How did Texas tax vehicle window-tinting charges before and after the February 12, 1986 rule change?

Plain-English summary

At the time of the February 3 letter, applying solar film to an automobile or truck was treated as selling and installing tangible personal property. The business had to collect sales tax on the film's selling price. Installation was also taxable unless separately stated to the customer.

The letter announced a different treatment effective February 12, 1986, when installing solar film would be considered motor-vehicle maintenance. Under a lump-sum contract, the business would not collect tax from the customer but would pay tax when buying the materials. Under a separated contract, it would collect tax on the materials' selling price, while labor would be nontaxable.

Common questions

Was installation labor taxable before February 12, 1986? Yes, unless separately stated.

How was a lump-sum tinting contract treated after the change? The business did not collect tax on the lump sum and instead paid tax on the materials it purchased.

How was a separated contract treated? The business collected tax on the selling price of materials, while labor was nontaxable.

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/8602L0694E13

Original ruling text

February 3, 1986

Dear ***:

Thank you for your letter of January 23, 1986 concerning the taxability
of solar film applied to the windows of automobiles and trucks.

At the present time, applying solar film to a vehicle is considered a
sale and installation of tangible personal property. You must collect
sales tax from your customer based on the selling price of the film.
The installation charge is also subject to sales tax, unless you
separately state the installation charge to your customer.

Effective February 12, 1986, installing solar film will be considered
maintenance of a motor vehicle. If you operate under lump sum contracts
with your customers, you will not collect sales tax on the lump sum charge.
You will pay sales tax on the materials used to perform the contract at
the time you purchase them from your supplier.

If you operate under a separated contract, you must collect sales tax
from your customer based on the selling price of the materials. The
labor is not taxable.

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