How did Texas tax auto-alarm installation and window tinting for vehicles, commercial buildings, residences, and new structures?

Plain-English summary

The requester sold and installed auto alarms and window tinting.

Both the auto alarm and its installation charge were taxable. Tinting an automobile windshield was motor-vehicle maintenance: under a lump-sum contract, the provider collected no tax from the customer and paid tax on materials; under a separated contract, the provider collected tax on the material selling price but not the labor.

Tinting an existing commercial building was taxable remodeling of real property, so the provider collected tax on the total charge. Tinting residences and new structures was not taxable as a service under the letter. For a lump-sum charge, the provider paid tax when buying materials; for separated labor and material charges, the provider collected tax on the material selling price.

What this means for you

The asset being tinted and the contract format changed the result. The letter treated auto alarms, vehicle tinting, existing commercial realty, and residential or new construction as separate categories.

Common questions

Were auto-alarm installation charges taxable? Yes, along with the alarm's sales price.

Was vehicle-tinting labor taxable? No under the described lump-sum or separated contracts, but material tax treatment differed.

Was tinting an existing commercial building taxable? Yes, on the total customer charge.

What about a residence or new structure? The service was not taxable; material tax depended on whether billing was lump-sum or separated.

Citations and references

• 34 Tex. Admin. Code Rule 3.357(b)(1) — real-property repair and remodeling provision cited by the letter

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9105L1135B03

Original ruling text

May 10, 1991

Dear ****:

Thank you for your letter regarding the taxability of the sale and
installation of auto alarms and window tinting.

Both the sale and installation of the auto alarms are taxable. You
will need to collect tax from your customer on both the sales price
and the installation charge for the auto alarm.

Tinting windshields of automobiles is considered maintenance of a
motor vehicle. If you operate under lump-sum contracts, you will
not collect sales tax on the lump-sum charge. You will pay sales
tax on materials used to perform the contract at the time you purchase
them from the supplier. If you operate under a separated contract, you
must collect sales tax from your customer based on the selling price
of the materials. The labor is not taxable.

Window tinting in commercial buildings such as store fronts or office
buildings is considered remodeling of real property and the
labor is taxable. See Rule 3.357(b)(1), enclosed. You should collect
tax on the total charge to the customer.

Window tinting residences and new structures is not taxable. See
Rule 3.357(b)(1). If your contract with your customer is a lumpsum
charge, then you should pay tax on the materials when you buy them.
If the contract has separated amounts for labor and materials,
then you should collect tax from the customer on the sales price
of the materials.

If you have any questions, please don't hesitate to call toll free
at 1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division