Does making floral arrangements count as "processing" for Texas utility sales tax exemption purposes?

Subject

Floral Arrangements — Making Flower Arrangement Is Processing — And Supplies Used (Wires, Stems, Vases)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9409L1324F07

Plain-English Summary

A floral shop owner wrote to the Texas Comptroller asking about the taxability of natural gas and electricity (utilities) used in the shop. In a very brief reply, the Comptroller's Tax Administration Division stated that the activity of making a floral arrangement is considered processing.

That is the entire substance of the ruling. It does not spell out the rate, the exemption certificate needed, or how the utility percentage exemption for manufacturing/processing is calculated for a floral shop — it only answers the threshold question of whether arranging flowers qualifies as "processing" in the first place. Texas allows a sales tax exemption on utilities (like natural gas and electricity) used predominantly in manufacturing, processing, or fabricating tangible personal property for sale. By confirming that floral arranging counts as processing, this letter signals that a floral shop may have grounds to pursue that utility exemption for the electricity and gas used in creating arrangements — but the letter itself does not grant, calculate, or guarantee the exemption.

What This Means For You

Florists and floral shop owners

If your shop assembles floral arrangements, this ruling supports treating that activity as "processing" for Texas tax purposes. That classification is often a threshold requirement for claiming a predominant-use utility exemption on the natural gas and electricity used in your shop. However, actually qualifying for and documenting that exemption (through a predominant use study and an exemption certificate) involves additional steps this short letter does not address.

Accountants and tax professionals

This letter is useful as persuasive precedent that flower arranging is "processing" under Texas sales tax principles, similar to how other processing/manufacturing activities have been treated. Because it is only binding on the original requestor (per STAR's detrimental-reliance rules) and does not walk through the predominant-use exemption mechanics, you should independently confirm current Comptroller guidance and any predominant-use study requirements before relying on this classification for a client.

Q&A

Q: Does this ruling mean a floral shop's utility bills are automatically exempt from Texas sales tax?
A: Not automatically. The letter only confirms that making a floral arrangement counts as "processing." It does not state that the shop's gas and electricity use meets the predominant-use threshold or walk through how to claim the exemption — those determinations would require further facts and documentation.

Q: Can other floral shops rely on this 1994 letter?
A: Only the original taxpayer who requested this ruling can assert detrimental reliance on it. Other floral shops can look to it as an indication of the Comptroller's reasoning, but STAR letters may not reflect current policy, and a shop with different facts should seek its own guidance.

Citations

No statutes, rules, or other authorities are cited in this letter.

Original ruling text

September 6,1994

Dear *****:

Thank you for your letter of August 18, 1994, concerning the taxability
of natural gas and electricity (utilities) used in a floral shop.

The activity of mailing floral arrangements is considered processing.

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

You may call toll me free 1-800-531-5441, extension 3-4683. The direct
line is 512/463-4683. You may also write to Tax Administration Division,
Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Administration Division

NOTE: Previous Accession Number 9409714L