Ezel / Tax Rulings / TX
TX 8712L0852F03 Sales and/or Use Tax (State,Local,MTA) 1987-12-16

How much of a vending machine's receipts was taxable when the operator could not determine the number of candy products sold from a machine containing candy and food?

Short answer: Texas required tax on candy and soft-drink receipts. If the operator could not determine the number of candy products sold from a machine containing candy, tax was due on 100% of that machine's total receipts rather than an assumed 50%.

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 December 1987 Texas Comptroller letter based on the described mixed-product vending machines. It says the opinion may change if the facts differ. The letter does not explain the tax status of every food product; its express conclusions concern candy and soft-drink receipts and the consequence of being unable to determine candy sales. Vending-machine, food, candy, beverage, and recordkeeping rules may have changed substantially; verify current law. STAR documents may no longer represent current policy even when not marked superseded.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 operator had machines containing both candy and food products. The Comptroller said tax was due on candy and soft-drink receipts.

If the operator could not determine the number of candy products sold from a machine containing candy, it had to pay tax on 100% of that machine's total receipts. The letter did not permit an assumed 50% allocation.

What this means for you

The historical result turned on whether the operator could identify candy sales. Inadequate records caused all receipts from the candy-containing machine to be treated as taxable.

Common questions

Could the operator simply tax half of mixed-machine receipts? No. The letter required the actual candy receipts to be taxed when determinable.

What happened if candy sales could not be determined? Tax applied to 100% of the total receipts from any machine containing candy products.

What receipts did the letter expressly call taxable? Receipts from candy and soft drinks.

Citations and references

  • No statute or administrative rule is cited in the letter text.

Source

Original ruling text

December 16, 1987

Dear Mr. **:

Thank you for your letter concerning sales of candy and food products through
vending machines.

You stated that several of your machines contain both candy and food products.
You asked, "Are we required to pay sales tax on only 50% of the total receipts
or pay sales tax on 100% of the total receipts since this machine contains some
candy products?"

Response: You must pay sales tax on 100% of the receipts from the sales of
candy and soft drinks. If it is not possible for you to determine the number of
candy products sold in a machine then you will be required to pay sales tax on
100% of the total receipts from any machine containing candy products.

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 our toll-free
number 1-800-531-5441. 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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