Were lump-sum balloon decorating, materials, labor, and delivered balloon arrangements taxable, and how did resale or prior tax payment work?

Plain-English summary

The business bought balloons, inflated them, and decorated shopping malls, model homes, hotel ballrooms, clubhouses, homes, and other locations.

The Comptroller said:

• the lump-sum decorating charge was taxable;
• materials and labor were taxable whether separately stated or not;
• materials transferred to customers could be bought tax-free with a resale certificate;
• if the decorator paid tax when buying materials, it could claim credit on its return under Rule 3.338(a); and
• delivered balloon arrangements for birthdays, get-well occasions, and other uses were taxable.

Both balloon arrangements and decorating orders were taxable; no distinction was needed.

What this means for you

Under this historical letter, tax applied to the total customer charge regardless of whether the transaction was described as decorating or a delivered arrangement.

Common questions

Was balloon-decorating labor taxable? Yes.

Did separating labor and materials change the result? No.

Could materials be bought for resale? Yes, when transferred to customers.

Were delivered arrangements taxable? Yes.

Citations and references

• 34 Tex. Admin. Code Rule 3.338(a) — historical credit for tax paid on resale materials.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8801L0869A11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller January 29, 1988

Dear ***:

Thank you for your recent letter which is restated with response below.

Would you please advise me on the procedure of collecting sales tax for
my
business.

I purchase balloons, blow them up and decorate shopping malls, model
homes, hotel ballrooms, clubhouses, homes, etc.

1. Do I collect sales tax on the lump-sum charge?

Answer: Yes.

2. Do I need to separate the materials charge from the labor charge?

Answer: Your charges for material and labor are taxable whether
separately stated or not.

3. If I pay sales tax when I purchase the materials, do I need to
   collect additional sales tax from my customers?

Answer: You may purchase the materials transferred to your customers
tax free on a resale certificate. If you do pay tax on the materials
at the time of purchase you may take credit on your return in keeping
with Rule 3.338(a). The total charge made to the customers is taxable.

4. If I sell and deliver balloon arrangements for birthdays, get
   wells, etc., are the arrangements taxable?

Answer: Yes.

5. What guidelines do I use to differentiate a balloon arrangement
   from a decorating order? Please be very specific.

Answer: Charges for both are taxable.

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 our toll-
free number 1-800-531-5441. The regular number is 512/463-4600. You may
write me at the Tax Policy Division.

Sincerely,
Al Van Allen
Tax Policy Division