How does Texas decide whether sand, gravel, and similar materials — and the charge to deliver them — are taxable?

Plain-English summary

Following a meeting with the Comptroller's staff, a hauler of dirt, sand, caliche, and rock asked for clarification of "processed" versus "unprocessed" and how the distinction affects both the material and the delivery charge.

The Comptroller drew the line this way:

• Washing or sorting the material leaves it unprocessed. Both the material and the delivery charge are not taxable, regardless of how they are billed and whether the customer picks it up or the seller delivers it.
• Any operation beyond washing or sorting is processing — for example, crushing or mixing. For processed materials, both the material and the delivery are taxable, whether billed lump sum or separated, and taxable even when the customer picks it up.

Two practical examples fill in the edges. Combining materials — such as sand and gravel or rock — to produce a material for making concrete is processing and is taxable. But if a customer simply wants an amount of sand and an amount of gravel and the two are dumped into the truck bed without processing, the charge is not taxable. And if, to meet a builder's specifications, the seller crushes a small percentage and blends it with the same uncrushed material, the whole thing is treated as processed.

What this means for you

Haulers and suppliers of aggregate

If the material is only washed or sorted, do not tax it or the delivery — the pickup-versus-delivery choice does not matter. Once you crush, mix, or otherwise process it, both the material and the delivery become taxable, and separating the charges does not change that.

The concrete and blending traps

Blending materials to make a concrete mix is processing and taxable. Even crushing just a small percentage and blending it into otherwise-uncrushed material makes the whole load processed. By contrast, loading separate unprocessed materials together in a truck bed — without any processing — stays nontaxable.

Common questions

Q: Is washed or sorted sand and gravel taxable?
A: No. Washing and sorting leave the material unprocessed, so both the material and the delivery charge are nontaxable — however billed, and whether picked up or delivered.

Q: What makes the material taxable?
A: Any operation beyond washing or sorting — such as crushing or mixing. Then the material and the delivery charge are both taxable.

Q: Is the delivery charge taxable for processed material even if the customer picks it up?
A: The charge for processed materials is taxable whether delivered or picked up, and whether billed lump sum or separated.

Q: Is dumping separate amounts of sand and gravel into a truck bed taxable?
A: No, not if the materials were not processed. Simply loading unprocessed materials together is not processing.

Q: Is blending materials to make concrete taxable?
A: Yes. Combining materials to produce a concrete material is processing, and crushing even a small percentage and blending it in makes the whole load processed and taxable.

Q: Can I rely on this 1988 letter today?
A: Treat it as guidance only. It is based on the facts presented and can change with different facts; on the STAR system it binds the Comptroller only as to the taxpayer it was issued to and may no longer reflect current policy.

Citations and references

Rules and statutes: The letter states the Comptroller's position on processed versus unprocessed aggregate and delivery charges but does not cite a specific rule or Tax Code section by number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8809L0894C07

Original ruling text

September 1, 1988

Dear **:

This is to follow up on the meeting Tom Soto and I had with you and

** concerning taxability of sand and gravel.

You specifically asked for clarification of "processed" and "unprocessed"

for determining taxability of the materials.

Materials that are washed or sorted are considered unprocessed. The

material and delivery charges are not taxable regardless of the manner of

billing. Sales tax should not be charged on unprocessed sand and gravel

whether the customer picks up the materials or the seller delivers them.

Any operation on sand and gravel other than washing or sorting is

considered processing. Accordingly, processing would include operations such

as crushing or mixing the materials. The charges for processed materials and

delivery are taxable whether the charges are lump sum or separated. The charge

for processed materials picked up by the customer are taxable.

Combining several materials such as sand and gravel or rock to produce a

material for making concrete is processing and the charge for the material is

taxable.

You indicated that many times a customer may want an amount of sand and

an amount of gravel. The two materials are dumped into the truck bed. The

charge to the customer is not taxable if the materials were not processed

materials.

You indicated that to meet builders specifications, it may be necessary

to crush a small percentage of materials and blend with the same kind of

uncrushed material. This is considered processed materials.

This opinion is based on the facts presented. If there are additional or

different facts, the opinion may change.

If you have additional questions or need more information, please write

me or call

463-3666.

Sincerely,

Jo Ann Dieck

Tax Correspondence Division