Was electricity used for aquaculture and drip-irrigation research exempt from Texas sales tax in this 1990 ruling?

Plain-English summary

A research operation used lighting and temperature controls to study fish growout, hatchery principles, maturation, and fry and fingerling production. It also planned drip-irrigation research for vegetables.

The 1990 letter treated electricity and natural gas used for that aquaculture and irrigation research as taxable commercial use. The operation was not manufacturing or processing tangible personal property for sale, and its work did not qualify as agricultural operations on a farm or ranch.

STAR adds a later-law alert: a qualified-research exemption for certain depreciable property was added to Tax Code Section 151.3182 by 2013 legislation, and Rule 3.340 may now apply. The alert does not say that this taxpayer or its electricity qualified under the later law.

What this means for you

The operative holding reflects 1990 law and facts. Anyone evaluating current research purchases should separately examine the later qualified-research provisions identified in STAR's alert.

Common questions

Was the aquaculture research electricity exempt in 1990? No.

Did the work qualify as manufacturing for sale? No.

Did it qualify as farm or ranch agriculture? No.

Does STAR identify a possible later exemption? Yes, for certain depreciable property used in qualified research, but it does not resolve whether this activity qualifies.

Citations and references

• Tex. Tax Code § 151.3182 (qualified-research property; later-law STAR alert)
• 34 Tex. Admin. Code Rule 3.340 (qualified research; later-law STAR alert)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9011L1057G13

Original ruling text

ALERT: An exemption for certain depreciable property used in "qualified research", as added to Section 151.3182 by the 83rd (2013) Legislative Session (H.B.800), may be available. See Rule 3.340 for additional details.

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

November 2, 1990

Dear **:

Thank you for your letter regarding sales tax exemption on elec-

tricity used in research and development in aquaculture.

You stated that *** is working with various kinds of fish.

You work on food fish growout techniques, hatchery principles,

maturation, and fry fingerling production. Lighting and temper-

ature controls are used to regulate reproduction and growth

rates. The work is incorporated into additional research and

development. Future plans include work on drip irrigation for

vegetables (lettuce, cucumbers, etc.).

The electricity (and natural gas) used in research and develop-

ment in aquaculture and d rip irrigation is commercial use and

does not qualify for sales tax exemption. Ewald is not engaged

in manufacturing or processing tangible personal property for

sale and the activity does not qualify as agriculture operations

on a farm or ranch.

This opinion is based on the facts presented. If there are addi-

tional or different fact, the 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 3-4666. You may write to Tax Cor-

respondence, Comptroller of Public Accounts.

Sincerely,

Jo Ann Dieck

Tax Correspondence