Could a railroad buy a modified track loader tax-free under the rolling-stock exemption when it would remain aboard connected gondola cars?

Plain-English summary

The railroad joined eight to ten gondola cars so a modified Caterpillar 215 track loader could move from car to car and unload material. The loader's tracks, bucket, and the railcars themselves were modified for this job.

The railroad assured the Comptroller that the loader would not be removed from the train. Based on those facts, the railroad could issue an exemption certificate instead of paying tax when buying the loader under the rolling-stock exemption.

Common questions

Was the track loader exempt? Yes, on the specific facts presented.

What fact was especially important? The loader would remain aboard the train.

Could a removable loader assume the same result? The letter did not decide that different fact pattern.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9002L0979E06

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 8, 1990

Dear ***:

I just want to take a minute to respond to your recent letter and
our follow-up phone calls on the taxability of a track loader for
on-board train use.

Facts: *** Railroad has created a unique material
handling device. It involves knocking the ends out of 8 to 10
gondola cars and joining them in such a way that a Caterpillar 215
track loader can drive from car to car unloading material. The
sides of the cars have been lowered to allow the loader to swivel
on its base while unloading. The loader's tracks are modified to
add stability while working in the train and the backhoe bucket is
reversed to allow it to scoop in a forward direction. You also
assured me that the loader will not be removed from the train.

Question: Will the track loaders be exempt from sales tax under
the rolling stock exemption?

Response: Your client may issue an exemption certificate in-lieu-
of tax when purchasing the track loaders to use in the gondola
cars.

This opinion is rendered based on the facts you presented. Other
facts, though similar, may yield different results.

Feel free to call or write me if you have questions. You can
reach me by calling toll free 800-531-5441 or FAX (512) 475-0900.

Sincerely,
Al Van Allen
Taxability Section
Legal Services Division