Texas Letter Ruling 9211L1205F07: Woodworking — Building Bird Houses And Feeders For Sale

Plain-English summary

The Texas Comptroller's office responded to a woodworker asking about sales tax responsibilities for a bird house and feeder business. The letter lays out four basic points:

1. You need a sales tax permit, which is free of charge, to sell bird houses and feeders in Texas.
2. You collect state and local sales tax based on where the sale is made. The letter gives an example: selling in a county outside city limits meant collecting 6 3/4% total (6 1/4% state tax plus a 1/2% county sales tax), reported and paid on the seller's sales tax return.
3. Filing frequency depends on volume. Unless the seller collects more than $1,000 in state sales tax in a year, they file a yearly return, due January 20th.
4. Materials can be purchased tax-free. Once the permit is obtained, the woodworker can issue a properly completed Texas resale certificate to vendors to buy the wood and other materials used to build the bird houses and feeders without paying sales tax on them.

The letter was signed by Mike Doyle, Director of Tax Administration, and offered a contact (Joe Newman) for further questions.

What this means for you

Woodworkers and craft sellers

If you're making and selling items like bird houses and feeders in Texas, this letter is a basic roadmap: get a free sales tax permit before you start selling, collect the correct combined state and local rate for the location of each sale, and use a resale certificate to buy your raw materials tax-free. If your total state sales tax collected stays at or under $1,000 for the year, you likely only need to file once a year, by January 20th.

Small business owners and hobbyists turning a profit

This ruling is a good reminder that even a small side business selling handmade goods triggers Texas sales tax permit and collection obligations. The tax-free purchase of materials via resale certificate can meaningfully reduce your costs, since you only collect tax on the finished item sold to the end customer, not on the wood, hardware, or supplies you buy to make it.

Accountants and tax professionals

The letter illustrates the standard local sales tax stacking approach (6 1/4% state rate plus applicable local rates, totaling 6 3/4% in the example given) and the $1,000 annual threshold for moving a filer to a yearly filing frequency instead of more frequent filing. Note that this is a routine, informal 1992 Comptroller correspondence letter rather than a formal, citable policy ruling — it does not cite statutes or rules, and current rates, thresholds, and filing frequency rules should be independently verified, as this is decades-old guidance.

Common questions

Q: Do I need a permit to sell bird houses and feeders in Texas?
A: Yes. The letter states you need a Texas sales tax permit, which is free of charge, before selling.

Q: How much sales tax do I collect?
A: It depends on where you make the sale — you collect the state tax plus any applicable local tax for that location. In the example given in the letter, a sale made in a specific county outside city limits totaled 6 3/4% (6 1/4% state plus 1/2% county tax).

Q: How often do I need to file a sales tax return?
A: Unless you collect more than $1,000 in state sales tax during the year, the letter says you file a yearly return, due January 20th.

Q: Can I avoid paying sales tax on the wood and materials I buy?
A: Yes, according to the letter. Once you have your permit, you can give your vendor a properly completed Texas resale certificate to purchase materials for your bird houses and feeders tax-free.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9211L1205F07

Original ruling text

November 17, 1992

Dear ***:

Thank you for your recent letter concerning your woodworking business. I will
be glad to help you with information about your Texas sales tax
responsibilities.

To sell bird houses and feeders in this state, you need to have a sales tax
permit, which is free of charge. You will collect and remit the state and
local sales tax from your customers based on the location where you make your
sales.

For example, if you sell in * County outside of the city limits of
* you will collect 6 3/4% sales tax. The 6 1/4% state tax and the l/2%
*** County sales tax is reported and paid when you file your sales tax
return with our office. Unless you collect more than $1,000 dollars in state
sales tax in a year, you will file a yearly return which is due January 20th.

In addition, you may purchase the materials for bird houses and feeders
tax-free. Once you obtain your permit, you may simply issue your vendor a
properly completed Texas resale certificate to purchase the materials tax-free
we have mailed you the application for the permit with additional information.

If you have any further questions, please feel free to contact Joe Newman in
the Tax Administration Division at our toll-free number 1-800-531-5441,
extension 5-0355.

Sincerely,

Mike Doyle
Director
Tax Administration