Ezel / Tax Rulings / TX
TX 8803L0869G06 Sales and/or Use Tax (State,Local,MTA) 1988-03-15

How did Texas tax custom millwork installed in original construction, incorporated into an existing nonresidential building, or supplied without installation?

Short answer: For separated original construction, materials and finish work were taxable but the installer's labor was not. Existing-building remodeling and supply-only sales were taxable on the total charge.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 1988 Texas Comptroller of Public Accounts letter applying the printed Rules 3.391 and 3.357, published on STAR. Its contractor, separated-contract, remodeling, finishing, and material-supplier treatment is historical; verify current construction rules before applying it today. This summary preserves Rule 3.391 exactly as printed rather than silently substituting another rule number. Letters on STAR can support detrimental reliance only for the taxpayer directly issued the letter and may no longer represent current policy. Taxpayer-identifying details 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

A company custom-manufactured architectural millwork, sent it to another contractor for painting or staining, and then delivered it for permanent installation.

When the millwork was permanently affixed in original building construction and the manufacturer was responsible for attachment, the Comptroller treated the manufacturer as a contractor under printed Rule 3.391. Under the separated contract, it collected tax on the materials and finish work but not on its installation labor.

The finishing craftsperson could buy paint and stain with a resale certificate and could accept the millwork company's resale certificate for the finish work.

If the millwork was incorporated into an existing nonresidential building, the company was a repairer or remodeler under Rule 3.357 and the total customer charge was taxable. If it only supplied millwork without responsibility for incorporation, it was a material supplier and also taxed the total charge.

What this means for you

Under the 1988 guidance, responsibility for permanent attachment, whether the building was original construction or existing, and the contract format controlled the result.

Common questions

Was installation labor taxable in the separated original-construction contract? No.

Were materials and finish work taxable? Yes.

Was existing nonresidential remodeling taxable? Yes, on the total charge.

Was a supply-only sale taxable? Yes, on the total charge.

Citations and references

  • 34 Tex. Admin. Code Rule 3.391, exactly as printed for original-construction contractor treatment.
  • Rule 3.357, applied to existing nonresidential building work.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 15, 1988

Dear ***:

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

Our firm is engaged in custom manufacturing of architectural
millwork. Architectural millwork is finished wood products
exposed to view and affixed permanently to new construction not
to be removed.

The product is manufactured in our **, Texas plant, then sent
to a painting contractor to have the finish applied. After
this, it is then delivered to the job site for erection. The
painter pays sales taxes on paint and stain used in his
processing.

Our billing is separated thus:

Materials fabricated x sales tax = amount due
Finish work x no sales tax = amount due
Labor for installation and
erection x no sales tax = amount due

Please, is this correct?

Response:

Assuming the millwork is permanently affixed as part of a contract for
original construction of a building and your firm is responsible for that
attachment, you will be treated as a contractor under Rule 3.391
(enclosed).
Under a separated contract as you describe, you would charge tax on the
materials and finish work but not on labor done by your firm.

The craftsmen doing the finish work could purchase his paint and stain
tax-free on a resale certificate. He could also accept a resale
certificate
from your firm in lieu of tax.

If you were incorporating the millwork into an existing nonresidential
building, you would be treated as a repairman or remodeler under Rule
3.357
(enclosed). As such, the total charge to your customer would be taxable.

If you were supplying millwork but were not responsible for incorporating
it
into the realty, you would be a material supplier. In this case also, you
would charge tax on your total charge to your customer.

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

Get today's answer for your situation

You just read a 1988 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.