Ezel / Tax Rulings / TX
TX 9202L1157B13 Sales and/or Use Tax (State,Local,MTA) 1992-02-10

How did Texas tax vehicle window etching with a theft guarantee and a chemical protection package with a warranty?

Short answer: Window etching was taxable; a mandatory bundled guarantee made the whole charge taxable, while an optional guarantee was not. Chemical protection application and its warranty were exempt, but the dealer paid tax on materials.

Apply this to your situation

This page answers the general question as of 1992. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1992
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A vehicle dealer offered two after-sale products: a theft-prevention package involving window etching and a guarantee, and a chemical protection package covering fiber, paint, vinyl, sound, or rust.

Window etching was taxable. If customers could not buy the etching without the theft guarantee, the entire bundled charge was taxable. If the guarantee was optional, the guarantee itself was nontaxable.

Applying the chemical protection to motor vehicles was an exempt maintenance service. The dealer had to pay sales or use tax on the materials used in the application, while the related warranty was not taxable.

What this means for you

Vehicle dealers

Optional and mandatory add-ons received different treatment. Document whether a customer could decline the guarantee and how charges were packaged.

Accountants and tax professionals

The nontaxable chemical application made the dealer the taxable consumer of application materials under this letter.

Common questions

Was vehicle window etching taxable? Yes.

Was the theft guarantee taxable? Not if optional; if inseparable from the etching, the entire charge was taxable.

Was chemical paint or fabric protection taxable? The application was treated as exempt maintenance.

Who paid tax on the protection materials? The dealer applying them.

Citations and references

The letter cited no specific statute or rule.

Source

Original ruling text

February 10, 1992

Dear ***:

Thank you for your letter regarding the taxability of certain
"After Sale" items offered to your customers.

The first item you asked is PREVENT-A-THEFT which involves etching
all windows of the vehicle and issuing a theft guarantee. The window
etching is taxable. If the window etching could not be purchased
without the guarantee, then the entire charge will be subject to the
sales tax. If the purchase of the guarantee is optional, it will not
be subject to the tax.

Secondly, you asked about the taxability of PERMAPLATE, a chemical
protection warranty for fiber, paint, vinyl, sound and/or rust.
The application of the chemical protection to motor vehicles is
considered an exempt maintenance service. Your company should pay
the sales or use tax on the materials used in applying this pro-
tection. The warranty is not subject to tax.

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

If you have any questions, please don't hesitate to write the Tax
Administration Division or call one of our tax specialists toll
free at 1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division

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