Ezel / Tax Rulings / TX
TX 8409L0593B13 Sales and/or Use Tax (State,Local,MTA) 1984-09-17

Were railroad crossties shipped into Texas exempt as supplies essential to operating locomotives and trains?

Short answer: Yes. The Comptroller treated railroad ties as supplies essential to train operations under Section 151.331, so the seller did not collect Texas use tax when the purchaser issued an exemption certificate claiming that use.

Apply this to your situation

This page answers the general question as of 1984. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1984
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The Texas Comptroller said railroad crossties qualified as supplies essential to operating locomotives and trains under Section 151.331.

The seller did not have to collect Texas use tax on ties sold and shipped into Texas to railroad companies or their contractors when the purchaser issued an exemption certificate claiming the exempt use.

What this means for you

Railroad suppliers

The historical exemption depended on the ties' essential railroad use and a purchaser exemption certificate.

Railroad contractors

The letter included purchasers working for railroad companies, but the certificate still had to claim the qualifying use.

Accountants and tax professionals

Retain the exemption certificate and verify the current scope of Section 151.331 and the carriers rule.

Common questions

Q: Were the railroad ties exempt?
A: Yes, as essential supplies under the cited section.

Q: What documentation was required?
A: An exemption certificate claiming the exempt use.

Q: Did the seller collect Texas use tax with a valid certificate?
A: No.

Citations and references

  • Tex. Tax Code § 151.331 (quoted in the letter)

Source

Original ruling text

September 17, 1984

Dear **:

Thank you for your recent letter concerning the taxability of crossties
sold and shipped into Texas to railroad companies and contractors working
for railroad companies.

Sec. 151.331 of the Texas Tax Code states: "Rolling stock, locomotives,
and fuel and supplies essential to the operation of locomotives and trains
are exempted from the taxes imposed by this chapter" (emphasis added). The
railroad ties qualify as essential supplies, and as long as the purchaser
issues you an exemption certificate claiming this exempt use you will not
have to collect any Texas use tax.

I have enclosed our rule on carriers which goes into more detail and some
exemption certificates for your convenience.

This opinion is based upon the facts you presented. If there are additional
or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/475-1931.

Sincerely,

F. Wayne McDonald
Tax Administration Division

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