How did Texas tax a livestock producer's employee uniforms, cattle-auction rentals and refreshments, motel space, pickups, trailers, and farm machinery?

Plain-English summary

The Texas Comptroller gave a livestock producer item-by-item answers across several taxes:

• Ranch-employee uniform rental was taxable because the agricultural machinery-and-equipment exemption did not extend to clothing.
• Portable toilets, chairs, and tables rented for a cattle auction were taxable because Rule 3.296(e)'s definition of machinery or equipment did not include them.
• Refreshment taxability depended on what was served and where it was served under Rule 3.293.
• Motel space rented to conduct a cattle auction was subject to hotel occupancy tax; the letter says the hotel tax law provided no exemption for that use.
• Pickups and trucks were subject to Texas motor vehicle sales tax, payable to the county tax assessor when titled.
• A trailer or other farm machine, such as a specialized feed-distributor unit used in a feedlot, was exempt from motor vehicle sales tax when used primarily for farming or ranching.

What this means for you

Agricultural status did not create a blanket exemption for every ranch or auction expense. The letter distinguished production machinery from clothing and event rentals, and it applied separate tax systems to lodging and titled vehicles.

Common questions

Was ranch-employee uniform rental exempt? No.

Were portable toilets, chairs, and tables used at a cattle auction exempt farm equipment? No.

Were refreshments always taxable? The letter does not give one answer; treatment depended on the food or drink and the serving location.

Was motel space used for the auction subject to hotel occupancy tax? Yes.

Were pickups and trucks exempt farm vehicles? No. The letter says motor vehicle sales tax was due when titled.

What farm vehicles did the letter treat as exempt? Trailers and other farm machines used primarily for farming or ranching, including the stated specialized feed-distributor example.

Citations and references

• Comptroller Rule 3.296(e) — definition of agricultural machinery or equipment.
• Comptroller Rule 3.293 — refreshment treatment based on the items and serving location.
• The Hotel Occupancy Tax Law is referenced but not cited by section.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8704L0808E13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller April 14, 1987

Dear ****:

Thank you for your letter of April 6, 1987, concerning the taxability of
certain expenses incurred as an original producer of livestock. Uniform rental
for ranch employees is taxable. The sales tax law exempts certain machinery
and equipment used on a ranch in the production of agricultural products sold
in the regular course of business. This exemption does not extend to clothing.

The rental of portable toilets, chairs and tables used during a cattle
auction is taxable. The definition of "machinery or equipment" under section
(e) of Rule 3.296 does not include these items. The taxability of refreshments
would be determined by the items being served and the location where the items
are served as outlined in Rule 3.293.

Hotel occupancy tax is applicable on space rented at a motel for use in
conducting a cattle auction. The Hotel Occupancy Tax Law does not provide an
exemption for such use.

Texas Motor Vehicle sales tax is due on any pick-up or truck and should
be paid to the County Tax Assessor when the unit is titled. A trailer or other
farm machine (such as a specialized feed distributor unit used in a feed lot)
used primarily for farming or ranching is exempt from Motor Vehicle sales tax.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

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,
Eddie C. Washington
Tax Policy Section
Tax Administration Division