Did Texas use tax apply when a Texas resident bought repair services outside the state and realized the repair in Texas?

Plain-English summary

Texas imposed sales tax on repair services performed in Texas and use or excise tax on repair realized in Texas. A Texas resident purchasing goods or services from an out-of-state seller owed use tax even when that seller was not required to collect it.

The letter explained that use tax prevented an out-of-state seller from receiving a competitive advantage over a Texas seller required to collect tax.

What this means for you

Buying repair service outside Texas did not itself avoid Texas tax when the repaired property or repair benefit was realized in Texas. The purchaser could owe the tax even if the vendor did not collect it.

Common questions

Was repair performed in Texas subject to sales tax? Yes, under the letter's description of the law.

What if the repair was performed outside Texas? A Texas resident owed use tax when the repair was realized in Texas.

Did the out-of-state seller have to collect the use tax? Not necessarily, but the resident's liability remained.

Citations and references

• No statute or rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8709L0840C10

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

September 24, 1987

Dear **:

Thank you for your letter of August 21, 1987, concerning the taxability
of repair service performed outside Texas.

The Texas sales tax law imposes a sales and use or excise tax on repair
services performed on personal property. The sales tax applies to repair
services performed in Texas while the use or excise tax applies to repair
realized in Texas.

A use tax is imposed on Texas residents who acquire goods and services
outside Texas to prevent Texas sellers of goods and services who must collect
tax from being put at a competitive disadvantage. The use tax is owed by a
Texas resident on goods and services purchased from sellers located outside
Texas even though the seller may not be required to collect the use tax.

I have enclosed several rules for reference. 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 me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Eddie C. Washington
Tax Policy Division