Ezel / Tax Rulings / TX
TX 8605L0732C06 Sales and/or Use Tax (State,Local,MTA) 1986-05-08

Was a separately stated charge for a commercial diver's own equipment taxable when the equipment was provided only with the diver's service?

Short answer: No. The diver provided a nontaxable service rather than an equipment rental, so the separate equipment charge was not taxed. The diver paid tax when buying the equipment.

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This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

Commercial divers performed dives using their own equipment. They could separately bill for the diving service and the equipment, but the equipment was never leased without the diver.

The Comptroller treated the arrangement as a nontaxable diving service rather than an equipment rental. No tax was due on the separate equipment charge, while the divers paid tax when buying their equipment.

Common questions

Was the diving service taxable? No.

Was the separately stated equipment charge taxable? No.

Why wasn't it a rental? The equipment was supplied only with the diver and was not leased independently.

Who paid tax on the equipment itself? The diver.

Source

Original ruling text

May 8, 1986

Dear ***:

Thank you for your letter of April 28, 1986, concerning tax on commercial
divers and the equipment they use.

I understand the divers are employed to dive and use their own equipment.
They may bill separately for their services and their equipment. The
equipment is not leased without the diver.

The divers are performing a non-taxable service. They should pay tax on
their equipment when they buy it. The divers are not renting or leasing
the equipment and no tax is due on the separate charge for the equipment
when provided as part of their diving service.

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

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