Ezel / Tax Rulings / TX
TX 8801L0853E01 Sales and/or Use Tax (State,Local,MTA) 1988-01-04

Could a vending-machine operator include sales tax in the item price and back it out of total gross receipts?

Short answer: Yes. Candy, gum, mints, soft drinks, and cigarettes were taxed on total gross receipts, but the operator could include tax in the sales price and back the tax out of gross receipts.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 January 1988 Texas Comptroller letter. It says the opinion may change if the facts differ and cites no statute or rule. The answer concerns candy, gum, mints, soft drinks, and cigarettes taxed on total gross receipts and does not explain the separate '50% of gross receipts' method mentioned in the request. Vending-machine, food, beverage, tobacco, gross-receipts, tax-included pricing, and reporting rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details 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

Candy, gum, mints, soft drinks, and cigarettes sold through vending machines were taxable based on total gross receipts.

The operator could include sales tax in each item's sales price and then back the tax out of gross receipts for reporting.

What this means for you

The historical answer allowed tax-included vending pricing for the named products. It did not explain or apply the separate “50% of gross receipts” method referenced in the taxpayer's question.

Common questions

Were the named vending products taxable? Yes, on total gross receipts.

Could tax be included in the displayed price? Yes.

Could the included tax be backed out? Yes.

Citations and references

The letter cites no numbered statute or rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller January 4, 1988

Dear ***:

Thank you for your letter concerning sales tax on vending machine sales.
You specifically asked about products not taxed at "50% of the gross
receipts".

Items such as candy, gum, mints, soft drinks and cigarettes are subject
to tax based on the total gross receipts. However, the sales tax can be
included in the sales price of these items. If the sales price includes
tax, the tax can be backed out of gross receipts.

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,
(Mrs.) Jo Ann Dieck
Tax Policy Division

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