Ezel / Tax Rulings / TX
TX 9008L1036G01 Sales and/or Use Tax (State,Local,MTA) 1990-08-15

Did heating thickened black liquor solely so it could be vacuumed from outdoor storage and moved indoors count as processing in Texas?

Short answer: No. The Comptroller treated the activity as transportation rather than processing and allowed an exemption certificate stating that purpose.

Apply this to your situation

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

A paper mill stored excess black liquor outdoors, where it thickened. A transportation company hired a hot-oil-truck operator to heat the material enough to vacuum it up and move it back into the mill's indoor facility.

The Comptroller said that activity was not processing the black liquor. The transportation company could give the hot-oil-truck operator an exemption certificate stating that it was only transporting the product, not processing it.

What this means for you

The letter classified the heating by its stated purpose: making already-existing material movable for transportation. Its conclusion was limited to those facts.

Common questions

Did the temporary heating count as processing? No.

Why was the black liquor heated? Outdoor storage made it too thick to vacuum and move indoors.

What documentation did the Comptroller direct the company to use? An exemption certificate stating that the activity was transportation, not processing.

Citations and references

  • No numbered statute or rule was cited in the letter.

Source

Original ruling text

August 15, 1990

Dear **:

Ms. Glover asked me to look into your situation. I appreciate your patience.

Let me restate the facts as I understand them.

Black liquor is a by-product from the paper industry. The paper mill uses black
liquor as fuel. At times the mill creates too much black liquor and stores it
in tanks outside. When the liquor is stored outside, it thickens. When the
liquor is too thick, it has to be heated to make it thin enough to be vacuumed
up and moved inside. Once inside the liquor is kept hot.

The paper company hired COMPANY A to move the liquor from the outside storage
to their inside facility. COMPANY A hired COMPANY C, the hot oil truck, to heat
the oil so that it could be moved to inside the facility.

In this situation, you are not processing the black liquor. Give COMPANY C an
exemption certificate stating that you are only transporting the product and
not processing it.

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 1-800-351-5441. The regular number is 512/463-4614. Or you
may write me at the Taxability Section of Legal Division {(fax) 512-475-0900}.

Sincerely,

Adina Whittemore
Taxability
Legal Division

cc COMPANY C

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