Ezel / Tax Rulings / TX
TX 9007L1033B11 Sales and/or Use Tax (State,Local,MTA) 1990-07-30

Did colored paint sprayed on steel coils qualify for a Texas manufacturing exemption as a label or as an ingredient or component of the product sold?

Short answer: The letter did not reach a final exemption holding. It said the paint did not clearly meet Rule 3.314's definition of a label, but might qualify under Rule 3.300(d)(2) if it became an ingredient or component part of the steel coils manufactured for sale.

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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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 Comptroller did not conclusively decide that the colored paint was exempt.

Based on the submitted facts, the paint did not clearly fit the definition of a “label” under Rule 3.314(a)(2). It might nevertheless qualify under Rule 3.300(d)(2) if it became an ingredient or component part of the steel coils manufactured for sale.

Common questions

Did the paint clearly qualify as a label? No.

Was the manufacturing exemption definitely allowed? No. The letter said it might apply as an ingredient or component part.

What additional issue controlled? Whether the paint became part of the manufactured product sold.

Citations and references

  • Comptroller Rules 3.300(d)(2) and 3.314(a)(2).

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller

July 30, 1990

Dear **:

Thank you for your letter dated July 17, 1990 concerning paint of
various colors that *** sprays on steel coils manufac-
tured for sale to steel processors.

Based on the information that you provided, the paint does not
clearly meet the definition of "label" as the term is used in
section (a) (2) of Rule 3.314 on wrapping and packing supplies.
However, the paint might qualify for exemption from tax under
section (d)(2) of Rule 3.300 on manufacturing as an ingredient or
component part of a product manufactured for sale.

This opinion is based upon the Facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have any additional
questions. You may write me, call toll free 1-800-252-5555 (ext.
3-4685) from anywhere in the United States or phone 512/463-4685.

Sincerely,
Julie Pesl
Tax Correspondence

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