Ezel / Tax Rulings / TX
TX 8410L0592A03 Sales and/or Use Tax (State,Local,MTA) 1984-10-05

Was leasing propane tanks to Texas customers taxable, and could the lessor buy the tanks with a resale certificate?

Short answer: Yes. The propane-tank leases were taxable, and the lessor could give its supplier a resale certificate instead of tax when acquiring the tanks for lease.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 leases of propane tanks to customers were taxable.

The lessor could give its supplier a resale certificate instead of paying tax when buying the tanks for lease.

What this means for you

Propane and tank-rental businesses

The historical transaction was treated as a taxable equipment lease, not a nontaxable service.

Accountants and tax professionals

Retain the resale certificate supporting the lessor's tax-free acquisition and verify current tank-rental and bundled fuel-service rules.

Common questions

Q: Was the tank lease taxable?
A: Yes.

Q: Could the lessor buy the tank tax-free for resale?
A: Yes, with a resale certificate.

Citations and references

  • The letter cites no statute or administrative rule.

Source

Original ruling text

October 5, 1984

Dear **:

Thank you for your recent letter regarding the taxability of propane
tanks leased to your customers. As you were told by Mr. Murphree, the
lease of these tanks is taxable. You may give a resale certificate to
your supplier in lieu of tax.

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, or call toll free 1-800-252-5555 from anywhere in Texas
or phone 512/475-1931.

Sincerely,

Al Van Allen
Tax Policy Section
Tax Administration Division

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