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 the net gains from selling two business divisions count as gross receipts, and were those receipts allocated to Texas?
Yes. The net gain from each division's tangible-asset sale was a gross receipt computed under GAAP pursuant to § 171.112, and the receipts were allocated to Texas because the assets were delivered to …
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…
Could close corporations and federal S corporations use their federal-income-tax accounting method to compute Texas franchise tax under the new 1989 law?
Yes, optionally, for reports originally due after December 31, 1989. A close corporation or federal S corporation had to be eligible by the original due date for an initial report or by May 1 for an a…
How did a veterans' post's Texas sales- and franchise-tax exemptions affect its purchases, resale inventory, permit, and taxable sales?
The post owed no franchise-tax report after its exemption cleared the account and could buy items tax-free when they furthered its exempt purpose. It could not use that exemption for beer, soda, cigar…
Did an unfunded $6 million paid-in-capital book entry have to be included in the subsidiary's 1989 franchise-tax surplus?
The preserved STAR body states the facts and question but gives no answer, so the surplus treatment cannot be determined from this record.
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.
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.
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.
For Texas franchise tax, at what value does a corporation report property an owner contributed tax-free in exchange for stock — federal tax basis or fair market value?
It depends on the corporation's surplus. Under Tex. Tax Code § 171.109(c), a corporation whose surplus is less than $1 million may compute its surplus using the same method it uses for its federal inc…
Did the Comptroller finally approve or deny reducing both stated capital and surplus by a subsidiary's pre-acquisition earnings?
No final decision is shown. The internal memo recommended denying a parent's attempt to reduce both stated capital and surplus by a subsidiary's pre-acquisition earnings, but STAR's copy leaves the AP…
How did the Comptroller's internal timeline assign annual franchise-tax report due dates, penalties, and interest when an extension was late, adequately paid, or only partially paid?
The guidance used March 15 when no timely qualifying extension existed and June 15 for additional tax after a timely, adequately paid extension. It also included a split calculation for a partial-paym…
What did the Comptroller's 1986 internal guidance say changed in Franchise Tax Rule 3.406 and its throwback-rule application?
Two policy changes applied to reports due on or after January 9, 1986; other revised provisions reflected older policy and could apply back within limitations.
Was the fee for membership in a merchant discount-card service subject to Texas sales tax?
No. The Comptroller said selling memberships in the discount service was not a taxable transaction.
Was cleaning the inside of a Texas well bore with hot oil taxable, and did the letter decide franchise-tax filing?
The hot-oil well-bore cleaning service was taxable. The letter did not decide whether the New Mexico corporation owed a Texas franchise-tax report; that answer was deferred to separate correspondence.
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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.