Were nursing-home, personal-care, and congregate-living natural gas and electricity exempt, and could nursing homes obtain refunds?

Plain-English summary

Nursing homes were treated as residential for natural gas and electricity beginning January 1, 1988. Their utilities were exempt from state, county, and MTA/CTD sales taxes, while city tax still applied in cities that retained tax on residential utility use.

Nursing homes that had paid tax since January 1, 1988 could request refunds in writing from their utility companies and provide exemption certificates stating residential use by a nursing home.

Personal-care and congregate-living facilities were also treated as multifamily residential units eligible to buy utilities tax-free. The letter also described the older predominant-use study available to mixed nursing-home and personal-care facilities before the nursing-home exemption.

Common questions

Were nursing-home utilities exempt from 1988? Yes, subject to the city-tax exception.

Could prior tax be refunded? Yes, with a written request and exemption certificate.

Did personal-care and congregate-living facilities qualify? Yes.

Citations and references

• 34 Tex. Admin. Code Rule 3.295

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8912L0969C12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

December 20, 1989

Dear ***:

Thank you for your letter concerning the gas and electricity
exemption for nursing homes. Nursing Homes are considered
"residential" and the natural gas and electricity is exempt
from tax effective January 1, 1988.

Because the utilities are exempt as residential use, the utilities
are exempt from the state, MTA/CTD, and county sales taxes. The
utilities are exempt from the city tax (1%-1 1/2%) except in those
cities that retained the city tax on residential use of natural
gas and electricity.

Nursing Homes, who have been paying Sales & Use Tax on gas and
electricity purchases since January 1, 1988, are entitled to a
refund. The refund request must be in writing to the utility
company and should be sent along with an exemption certificate
stating the reason for the exemption (i.e., residential use-
nursing home).

Personal care and congregate living facilities are considered
multi-family residential units and may purchase gas and
electricity tax free.

Before nursing home facilities were exempt from sales and use tax
on gas and electricity, a facility which consists of both nursing
home units and personal care units could claim an exemption from
the sales and use tax on gas and electricity if it could prove,
through a valid engineering study in accordance with Rule 3.295,
that the predominant use of the electricity was for the personal
care units.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

If you have any questions, please contact Tax Correspondence. You
may call toll free 1-800-252-5555, or our regular number is
512/463-4600. My extension is 3-4653.

Sincerely,
Sherry Buckley
Tax Correspondence