Was natural gas used to heat chicken houses exempt from Texas sales tax, and could the operator obtain a refund for prior billing periods?

Plain-English summary

The requester sought a Texas sales-tax exemption and refund for natural gas billed from July 5, 1990, through January 7, 1991 and described as heating chicken houses.

The Comptroller said natural gas used by a business raising chickens for sale or selling eggs was exempt agricultural use. The letter did not yet approve the refund, however. It asked whether the houses were actually heated during July, August, and September and whether the same meter served any other gas uses.

If the meter had other uses, the requester had to prepare the predominant-use study required by Rule 3.295. The Comptroller would decide the exemption and refund only after receiving those answers.

STAR now carries an alert that H.B. 268 added a registration-number requirement for certain agricultural and timber exemptions effective January 1, 2012.

What this means for you

The historical letter recognized an agricultural exemption for fuel used to raise poultry or produce eggs, but meter-level facts and predominant-use proof controlled the refund. Current claims also must account for the later registration requirement identified by STAR.

Common questions

Was chicken-house heating gas exempt? Yes, when used by a business raising chickens for sale or selling eggs.

Did the letter approve the requested refund? Not yet. The Comptroller requested more information first.

When was a predominant-use study required? When the same meter supplied other natural-gas uses.

Why did the summer months matter? The Comptroller specifically questioned whether the chicken houses were heated during July, August, and September.

Citations and references

• 34 Tex. Admin. Code Rule 3.295 — predominant-use study identified by the letter
• H.B. 268, 82nd Regular Legislative Session (2011) — later registration-number requirement described in STAR's 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/9105L1109C01

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

May 14, 1991

Dear *****:

The sales tax refund request that you sent to GAS COMPANY X
was forwarded to this office for review.

The sales tax exemption and refund apparently cover billing
periods beginning July 5, 1990, through January 7, 1991. The
reason for exemption is "farm use - used to heat chicken houses.

If you are in the business of raising chickens for sale or selling
eggs, the natural gas used to heat the chicken houses is exempt
agriculture use. However, are the chicken houses actually heated
in the months of July, August, and September? Are there any other
uses of natural gas on this meter? If so, a study to determine
predominant use must be prepared as required in the enclosed Rule
3.295.

Upon receipt of your reply to the above questions, you will be
advised if sales tax exemption and refund are applicable.

If you have any questions or need additional information, you may
call me toll free at 1-800-252-5555, extension 3-4666. Please
send your reply to my attention at Tax Administration Division.
Thank you for your assistance.

Sincerely,

Jo Ann Dieck
Tax Administration Division