Were an electric cooperative's security-light charges taxable when the cooperative owned and controlled the light?

Plain-English summary

A cooperative's security-light service was nontaxable when the cooperative owned and controlled the light and the customer neither maintained nor switched it on or off. The result was the same whether the light and electricity charges were lumped together or separately stated.

Items used to provide that nontaxable service were taxable to the cooperative when purchased unless the cooperative itself was an exempt entity formed under the Electric Cooperative Corporation Act.

If the cooperative kept ownership but the customer controlled the light, the total customer charge was taxable. The cooperative could accept an exemption certificate for a residential security light when the account was not coded residential.

What this means for you

Ownership alone did not control the result. Operational control—particularly who maintained and switched the light—separated the nontaxable service from the taxable charge.

Common questions

Was a cooperative-controlled security light taxable? No, under the stated facts.

Did separate billing for electricity change the result? No.

What if the customer controlled the light? The total charge was taxable.

Citations and references

• Electric Cooperative Corporation Act, Tex. Rev. Civ. Stat. Ann. art. 1528b

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9104L1105E06

Original ruling text

April 16, 1991

Dear ****:

Thank you for your letter regarding taxability of charges to your
customers for security lights.

Providing a security light to your customer is considered to be a
nontaxable service if the light remains the property of the
cooperative, it is under the control of the cooperative, and it is not
operated by the customer. This means that the customer does not
maintain the light and does not turn it off or on.

In this situation, the charge to your customer for a security
light (nontaxable service) is not taxable whether the charge for
the light and electricity is lump-sum or separated. All of the
taxable items used in providing the nontaxable service are taxable
to the cooperative at the time of purchase unless the cooperative
is an exempt entity (formed under the Electric Cooperative
Corporation Act (Tex. Rev. Civ. Stat. Ann. art. 1528b)).

If the security light remains the property of the cooperative but
the customer has control, the total charge to the customer is
taxable. An exemption certificate may be accepted in lieu of the
tax if the security light is for a residence and the cooperative
does not code the account as residential.

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

If you have any questions or need additional information, you may
call me toll free at 1-800-252-5555, extension 3-4666. You may
write to Tax Administration Division.

Sincerely,

Jo Ann Dieck
Tax Administration Division