Ezel / Tax Rulings / TX
TX 9110L1137C13 Sales and/or Use Tax (State,Local,MTA) 1991-10-28

Could a software developer buy boxes, wrapping paper, envelopes, tape, and similar supplies tax free when they were used to package computer programs?

Short answer: Yes. If the corporation produced computer programs as defined by Rule 3.308, it could buy the listed wrapping and packaging supplies tax free by giving its suppliers an exemption certificate instead of paying tax.

Apply this to your situation

This page answers the general question as of 1991. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1991
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The corporation asked about wrapping and packaging supplies used by software developers. The Comptroller said that, if the corporation produced "computer programs" as defined by Rule 3.308, it could buy boxes, wrapping paper, software envelopes, wrapping line, wrapping tape, and similar supplies tax free.

The corporation had to give each supplier an exemption certificate instead of paying tax.

What this means for you

For this taxpayer, the packaging-supply exemption depended on the product meeting Rule 3.308's definition of a computer program. The letter did not decide the treatment of registration cards, manuals, catalogs, newsletters, or other items named only in STAR's subject line.

Common questions

Were boxes and wrapping supplies taxable? No, when used to package qualifying computer programs. How did the corporation claim the treatment? By issuing an exemption certificate to the supplier. Did the letter address every item in STAR's subject? No; its operative text discussed boxes, wrapping paper, software envelopes, wrapping line, wrapping tape, and similar packaging.

Citations and references

  • Rule 3.308 (the letter's definition reference for computer programs)

Source

Original ruling text

October 28, 1991

Dear ***:

Thank you for your recent letter asking about wrapping and packaging
supplies used by software developers.

If your corporation produces "computer programs" as defined by the
enclosed Rule 3.308, the boxes, wrapping paper, software envelopes,
wrapping line, wrapping tape etc. used to wrap or package the programs
may be purchased tax free by issuing suppliers an exemption
certificate in lieu of tax.

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

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