According to Texas Sales Tax Rule 3.30, certain equipment for manufacturing is exempt from sales tax. If the exemption is claimed when the machinery is purchased, future service and repair of the equipment and accerssories is also exempt.

An ice machine in a restaurant to produce ice for beverages, or an ice machine in a convenience store to produce ice for sale, is exempt from sales tax. But the exemption needs to be claimed when the equipment is purchased. This is accomplished by simply providing a Sales Tax Exemption certificate denoting the rule, upon purchase of your machinery.

Often, after the purchase the exemption is forgotten and servicers will charge sales tax on service and parts for your machine, out of habit. I recommend that you put an exemption certificate on the machine cabinet in order to remind your management and the servicer that sales tax is not to be charged for service on the machine. If a mistake is made and sales tax is collected, you can claim a credit on your sales tax return if you hold a resale certificate and remit sales taxes for the exempt purchase or service.

Some uses of the ice produced by your ice maker may not meet the exemption requirement. For example, if you utilize the ice to maintain product in a salad bar for instance, this is not exempt use. You can in this instance pro-rate the utilization of the salad bar ice relative to the food or product use of the ice and remit only that portion of the total sales tax.

For more information from the Texas State Comptroller, see ACCESSION NUMBER: 200612897L and also PUBLICATION 94-124.