Were machinery disassembly, moving, reassembly, loading, unloading, in-plant moves, and export packing taxable?

Plain-English summary

Disconnection, disassembly, transport, reassembly, and reconnection of heavy machinery were nontaxable when performed only to move the equipment and when reassembly did not reconfigure or repair it. The letter compared that work to a household mover disassembling furniture solely for transport.

Loading machinery onto a common carrier, unloading it from one, and moving machinery within a customer's facilities also were nontaxable when no connected repair, remodeling, or assembly service was provided.

Export packing of a manufacturer's property for foreign use was nontaxable. Under Rule 3.314(d), an export packer could issue exemption certificates for qualifying crating and packaging supplies but had to keep records tying those materials to exported property and pay tax on nonqualifying items.

The ruling body does not address storage despite that word appearing in the STAR subject label.

Common questions

Was disassembly for the sole purpose of moving equipment taxable? No.

What if the work repaired or reconfigured the equipment? The stated moving-service answer did not apply.

Were loading, unloading, and in-plant moves taxable? No, absent connected taxable services.

Was export packing taxable? No, under the facts stated.

Citations and references

• 34 Tex. Admin. Code Rule 3.314(d)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8909L0958G01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller September 1, 1989

Dear *:

Thank you for your letter regarding applicability of the sales and
use tax to a machinery moving and export crating company. The
basic aspects of the business are restated below with response.

1. The disconnection, disassemble, loading, transporting,
   unloading, reassembly, and reconnection of heavy machine tools and
   associated equipment. This requires the transportation of men,
   tools, and equipment to job locations as well as the use of
   transportation equipment for hauling the heavy machine tools once
   disassembled.

Response: Generally, the disassembly and reassemble labor would
be taxable. However, if the disassembly and reassembly of the
equipment is performed only to effect the moving of the equipment
from one location to another, as indicated in your description,
and the reassembly is not a reconfiguration or repair of the
equipment, the charge for the moving service in not taxable. In
other words, if the transaction is like a household moving company
that may disassemble beds, tables, etc. to move them and
reassemble them at the new location, your client's charges would
not be taxable.

2. Providing and transporting-men, tools and equipment to off-load
   a customer's heavy machine tools and/or associated equipment from
   a common carrier.

Response: Not taxable

3. Providing and transporting men tools and equipment to load a
   customer's heavy machine tools and/or associated equipment onto a
   common carrier.

Response: Not taxable.

4. Providing and transporting men, tools and equipment to job
   locations to move a customer's heavy machine tools and/or
   associated equipment within the customer's facilities.

Response: Not taxable.

The responses to questions 2 through 4 are based on the assumption
that there are no taxable services provided in connection with
these activities such as repair/remodeling or assemble.

5. The export packing of materials and equipment sold by American
   manufacturers to foreign entities for use and consumption outside
   the United States. The taxpayer in question is never the owner or
   seller of any of the items that are packed for export.

Response: The charge by the taxpayer to the manufacturer for
export packing is not taxable. An "export packer" ( a person who
packages property to be exported outside the territorial limits of
the United States) may give exemption certificates to his
suppliers in lieu of tax on the crating and packaging supplies,
but must maintain records showing which materials were used for
the exempt purpose of exporting tangible personal property. The
tax must be paid on all other items not qualifying for
exemption. Please refer to Rule 3.314(d).

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 toll-free 1-800-252-5555. My extension is 3-4666. You may
write to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence