Which purchase orders and contracts qualified for the Texas sales-tax rate in effect before the January 1, 1987 increase?

Plain-English summary

The Texas Comptroller said actual orders for specific items submitted before January 1, 1987 used the tax rate in effect before the increase.

Binding contracts entered before that date also used the prior rate when they had a definite price or a price based on criteria outside the parties' control.

What this means for you

The old rate depended on a real, specific order or binding contract and a qualifying price term. A vague future purchasing arrangement was not described as sufficient.

Common questions

Did a specific pre-1987 order use the prior rate? Yes.

Did a binding pre-1987 contract use the prior rate? Yes, if its price was definite or based on outside criteria.

Did the letter address current tax rates? No.

Citations and references

• The letter cited no numbered statute or Comptroller rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8701L0785A01

Original ruling text

January 8, 1987

Dear ***:

Thank you for your letter of December 16, 1986, concerning the correct
sales tax rate on purchase orders and contracts made before January 1, 1987.

Actual orders of specific items submitted prior to January 1, 1987, and
binding contracts with a definite price or a price based on criteria not
controlled by parties to the contract, entered into prior to January 1,
will be subject to the tax rate in effect prior to the tax increase.

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 or phone
512/463-4600.

Sincerely,

Tax Policy Section
Tax Administration Division