Was liquid petroleum gas exempt from Texas limited sales tax, and could an itemized fuel expense still be taxed as part of a taxable service?

Plain-English summary

The Comptroller said liquid petroleum gas was exempt from limited sales tax under Section 151.308. When used as motor-vehicle fuel, however, it was subject to the liquefied-gas tax imposed by Section 153.301.

The letter also said limited sales tax applied when a person incurred the LPG expense while performing a taxable service and itemized that expense on the customer's bill. Its example was a fuel-adjustment charge for LPG used to operate a wireline unit pulling oil-well tubing that needed repair.

What this means for you

The historical letter distinguished the tax treatment of the fuel itself from a fuel expense included in the billed price of a taxable service. Separately itemizing the expense did not remove it from the taxable service charge.

Common questions

Was LPG subject to limited sales tax by itself? No under Section 151.308 as applied in the letter.

Was LPG used as motor-vehicle fuel subject to another tax? Yes, the letter cited the liquefied-gas tax under Section 153.301.

Could an itemized LPG expense be taxed? Yes, when incurred in performing a taxable service and itemized on that service's bill.

Citations and references

• Texas Tax Code § 151.308, limited-sales-tax exemption for liquid petroleum gas as applied in the letter
• Texas Tax Code § 153.301, liquefied-gas tax when LPG is used as motor-vehicle fuel

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8710L0838F08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

October 9, 1987

Dear ***:

Thank you for your letter of September 24, 1987, concerning the
taxability
of liquid petroleum gas under the Limited Sales and Use Tax Act.

Liquid petroleum gas is exempt from the limited sales tax under Section
151.308. Liquid petroleum gas is subject to liquefied gas tax imposed
under
Section 153.301 when used for fuel in motor vehicles.

The limited sales tax would apply if the liquid petroleum gas is an
expense
incurred by a person using the fuel in the performance of a taxable
service
and the expense is itemized on the bill for the taxable services
performed.
An example would be a fuel adjustment charge for liquid petroleum gas
used to
operate a wireline unit used to pull oil well tubing in need of repair.

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 Policy Division.

Sincerely,
Eddie C. Washington
Tax Policy Division