This small article will give an overview of some of the freely available taxability resources for Texas sales and use tax.
As a quick caution, If you don't know sales tax and can't afford not to know, get an expert. Taxes are not a great place to do it yourself.
With that qualifier, there's a number of resources available to the public, many of which we use, and others are very much geared towards business owners and accountants. A few things to consider before diving in and researching:
Different documents are written by different branches of the government, each exercising their power and authority. In practice this means rule making out of the Comptroller (executive branch /administration) is usually from a pro-administration, pro-taxation perspective, so should not be taken as the final and only authority. This is a 3 branch governmental system, not a 1 branch governmental system.
There's always a tension here between clarity and authoritative weight until an issue is resolved by the courts. In practice, while a policy document written by the Comptrolller's Tax Policy Division may look to speak to your situation and find certain activities taxable, a court may find otherwise.
The executive branch is slow to acknowledge or update their policy after losing in court. So if only executive branch documents are reviewed, there's the possibility of an incorrect determination. It can takes years, sometimes the changing of high level officials, for changes to occur.
With those cautions, much of the sales tax code has been relatively stable for decades in Texas so many of the issues are settled. There's not a question of if tangible personal property is generally taxable in Texas. It is.There are questions of what is and is not 'data processing' and that continues to see revision after revision from the administration.
So with that, below are the main freely available texts/tools used for sales tax in Texas.
Statute (Legislative Branch)
Statute is generally the most authoritative, however it's not always clear what the legislature intended, so some interpretation is necessary. Great place to start but questions generally don't end here.
Administrative Code (Executive Branch)
Administrative Code is the the executive administration putting together their interpretations of the statute in a way they think makes sense. Most of the time, during an audit, the auditor will be checking here for guidance as it's generally has most practical answers.
Policy and Hearings ( Executive Branch)
Tax Policy Division documents and SOAH (State Office of Administrative Hearings) hearings are further executive branch interpretations of the tax code as it relates to whatever scenario is currently being contemplated. Since it's the executive branch reviewing other executive branch work, from people who have worked with each other for years and are all being paid from the same pocket, they will commonly agree.
STARS is the Comptroller's repository.
Judicial Hearings (Judicial Branch)
No link here I'm afraid. If you're situation where reviewing court cases is necessary, you are outside the scope of free resources. STARS from above, does archive that some cases exist, but do so in a way that is generally not timely and should not be used as a meaningful review. If your search has lead you here, and you don't already have a CPA or an attorney, there's a good chance you are doing yourself a disservice.
We're happy to help point folks in the right direction of what's available. Feel free to contact us with questions.
