Could a customer that owned a manufacturing aid claim the manufacturer refund when it was not itself engaged in manufacturing for ultimate sale?

Plain-English summary

This September 24 letter expressly superseded and overruled the writer's September 14 answer.

A customer could become owner of a manufacturing aid under Rule 3.300(b)(3), but ownership did not qualify it for the Section 151.318(g) refund. The statute granted the refund to a person engaged in manufacturing tangible personal property for ultimate sale. Because the hypothetical customer was not engaged in that manufacturing, it could not claim the refund.

What this means for you

Title to molds, dies, patterns, or tooling was not enough. The claimant itself had to satisfy the statute's manufacturing activity requirement.

Common questions

Did ownership of the manufacturing aid qualify the customer? No.

Why was the refund denied? The customer was not itself engaged in manufacturing tangible personal property for ultimate sale.

Did this letter replace an earlier answer? Yes, the September 14 response.

Citations and references

• Texas Tax Code § 151.318(g) — manufacturer refund
• Comptroller Rule 3.300(b)(3) — ownership of manufacturing aids

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9009L1046B13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller September 24, 1990

Dear ***:

As I mentioned in our telephone conversation last week, the Taxability
Section has reconsidered my original answer to your question about
sales tax refunds for manufacturers. The letter I write today super-
sedes and overrules my letter of September 14, 1990. I apologize for
any inconvenience this has caused. Your question is restated below:

Question: May a customer who becomes the owner of a manufacturing aid
under Rule 3.300 (b)(3) claim the sales tax refund allowed to manufac-
turers under Tax Code Section 151.318 (g)?

Answer: No. The statute expressly reads: "Each person engaged in manu-
facturing tangible personal property for ultimate sale is entitled to
a refund. . " Tax Code . . . Section 151.318 (g).

In your hypothetical, the customer is not engaged in manufacturing tan-
gible personal property for ultimate sale and is not, therefore, enti-
tled to claim a refund under this section.

This opinion is based on the question presented. Different questions,
though similar, might result in different answers. If you have any fur-
ther questions, feel free to write or call me at 1- 800- 531- 5441, ext.
3-3889.

Sincerely,
John Christian
Taxability Section
Legal Services Division