Were rental charges for safe-deposit boxes affixed to building walls or floors taxable?

Plain-English summary

The corporation rented and sold safe-deposit boxes attached to steel frames that were fixed to building walls or bolted to floors. It argued the boxes resembled real property or trade fixtures rather than tangible personal property.

The Comptroller said charges for renting the boxes were not taxable. The corporation could choose to refund tax it had previously collected from customers and apply to the Comptroller for a refund.

Although the request asked about both rentals and sales, the reproduced response addresses only rental charges. It does not provide a holding on sales of the boxes.

Common questions

Were the rental charges taxable? No. Could prior collections be addressed? The letter suggested customer refunds followed by a refund application. Did the letter rule on box sales? No.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8501L0616E10

Original ruling text

January 29, 1985

Dear ***:

Thank you for your recent letter regarding safe deposit boxes in which
you state.

We are writing on behalf of our client, a Texas corporation, whose
primary business activity is the rental and sale of safe deposit boxes.
Beginning April 1, 1982, rentals and sales of these boxes were made and
sales tax was paid thereon. It was assumed at that time that these boxes
more closely resemble real property than tangible personal property for
tax purposes.

The boxes are affixed to a steel frame which, in turn, is affixed to the
walls of the building, similar to the way safe deposit boxes in banks are
affixed. Other boxes are affixed to a steel frame which is bolted to the
floor of the building, away from the walls, achieving a "locker-room"
effect. These boxes would, at a minimum, be considered trade fixtures
under the Uniform Commercial Code. As such, we are requesting an
administrative ruling from the Office of the Comptroller as to the
classification, for purposes of the Texas sales tax, of these safety
deposit boxes.

Because we believe that these boxes are, in fact, real property and not
tangible personal property, we are also requesting an exemption from the
State of Texas sales tax on rental and sales of such boxes.

Response: The charges for box rental are not taxable. You may care to
refund the tax previously collected from your customers and apply for a
refund.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

You may write to the Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division