TEXAS confirmed that manufacturing companies in the state do not have to pay sales taxes on natural gas they purchase to generate their own electricity. The advice came in a “taxability letter” the comptroller’s office issued recently to a manufacturing company that makes plastic injection molding.

The state exempts from sales taxes natural gas and electricity “used in processing tangible personal property for sale as tangible personal property.” In this case, the gas is effectively an input in manufacture of the plastic molding. Texas told the owner of a petrochemicals refinery in a separate “taxability letter” that no sales taxes would be triggered by a sale-leaseback of the refinery because the transaction was really just a secured financing, even though it was set up as a sale-leaseback in form.