Ezel / Tax Rulings / TX
TX 8901L0932D07 Sales and/or Use Tax (State,Local,MTA) 1989-01-26

Was a charge to a manufacturer for verifying that service-station equipment was safely and properly installed taxable?

Short answer: No. The verification charge was not taxable, but the service provider had to pay tax on equipment or materials used to perform the service.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The requester sold service-station equipment and gasoline pumps and separately charged the manufacturer to verify that the equipment had been properly installed for safe operation.

The Comptroller said the verification charge was not taxable. The requester still had to pay tax on any equipment or materials used to perform that service.

Common questions

Was the start-up verification charge taxable? No.

Could equipment and materials used in the service be bought tax-free? The letter says the provider had to pay tax on them.

Did the letter address repair or installation charges? No. It addressed the stated verification service.

Source

Original ruling text

January 26, 1989

Dear ***:

Thank you for your inquiry regarding the taxability of a "start-up commission."

You state that you sell service station equipment and gasoline pumps. In
addition, you verify that the equipment is properly installed for safe
operation and charge the manufacturer for this service.

Your charge to the manufacturer for verifying that the equipment is installed
properly isn't taxable. However, you must pay tax on any equipment or
materials used in performing this service.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions, please contact Tax Correspondence. You may call
toll free 1-800-252-5555, or our regular number is 512/463-4600. My extension
is 3-4662.

Sincerely,

Bob Jeffcoat
Tax Correspondence

Get today's answer for your situation

You just read a 1989 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.