Did placing precast concrete products into an excavation prepared by someone else make the manufacturer a real-property contractor?

Plain-English summary

Administrative Hearing 20,023, issued January 30, 1987, superseded the attached May 20, 1977 Comptroller letter.

Mere placement of precast concrete in an excavation prepared by another party was not an improvement to realty. For the seller to be treated as making a real-property improvement, it had to perform some act affixing or incorporating the product into the customer's realty.

The attached 1977 letter had said placing the product in a prepared excavation was an improvement. This page follows the later hearing and December 1989 letter as controlling within the source.

Common questions

Was lowering the product into the excavation enough? No.

What additional conduct was required? Some act affixing or incorporating the product into the customer's realty.

Does the attached 1977 letter control? No; the 1987 hearing superseded it.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8912L0980B07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 11, 1989

Dear ***:

Thank you for your recent letter concerning the application of
sales tax on sales of precast concrete products used on under-
ground utility construction.

Administrative Hearing 20,023 issued January 30, 1987, super-
cedes the May 20, 1977 letter from John Pratt. The mere place-
ment of concrete products in a prepared excavation is not con-
sidered an improvement to realty. In order to be considered
an improvement to realty, the seller of the concrete products
must perform some act to affix to or incorporate the product into
the customer's realty.

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

If you have any questions or need more information, you may call
toll-free 1-800-252-5555, ext. 3-4683. The regular number is 512/
463-4600. You may write me at Tax Correspondence, Comptroller of
Public Accounts.

Sincerely,
Eddie C. Washington
Tax Correspondence

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN 78774

May 20, 1977

Attention: ***

Dear ***:

This Department has been involved in determining the correct tax status
of items manufactured and delivered by businesses in your industry. The
principal problem is to determine if a sales has occurred or is the
trans-
action of an improvement to realty.

Our field personnel contacted manufacturers, examined plant facilities
and witnessed actual deliveries of products. The information obtained
was forwarded to our Legal Services Division for review and
recommendation.
It is their opinion that when the concrete products are placed in a pre-
pared excavation that this would be considered an improvement to realty
and the manufacturer would owe Use Tax on the cost of materials. If the
products are only delivered to the job site this should be considered a
sale and tax should be collected on the total sale price.

The recommendations of our Legal Services Division should be followed in
reporting Sales Tax on future reports.

If you have any questions regarding reporting tax or taxability of your
products, please contact Ledford Kelly in Field Operations Division,
1-800-252-5555, extension 170.

Yours very truly,
John Pratt
Assistant Comptroller
Field Operations