Does microwave equipment that relays a TV news truck's signal back to the television station qualify for the manufacturing exemption?

Plain-English summary

A television station asked whether microwave equipment used to relay a signal from a news truck back to the station qualifies for the sales tax manufacturing exemption. The Comptroller said no — the equipment doesn't qualify under either Tex. Tax Code § 151.318 (the general manufacturing exemption) or § 151.3185 (property used in producing a motion picture, video, or audio recording/broadcast).

The station argued the equipment would be taxable if used to relay the signal onward to the main transmitter and out to the public, but should be treated differently (nontaxable) when only relaying to the station itself. The Comptroller rejected that distinction: equipment used to transmit the signal to the station is likewise taxable, same as equipment relaying to the public transmitter.

The station also tried an analogy to a camera cable, arguing the microwave relay equipment should be exempt the same way. The Comptroller distinguished this: a camera cable is only exempt because it's a component part or accessory of an already-exempt camera — that reasoning doesn't extend to separate relay/transmission equipment like this microwave system.

Finally, the letter notes that § 151.318 specifically excludes intraplant transportation equipment from the manufacturing exemption — the same reason a conveyor or pipe that moves product from one manufacturing stage to the next isn't exempt in a manufacturing plant. This reinforces why equipment that simply relays/moves a signal (or product) between two points, rather than directly causing a change to it, doesn't qualify.

What this means for you

Television and broadcast news operations

Microwave relay equipment moving a signal from a news truck to the station is taxable, regardless of whether you draw a line between "relaying to the station" versus "relaying onward to the public transmitter" — both are taxable. Only equipment that's a genuine component/accessory of an already-exempt piece of production equipment (like a camera) can piggyback on that camera's exemption; standalone relay/transmission equipment cannot.

Manufacturers and other businesses considering the "camera cable" analogy for ancillary equipment

Be cautious extending an accessory-based exemption argument to standalone equipment that performs a distinct relay/transportation function — the Comptroller treats that kind of equipment like intraplant transportation equipment (conveyors, pipes moving product between stages), which is expressly excluded from the manufacturing exemption.

Accountants and tax professionals

Useful precedent on two points: (1) § 151.3185's broadcast/production exemption doesn't extend to signal-relay equipment, and (2) the intraplant-transportation exclusion under § 151.318 is a broader principle than just conveyors/pipes — it applies to any equipment whose function is moving something (product or signal) between points rather than directly transforming it.

Common questions

Q: Does microwave equipment relaying a TV signal from a news truck to the station qualify for the manufacturing exemption?
A: No, under either § 151.318 or § 151.3185.

Q: Does it matter whether the signal is relayed just to the station versus onward to the public transmitter?
A: No — both are taxable.

Q: Why doesn't the camera-cable analogy work here?
A: A camera cable is exempt only as a component/accessory of an already-exempt camera; standalone relay equipment doesn't get that treatment.

Q: Can I rely on this letter for my own broadcast equipment?
A: No. This opinion is based on the facts submitted, and other facts, though similar, may yield different results.

Citations and references

Statutes:

• Tex. Tax Code § 151.318 (manufacturing exemption — intraplant transportation equipment excluded)
• Tex. Tax Code § 151.3185 (production of motion picture, video, or audio recording/broadcast)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200003154L

Original ruling text

March 30, 2000

Dear **:

Thank you for your letter concerning the taxability of microwave equipment used
to transmit signals from a television news truck to the station.

The microwave equipment to relay signals from the news truck to your television
station does not qualify for exemption under the provisions of Texas Tax Code
Section 151.318 or Section 151.3185. You stated the equipment would be taxable
if used to relay a signal to your main transmitter and onto the public. This
is true, but equipment used to transmit the signal to the station is likewise
taxable.

You used a camera cable that hooks up to a camera as an analogy for exempting
the microwave equipment. However, a camera cable is only exempt if it is a
component part or accessory to an exempt camera. That would not be the case
with the microwave equipment. In addition, Section 151.318 specifically
excludes intraplant transportation equipment from exemption. That is why a
conveyor or pipe that moves product from one manufacturing stage to another
stage of processing or fabrication is not exempt in a manufacturing plant.

This opinion is based on the facts you submitted. Other facts, though similar,
may yield different results.

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct line is
512/475-0030. You may also write to Tax Policy, Comptroller of Public
Accounts.

Sincerely,

David Somerville
Tax Policy Division