Ezel / Tax Rulings / TX
TX 9008L1037G13 Sales and/or Use Tax (State,Local,MTA) 1990-08-21

Did a local exemption for telecommunications services also exempt equipment sold to customers and repairs to customer-owned equipment?

Short answer: No. Equipment sold with title transferred to the customer and repairs to customer-owned equipment remained subject to local sales tax even where the local jurisdiction exempted telecommunications services. The letter separately reconfirmed prior treatment of equipment rented as an integral part of the service, while STAR now directs readers to amended Rule 3.285 for care-custody-control guidance.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Local jurisdictions' exemption of telecommunications services did not extend to equipment sold to customers or repairs of customer-owned equipment. Those transactions remained subject to local sales tax.

The letter also reconfirmed an earlier response about equipment whose care, custody, and control was transferred to the customer as a rental integral to telecommunications service, but the saved body does not restate that earlier response's rate calculation.

STAR places a later alert above the letter directing readers to Rule 3.285, amended in 2017, for current guidance on care, custody, and control of tangible personal property used in providing a taxable service.

Common questions

Was sold equipment exempt because telecommunications service was locally exempt? No.

Were repairs to customer-owned equipment exempt? No.

Does the 1990 letter contain the full treatment of rented integral equipment? No. It reconfirms an earlier letter without reproducing its calculation, and STAR points to later Rule 3.285 guidance.

Citations and references

  • 34 Tex. Admin. Code Rule 3.285, identified in STAR's later alert.

Source

Original ruling text

ALERT: For specific guidance relating to the care, custody and control of TPP when providing a taxable service, please see Rule 3.285, Resale Certificates; Sales for Resale (amended 11/01/2017.

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

August 21, 1990

Dear **:

This letter is in response to **'s request that
we reconfirm the information provided in Mr. Van Allen's
letter dated February 13, 1989, on telecommunications ser-
vices and repairs to equipment rented as part of telecom-
munications services.

Mr. Van Allen's letter is correct regarding the taxation
of equipment in which the care, custody and control of
that equipment is transferred (rented) to the customer as
an integral part of the telecommunications service. Equip-
ment that is sold (title to the equipment is transferred)
to the customer and repairs to customer-owned equipment
are subject to sales tax imposed by local taxing jurisdic-
tions even if the local taxing jurisdictions exempt tele-
communications services from local sales and use tax.

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

You may call toll free 1-800-252-5555 if you have any ques-
tions or need more information. You may write to Tax Cor-
respondence, Comptroller of Public Accounts.

Sincerely,
Eddie C. Washington
Tax Correspondence

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