Ezel / Tax Rulings / TX
TX 8710L0843B13 Sales and/or Use Tax (State,Local,MTA) 1987-10-30

When a customer pays partly with food stamps and partly with cash, how should the food stamps be applied for Texas sales-tax purposes?

Short answer: Apply the food stamps first to taxable eligible items. Collect sales tax on taxable items remaining in the portion paid with cash.

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 is a taxpayer-specific October 1987 Texas Comptroller letter about applying food stamps and cash to one purchase. It says the opinion may change if the facts differ. Its food-stamp terminology and tax procedure are historical; verify current law and payment-program rules. STAR documents may no longer represent current policy even when not marked superseded.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

A customer had a $10 purchase but only $3 in food stamps. The Comptroller said the $3 in food stamps should be applied first to taxable items that were eligible for purchase with food stamps.

Sales tax then had to be collected on any taxable items remaining in the $7 balance paid with cash.

What this means for you

For the mixed-payment transaction described in this historical letter, the retailer did not simply exempt the entire purchase. It allocated the food stamps first to taxable eligible items and taxed taxable items left in the cash-paid balance.

Common questions

Did the retailer forgive all sales tax because some food stamps were used? No.

Where were the food stamps applied first? To taxable items eligible for purchase with food stamps.

What part remained taxable? Any taxable items included in the balance paid with cash.

Citations and references

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

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller October 30, 1987

Dear ***:

Thank you for your letter concerning sales tax on items purchased with
food
stamps.

Your question relates to a situation in which a customer has a food
stamp bill total of $10.00 yet only has $3.00 in food stamps.

Question: Do we forgive the tax even though they pay mostly in cash?

Answer: The $3.00 in food stamps are to be applied first against any
taxable eligible items. Sales tax must then be collected on any taxable
items included in the balance of $7.00 which is paid in cash.

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,
Julie Pesl
Tax Policy Division

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