Were other states and their political subdivisions exempt from Texas sales and use tax on purchases made in Texas?

Plain-English summary

A taxpayer asked whether political subdivisions outside Texas qualified for a governmental sales-and-use-tax exemption.

The Comptroller said Texas generally exempted the United States and its various parts, Texas, and Texas political subdivisions. It did not exempt other states or their political subdivisions.

Those out-of-state governmental agencies therefore had to pay Texas state sales tax and any applicable local sales taxes on purchases made in Texas.

What this means for you

A government purchaser's exempt status in its home state did not create a Texas exemption under this letter. Sellers needed to distinguish covered federal and Texas governmental units from other states and their subdivisions.

Common questions

Were other states exempt? No.

Were political subdivisions of other states exempt? No.

What taxes applied? Texas state sales tax and any applicable local sales taxes on purchases made in Texas.

Citations and references

• Tex. Tax Code § 151.309 (governmental entities)
• 34 Tex. Admin. Code Rule 3.322(b)(1), (2), (4), and (5) (exempt organizations)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9012L1063G11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller December 27, 1990

Dear **:

Thank you for your recent letter concerning the exempt status of
political subdivisions outside Texas.

The Texas sales and use tax law exempts certain governmental units.
Generally, these are comprised of the United States, including all
of its various parts, and the State of Texas and its political sub-
divisions. Please see the enclosed copy of subsection 151.309 of
the statute and Rule 3.322, section (b), paragraphs (1), (2), (4),
and (5).

However, there is no exemption from sales and use taxes for other
states and their political subdivisions. Therefore, these govern-
mental agencies must pay Texas state sales and any applicable lo-
cal taxes on purchases made in this state.

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

You may call me toll free at 1-800-252-5555, ext. 34697. The regu-
lar number is 512/463-4697. You may also write to Tax Correspon-
dence at the above address.

Sincerely,
Sandi Skaggs
Tax Correspondence Division