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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Is on-site computer network administration (backups, file cleanup, running reports, data manipulation) taxable as a data processing service in Texas?
Partly yes. The Comptroller held that backing up files, cleaning up old files/messages, and using existing tools to produce reports or manipulate data are taxable data processing services under Tax Co…
Is the rental of a mobile office/office trailer subject to Texas sales tax, and is a separately stated property tax charge taxable?
Yes. Effective October 1, 1993, mobile offices are no longer classified as motor vehicles but as tangible personal property, so their sale, lease, or rental is subject to state and local sales/use tax…
Does a maid/housekeeping business have to collect Texas sales tax on residential cleaning services?
It depends on the working arrangement. The Comptroller explained that Texas exempts cleaning services performed by an individual employee who cleans the same home for wages, but if the business owner …
Is a new computer/drafting consulting company's revenue — drafting, technical graphics, consulting, hardware/software sales, and sub-contracted work — subject to Texas sales tax?
It depends on the service. The Comptroller ruled that drafting and CAD services (billed by customer specifications), technical graphics/charts/posters, and hardware/software sales are all taxable. Sta…
Does renewing or extending a fixed-term operating lease lock in the original tax rate, or does a new rate apply?
A new rate applies. The Comptroller ruled that while a fixed-term operating lease is taxed at the rate in effect when it was executed for its initial term, each renewal or extension is treated as a se…
Does a Texas company owe use tax when it transfers goods between its own divisions, including goods shipped from a Mexico City headquarters or from an out-of-state office?
Yes, generally. The Comptroller ruled that a Houston division owes Texas use tax, based on the original purchase price, when it receives goods (no money changing hands) from a company division in Mexi…
Is cutting or closing an opening in a fence to let trucks through a taxable real property service in Texas?
Yes, for a nonresidential fence. The Comptroller ruled that cutting an opening in a fence is taxable remodeling of an improvement to realty, and closing that opening back up is taxable repair, restora…
Can a customs broker with the purchaser's power of attorney collect a sales tax export refund on the purchaser's behalf?
Yes. The Comptroller ruled that a licensed customs broker may bring export documentation to a retailer and obtain a sales tax refund on the purchaser's behalf, as long as the broker holds the purchase…
Does a personal shopper have to collect Texas sales tax on commission and consulting fees charged to clients?
Yes, when the fees relate to a sale of clothes. The Comptroller ruled that a personal shopper who buys clothes for clients is a seller of that clothing, so commissions and consulting fees added to the…
Is prepared coffee sold by a non-restaurant for on-premises consumption taxable in Texas?
Yes. The Comptroller ruled that a charge for prepared coffee sold by a non-restaurant business for consumption on the seller's premises is taxable. This coffee answer is one item in a longer multi-top…
Does a Sequential Compression Device (SCD) qualify for exemption from Texas sales or use tax?
Yes. The Comptroller ruled that Sequential Compression Devices (SCD) qualify for exemption from sales or use tax, and that this exemption covers both the SCD sleeves and the machines themselves. The l…
Is the Berman Airway, a mouthpiece that keeps the mouth open and tongue down, exempt from Texas sales tax?
Yes. The Comptroller ruled that the Berman Airway, a mouthpiece that keeps the mouth open and the tongue down, is exempt from Texas sales tax when used to keep the airway open or to keep the mouth ope…
Can an aircraft previously purchased under the certificated carrier exemption be used as a tax-free trade-in toward a new aircraft that will not be used as a licensed carrier?
Yes. The Comptroller ruled that an aircraft purchased more than five years earlier under the certificated carrier exemption could still be used as a valid trade-in to reduce the sales tax owed on a se…
Are purchases made by federal employees using a Government Visa (I.M.P.A.C.) credit card exempt from Texas sales tax?
Yes. The Comptroller ruled that purchases made with the Government Visa I.M.P.A.C. credit card are exempt from Texas sales tax when cardholders are authorized only to make purchases for official gover…
Is renting carbon absorption units used to treat recovered ground water taxable, or is it a nontaxable remediation service?
It's a nontaxable service, not a taxable rental. The Comptroller ruled that although carbon absorption units are left on customers' premises to treat recovered ground water, the customers are not rent…
Is painting lettering on a store's windows a taxable service in Texas?
Yes. The Comptroller ruled that painting letters on a store's windows is taxable as nonresidential repair and remodeling of real property under Rule 3.357. The service provider must collect and remit …
Is a for-profit bookstore required to collect sales tax on Bibles and other scriptures published by a nonprofit religious organization?
No. Tax Code Section 151.312 exempts periodicals and writings published and distributed by a qualifying non-profit religious, charitable, historical, scientific, or similar organization. Because 'dist…
Are telephone cooperatives exempt from Texas sales tax on construction materials, and must their contractors pay tax on those materials?
It depends on how the cooperative was formed. Telephone cooperatives generally do not qualify as tax-exempt entities under Tax Code Sections 151.309 or 151.310, so contractors building new lines for t…
Does the Texas pollution control or manufacturing exemption apply to air quality monitoring systems (instruments, analyzers, computers, software) sold to manufacturers?
No. The Comptroller ruled that air quality monitoring systems sold to manufacturers — including the hardware, replacement parts, repair labor, and software programming and modifications — do not quali…
Does vibration monitoring equipment used by petroleum manufacturers and electric utilities qualify for the Texas manufacturing exemption?
No. The Comptroller ruled that vibration monitoring equipment used by manufacturers of petroleum products and by electric utilities using fossil fuel turbines does not qualify for the manufacturing ex…
Is a company that monitors horse races at racetracks with its own personnel and equipment performing a taxable equipment rental or a nontaxable service?
It's a nontaxable service, not a taxable equipment rental. The Comptroller ruled that a company providing race monitoring services to racetracks — using its own personnel and equipment (cameras, monit…
Can a manufacturer buy raw materials tax-free in Texas if the processed goods are sold to a foreign buyer rather than resold domestically?
Yes. The Comptroller ruled that a manufacturer buying raw materials (here, horse pericardia) to be processed and resold can use the Tax Code Section 151.318(a)(1) manufacturing exemption even though t…
Were asphalt pump-kettle units subject to Texas motor vehicle tax or limited sales tax?
Limited sales tax applied. Although local officials viewed the units as trailers, the Tax Administration Division found they were not designed and built to transport people or property on highways, so…
Is a custom-designed communication board (like a FACTS board) for someone who cannot speak exempt from Texas sales tax?
No. The Comptroller found no statutory exemption for a communication board (a FACTS board) designed for someone who cannot communicate verbally. Texas law exempts certain items used by the deaf and le…
Is waste and garbage collection service provided to an ocean-going vessel operating under a foreign flag exempt from Texas sales tax?
No. The Comptroller ruled that waste collection and disposal services performed for ocean-going vessels in Texas are not exempt from sales tax. The Tax Code's exemptions for a vessel's component parts…
Texas Letter Ruling 9211L1211B11: Energy Management/Control System — Installed To Existing Heating And Air Conditioning Systems
Taxable. The Comptroller ruled that selling and installing a computerized energy management/control system as a replacement and upgrade to a supermarket's existing HVAC controls is remodeling of nonre…
Texas Letter Ruling 9211L1205B03: Statute Of Limitations — Tax Refund On Federal Contracts — Federal Law Vs. State Law
This is an internal 1992 Comptroller staff memo, not a taxpayer ruling. It states the agency's position that Texas's own four-year statute of limitations governs sales and use tax refund claims from f…
Texas Letter Ruling 9211L1211C01: Does an on-line service that lets buyers and sellers trade consulting services, software, and information electronically owe Texas sales tax, and has it created nexus in Texas?
Yes to both. Attending Texas trade shows, conventions, and users group meetings gave the out-of-state on-line service nexus in Texas. Once nexus exists, the service must collect Texas sales tax on pre…
Texas Letter Ruling 9209L1194E11: Change Orders To Contracts — Rule Amendment — Being Applied Prospectively To Contracts Executed On And After 7/23/92
The Comptroller told this trade association that whether a change order is taxed as part of the original contract now depends on the date of the original contract, not the date of the change order. Ch…
Can a contractor accept a direct payment exemption certificate for underground storage tank, fence, and concrete replacement work, and how does the answer depend on whether the work is new construction or remodeling?
Split answer depending on the work: (1) a new underground storage tank is new construction, taxable as a lump-sum contract unless material charges are separately ticketed to the customer; (2) totally …
Does wearing an item of tangible personal property (like a watch) in Texas before it is exported disqualify it from the sales tax export exemption, and does a particular bill of lading form satisfy the proof-of-export rule?
Yes -- wearing tangible personal property in Texas before it is exported (the letter's example is wearing a watch) constitutes a taxable 'use' in the state, so the item does not qualify for a sales ta…
Does a nonprofit private fishing club have to collect sales tax on boat stall and locker rentals, and on membership dues, charged to its members?
No. The Comptroller ruled that a nonprofit (IRC Sec. 501(c)(7)) private fishing club does not have to collect sales tax on boat stall and locker rentals or on membership dues and fees. Although nonpro…
Is the sale of a security-monitoring customer contract from one alarm company to another subject to Texas sales tax?
No. The Comptroller ruled that when one security company sells its customer monitoring contracts to another company (who then takes over billing and monitoring), the transaction is the sale of an inta…
Are membership dues paid to a private hunting and fishing club subject to Texas sales tax as an amusement service?
No -- membership dues and annual fees for a private hunting club are not subject to Texas sales tax, because hunting itself is not a taxable amusement service, and this holds true even though the club…
What Texas sales, use, hotel occupancy, and fuel taxes apply to (and can be exempted or refunded for) a motion picture production company filming in Texas?
A film producer is treated as a manufacturer for Texas sales tax purposes, so goods and short-lived equipment (useful life under six months) used directly in producing a film -- props, costumes, set m…
Is an original painted portrait subject to Texas sales tax, and if so, who -- the out-of-state company arranging the commission or the artist -- must collect it?
Yes -- original painted portraits are taxable tangible personal property in Texas, not an exempt professional service. Who must collect the tax depends on the arranger's role: if the out-of-state corp…
Is road grading/reworking exempt 'maintenance,' and what documentation lets a subcontractor buy highway-contract materials tax-free?
Two separate rulings in one letter. First, reworking a private road 'as needed' is not exempt maintenance -- it is a taxable repair or restoration service, and the taxpayer lacked enough documentation…
Does a supplier still have to remit tax on sales it makes to mobile vendors, now that many mobile vendors operate independently rather than exclusively under one supplier?
Split answer based on the vendor's relationship to the supplier. If the mobile vendor still operates under the company and is connected to it through leased vehicles, Comptroller Rule 3.293 still appl…
Are unredeemed coupon revenue, exhibitor car-pass charges, and game revenue at a nonprofit state fair subject to Texas sales tax?
Split ruling on three issues. (1) Coupon revenue for unredeemed fair coupons is not taxable when the coupon is sold, but tax is triggered when the coupons are actually redeemed for food or an amusemen…
Are materials used to build a railroad loading and containment facility exempt from Texas sales and use tax as railroad track materials?
Split answer: materials actually incorporated into the railroad track itself (rails, cross ties, etc.) qualify for exemption from Texas sales and use tax. But materials used to build the loading and c…
Is a breakage/scratch protection guarantee for eyeglasses (and the reduced-fee replacement it provides) taxable under Texas sales tax, and does it matter whether the eyewear is prescription or non-prescription or who sells it?
Split answer that depends on two facts, not one. Repairs and reduced-fee replacements under the breakage protection guarantee are tax-exempt when the eyewear is prescription, as long as the seller kee…
How is Texas sales/use tax applied to three separate vendor invoices: a used scale and scale house, a new water well drilling job, and converting an existing tank into a silo?
Three separate answers for three separate invoices. The used scale and scale house is taxable tangible personal property (being bolted to a concrete slab does not make it realty). The water well drill…
Is a corporate wellness program's health screening, fitness instruction, and re-evaluation/monitoring services subject to Texas sales tax?
No -- the charge for the wellness program's services (health risk appraisal/screening, wellness information and instruction, and re-evaluation/monitoring) is not subject to Texas sales tax. However, a…
How did Texas tax financing leases of motor vehicles and a wheeled compressor?
For the two vehicles, lease payments were not separately taxed, but the lessee owed historical vehicle tax on all lease payments plus the buyout when title passed, less tax paid by the lessor at purch…
Was an extended service contract sold with a motor vehicle taxable in Texas?
The contract itself was not subject to motor vehicle tax or limited sales and use tax. Repair and replacement parts used under it remained taxable: separately billed parts were taxed to the customer, …
Was labor to turn a motor vehicle brake rotor subject to Texas sales tax?
No. The 1990 letter treated labor to repair a motor vehicle or component such as a brake rotor as nontaxable. The repair business, however, had to pay tax to its supplier on the lathe and accessories …
If a moving company damages a customer's furniture and files an insurance casualty claim to cover the repair, is the repair charge still subject to Texas sales tax?
PARTIALLY SUPERSEDED (see note below). As of 1990, repairing personal property (like furniture or drinking glasses) that a moving company damaged during a move was fully TAXABLE, and filing an insuran…
Could an off-road motorcycle or ATV trade-in reduce the taxable amount on a street motorcycle?
No. Only a motor vehicle traded for another motor vehicle reduced the motor vehicle tax base, and the letter said ATVs and off-road bikes were not motor vehicles. For limited sales tax, it separately …
How did Texas tax an automobile extended warranty and repairs performed under it?
The extended warranty and motor vehicle repair labor were not taxable, but parts, supplies, and materials were. Under a separated contract the repairer collected parts tax from the customer, usually 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…
How did Texas tax installation and repair of refrigeration units on trucks and trailers?
Sale and installation of a vehicle refrigeration unit were taxable. Repair labor on a truck- or trailer-mounted unit was not; in lump-sum repairs the shop paid tax on parts, while with separately bill…
How did Texas tax labor and parts for repairs to farm, livestock, horse, and utility trailers?
Repair labor was not taxable. Separately billed parts were taxable unless the trailer was unlicensed for highway use and operated exclusively on the farm or ranch by the original producer, documented …
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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.