When did Texas sales or use tax apply to flexible food packaging bought from Texas or out-of-state suppliers?

Plain-English summary

The Comptroller said manufacturers and processors could continue buying flexible packaging and printed overwrap or bags tax free when used to package products for resale, as long as they gave the seller an exemption certificate.

Sales to people who were not manufacturers or processors were taxable. A Texas buyer that would owe sales tax on packaging bought in Texas instead owed Texas use tax when it bought the same taxable packaging from an out-of-state supplier. Packaging shipped by its manufacturer to a customer outside Texas was exempt from Texas tax.

What this means for you

Buying from another state did not erase Texas tax on packaging used in Texas when the purchase was otherwise taxable. Separately, the letter recognized an exemption when the packaging manufacturer itself shipped the goods to an out-of-state customer.

Common questions

Could food manufacturers buy the packaging tax free? Yes, as manufacturers or processors and with an exemption certificate.

What if the buyer was not a manufacturer or processor? The seller had to collect sales tax.

What if taxable packaging came from an out-of-state supplier? The Texas buyer owed use tax.

What if the packaging seller shipped it to an out-of-state customer? The letter says the shipment was exempt from Texas tax.

Citations and references

• The letter does not identify a numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9109L1137D01

Original ruling text

September 25, 1991

Dear **:

Thank you for your recent letter regarding the change in the Texas Tax Code on
wrapping and packaging supplies.

You indicated that your client sells flexible packaging materials and printed
material that is used as an overwrapper or bag to food manufacturers.
Manufacturers and processors retain their exemption for wrapping and packaging
material used to wrap or package a product for resale. Your client may continue
to accept an exemption certificate in lieu of Texas tax from manufacturers and
processors.

Should your client sell to persons other than manufacturers or processors, your
client would be required to collect sales tax on the packaging materials.

You are correct that person required to pay Texas sales tax on packaging
supplies would owe Texas use tax if the packaging supplies were purchased from
an out-of-state supplier.

You asked about interstate shipments. Packaging material shipped to a customer
out of state by the manufacturer of that material would be exempt from Texas
tax.

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 more information, you may call me toll free
at 1-800-252-5555, extension 3-4633. The regular number is 512/463-4633.

Sincerely,

Wanda Hutcheson
Tax Administration Division