Did paint and coatings used against corrosion qualify for Texas's manufacturing refund or phase-in exemption?

Plain-English summary

A manufacturer asked whether exterior paint and coatings used on process pipe and equipment to protect against corrosion, leaks, and spills qualified for the manufacturing refund or phase-in exemption.

The Comptroller said coatings used on processing machinery and equipment to prevent corrosion and deterioration qualified. Coatings did not qualify on piping or other nonqualifying items, including intraplant transportation machinery and equipment. Coatings required by law or regulation to control pollution also qualified.

Labor to apply the coatings did not qualify. To claim a refund or exemption for qualifying materials, the paint and coating charges had to be separately stated from application labor.

What this means for you

The material's use and the underlying item controlled. Coatings on qualifying processing machinery received different treatment from coatings on nonqualifying piping or intraplant transportation equipment, and materials had to be separated from labor.

Common questions

Did corrosion-prevention coatings on processing machinery qualify? Yes.

Did coatings on nonqualifying piping qualify? No.

Did legally required pollution-control coatings qualify? Yes.

Did application labor qualify? No.

Did charges need to be separately stated? Yes.

Citations and references

No statute or administrative rule was cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9102L1078E02

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

JOHN SHARP
Comptroller February 27, 1991

Dear *****:

Thank you for your recent letter, in which you asked whether
exterior paint and coatings used on process pipe and equipment
to protect it from corrosion, leaks and spills would qualify
for the manufacturers refund/phase-in exemption.

The paint and coatings used on processing machinery and
equipment to prevent corrosion and deterioration will
qualify. Paint and coatings do not qualify if used on
piping and other non-qualifying items (such as intraplant
transportation machinery and equipment). Paint and coatings
required by law or regulation to control pollution qualify.

The labor to apply the paint and coatings does not qualify
for the refund/phase-in exemption. The charges for the
paint and coatings must be separately stated from charges
for labor to apply them, in order to claim any refund or
exemption for the paint and coatings.

This opinion is based on the facts presented. Different
facts, though similar, might lead to different answers. If
you have further questions, feel free to write or call me at
1-800-531-5441, ext. 3-3889.

Sincerely,
John Christian
Tax Administration