Was electricity used by a dialysis treatment center exempt from Texas sales tax?

Plain-English summary

Section 151.317 exempted natural gas and electricity except when sold for commercial use. Rule 3.295(a)(1) defined commercial use to include use by someone selling a commodity or a professional or personal service.

The Comptroller classified electricity used at the dialysis center as commercial use and therefore taxable. The nontaxability of the doctors' services and dialysis treatments did not change that result, nor did the exemption under Section 151.313 for some supplies given to patients.

What this means for you

An exemption for the medical service or supplies did not automatically extend to the facility's electricity. The utility use was tested separately under the commercial-use rule.

Common questions

Was the dialysis center's electricity taxable? Yes.

Did nontaxable dialysis treatments make the electricity exempt? No.

Did exempt patient supplies change the electricity result? No.

Citations and references

• Texas Tax Code § 151.317 — natural gas, electricity, and commercial use
• Comptroller Rule 3.295(a)(1) — commercial-use definition
• Texas Tax Code § 151.313 — exemption for some patient supplies

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9009L1047F13

Original ruling text

September 13, 1990

Dear **:

Thank you for your letter regarding sales tax exemption on electricity used
at the dialysis center.

Section 151.317 of the Texas Tax Code provides that natural gas and
electricity are exempt from the tax except when sold for commercial use.
"Commercial use" is defined as "use by a person engaged in selling,
warehousing, or distributing a commodity or a professional or personal
service. Please refer to Rule 3.295 (a)(1).

The electricity used in the dialysis center is commercial use and is taxable.
The fact that the doctor's services and dialysis treatments are not taxable
and that some of the supplies given to the patients in the treatment are
exempt from tax under Section 151.313 of the Texas Tax Code does not cause the
electricity to be exempt.

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

If you have any questions or need additional information, you may call toll
free 1- 800- 252- 5555 or the regular number 512/463-4600. My extension is
34666. You may write to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Jo Ann Dieck
Tax Correspondence