Could a Texas company claim exemption from city sales tax for taxable sales and deliveries at a terminal facility inside the city limits?

Plain-English summary

The Texas Comptroller rejected a company's claimed city sales-tax exemption for a terminal facility. The city's tax department said the facility area was within the city limits.

Unless the area was de-annexed and proper notice sent to the Comptroller, taxable sales made in the area and deliveries of taxable items to the area were subject to city tax. The company was told to immediately notify its suppliers to disregard the exemption notice.

What this means for you

A company's own statement that a facility was outside the taxing city did not override the jurisdiction's boundary determination. The exemption remained invalid until an actual boundary change and proper agency notification occurred.

Common questions

Was the terminal facility exempt from city sales tax? No.

Why was the exemption invalid? The facility was within the city limits according to the city tax department.

What would have to change? The area would have to be de-annexed and proper notice sent to the Comptroller.

What were suppliers told to do? Disregard the company's exemption notification.

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/8703L0828A08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 5, 1987

Dear ***:

One of your suppliers, COMPANY A, has submitted a copy of your memo
dated February 1, 1987, and an exemption certificate in which CORP X
claims an exemption from payment of CITY M city sales tax.

The claimed exemption is invalid. According to the tax department of the
CITY M, this "terminal facility" area is within the city limits of M.
Unless this area is de-annexed and proper notification sent to the Comp-
troller's office, all sales of taxable items made within this area and
all deliveries of taxable items to this area are subject to city tax.

Please immediately inform all of your suppliers to disregard your
exemption
notification.

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,
Julie Pesl
Tax Policy Section
Tax Administration Division