Ezel / Tax Rulings / TX
TX 8610L0766D05 Sales and/or Use Tax (State,Local,MTA) 1986-10-17

Was placing a portable sign at a customer's premises a taxable rental or a nontaxable advertising service?

Short answer: It depended on customer control. If the customer could not control the sign, the transaction was a nontaxable advertising service; if the customer could change its message, it was a taxable rental of tangible personal property.

Apply this to your situation

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

A portable-sign business delivered signs to customers' premises for set periods. The Comptroller said the tax result depended on whether the customer controlled the sign, not on whether the sign was attached to a trailer.

If the customer had no control over the sign, the transaction was a nontaxable advertising service. If the customer could change the information displayed, that control made the transaction a taxable rental of tangible personal property.

Common questions

Did mounting the sign on a licensed trailer determine taxability? No. The letter called that fact immaterial.

When was the transaction a nontaxable advertising service? When the customer had no control over the sign.

What made it a taxable rental? The customer's ability to change the information displayed on the sign.

Citations and references

  • The letter cited no numbered statute or Comptroller rule.

Source

Original ruling text

October 17, 1986

Dear ***:

This letter is in response to your request for information about the
sales tax responsibilities of your client, ***.

Your client is in the portable sign business, according to your letter.
The signs had been attached to licensed trailers but are being converted
and will now be taken to a site on a licensed sign carrier, then placed
on the customers premises, to remain for a specific period of time.

The rental of signs is considered a nontaxable service, if the customer
has no control over the sign. Whether the sign is affixed to a trailer
or not is immaterial. If the customer is able to change the information
shown on the sign, the customer has sufficient control of the sign to
make the situation a taxable rental of tangible personal property,
rather than a nontaxable advertising 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. The regular number is
512/463-4600. You may write us at the Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division

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