Ezel / Tax Rulings / TX
TX 8806L0902E10 Sales and/or Use Tax (State,Local,MTA) 1988-06-01

How did Texas tax hydrostatic testing and separated repair charges for compressed-gas tube trailers?

Short answer: Texas treated the tube trailers as motor vehicles. Under the separated repair invoices described, labor to disassemble, test, and repair the trailers was not taxable, while sales tax had to be collected on the repair parts.

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 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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 company performed required five-year hydrostatic retesting on compressed-gas tube trailers. Testing required complete disassembly, and the company also repaired worn or damaged undercarriages, brakes, fifth wheels, dollies, and other items and might repaint the trailer. Its invoices separated labor and materials.

Texas treated the tube trailers as motor vehicles. On the separated repair bill, labor was nontaxable and parts were taxable.

What this means for you

Trailer testing and repair businesses

When the equipment qualifies as a motor vehicle and the invoice separates repair labor from materials, this letter treats the labor as nontaxable and requires tax on the parts.

Fleet and compressed-gas operators

The regulatory testing context did not change the stated motor-vehicle repair treatment. Preserve separated invoices showing labor and materials.

Common questions

Q: Were the tube trailers motor vehicles?
A: Yes, according to the letter.

Q: Was repair labor taxable?
A: No, under the separated repair described.

Q: Were parts taxable?
A: Yes. The repairer had to collect tax on the parts charge.

Q: Does the letter cite a numbered rule?
A: No.

Citations and references

The letter applies motor-vehicle repair treatment but cites no specific Tax Code section or Comptroller rule by number.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller June 1, 1988

Dear ***:

Thank you for your letter concerning proper collection of sales
tax from your customers based on the following facts:

Our company receives tube trailers for quinquennial
hydrostatic retest from across the country, as required
by Department of Transportation regulations. These
trailers have various numbers of cylinders attached
horizontally to a trailer framework. The cylinders are
manifolded together inside a cabinet on one or both
ends. To hydrostatic test the tubes the trailer must
be disassembled completely, at which time we repair any
undercarriage, brake, fifth wheel, dolly, or other
items that might be worn or damaged. Paint may be
removed and trailer repainted. Our invoices are
broken down between labor and materials.

Based on our telephone conversation, the tube trailers are motor
vehicles. The labor to repair motor vehicles is not taxable.
Under a separated repair, sales tax must be collected on the
charge for parts. The charge for labor is not 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 1-800-252-5555. 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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