Does Texas sales tax apply to the sale and hauling of dirt, sand, caliche and rock, and does it matter whether the material has been processed?

Plain-English summary

A hauler of dirt, sand, caliche, and rock asked the Comptroller about the sales-tax treatment of these materials and the charges to haul them. The Comptroller confirmed a change in policy: as of June 13, 1988, Texas sales tax is no longer due on the sale and transportation of unprocessed materials such as sand, dirt, and gravel.

The dividing line is processing. Processed materials are those that have been crushed, mixed, or subjected to any process other than washing and sorting — merely washing or sorting the material does not make it "processed." Tax is due on the sale and transportation of processed materials.

The policy change is prospective only. It does not change the taxability of transactions before June 13, 1988: taxes already collected and remitted on those earlier sales stand as they are, with no refunds. Sales of these materials after June 12, 1988 should not be taxed (when the material is unprocessed).

What this means for you

Haulers and suppliers of dirt, sand, gravel, and similar materials

If the material is unprocessed — not crushed or mixed, only (at most) washed and sorted — you do not collect Texas sales tax on either the material or the hauling charge for sales on or after June 13, 1988. Keep your invoicing consistent with the material's actual state.

When the material has been processed

Crushing, mixing, or any handling beyond washing and sorting makes the material taxable, and the tax applies to the transportation/delivery charge as well as to the material itself. Track which loads are processed so you tax the delivery charge correctly.

Periods before the change

The change does not reach back before June 13, 1988. Tax that was properly collected and remitted on pre-change sales is not refundable under this letter.

Common questions

Q: Is Texas sales tax due on hauling unprocessed sand, dirt, or gravel?
A: No, not for sales on or after June 13, 1988. The sale and transportation of unprocessed materials are no longer taxed.

Q: What counts as "processed"?
A: Material that has been crushed, mixed, or put through any process other than washing and sorting. Washing and sorting alone do not make it processed.

Q: Is the transportation charge taxable for processed material?
A: Yes. Tax is due on both the sale and the transportation of processed materials.

Q: Can I get a refund of tax I paid on these materials before the change?
A: No. The change is prospective; taxes collected and remitted before June 13, 1988 stand with no refunds.

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 announces a Comptroller policy change effective June 13, 1988 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/8810L0904F07

Original ruling text

October 4, 1988

Dear *:

I am providing this written information in response to your telephone

conversation with Teresa Flores. Sales tax is no longer due on the sale

and transportation of unprocessed materials such as sand, dirt, and gravel.

Processed materials are those that have been crushed, mixed, or any other

process other than washing and sorting. Tax is due on the sale and

transportation of processed materials.

This change in policy is prospective and does not change the taxability

of these transactions prior to June 13, 1988. The taxes collected and

remitted will stand as they are without any refunds. Sales of these materials

should not be taxed after June 12, 1988.

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

different facts, the opinion may change.

You may write at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division

Tax Correspondence