Ezel / Tax Rulings / TX
TX 8807L0889D01 Sales and/or Use Tax (State,Local,MTA) 1988-07-29

Is testing commercial underground gasoline storage tanks taxable in Texas?

Short answer: Testing commercial underground gasoline storage tanks is a nontaxable service in Texas. The equipment used to provide that testing service is, however, taxable to the service provider — the provider pays tax on its own testing equipment. (Although the file's caption lists other testing subjects, the Comptroller's answer here is limited to the testing of underground storage tanks.)

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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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 company asked the Comptroller about the taxability of testing commercial gasoline storage tanks. The Comptroller's answer:

  • The testing of underground tanks is a nontaxable service.
  • The equipment used to provide that testing service is taxable to the service provider — the provider is the consumer of its own testing equipment and pays tax on it.

Note on scope: the file is captioned broadly (referring to testing of semiconductors, chips, metal, oil, equipment, and welds), but the body of this letter addresses only the testing of commercial underground gasoline storage tanks. We ground the holding on what the letter actually decides.

What this means for you

Tank-testing service providers

If you test underground (commercial gasoline) storage tanks, that testing service is not taxable — don't charge customers sales tax on it. But you owe tax on the equipment you buy to perform the testing, because you consume it in providing a nontaxable service.

Don't over-read the caption

The file's title lists several kinds of testing, but the Comptroller's response here is specific to underground storage-tank testing. Other testing services can have different treatment; confirm separately before assuming this result applies.

Common questions

Q: Is testing underground gasoline storage tanks taxable in Texas?
A: No. The Comptroller states that testing underground tanks is a nontaxable service.

Q: Do I owe tax on my testing equipment?
A: Yes. The equipment used to provide the testing service is taxable to you, the service provider.

Q: Does this cover all kinds of testing?
A: The letter's answer addresses testing of underground storage tanks. Despite the broader caption, it does not separately decide the taxability of other testing services.

Q: Can I rely on this 1988 letter today?
A: Treat it as guidance only. It is based on the facts presented and can change with different facts; on the STAR system it binds the Comptroller only as to the taxpayer it was issued to and may no longer reflect current policy.

Citations and references

Rules and statutes: The letter treats underground-tank testing as a nontaxable service and the provider's testing equipment as taxable to the provider, but does not cite a specific Tax Code section or Comptroller rule by number.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

July 29, 1988

Dear *****:

Thank you for your recent letter regarding the taxability of testing
commercial gasoline storage tanks.

As discussed by you and ***** in your telephone conversation, the
testing of underground tanks is a nontaxable service. The equipment used
to
provide this service is taxable to the service provider.

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 Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Julie Pesl
Tax Correspondence

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