taxable.
How did a foreign consular officer or family member obtain a Texas motor-vehicle-tax exemption under this 1988 guidance?
The Comptroller said qualifying consular officers, technical employees, and certain family members generally had to obtain motor-vehicle title and registration through the U.S. State Department's Offi…
Were daily gauge readings and written reports taxable when a pumper also performed minor well-site maintenance?
Gauge reading and written reports alone were not taxable, but the provider's general equipment maintenance made the described service taxable. The Comptroller approved the tax being charged.
Could a seller obtain a Texas refund of tax, penalty, or interest collected from customers before returning the tax and interest to those customers?
No. Rule 3.325(c)(4) required the seller to refund all tax and interest to the people from whom it collected them before the state would refund the seller's tax, penalty, or interest.
When were lump-sum bookkeeping, bundled payroll data work, and separately stated computer-generated reports taxable in Texas?
Lump-sum bookkeeping was not taxable. Bundled payroll data work at 5% or less of the total stayed nontaxable, but separately stated computer-generated report charges were taxable.
Was the described child-identification program a taxable service, did it need a Texas sales-tax permit, and how were its supplies treated?
The program was not a taxable service and did not need a sales-tax permit. It still had to pay sales tax on all materials and supplies used to provide the service.
Was a lump-sum pit-scale installation incorporated into an existing dirt road fully taxable after Texas's January 1, 1988 real-property change?
Yes, for work on or after January 1, 1988, because the scale was incorporated into an existing road. The letter applied a historical 7% rate because the agreement predated the county tax.
Could a supplier accept the exemption certificate printed on a purchase order for property bought for offshore exploration outside Texas?
Yes. The Comptroller found the purchase-order certificate sufficient for the described out-of-Texas offshore exploration use, so the supplier could accept it instead of tax.
How did Texas's 1988 rules treat HVAC maintenance contracts, repairs, residential and commercial installations, freight, tools, refunds, and window units?
Routine real-property maintenance was nontaxable if repairs stayed within 5%; commercial repair was taxable, residential and new-construction labor was not, and window-unit work was taxable.
When could sellers accept resale or agricultural-exemption certificates for horseshoeing supplies, horseshoes, halters, and bridles?
Resale stores could give resale certificates. Horseshoers generally paid tax on supplies used in lump-sum jobs, but could buy separately resold items for resale. Horseshoes, halters, and bridles quali…
How did Texas tax painted or vinyl lettering on vehicles, movable signs, traffic signs, and commercial building doors, windows, and walls?
Vehicle and movable-sign work was taxable before and after the 1988 change. Commercial-building window, door, and wall graphics became taxable real-property remodeling on January 1, 1988.
How did Texas classify window air conditioners and portable buildings as tangible personal property or real property for repair-tax purposes?
Window-opening units were personal property; wall-installed units could be permanent realty. Portable buildings were real property only if permanently slab-affixed, plumbed, and wired.
Were claims-adjustment services exempt when provided to a federally administered flood-insurance program or to an insurer reimbursed by that program?
A FEMA-created and administered federal flood program was exempt, but services sold to an insurance company were taxable even when the federal program reimbursed the insurer.
Could a free weekly advertising shopping guide buy newsprint, ink, and outside printing without Texas sales tax?
Yes, if the guide was printed on newsprint and therefore qualified as a newspaper. It could issue an exemption certificate for newsprint, ink, and outside printing. If it was not printed on newsprint,…
Were confidential paleontologic and geologic analyses and studies taxable Texas information services?
No. Texas classified the described paleontologic and geologic work as an information service but treated the charges as nontaxable under Rule 3.342(d)(2), based on the exclusive-use facts presented.
Could a yearbook seller treat books distributed on one designated carnival day as tax-exempt while taxing all other distributions?
Yes. The Comptroller accepted the proposal to exempt yearbooks distributed on the first designated carnival day and tax all other distributions or sales, based on the facts presented.
Were freight and U.S. postage charges taxable when a parts seller arranged shipping and rebilled the customer?
Yes. Freight or postage that the seller incurred and rebilled to the customer was taxable. Transportation was not taxable when the customer arranged pickup and the freight company billed the customer …
Who collected and remitted Texas sales tax when a city bought commercial trash collection and billed its own customers?
The city did. After receiving additional contract facts, Texas treated the city as purchasing trash collection for resale. The city gave the contractor a resale certificate and was responsible for col…
Were gas-chart work, gas-volume calculations, and calibration or repair of oilfield meters taxable in Texas?
Gauger-like chart recording and volume calculations were nontaxable. Calibration and repair of meters on flow or gathering lines were taxable as personal-property work. Pipeline or booster-station met…
Was labor to repair or remodel a long road used primarily to access a residence nontaxable residential real-property work, even if it could also serve a ranch?
Yes, for the road leading to the residence. Farm and ranch roads were not normally residential, but the access portion serving the residence was a residential improvement under Rule 3.357.
Did a retired vehicle have to be sold in Texas to qualify for Texas's fair-market-value deduction?
No. The Comptroller said the retired vehicle did not have to be sold in Texas. It needed to be titled in Texas for business or personal use, retired, and offered for sale, but the offer could be made …
How did Texas tax an association's member journal, magazine subscriptions, textbook sales by a Section 501(c)(3) organization, and out-of-state artwork?
Printing could be bought tax-free when a stated journal or magazine price made the publication a resale. Six-month-or-longer second-class-mail subscriptions were exempt, but single copies were taxable…
Which pest, insurance, and general real-estate inspection services were taxable under Texas's 1988 rules?
Pest-infestation inspections and insurance-related property inspections were taxable. General real-estate inspections of building components and systems were not taxable.
Were exercise bicycles and treadmills exempt therapeutic devices when sold on a doctor's prescription for rehabilitation?
Yes. Texas treated prescription exercise bicycles and treadmills sold for rehabilitation as exempt therapeutic devices. Sales to doctors, hospitals, or clinics were taxable unless the institution inde…
After revising its earlier answer, did Texas tax the total charge for providing and setting up chairs at a graveside?
No. The February 11 revision treated the total chair rental-and-setup charge as a nontaxable service because no true rental occurred and the funeral director did not have constructive possession of th…
Were speech and hearing evaluations or therapy taxable, and was calibrating customers' audiometers taxable?
Speech and hearing evaluations and therapy for communicatively handicapped people were not taxable. Calibrating audiometers for other agencies and industries was taxable.
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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.