Ezel / Tax Rulings / TX
TX 8605L0737A01 Sales and/or Use Tax (State,Local,MTA) 1986-05-22

Was electricity used by beer distributors to cool and preserve beer exempt as electricity used in processing?

Short answer: No. The distributors bought a finished product from the brewery and used electricity only to preserve it, so they were not processors and the electricity was taxable.

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This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Beer distributors bought a finished product from the brewery and used electricity to preserve it.

The Comptroller said that activity was not processing. The distributors' electricity use was taxable.

Common questions

Were the distributors processors? No.

Why not? They received finished beer and only preserved it.

Was their cooling electricity exempt? No.

Source

Original ruling text

May 22, 1986

Dear **:

Thank you for your letter of May 6, 1986, regarding sales tax exemption
on electricity used by ** beer distributors.

The distributors are not considered to be processors. They are
purchasing a Finished product from the brewery.

The electricity used by the distributors is for preserving the finished
product received and is taxable.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at
the Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division

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