Were charges to disassemble and reassemble modular office furniture taxable when the work was necessary to move an office?

Plain-English summary

An office mover sometimes had to disassemble modular furniture to move it and then reassemble it at the destination. The moves were unrelated to the furniture's original sale and assembly.

The Comptroller reconsidered a prior answer and treated necessary disassembly and reassembly as exempt moving service when the company's purpose was moving furniture rather than assembling it. Invoices and accounting entries had to make the job's moving purpose clear.

Charges to reconfigure, repair, or add new parts to modular furniture remained taxable.

What this means for you

The same physical reassembly could receive different treatment depending on why it occurred. Clear contemporaneous records were required to show it was incidental to moving.

Common questions

Was necessary disassembly for an office move taxable? No.

Was later reassembly at the destination taxable? No, on the stated moving facts.

Were reconfiguration and repairs taxable? Yes.

Citations and references

• Comptroller Hearing No. 24,478

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9009L1044E13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller September 19, 1990

Dear **:

This letter is in reference to Adina Whittemore's letters sent to you in
June of '86 and April of '89 and my letter to you dated August 15, 1990.

Your company and its related corporations deal in the sale of office fur-
niture and also in moving office furniture.

A substantial portion of the retail office furniture sales are sales of
"modular" furniture or furniture systems. I understand that the assembly
of these systems has been properly taxed at the time of the sale.

The problem you are having is with your corporation that handles the mov-
ing of entire offices. You have stated that in some cases these customers
had purchased their furniture from you and some had not; however, the
moves of the offices were in no way connected with the original sale and
assembly of office furniture.

In my previous letter to you, I told you that the disassembly and reas-
sembly of modular furniture was-taxable, whether the furniture was recon-
figured or put back exactly in the same form when reassembled. I also
mentioned our hearing #24,478. After reading the facts in that hearing,
it was apparent that the taxpayer's invoices were written in such a way
that it was difficult to distinguish between taxable assembly, and reas-
sembly, exempt moving charges or taxable installation charges.

In the case of your moving company, the disassembly and reassembly of the
equipment is necessary to effect the moving of the furniture from one lo-
cation to another. If it were practical to move the furniture without
disassembly, that would definitely be done. In other words, the purpose
of your moving company is to move furniture, not assemble furniture. We
will consider, disassembly and subsequent reassembly of modular furniture
in conjunction with moving the furniture to be exempt from tax. The
accom-
panying invoices and accounting entries should be clear on the purpose of
the job.

Thus, when a job is done to reconfigure, repair or add new parts to modu-
lar furniture, the charges will be taxable.

This opinion is based on the facts presented. If there are additional
facts, or if the circumstances change, the opinion may change.

Please write or call if you have any questions. You can call toll-free at
1-800-531-5441. Our regular number is 512-463-3830 and our FAX number is
512-475-0900.

Sincerely,
Larry Koenig
Taxability Section
Legal Services Division