How did Texas tax moving, storage, packing, crating, repair, packaging-material sales, and export-packing services?

Plain-English summary

The Comptroller treated local movement and public storage of furniture and other goods as nontaxable. Labor to prepare household goods for transit and labor to pack, load, and close a customer's goods were also nontaxable, but the provider owed tax on the materials it consumed. Reconfiguring, repairing, or adding parts to modular furniture, and repairing appliances or household goods, were taxable; repair charges had to be separated from transit-preparation charges.

Crates sold to a manufacturer could qualify for the manufacturing-process packaging exemption. If the moving company used crates in its own packing and delivery service, the crates were taxable to the company. The same consumer treatment applied to blankets, padding, twine, paper, straw, separators, bags, shredded paper, crates, and cartons used in customer packing.

Packaging materials sold to customers were taxable retail sales, and the company could buy resale inventory with a resale certificate. The letter also described credits when tax had already been paid on resold materials, including a limited local-tax credit tied to reporting tax for the same local jurisdiction.

Crates and packaging materials used by an export packer for property exported beyond the United States were exempt under the export clause and Tax Code Section 151.155.

What this means for you

A moving company should separate nontaxable transit preparation from taxable repairs and distinguish supplies it consumes from packaging products it resells. Export packing and qualifying manufacturer packaging required their own documented treatment.

Common questions

Were local moving and storage taxable? No. Were repairs taxable? Yes. Did the mover owe tax on packing supplies it consumed? Yes. Were packaging materials sold to customers taxable? Yes. Could export-packing materials be exempt? Yes under the conditions described.

Citations and references

• Texas Tax Code Section 151.155
• 34 Tex. Admin. Code Rule 3.314

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9112L1145D05

Original ruling text

December 30, 1991

Dear **:

Your letter requesting clarification of the recent change involving wrapping
and packaging materials has been assigned to me for review and response. I
appreciate your patience and apologize for the delay in responding.

You listed the various services and/or products that your company provides and
requested a taxability determination on each. You presently pay tax on all
materials that you purchase to perform the services listed. These services
and/or products are restated below followed by my response:

1. Provide labor to perform local movement of office furniture and fixtures and
   occasional storage.

Response: Storage of furniture and fixtures is not taxable. Labor for local
movement of furniture and fixtures is not taxable. When a job calls for your
company to re-configure, repair, or add new parts to modular furniture, the
charges for these services will be taxable.

2. Provide labor and occasionally parts, to service appliances and other
   household goods in preparation for safe movement by a van line. This service is
   secured and paid for by the van line as a service they provide the moving
   public, moving locally, intrastate, interstate, and closing.

Response: Labor to prepare goods for transit is not taxable. You should pay
sales tax to your supplier on all materials used to perform this service. When
you repair tangible personal property, you are acting as a repairman. You
should separate the charge for preparing goods for transit from the charge to
repair appliances or other household goods and collect tax on the total charge
for repair.

3. Provide wooden crates for protection of delicate household goods for the van
   lines, as above. This service includes packing goods in crates and closing.

Responses: Labor to prepare goods for transit is not taxable. You should pay
sales tax to your supplier on all materials used to perform this service.

4. Provide wooden crates to various manufacturers.

Response: The exemption for materials used in wrapping and packaging was
repealed effective October 1, 1991. Wrapping and packaging materials purchased
by manufacturers for use as part of the completion of the manufacturing process
still qualify for exemption. Please see section (b) of the enclosed copy of
emergency Rule 3.314 Wrapping, Packing, Packaging Supplies, Containers, Labels,
Tags, and Export Packers. The crates may qualify for exemption if sold to the
manufacturer; however, if you are using the crates in a packing and delivery
service, the crates are taxable to you.

5. Provide wooden crates, and labor, to pack, load, and close customers' goods.

Response: when you pack, load and close a customer's goods, you are providing a
nontaxable service. Blankets, padding, twine, rope, wrapping paper, packing
paper, excelsior, straw, separators, carton bags, shredded paper, crates and
cartons used for this service would be taxable to COMPANY at the time of
purchase. See section (a) of Rule 3.314.

6. Provide various new packaging materials to the shipping public, such as
   wrapping material, padding material, bags, tape, etc.

Response: Packaging materials sold to customers would be taxable. You may issue
a resale certificate to your supplier for items that you will resell. If tax
was paid on packing materials that you resell, you may take credit on your
sales tax return by reducing the taxable sales reported by the cost of
materials sold on which you paid tax. You may also take credit for any local
taxes paid to suppliers, but only if you report tax for those same local taxing
jurisdictions.

7. Provide crates, labor and materials, for international exports.

Response: A person who packages property to be exported outside the territorial
limits of the United States is an "export packer". Crating and packaging
materials purchased by an export packer to export personal property are exempt
under the export clause of the United States Constitution, Tax Code 151.155,
whether used to package the export packers' property, that of vendors shipping
such property to their foreign customers, or that of purchasers who contract
and pay for such services. See section (d) of Rule 3.314.

8. Provide local moving services for companies and individuals.

Response: This is a nontaxable service. Tax is due on materials used by COMPANY
to provide this service.

9. Provide public storage for companies and individuals.

Response: This is a nontaxable service.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

If you have other 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