Ezel / Tax Rulings / TX
TX 9009L1048E07 Sales and/or Use Tax (State,Local,MTA) 1990-09-11

Could contractors building the federal Homeport naval facility in Corpus Christi rent equipment and obtain supplies tax-free?

Short answer: Yes. Although federal-contract equipment rentals were generally taxable, Homeport contractors could give suppliers exemption certificates for qualifying contract inputs.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The request concerned equipment rented by a contractor working on Homeport, the federal naval facility in Corpus Christi.

The Comptroller said equipment rented for federal-government contracts was generally taxable, but Homeport was an exception. Contractors building that facility could give suppliers exemption certificates instead of tax on equipment, supplies, and materials purchased, leased, or rented for use in performing their contracts.

What this means for you

This was a facility-specific exception, not a general federal-contract exemption. The acquired item had to be used in performing a Homeport construction contract.

Common questions

Were federal-contract equipment rentals generally exempt? No.

Did Homeport receive an exception? Yes.

What could qualifying contractors acquire with an exemption certificate? Equipment, supplies, and materials purchased, leased, or rented for contract performance.

Citations and references

  • Texas Tax Code § 151.311

Source

Original ruling text

September 11, 1990

The Honorable Todd A. Hunter
Texas House of Representatives
413 A Capitol Building
Austin, Texas

Attention: **

Dear Representative Hunter:

** called about sales tax equipment rented by a contractor to use
on a job for the federal government. The project is Homeport - the naval
facility in Corpus Christi.

I'm enclosing a copy of 151.311 of the Tax Code. As a general rule, tax is due
on equipment rented for use on a contract with the federal government.
However, there is one exception - Homeport. Contractors building this facility
may give their suppliers exemption certificates instead of tax on equipment,
supplies and materials purchased, leased or rented for use in performance of
their contracts.

If you have any questions or need more information, please call me. My number
is 512/463-4614. Or you may write me at the Taxability, Legal Division. [(fax)
512-475-0900]

Sincerely,

Adina Whittemore
Taxability
Legal Division

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