Government Contractor May Claim Resale Exemption, Texas Supreme Court Rules
The Texas Supreme Court held that a government contractor was entitled to a sales and use tax refund for tax paid on tangible personal property and taxable services, but not leases of tangible personal property, purchased for use to perform a contract to administer two health insurance programs. The Court said the sale-for-resale exemption applied to the tangible personal property and taxable services because they were resold to the government in the form and condition in which they were acquired. No evidence was provided to support that the leased property was re-leased (resold) to the government. Therefore, the Court held that the taxpayer used the leased property during the performance of the contract.[Combs. v. Health Care Services Corp., TX, Nos. 11-0283, 11-0652, 6/7/13]
Please review the case for all of the details which may alter the future application of this decision, and seek assistance before applying to your specific fact pattern.
Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
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Because state and local taxes are deceptively simple and endlessly complicated.