Ezel / Tax Rulings / TX
TX 8706L0818E03 Sales and/or Use Tax (State,Local,MTA) 1987-06-09

Could verbal quotations qualify for Texas's 1987 prior-contract exemption?

Short answer: No. A qualifying real-property contract had to be written and signed by both parties before January 1, 1987, without tax-based change or modification.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This 1987 Texas Comptroller letter concerns a historical transition exemption for real-property contracts signed before January 1, 1987. Its cutoff date and certificate procedure are not current rules. The conclusion is limited to the written-versus-verbal facts stated. STAR documents may no longer represent current policy even when not marked superseded. Identities are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The Comptroller said verbal quotations did not qualify as prior contracts.

A contractor could use the historical exemption when the customer had a written real-property-improvement contract signed by both parties before January 1, 1987, and the contract could not be changed or modified because of the tax. The contractor could then issue a prior-contract exemption certificate identifying the job where the materials would be used.

What this means for you

The historical exemption required contemporaneous written proof. An oral agreement or verbal price quote could not substitute for a signed pre-cutoff contract.

Common questions

Did a verbal quote qualify? No.

What type of contract could qualify? A written contract to improve real property, signed by both parties before January 1, 1987.

Could the contract shift because of the tax? No.

What could the contractor give its supplier? A prior-contract exemption certificate stating the job where the materials would be used.

Citations and references

  • No statute or rule number is cited in the ruling text.

Source

Original ruling text

June 9, 1987

Dear ***:

Thank you for your letter of May 28, 1987, concerning a "prior contract"
exemption.

Verbal quotes do not qualify as prior contracts.

If your customer had a written contract to improve real property signed by both
parties prior to January 1, 1987, and the contract is not subject to change or
modification by reason of the tax; then the contractor may issue a prior
contract exemption certificate stating what job the materials will be used on.

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,

Adina Whittemore
Tax Policy Section
Tax Administration Division

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