Was Texas sales tax due when a contract carrier picked up insulation at the seller's Texas plant and delivered it directly to an out-of-state customer?

Plain-English summary

The seller sold insulation to customers outside Texas. A contract carrier picked it up at the Texas plant and delivered it directly to the out-of-state customer.

The letter quoted Black's Law Dictionary's description of a contract carrier as serving shippers' special needs that common carriers could not adequately serve.

Texas sales tax was not due on the insulation sales delivered directly out of state. The seller had to keep copies of the carrier's bills of lading to document the deliveries.

Common questions

Was Texas sales tax due? No.

What delivery facts mattered? The contract carrier delivered directly from the Texas plant to the out-of-state customer.

What records did the seller need? Copies of the bills of lading.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8604L0727B07

Original ruling text

April 28, 1986

Dear ***:

Thank you for your letter of April 18, 1986, concerning tax on items
delivered to out of state customers by a contract carrier.

I understand that CORP A is a contract carrier delivering insulation
for CORP Z and other insulation manufacturers. CORP Z may sell insulation
to a customer in Colorado. CORP A, acting as a contract carrier, will pick
up the insulation at the CORP Z plant in Texas and deliver the insulation
to CORP Z's customer in Colorado.

A "contract carrier", as defined by Black's Law Dictionary, is "a
carrier which furnishes transportation service to meet the special
needs of shippers who cannot be adequately served by common carriers..."

Since the insulation is delivered directly to customers out of state by
a contract carrier, Texas sales tax is not due on the sale of the insulation
to out of state customers. CORP Z should keep copies of your bills of lading
to document the out of state deliveries.

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
1-800-242-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division