Were transportation charges taxable when a storage-tank repairer billed every freight leg, including delivery to an independent cleaner before the taxable repair?

Plain-English summary

Every transportation charge billed by the storage-tank repairer in connection with a taxable repair was taxable, including the freight leg taking the tank to a separately contracted independent cleaner.

The result changed when the company only arranged transportation to the cleaner and performed no repair or other taxable service. In that transport-only situation, the billed transportation charge was nontaxable.

Common questions

Did separately stating each freight leg make it nontaxable? No, when the freight was connected with the repair.

Did using an independent cleaner remove the first freight leg from tax? No. The repairer billed it as part of the taxable repair transaction.

What if the company performed no repair? Transportation-only charges to the cleaner were nontaxable.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1040C01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller August 8, 1990

Dear **:

Thank you for your letter concerning the taxability of freight
which is billed by your firm in connection with the cleaning and
repair of storage tanks.

It is my understanding from your letter and our phone conversa-
tion that you repair storage tanks which are first cleaned by
another independent vendor. The cleaning is separately contracted
for between the cleaning firm in La Porte and the customer. COM-
PANY A will arrange and bill all transportation including the
transportation to the cleaner in La Porte. Each leg of the trans-
portation is separately billed occasionally, no repair is performed
and you are only involved in transporting the tank to the cleaner.

Transportation charges which are bille d by a seller in connection
with a taxable sale, is part of the sales price and is taxable.
The tank repair is taxable; thus, all transportation charges asso-
ciated with the repair and billed by you, including the transpor-
tation to the independent cleaner, are taxable.

In situations where your firm only arranges transportation to the
independent cleaner and does not perform a repair or other taxable
service, the transportation charges billed by you are not taxable.

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, please contact
the Tax Correspondence Division. You may call toll free at 1-800-
252-5555, extension 3-4684 or write to the division.

Sincerely,
Curt Swenson
Tax Correspondence