Ezel / Tax Rulings / TX
TX 8812L0918E08 Sales and/or Use Tax (State,Local,MTA) 1988-12-09

How did Texas tax the sale and installation of tires, batteries, shock absorbers, and mufflers under its revised 1988 policy?

Short answer: Installation labor was not taxable. On lump-sum repairs the repairman paid tax on the part; on separated bills the customer paid tax on parts but not labor.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Texas revised its policy effective November 16, 1988 and treated sellers who installed tires, batteries, shock absorbers, and mufflers as repairmen. Their labor to replace those items was not taxable.

For one lump-sum repair charge, the repairman did not charge the customer tax and instead paid tax when buying the part. If parts and labor were separately stated, the repairman charged tax on the parts but not the installation labor.

Common questions

Was installation labor taxable? No under the revised policy.

How was a lump-sum repair handled? The repairman paid tax on the part and did not charge tax on the customer's lump sum.

What if parts and labor were separated? Parts were taxable; installation labor was not.

Source

Original ruling text

December 9, 1988

Dear *****:

I just want to take a minute to let you know that we have revised our policy on
the labor involved in motor vehicle repair.

People who sell and install tires, batteries, shock absorbers, and mufflers on
motor vehicles are now treated as repairmen. That means the labor to replace
these items is not taxable. The effective date of this change is November 16,
1988.

If the repairman charges a single lump-sum amount for the repair, he doesn't
charge tax at all. He simply pays tax on the part when he buys it from his
supplier and recoups all of his costs and profit in his lump sum charge to the
customer.

If the repairman separates the charges for parts and labor on the customer's
bill, he must charge tax on the parts. His charge for installation labor is
not taxable.

I am enclosing a copy of the emergency rules we recently filed for your
reference. We would appreciate your help in notifying your members who may be
affected.

We will also begin the process of adopting permanent versions of these rules.
If you have suggestions, we'd like to consider them. Please send your comments
to me by January 10, 1989.

Please feel free to call me any time. You can reach me directly by calling
(512) 463-4606, or toll free at 1-800-531-5441.

Sincerely,

Martin Cherry
Assistant Director
Legal Services Division

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