Ezel / Tax Rulings / TX
TX 8509L0663D05 Sales and/or Use Tax (State,Local,MTA) 1985-09-16

Could an electric cooperative recover tax on its ownership share of generating-project property purchased after its operating agreement?

Short answer: Yes, for purchases from the agreement date based on its ownership percentage, using supplier refunds and a project-specific exemption certificate; earlier purchases did not qualify.

Apply this to your situation

This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
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 1985 Texas Comptroller taxpayer-response letter based on an electric cooperative's ownership percentage in a generating-facility project and the April 8, 1982 execution date of its ownership, construction, and operating agreement. Recovery had to come from suppliers through a certificate issued by the purchasing entity and identifying the project and ownership percentage. It expressly says different facts could change the opinion. Current cooperative, project, ownership, certificate, supplier-refund, and sales-and-use-tax rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. This summary is informational only and is not legal or tax advice.
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

Tangible personal property bought for the generating-facility project on or after April 8, 1982—the date the ownership, construction, and operating agreement was executed—qualified for exemption based on the cooperative's ownership percentage.

Tax paid from that date had to be recovered from the suppliers that received it. The purchasing entity had to give each supplier a completed exemption certificate identifying the project and the cooperative's ownership percentage.

Property bought before April 8, 1982 did not qualify for a refund to the cooperative.

Common questions

When did qualifying purchases begin? April 8, 1982.

Was the full project exempt for the cooperative? Only its ownership-percentage share.

Who issued the certificate? The entity that bought the property and paid the tax.

Did earlier purchases qualify? No.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

Original ruling text

September 16, 1985

Dear ***:

Thank you for your letter of August 23, 1985, regarding a sales tax
refund for ELECTRIC COOP X (*).

Tangible personal property purchased for the *** generating
facility project from April 8, 1982, the date the Ownership, Construction
and Operating Agreement was executed, would qualify for sales and use tax
exemption based on X's percentage of ownership.

Sales and use tax paid on the personal property from April 8, 1982, will have
to be recovered from the suppliers to whom it was paid. A completed exemption
certificate identifying the project and X's percentage of ownership must be
issued to the supplier by COMPANY A, the entity that purchased the personal
property and paid the tax.

X would not be entitled to a tax refund on tangible personal property purchased
by COMPANY A prior to April 8, 1982.

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 us if you have additional questions. You may write us,
call toll free 1-800-252-5555 from anywhere in Texas.

Sincerely,

Tax Policy Section
Tax Administration Division

Get today's answer for your situation

You just read a 1985 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.