Ezel / Tax Rulings / TX
TX 8608L1023B01 Sales and/or Use Tax (State,Local,MTA) 1986-08-20

Did Texas treat the bolted-down pulp-making and paper-making equipment at a paper mill as real property or tangible personal property?

Short answer: The classifications differed. The pictured pulp-making machinery was realty, while the quarter-mile paper-making machinery and cut-size shelter were tangible personal property.

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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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

An auditor submitted pictures and brochures of paper-mill equipment for classification under Rules 3.291 and 3.292. The request said the pulp- and paper-making machinery was bolted to steel plates concreted into supporting steel beams so it could withstand movement during production.

Tax Policy classified the pictured pulp-making machinery on brochure pages 24 through 27 as realty. It separately classified the quarter-mile paper-making machinery shown on pages 30, 33, and 34, plus the cut-size shelter on page 37, as tangible personal property.

The underlying pictures were available only through microfiche and are not reproduced in the STAR text.

Common questions

Was all bolted-down paper-mill equipment classified the same way? No.

What was realty? The pulp-making machinery identified on brochure pages 24 through 27.

What was tangible personal property? The quarter-mile paper-making machinery on pages 30, 33, and 34 and the cut-size shelter on page 37.

Citations and references

  • 34 Tex. Admin. Code Rules 3.291 and 3.292 were identified in the auditor's request.

Source

Original ruling text

DATE: August 20, 1986

TO: Jean Chan, ** Audit **

FROM: Jo Ann Dieck, Tax Policy, Tax Administration

SUBJECT: CORPORATION A

The pulp making machinery on pages 24-27 is realty.

The quarter mile paper making machinery on pages 30, 33, 34 and cut-size
shelter on page 37 is tangible personal property.

The brochures are returned as you requested.

August 7, 1986

To: Jo Ann Dieck, Tax Administration Division

From: Jean Chan, Auditor, ** Audit

Subject: Tangible Personal Property vs. Real Property Paper Mill Machinery and
Equipment (Rules 3.291, 3.292)

Per our conversation on August 5, 1986, I am sending you pictures and brochures
of a paper mill. CORPORATION A'S prime business is making newsprint and find
papers to be used in the printing industry. Some pictures of the pulp making
machinery can be found on pages 25, 26 and 27 of the brochure. Pictures of
paper making machinery are shown on pages 30, 33, 34 and 37. All of the
machinery's are bolted down on steel plates and the plates are concreted in
with the steel beams beneath them for better support. All those machinery's
have to be bolted down to steel plates in order to sustain the vast movements
during paper making process. Based on the information given, I would like to
know if the machinery used in pulp and paper making are real or personal
property. Also, I would like to get the brochure back after you are through
with it. Please feel free to call me at (713) 799-1000 if you have any
questions. Thank you for your help.

NOTE: Pictures available only through microfiche.

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