Texas Comptroller of Public Accounts    STAR System


Comptroller of Public Accounts
Tax Administration
Title 34

Section 3.314

The Comptroller of Public Accounts adopts an emergency repeal of Section 
3.314,concerning wrapping, packing, packaging supplies, containers, labels, 
tags, and export packers.  This section is being repealed on an emergency basis 
because of extensive changes in the Tax Code that caused a new rule to be 

This repeal is adopted on an emergency basis under the Tax Code,  Section 
111.002, which provides the comptroller with the authority to prescribe,  
adopt, and enforce rules relating to the administration and enforcement of the  
provisions of the Tax Code, Title 2.

Section 3.314.    Wrapping, Packing, Packaging Supplies, Containers, Labels, 
Tags, and Export Packers. (Texas Tax Code 151.151, 151.302, 151.322).

 [(a) Wrapping, packing, and packaging supplies.

 [(I)  There are exempted from the taxes imposed by the Texas  Limited Sales, 
Excise, and Use Tax Act the receipts from the sales of all  internal and 
external wrapping, packing, and packaging supplies and materials  to any person 
for use in wrapping, packing, or packaging any tangible personal  property for 
the purpose of expediting or furthering in any way the "sale or rental of 
tangible personal property or distribution of a newspaper." Only  wrapping, 
packing, and packaging supplies whose care, custody, and control are  
transferred to the customer as part of taxable services are exempt as sales  
for resale.  See Section 3.285 of this title (relating to Resale Certificate; 
Sales  for Resale).    Wrapping, packing, and packaging supplies when used in  
connection with the furnishing of a nontaxable service are taxable.

 [(2)   For the purpose of this section, wrapping, packing, and   packaging 
supplies shall include, but not be limited to, wrapping paper,  wrapping twine, 
bags, cartons, crates, pallets, crating materials, tape, rope,  labels, 
staples, glue, mailing tubes, excelsior, straw, cardboard covers,  separators, 
shredded paper, cotton batting, shirt board, hay, and lath.

 [(3)   Wrapping, packing, and packaging supplies does not include  returnable 
containers.  Wrapping, packing, and packaging supplies must qualify  for 
exemption through their use.  A wrapping, packing, or packaging supply  would 
be exempt from the tax where it is used for the purpose of furthering a  sale, 
lease, or rental of tangible personal property, but would be taxable  where it 
is used in performing a nontaxable service.    Example: The following  items 
would be exempt when purchased by a person in the business of selling  
clothing: shirt boards, polyethylene bags, coat retainers, shoulder guards,  
trouser guards, and paper shields.  Blankets, padding, twine, rope, wrapping  
paper,   packing paper, excelsior,  straw, separators,  carton bags,  shredded  
paper, and cartons used in the moving and storage trade would be taxable to a  
moving and storage firm at the time of purchase by it, since the only sale  
made is the sale of a nontaxable service.]

 [(b)   Containers.  There are exempted from the taxes imposed by the  Texas 
Limited Sales and Use Tax Act the receipts from sales, leases, or  rentals of, 
and the storage, use, or other consumption, in this state, of the  following:

 [(l)   Nonreturnable containers when sold without the contents to  persons who 
place the contents in the container and sell the contents together  with the 
container.  Example:    A dairy, purchasing disposable milk cartons,  would not 
have to pay the tax on such containers, if the containers were  subsequently 
filled with dairy products and the container and the dairy  products were then 
sold as a single unit.  Throwaway bottles are nonreturnable 

 [(2)   Containers when sold with the contents, if the sales price  of the 
content is not required to be included in the measure of the taxes  imposed by 
this law.

 [(3)   Returnable containers when  sold with the contents in  connection with 
retail sale of the contents or when resold for refilling.  Example:  Soft 
drinks, when sold in glass bottles, are sold in returnable  containers.  There 
is no tax on the deposit of such returnable containers when  they are returned 
or resold.    The bottler would, however, pay a tax on the  bottles at the time 
he purchases them originally from the manufacturer because  they are used by 
the bottler since they are filled prior to their sale.  As  used in this 
section, the term "returnable containers" means a container of a kind 
customarily returned by the buyer of the contents for reuse.   All other 
containers would be "nonreturnable containers."]

 [(c) Labels and tags.  This tax does not apply to the sale of labels or name 
plates if:

 [(I)   the purchaser affixes them to property to be sold and sells  them along 
with and as a part of such property, as:   example: sales of name  plates of 
manufacturers or producers which are permanently affixed to each  unit of 
products sold, such as automobiles and machinery; and

 [(2)   the purchaser affixes them to nonreturnable containers of  property to 
be sold, or to returnable containers of such property if a new  label is 
affixed to the container each time it is refilled.  Example: Labels  affixed to 
fruit boxes, cans, bottles, and packing cases, by growers, packers,  bottlers, 
and others who place the contents in the containers.  Tax does not  apply to 
sales of feed analysis tags to be attached to containers of feeds and  sold 
along with the container and contents.     Tax applies to sales of such  items 
as advertising matter used in connection with the sale of property or enclosed 
with the property sold.]

 [(d) Export packer.

 [(l)   An "export packer" is a person who packages property to be exported 
outside the territorial limits of the United States.

 [(2) Crating and packaging supplies as listed in subsection (a)(2) of this 
section, when purchased by an export packer to export personal property, are  
exempt under   the  export clause   of  the   United    States Constitution, 
Tax Code, 151.155, whether used to package the export packer's property, that 
of vendors shipping such property to their foreign customers, or that of 
purchasers who contract and pay for such services.

 [(3)  An export packer may give exemption certificates to his  suppliers on 
his material purchases, but must maintain records showing which  materials were 
used for the exempt purpose of exporting tangible personal  property.

 [(4) The export packer need not obtain a sales tax permit if all  of his 
crating and packing supplies are purchased for exporting tangible  personal 

This agency hereby certifies that the repeal has been reviewed by legal counsel 
and found to be within the agency's authority to repeal.

Issued in Austin, Texas, on                  9 / 30 / 91

Chief, General Law Section
Comptroller of Public Accounts

DATE: 09/30/1991