Which charges for moving, assembling, setting, loading, and hauling a pumping unit were taxable?

Plain-English summary

Moving an already assembled pumping unit from the customer's yard to a new well location and placing it on the base was not taxable. Labor to assemble a pumping unit was taxable, while a separately stated charge merely to set the assembled unit on the base was not.

If assembly and setting were billed as one charge, the entire charge was taxable. The letter also treated the full $735 invoice as taxable: loading the base was part of its sales price, and hauling by the seller was taxable under the described rules effective October 2, 1984. Loading and hauling were billed together, which the letter says would have made the hauling taxable even before that change.

Common questions

Was setting an already assembled pumping unit on its base taxable? No, when the job only involved moving the assembled unit and placing it on the base.

Was assembling the pumping unit taxable? Yes.

What if assembly and setting were billed together? The entire single charge was taxable; only a separately stated setting charge was nontaxable.

Why was the $735 invoice taxable? Loading was included in the base's sales price, hauling by the seller was taxable under the described post-October 2, 1984 rule, and the loading and hauling were combined in one charge.

Citations and references

• "Tex. Tax Code Ann. Sec. 151AO7(a)(2)" — quoted in the source for amounts included in sales price; the reproduced text appears exactly this way.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8509L0664C03

Original ruling text

September 3, 1985

Dear ***:

Thank you for your letter of August 23, 1985, concerning the taxability
of a labor charge for setting a customer's pumping unit at a new well location.

The charge for setting a pumping unit at a new location is not taxable if
the job only involves removing an assembled unit from the customer's yard,
taking it to the location and putting it on the base.

A charge for labor to assemble a pumping unit is taxable. A charge for
setting the assembled unit on a base is not taxable. The total amount of a
single charge for assembling a unit and setting it is taxable; a separately
stated charge for setting the unit on the base would not be taxable.

The total amount charged on the copy of the invoice enclosed ($735.) is
taxable for two reasons. First, the sales price of the base includes "the
materials used, labor or service employed ... or other expenses." Tex. Tax Code
Ann. Sec. 151AO7(a)(2).The charge for loading the base is part of the sales
price and is taxable.

Second, as of October 2, 1984, the charge for hauling the base is taxable
even if the hauling charge is separately stated from the sales price (it isn't
on this invoice). Since October 2, 1984, a sale occurs only when title to
a taxable item is transferred for consideration or possession of a taxable item
is transferred for consideration. Title to a taxable item passes when there is
a contract which is binding on both seller and buyer setting out where title is
to transfer. If there is no contract, the transfer of possession determines
when the sale occurs. When transfer of possession determines when a sale
occurs, hauling by the seller occurs before the sale and is taxable.

The hauling charge and the loading charge was billed as a single charge.
Billing the hauling charge in this manner rendered it taxable even before the
October 2, 1984 changes in the sales tax law.

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

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the Tax
Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division