When a contractor rents scaffolding to perform a construction project (including for a tax-exempt entity), is the labor to erect/assemble the scaffolding taxable, and does it matter who does that labor — the rental company, a third party, or the contractor's own employees?

Plain-English summary

A contractor was renting scaffolding to perform a construction project for a tax-exempt entity and had follow-up questions about how sales tax applies to the labor of erecting or assembling that scaffolding. The Comptroller's answer depends entirely on who does the assembly work:

The rental company itself. If the scaffold rental company charges for labor to erect or assemble the scaffolding, that labor charge is taxable as part of the total price of the rental or lease — even if it's separately stated on the invoice (Rule 3.294(d)).

A third party. If someone other than the rental company (a third-party erector) assembles the scaffolding for the contractor, that third party's ENTIRE charge, including labor, is taxable. The reasoning: fabrication labor to assemble tangible personal property is itself a taxable sale.

The contractor's own employees. If the contractor's own workforce assembles the scaffolding, there's no sales or use tax owed — a contractor never owes tax on salaries paid to its own employees, regardless of what task those employees perform.

What this means for you

Scaffolding and equipment rental companies

If you charge for erection/assembly labor as part of a rental, that labor is taxable along with the rest of the rental price — separately stating it on the invoice doesn't remove it from the taxable base.

Construction contractors renting scaffolding for exempt or taxable jobs

Using your own employees to erect rented scaffolding avoids a separate tax on that labor entirely. Hiring the rental company or a third-party erector instead means paying tax on the full erection charge (and, for a third party, the full assembly charge).

Third-party scaffolding erection/assembly services

Your entire charge for erecting scaffolding — not just a portion of it — is taxable as fabrication labor on tangible personal property, regardless of how the job is billed.

Common questions

Q: If I rent scaffolding and pay the rental company to erect it, is that labor taxable?
A: Yes — it's taxable as part of the total rental price, even if the labor charge is separately stated on the invoice.

Q: What if I hire a different company (not my scaffolding vendor) to assemble the scaffolding?
A: That third party's entire charge, including labor, is taxable as fabrication labor on tangible personal property.

Q: Do I owe tax if my own employees assemble the scaffolding?
A: No — a contractor doesn't owe sales or use tax on salaries paid to its own employees.

Citations and references

Statutes and rules:

• 34 Tex. Admin. Code Rule 3.294(d) (other charges related to lease agreements — erection/assembly labor taxable as part of rental price)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200005371L

Original ruling text

May 31, 2000

To: **

Subject: ** -Sales Tax

Dear **:

Thank you for your follow-up e-mail concerning sales tax on scaffolding rented
by a contractor to perform a construction project for a tax-exempt entity.

The scaffold rental company is required to collect sales tax on the separate
charge for labor to erect or assemble the scaffolding. The charge is taxed as
part of the total price of the rental or lease, even if separately stated. See
Rule 3.294(d) on the taxability of other charges related to lease agreements.
The rule is found on the Window on State Government web site at
by clicking on "The Sales Tax" under Quick Links and
then by clicking on "State Sales Tax" underneath Current Tax Rules.

If a third-party erects or assembles the scaffolding for the contractor, the
total charge (including labor) by the third-party is taxable. Fabrication
labor to assemble tangible personal property is a taxable sale.

It does matter if the contractor assembles the scaffolding himself. A
contractor does not owe sales or use tax on salaries paid to his own employees.

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

I hope this information helps. If you have further questions, please e-mail me
at , or you may reach me by phone at 1-800-531-5441,
ext. 5-0030.

Sincerely,

David Somerville
Tax Policy Division