Did shop-order envelopes qualify for Texas's manufacturing exemption as short-lived machinery, equipment, accessories, or essential manufacturing materials?

Plain-English summary

The Texas Comptroller said shop-order envelopes were not exempt under Rule 3.300. The rule exempted machinery, equipment, accessories, and replacement parts that were entirely consumed or had no value within six months after purchase when new, but the envelopes were not machinery, equipment, or accessories covered by that short-life provision.

The letter also found that the envelopes were not materials necessary or essential to manufacturing and were not directly used or consumed in the manufacturing process.

What this means for you

Short useful life did not itself establish a manufacturing exemption. The item first had to fit the rule's qualifying property categories or satisfy the direct manufacturing-use standard.

Common questions

Were shop-order envelopes exempt manufacturing supplies? No.

Did the six-month useful-life provision apply? No. The envelopes were not machinery, equipment, or accessories covered by it.

Were the envelopes necessary or essential manufacturing materials? The Comptroller said they were not.

Were they directly used or consumed in manufacturing? No.

Citations and references

• Comptroller Rule 3.300(d)(7) — short-life exemption for qualifying machinery, equipment, accessories, and replacement parts.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8704L0816E10

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller April 29, 1987

Dear ***;

Thank you for your letter of April 21, 1987, concerning the tax status of
"shop order envelopes."

The shop order envelopes are not exempt from sales tax under Rule 3.300.
Under section (d)(7) of the rule, "machinery, equipment, accessories and
replacement parts which are entirely consumed or without value within six
months of the date the items were purchased new are exempt." These items
do
not meet the definition of machinery, equipment or accessory to which the
six
month useful life exemption apply. These items are not materials
necessary
or essential to the manufacturing process nor are they directly used or
consumed in the manufacturing process.

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