Ezel / Tax Rulings / TX
TX 8812L0928E12 Sales and/or Use Tax (State,Local,MTA) 1988-12-29

Did a qualifying prior-contract exemption survive when unchanged data-processing contracts passed to a surviving company in a liquidation?

Short answer: Yes. The exemption remained because the contracts were transferred unchanged and the surviving company was bound by the same terms.

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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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 with taxable data-processing contracts was liquidated into another company. The contracts had been signed on or before July 21, 1987 and otherwise qualified as prior contracts under Rule 3.319.

The surviving company received the contracts without any change to their dates, signatures, or terms and became bound by the same conditions. Under those facts, the Comptroller said the prior-contract exemption was not lost.

Common questions

Did the liquidation terminate the exemption? No.

What facts mattered? The contracts remained unchanged, and the surviving company assumed the same obligations.

Would modified contracts receive the same answer? The letter does not say; its holding is limited to unchanged contracts.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 29, 1988

Dear ***:

You wrote concerning the effect of a liquidation on a contract
which otherwise qualified as a prior contract under Rule 3.319.

I understand CORP A is being liquidated into CORP B. CORP A had
contracts to provide taxable data processing services. The con-
tracts fall within the definition of a prior contract as outlined
in Rule 3.319, and the contracts were signed on or before July 21,
1987. CORP A will transfer these contracts to CORP B as a result of
the liquidation. The contracts will not be changed or modified,
and the date and signatures will remain the same. CORP B will be
bound by the same conditions of the contract as was CORP A.

Under these conditions, the prior contract exemption will not be
lost when CORP B assumes the contracts as the surviving company.

This opinion is based on the facts presented. If there are addi-
tional 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
512/463-4614. You may write me at the Taxability Section, Legal
Services Division.

Sincerely,
Adina Whittemore
Taxability Section
Legal Services Division

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