Ezel / Tax Rulings / TX
TX 9005L1022C02 Sales and/or Use Tax (State,Local,MTA) 1990-05-24

Did a security-services contract qualify for Texas's prior-contract exemption when the seller submitted its bid before July 21, 1987, but the parties signed later?

Short answer: Yes. A seller's bid submitted on or before July 21, 1987, qualified when the resulting contract was based on that bid, regardless of the later signing date. The one-year security-services contract was exempt for October 1, 1987, through September 30, 1988.

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This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 security-services contract qualified for the prior-contract exemption because the seller submitted the underlying bid on July 13, 1987—before the July 21 cutoff.

The contract was signed later, on August 6 and September 15, but Rule 3.319 allowed the exemption when the actual contract was based on a timely seller bid regardless of the signing date.

The one-year contract qualified for the exemption from October 1, 1987, through September 30, 1988.

Common questions

Was the bid submitted by the deadline? Yes, on July 13, 1987.

Did later contract signatures defeat the exemption? No.

What period qualified? October 1, 1987, through September 30, 1988.

Citations and references

  • Comptroller Rule 3.319.

Source

Original ruling text

May 24, 1990

Dear **:

I have received your letter of May 17, 1990 concerning a prior contract
exemption for security services provided by CORP A to CORP B.

I understand CORP A submitted a bid for those services to CORP B on
July 13, 1987. The bid was then accepted and a contract signed August 6,
1987 and September 15, 1987. This contract was for one year.

A bid submitted by the seller on or before July 21, 1987, will qualify for
a prior contract exemption provided the actual con-tract is based on that
bid regardless of the date the actual contract is signed. See the
definition of a prior contract or bid in the attached Rule 3.319.

The contract will qualify for the exemption for the period October 1,
1987, through September 30, 1988.

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 me.
The toll-free number is 1-88-531-5441. The regular number is 512/463-4614.
or you may write me at the Taxability Division. (fax) 512-474-16431

Sincerely,

Adina Whittemore
Taxability Division

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