Ezel / Tax Rulings / TX
TX 8903L0927G14 Sales and/or Use Tax (State,Local,MTA) 1989-03-28

Did a corporate group lose Texas's intercorporate-service exemption by choosing not to file a consolidated federal return?

Short answer: No. Eligibility to report on a consolidated federal return was enough; the group's decision not to use that method did not destroy the exemption.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The corporate group met the Internal Revenue Code requirements for reporting income on a consolidated federal return but chose not to file that way.

Texas concluded that the filing choice did not destroy the sales-tax exemption for intercorporate services under Tax Code section 151.346.

Common questions

Did the group need to qualify for consolidated filing? Yes.

Did it need to actually file a consolidated return? No.

Source

Original ruling text

March 28, 1989

Dear **:

As a result of our meetings and correspondence on the application of the
sales tax exemption for intercorporate services, we have concluded that your
position is correct.

Your question assumes that your client is a corporate group which meets
all requirements of the Internal Revenue Code for reporting its income on a
consolidated federal income tax return. However, your client has chosen not to
file on that basis.

The decision not to use this filing method does not destroy the
availability of the sales tax exemption authorized by Tax Code Section 151.346.

Sincerely,

Martin Cherry
Assistant Direct
Legal services Division

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