Were charges to place and remove Realtor-owned for-sale signs at residential properties taxable when the service provider did not sell, assemble, or erect the signs?

Plain-English summary

The provider placed and removed Realtor-owned "FOR SALE" signs at residential properties. Texas defined installation as placing tangible personal property in position, without changing its form, so it could accomplish its intended purpose.

Under those facts, the labor charge was nontaxable as long as the provider did not sell, assemble, or erect the signs. Assembly or erection—connecting component parts into a finished product—was taxable as the final stage of manufacturing, and a seller's charge to install property it sold was taxable.

What this means for you

The result depended on the provider's limited role. Simple placement and removal of customer-owned completed signs was nontaxable; selling the property or building it from components changed the treatment.

Common questions

Was sign placement taxable? No under the stated facts. Was removal taxable? No. What if the provider assembled the sign? That labor was taxable. What if the provider sold and installed the sign? The installation charge was taxable.

Citations and references

• The letter does 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/9110L1135G09

Original ruling text

October 8, 1991

Dear **:

Your letter concerning the taxability of charges for sign
placement and removal has been assigned to me for review and
response.

You currently install and remove "FOR SALE" signs for various
Realtors in Austin, Round Rock and San Marcos. The signs and
posts are owned by the Realtors and are placed (or removed)
by you in (from) residential properties.

For sales and use tax purposes, the definition of "installation"
is to place tangible personal property in position, without
changing its form, where item will reasonably accomplish the
purpose for which it will be utilized. Your charge for the labor
to install or remove these signs is not taxable as long you do
not sell, assemble, or erect these signs.

Assembly or erection is the labor to connect component parts into
a finished product; it is the final stage in the manufacturing
process and is taxable. A charge by the seller of tangible
personal property for the installation of that property is
subject to tax.

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

If you have further questions or need more information, you may
call 512/463-4600, or 1-800-252-5555 from outside Austin. You
may write to Tax Administration Division.

Sincerely,

Gilbert Zamora
Tax Administration Division