How did Texas distinguish lump-sum repair and painting charges for motor vehicles from charges for equipment?

Plain-English summary

The Comptroller distinguished repair and painting of equipment from the same work on motor vehicles.

For equipment, the entire repair or painting charge—labor and materials—was taxable regardless of contract type.

For a motor vehicle repaired or painted for a lump sum, the customer owed no tax. The repairer or painter instead paid tax on the materials or paint used.

If equipment mounted on a motor vehicle and the vehicle itself were painted for one combined charge, the entire charge was taxable. If the equipment-painting amount was separately stated, only that equipment portion, including its labor and materials, was taxable.

What this means for you

Repair and paint shops

Classify the property before invoicing. Mounted equipment did not automatically take the vehicle's treatment, and a combined charge could make the full job taxable.

Accountants and tax professionals

Separate vehicle and equipment work when the facts support it. The letter tied the tax base to both property classification and billing structure.

Common questions

Was equipment repair taxable? Yes, in full.

Was lump-sum motor-vehicle repair taxable to the customer? No; the repairer paid tax on materials.

What if vehicle and mounted equipment were painted for one price? The entire charge was taxable.

What if equipment painting was separately stated? Only that separately stated equipment portion was taxable.

Citations and references

The letter cited no specific statute or 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/9202L1155C06

Original ruling text

February 4, 1992

Dear ***:

Thank you for your recent letter asking about lump-sum repairs and
painting of drilling rig equipment, trucks, truck motors, and trailers.

For tax purposes, work performed on an item of equipment is treated
differently from work performed on a motor vehicle.

If an item of equipment is repaired, the total charge (labor and
material) to the customer is taxable. The type of contract used is
irrelevant.

If a motor vehicle is repaired for a lump-sum amount, the customer owes
no tax. The person performing the repair owes tax on the cost of materials.

If equipment is painted, the total charge to the customer is taxable.
The type of contract used is irrelevant.

If a motor vehicle is painted or repainted for a lump-sum amount, the
customer owes no tax. The painter owes tax on the cost of the paint.

If equipment is mounted on a motor vehicle and both are painted for a
single charge, the total charge will be taxable. If there is a separately
stated charge for painting a vehicle-mounted equipment, only the separately
stated charge for painting the equipment will be taxable (both materials
and labor).

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

If you have additional questions or need more information, you may call
me toll free at 1-800-252-5555, ext. 3-4633. The regular number is
512/463-4633. You may also write to Tax Administration.

Sincerely,

Wanda Hutcheson
Tax Administration Division