When did Texas treat computer software used by ranchers and other original agricultural producers as exempt?

Plain-English summary

The Texas Comptroller said computer software designed specifically to aid the original producer in producing, processing, packing, or marketing agricultural products qualified for the sales-tax exemption.

The statutory language was exclusive. Software used for forecasting, developing marketing surveys, or producing other analytical data did not qualify.

The taxpayer described cattle-history software tracking weight, weaning dates, weight gain, medical history, and ancestry. The response stated the functional rule but did not separately say which listed feature controlled. STAR now adds an alert that H.B. 268 required people claiming certain agricultural and timber exemptions to obtain and provide a Comptroller registration number beginning January 1, 2012.

What this means for you

Agricultural use alone did not exempt every program. The software had to be specifically designed for one of the original producer activities named in the letter, and analytical or survey functions fell outside the rule.

Common questions

Did agricultural software automatically qualify? No.

What functions qualified under the letter? Software specifically aiding production, processing, packing, or marketing by the original producer.

What functions did not qualify? Forecasting, marketing surveys, and other analytical-data uses.

What later requirement does STAR flag? A Comptroller registration number for certain agricultural and timber exemptions effective January 1, 2012.

Citations and references

• H.B. 268, 82nd Texas Legislature, Regular Session (2011) — identified in STAR's alert as adding the registration-number requirement.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8703L0800G13

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller

March 10, 1987

Dear ***:

Thank you for your recent letter which is restated with response below.

Two other men and myself have developed a computer software
program/package for working cattle operations' to be used in
keeping up with cattle history. We are planning to market this
program to ranchers and we have formed a partnership to market it.

The program keeps up with the weight of the animal (from birth),
the weaning date, weight gain, and the medical history plus
ancestry line of each animal.

Our question is whether these programs are taxable for state sales
tax or whether the ranchers are exempt as purchases under the
agricultural exemption.

Response: Computer software which is designed specifically to aid in the
production, processing, packing or marketing of agricultural products of
the original producer qualifies for sales tax exemption. The language in the
statute is exclusive. Use of software to facilitate forecasting, developing
marketing surveys and other analytical data would not qualify for exemption.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,

Al Van Allen
Tax Policy Section
Tax Administration Division