Ezel / Tax Rulings / TX
TX 8711L0845F06 Sales and/or Use Tax (State,Local,MTA) 1987-11-06

Were separately stated delivery charges on taxable equipment sales and mileage charges incidental to equipment repair taxable in Texas?

Short answer: Yes. Effective October 1, 1987, delivery charges tied to taxable property were taxable regardless of separate billing, carrier, postage, or F.O.B. terms. Rule 3.292(c)(1) also taxed the entire repair charge, including mileage and other transportation incidentals.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
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 a taxpayer-specific November 1987 Texas Comptroller letter deciding delivery charges connected with taxable tangible-personal-property sales and mileage incidental to in-state equipment repair. It says the opinion may change if the facts differ. Although the STAR caption also lists travel, car or equipment rental, airfare, meals, and hotels, the body does not decide those items. The October 1, 1987 change, F.O.B. treatment, and repair rules are historical and may have changed substantially; verify current law and each charge. STAR documents may no longer represent current policy even when not marked superseded. Identities are redacted. This summary is informational only and is not legal or tax advice.
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

Effective October 1, 1987, transportation and delivery charges connected with a sale of taxable tangible personal property were taxable even when separately stated. The letter included common carriers, freight, shipping, delivery, and postage, and said F.O.B. terms did not change the result.

For the period beginning October 2, 1984 and ending before October 1, 1987, a separately stated delivery charge could be nontaxable if delivery occurred after the sale was complete, such as under F.O.B. shipping-point terms.

Mileage separately charged in connection with servicing, maintaining, or repairing equipment in Texas was also taxable. Under Rule 3.292(c)(1), a repairer collected tax on the entire charge for materials, parts, labor, and transportation incidentals.

The STAR caption lists additional expenses, including travel, car and equipment rental, airfare, meals, and hotels. The published body does not analyze or decide those charges.

What this means for you

The historical letter rejected separate billing and F.O.B. terms as ways to remove post-October 1 delivery charges from a taxable property sale. It likewise treated repair mileage as part of the taxable repair charge.

Common questions

Were separately stated freight or postage charges taxable after October 1, 1987? Yes, when connected with a taxable property sale.

Did F.O.B. origin terms change the post-October 1 result? No.

Was mileage incidental to equipment repair taxable? Yes, as part of the entire repair charge.

Does the letter decide airfare, meals, hotels, or rental-car reimbursement? No. Those appear only in the STAR caption.

Citations and references

  • 34 Tex. Admin. Code Rule 3.292(c)(1) (repair of tangible personal property)

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller November 6, 1987

Dear ***:

Thank you for your recent letter concerning taxability of separately
stated
freight charges.

You questioned the taxability of separately stated charges for the
transportation of equipment sold and shipped via common carrier, U.S.
mail,
and on F.O.B. origin terms.

Answer: Effective October 1, 1987, transportation or delivery charges,
when connected with the sale of taxable tangible personal property, are
taxable whether billed separately stated, regardless of F.O.B. terms,
including common carriers, freight, shipping, delivery, or postage
charges.

Prior to October 1, 1987 and effective October 2, 1984, transportation
or delivery charges, when connected with the sale of tangible personal
property, was taxable with the exception of the following:

If charges for transportation or delivery were stated separately from
the sales price of the tangible personal property sold; and transpor-
tation or delivery took place after the completion of sale (example
F.O.B. shipping point); then tax for transportation charges for that
three year period, would not have been taxable.

Your second question referred to the taxability of mileage charges,
separately stated, and connected with the service, maintenance or repair
of
tangible personal property, (equipment) located in this state.

Answer: Per Rule 3.292 (c)(1) repair of tangible personal property,
repairmen must collect tax on the entire charge for materials, parts,
labor, and any charge incidental to the transportation of a repair,
remodeling, restoration or maintenance service.

The aforementioned rules are enclosed.

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,
(Mrs.) Jo Ann Dieck
Tax Policy Division

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