Did an auto dealer have to collect Texas sales tax when recovering, filtering, returning, or adding refrigerant during an air-conditioner repair?

Plain-English summary

Auto dealers used recovery equipment to capture refrigerant during air-conditioner repairs. The gas was generally returned to the same system, sometimes with additional refrigerant, and recovered gas could be mixed and filtered with gas from other repair jobs.

The Comptroller said the procedure was treated as a nontaxable motor-vehicle repair as long as the dealer made no charge for refrigerant.

If the dealer charged for refrigerant, sales tax applied to that charge whether the refrigerant was new or recovered from another job.

What this means for you

The separate refrigerant charge—not whether the gas was newly purchased, recovered, filtered, or returned—controlled the tax result in this letter.

Common questions

Was refrigerant recovery itself taxable? Not when performed as part of the repair with no refrigerant charge.

Was newly added refrigerant taxable? Yes, if charged to the customer.

What about recovered refrigerant from another job? Its charge was also taxable.

Citations and references

The letter did not identify a numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9107L1118G14

Original ruling text

July 8, 1991

Dear **:

Recently we spoke concerning taxability issues involved in motor
vehicle air conditioner repair and freon recovery.

The situation is that dealers will use freon recovery equipment to
capture freon from an air conditioner system as part of the air
conditioner repair. The freon is generally returned to the air
conditioner system. In some situations additional freon is added
to the system.

In some situations freon may be mixed in the recovery equipment
with gas from another repair job. We are aware that the recovery
equipment may filter the gas.

As long as no charge is made for freon, the procedure is
considered a motor vehicle repair and is not subject to sales tax.
If a charge is made for freon, whether it be new or recovered from
another job, sales tax will be due on the charge for the freon.

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

If you have any questions or need more information, please contact
me at 463-4684.

Sincerely,

Curt Swenson
Tax Administration