Ezel / Tax Rulings / TX
TX 8611L0769D01 Sales and/or Use Tax (State,Local,MTA) 1986-11-07

What Texas sales-tax rate applied to student meal plans paid in late 1986 but used after the January 1, 1987 rate increase?

Short answer: The pre-increase four-and-one-eighth-percent state rate applied because the university was bound by a fixed-price written contract entered before January 1, 1987.

Apply this to your situation

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 1986 Texas Comptroller letter concerns student board fees collected before a historical January 1, 1987 rate increase under a fixed-price written contract. It is not current meal-plan or rate guidance. College, university, meal, board-plan, contract, payment, consumption-date, rate, and local-tax rules may have changed. STAR documents may no longer represent current policy even when not marked superseded. Identities are redacted. 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

The Texas Comptroller said the university should collect the four-and-one-eighth-percent state rate in effect before the January 1, 1987 increase on student board fees paid in November or December 1986 for meals beginning in January.

The university had a written, fixed-price obligation to provide the meals at the amount paid before the rate increase. That arrangement qualified for the historical prior-contract exemption.

What this means for you

The meal-consumption date did not control this historical transition. The pre-increase written contract and fixed price supported the old rate.

Common questions

What rate did the letter apply? Four and one-eighth percent state sales tax.

Why did January meal use not trigger the new rate? The university was already bound by a pre-1987 fixed-price written contract.

Citations and references

  • The letter cited no numbered statute or Comptroller rule.

Source

Original ruling text

November 7, 1986

Dear ***:

Thank you for asking for written confirmation of the telephone
conversation we had on meals sold to students who preregister.

Your question is restated below followed by our answer.

When fees for board, which includes sales tax, is collected and
deposited in November and December 1986, but the board is not used by
the student until the middle of January 1987 what sales tax rate should
be used?

ANSWER: You should collect the 4 1/8% state sales tax rate. The
legislature exempted from the increase in the rate the sale of taxable
items under a written contract entered into before January 1, 1987, if
the contract price is not subject to change because of the tax. The
University is contractually obligated to provide the students with the
meals at the price paid before the effective date of the rate increase
and comes under the prior contract exemption.

This opinion is based upon the facts 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 or
telephone 512/463-4600.

Sincerely,

Tax Policy
Tax Administration Division

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