If you are engaged in the business of bottling soft drinks or alcoholic beverages, your sales are taxable. You must obtain a sales and use tax permit. You are responsible for collecting tax on your sales, unless you receive a valid resale or exemption certificate from your customer.
To obtain a sales tax permit, download the application form from the Comptroller's Internet Web page at www.window.state.tx.us, call us toll free at 1-800-252-5555 and request a sales tax application, or visit your local field office.
For sales tax purposes, bottlers are generally manufacturers and may qualify for the manufacturing exemptions. Manufacturing machinery and equipment, accessories, and replacement parts purchased on or after January 1, 1995, that are necessary, essential, and used directly in the manufacturing or processing operation are exempt from tax. Effective October 1, 1997, the Legislature amended the manufacturing exemption. As a result, manufacturing machinery and equipment purchased on or after October 1, 1997, that are necessary, essential, and directly cause a chemical or physical change in the product (beverage) manufactured for sale are exempt from tax. Labor to repair tangible personal property that qualifies for the manufacturing exemption is also exempt. For additional information, please request Rule 3.300 concerning Manufacturing, Custom Manufacturing, Fabricating, and Processing, and Sales Tax Bulletin 94-124. These documents are also available on the Comptroller's Web page.
Manufacturers are also entitled to claim an exemption on certain purchases of wrapping and packaging supplies. Exempt items include bottle crowns, throwaway cartons and containers, and labels. Tax is due on wooden cases and returnable containers. For additional information, you may request a copy of Rule 3.314 concerning Wrapping and Packaging Supplies, or review it on the Comptroller's Web page.
Bottlers that simply repackage the soft drinks or alcoholic beverages without making any physical or chemical change to the product are repackagers. Repackagers do not qualify for any manufacturing or wrapping and packaging exemptions.
Vending machines used by a bottler to dispense drinks are taxable at the time of purchase. Bottlers selling or leasing vending machines to customers may purchase the vending machines tax free by issuing a resale certificate to their suppliers. The bottler is responsible for collecting tax on the sale or lease of the vending machine to the customer. For additional information, you may request a copy of Rule 3.294 concerning Rental and Lease of Tangible Personal Property.