Were amusement-park locomotives and coaches, track materials, operating supplies, and repair or maintenance charges exempt from Texas sales and use tax?

Plain-English summary

Amusement-park locomotives and coaches qualified as exempt rolling stock under Rule 3.297.

Fuel and supplies essential to operating the trains were also exempt, including trestles, track, ties, and other track or track-bed materials. The letter separately noted exemptions for diesel fuel under the motor-fuels laws and for pure water regardless of use.

Materials and labor to repair or maintain the trains were not taxable because the property being serviced would itself have been exempt if sold, leased, or rented. Materials for depots and other items not essential to train operation remained taxable.

Common questions

Were the locomotives and coaches taxable? No.

Were track and ties exempt? Yes, as essential operating supplies under the letter.

Were depot materials exempt? No.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9003L0996A01

Original ruling text

March 30, 1990

Dear *****:

In your letter of March 22, you requested information concerning the taxability
of your amusement park trains and related supplies and services.

Sales of the engines (locomotives) and coaches are exempt because this
equipment qualifies as rolling stock under the enclosed Comptroller's Rule
3.297 (Carriers). In addition:

1. Fuel and supplies essential to the operation of locomotives and trains are
   exempt (Rule 3.297 (d)(2)) from sales and use tax. Therefore, your purchases of
   trestles, track, ties, and other materials for the track or track bed are
   exempt. Moreover, diesel fuel is specifically exempt from sales/use tax because
   it is taxed, defined, or exempted under the motor fuels tax statutes. You
   should also note that pure water is exempt from sales/use tax regardless of how
   it is used.

2. Charges for materials and labor to repair or maintain the locomotives and
   trains aren't taxable. Specifically, charges to repair or maintain tangible
   personal property are exempt if they are performed on tangible personal
   property that, if sold, leased, or rented, at the time of the performance of
   the service, would be exempt because of the nature of the property, its use, or
   a combination of its nature and use.

3. Materials for construction of depots or materials that aren't essential to
   the operation of the trains are taxable.

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. You may write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Bob Jeffcoat
Tax Correspondence