Ezel / Tax Rulings / TX
TX 8712L0852F05 Sales and/or Use Tax (State,Local,MTA) 1987-12-18

Did Texas's manufacturing-utility sales-tax exemption apply to propane, and what remedy was available for sales tax paid on propane purchases?

Short answer: No. The letter said propane was subject to fuels tax rather than limited sales tax, while the manufacturing-utility exemption was limited to natural gas and electricity. Any sales tax paid on propane was paid in error, and the taxpayer should request a refund from the supplier.

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 a propane-use study and the facts presented. It says the opinion may change if the facts differ. The letter addresses propane even though the STAR caption also names butane; it does not state a butane holding. Fuels-tax, sales-tax, manufacturing-exemption, and refund rules may have changed substantially; verify current law and procedure. STAR documents may no longer represent current policy even when not marked superseded.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 propane was subject to fuels tax, not limited sales tax. It also said the manufacturing-utility sales-tax exemption was limited to natural gas and electricity and did not apply to propane.

Because sales tax on the propane purchases was paid in error, the taxpayer was instructed to request a refund from the supplier.

What this means for you

Under this historical letter, propane did not qualify for the cited manufacturing-utility exemption, but it also was not a limited-sales-tax purchase. The stated refund route was through the supplier.

Common questions

Did the manufacturing-utility exemption cover propane? No. The letter limited that exemption to natural gas and electricity.

Was limited sales tax due on propane? No. The letter treated propane as subject to fuels tax instead.

How was erroneous sales tax to be recovered? By requesting a refund from the supplier.

Did the letter decide the treatment of butane? No. Butane appears in the STAR caption, but the operative letter discusses only propane.

Citations and references

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

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 18, 1987

Dear ****:

Thank you for your letter of December 4, 1987, and the accompanying
propane use study.

Propane is a fuels tax which is not subject to the limited sales tax.
You should not have paid limited sales tax on your propane purchases.

The exemption in the sales tax laws for utilities used in manufacturing,
fabricating (or processing tangible personal property for sale as tangible
personal property is limited to natural gas and electricity. This exemption
does not apply to propane.

If you did pay sales tax on your propane purchases, you paid tax in
error. You should request a refund of tax from the supplier.

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,
Eddie C. Washington
Tax Policy Division

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