How did Texas tax portable-building sales versus permanently affixed residences or broiler houses, and did an agricultural exemption apply?

Plain-English summary

The total portable-building charge, including labor and materials, was taxable.

If the builder permanently affixed residences or broiler houses to real property, it became a contractor under Rule 3.291. For permanent residential improvements, labor was not taxable. A lump-sum materials-and-labor charge was not taxable to the customer, while the builder paid tax on its material cost; if materials and labor were separately priced, tax applied to the materials' selling price.

Repair or remodeling of nonresidential real property was taxable. Neither portable buildings nor permanent real-property improvements qualified as agricultural equipment under the cited rule provisions.

Common questions

Was a portable-building installation taxable? Yes, including labor and materials.

How was a permanent residential improvement treated? Under contractor rules, with different results for lump-sum and separated contracts.

Did a broiler-house use create an agricultural-equipment exemption? No.

Citations and references

• 34 Tex. Admin. Code Rule 3.291(a)(2)
• 34 Tex. Admin. Code Rule 3.357
• 34 Tex. Admin. Code Rule 3.347
• 34 Tex. Admin. Code Rule 3.296(g)(8) and (i)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9002L0981A01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 15, 1990

Dear *

Thank you for your letter dated January 19, 1990, concerning
construction of residences and broiler houses.

As you stated in your letter, the total charge, including labor
and materials, for constructing and installing a portable building
is taxable. You did not indicate whether COMPANY A will permanent-
ly affix the residences and broiler houses to real property.

COMPANY A will be considered a contractor, subject to the provisions
of the enclosed Rule 3.291, if it makes permanent improvements to
real property. This includes building new structures and making any
permanent improvements to residential realty. Please see section (a)
(2) of Rule 3.291. The labor is not taxable in this situation. If
COMPANY A charges its customer one lump-sum amount for materials and
labor, then the charge to the customer is not taxable. COMPANY A will
owe tax on the cost of the materials when purchased. If the charge to
the customer is separated between materials and labor, then tax must be
collected from the customer based on the selling price of the materials.

The total charge for repair or remodeling of nonresidential real
property is taxable. Please review Rule 3.357.

Rule 3.347 on improvements to realty and Rule 3.296 on agricultural
exemptions are also enclosed for your reference. Portable buildings
and permanent improvements to real property do not qualify for ex-
emption from sales tax as agricultural equipment. Please review
sections (g)(8) and (i) of Rule 3.296.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change. Please
feel free to contact me if you have any additional questions. You
may write me, call toll free 1-800-252-5555 (ext, 3-4685) from any-
where in the United States or phone 512/463-4685.

Sincerely,
Julie Pesl
Tax Correspondence