Ezel / Tax Rulings / TX
TX 8908L0947F01 Sales and/or Use Tax (State,Local,MTA) 1989-08-07

What happened when a seller mixed taxable crushed gravel with nontaxable unprocessed gravel?

Short answer: The entire mixture was taxable. The seller could preserve the nontaxable treatment of unprocessed gravel only by keeping it separate and charging tax solely on sales of processed material.

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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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 seller's unprocessed gravel was nontaxable, while its crushed or otherwise processed gravel was taxable. About 95% needed no processing and 5% was crushed.

When the seller mixed the processed and unprocessed material, the Comptroller treated the entire mixture as taxable. If the two categories were kept separate, tax applied only to sales of the processed gravel.

Common questions

Was unprocessed gravel taxable? No, under the letter's facts.

Was crushed gravel taxable? Yes.

What if they were mixed? The entire mixture was taxable.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

BOB BULLOCK

Comptroller

August 7, 1989

Dear ***:

Your letter regarding processed and non-processed gravel has been

transferred to me for response.

Briefly stated:

  • CORP A sells gravel.

  • Ninety five percent of the gravel needs no processing

prior to sale.

  • Five percent of the gravel needs to be crushed.

  • Non-processed gravel may be sold tax free while crushed or

processed gravel is taxable.

  • CORP A mixes the two types of gravel together which causes

all the gravel to be taxable.

  • You feel that this puts CORP A at a competitive disadvantage

since some of the material they produce is more coarse then

the material their competitors produce.

Response:

When CORP A mixes processed and non-processed gravel together, the

mixture is taxable. However, CORP A is not require to mix the

material together. As we discussed, if they kept them separate,

they would charge tax only on their sale of processed material.

Feel free to call or write me if you have questions. You can

reach me by calling toll free 800-531-5441 or FAX (512) 475-0900.

Sincerely,

Al Van Allen

Taxability Section

Legal Services Division

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