Does a Texas auto shop owe sales tax on window tinting, alarm installation/repair, and cellular phone sale/installation/repair for vehicles?
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This page answers the general question as of 1992. Ezel answers yours, under current Texas tax law, with citations.
Subject
Cellular Phone — Motor Vehicle Equipment — Sale And Installation/Repairs/Removal
Plain-English summary
This is an August 10, 1992 letter from the Texas Comptroller's Tax Administration Division that amends three answers (12, 18, and 19) from an earlier August 6 letter to the same taxpayer, an auto-service shop. The letter restates the taxpayer's list of 21 specific activities and gives a taxability answer for each. The taxability outcomes themselves are unchanged from the original letter — only the reasoning/wording of items 12, 18, and 19 was revised.
The shop performs several categories of work: applying window tint to vehicles, residences, and commercial buildings; selling, installing, repairing, and removing vehicle alarms; and selling, installing, and repairing cellular phones in vehicles. The Comptroller sorted these into three groups:
- Nontaxable maintenance/accessory-repair labor: Tinting a customer's own vehicle windows is treated as motor vehicle maintenance, so the lump-sum charge is not taxable (though the shop still owes tax on the tinting materials it buys, unless it already paid tax at purchase). Labor-only installation, removal, or repair of a customer-owned vehicle alarm is also not taxable, because the alarm is treated as a motor vehicle accessory and separately stated repair labor on accessories is exempt.
- Fully taxable sales: Selling and installing a new alarm or a new cellular phone (materials plus labor billed together) is fully taxable. Selling and installing add-on phone features like antennas or microphones is also fully taxable.
- Cellular phones treated differently from alarms: Even though alarms are treated as motor vehicle accessories (so their repair labor is exempt), the Comptroller specifically says cellular phones are not accessories or components — they're treated as motor vehicle equipment. As a result, labor to repair a cellular phone (whether labor-only or materials-and-labor) is taxable, unlike alarm repair labor.
Tinting applied to a customer's residence is not taxable on the lump-sum charge either way (materials tax is owed by the shop regardless of when it's paid), while tinting applied to a commercial business is taxable on the full lump-sum charge, with the shop able to buy materials tax-free using a resale certificate.
What this means for you
Auto shops offering tinting, alarms, or phone installation
Track your services carefully by category, because near-identical work is taxed differently depending on ownership and item type. Installing or removing a customer's own alarm or phone (labor only, no new materials) is not taxable. Selling and installing a new alarm or phone is fully taxable. Repairing a customer-owned alarm (labor only, separately stated) is not taxable, but repairing a cellular phone — even labor only — is taxable, because the Comptroller treats phones as vehicle equipment rather than an accessory.
Businesses billing lump-sum vs. separately stated charges
Whether you break out labor from materials on your invoice matters. For accessory repairs like alarms, the ruling specifically notes the exemption applies to "separately stated charges for labor." For tinting, the ruling treats the entire lump-sum charge as nontaxable service, but the business still owes use tax on its tinting materials unless tax was already paid when purchased.
Businesses serving both residential/individual customers and commercial customers
The same tinting service is taxed differently depending on the customer: tinting an individual's car or home is not taxable on the labor charge, but tinting a commercial business is fully taxable on the lump-sum charge. If you serve both types of customers, apply tax only to the commercial jobs, and consider issuing a resale certificate to your materials supplier for commercial work.
Common questions
Q: Do I owe sales tax on window tinting for a customer's car?
A: No, tinting a customer's own vehicle windows is treated as vehicle maintenance, and the lump-sum labor charge is not taxable. You do owe tax on the tint materials you purchase, unless you already paid tax on them at the time of purchase.
Q: Is tinting a commercial building taxable?
A: Yes. Tinting applied to a commercial business is subject to sales tax on the full lump-sum charge. You can give your materials supplier a resale certificate instead of paying tax on the materials at purchase, since you'll collect tax from the customer on the whole job.
Q: Is installing or repairing a customer's own alarm taxable?
A: Installing, removing, or relocating a customer-owned alarm (labor only, no materials) is not a taxable service. Separately stated labor to repair a customer-owned alarm is also not taxable, because the ruling treats vehicle alarms as motor vehicle accessories.
Q: Why is repairing a cellular phone taxed differently from repairing an alarm?
A: The Comptroller specifically states that cellular phones are not treated as motor vehicle components or accessories, but as motor vehicle equipment. That distinction means labor to repair a cellular phone — even if it's labor only — is subject to sales tax, unlike labor to repair a customer-owned alarm.
Q: Is selling and installing a new cellular phone taxable?
A: Yes. The ruling states the total charge for selling and installing a cellular phone in a vehicle is taxable, as is selling and installing additional phone features such as antennas or microphones.
Citations and references
No statutes, administrative rules, or case law are cited in this letter. It is a fact-specific application letter answering 21 numbered scenarios based on the Comptroller's existing policy positions, without reference to specific Texas Tax Code sections or Comptroller rules.
Source
- STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
- Opinion: https://star.comptroller.texas.gov/view/9208320L
Original ruling text
August 10, 1992
Dear **:
I am amending responses 12, 18, and 19 of my letter of August 6. The taxability
of each remains the same.
Thank you for your recent letter which is restated in part with responses
below.
This letter is to obtain, in writing from you, a clarification of our various
activities and whether or not we should be collecting tax. Please indicate at
the end of each activity if tax should be collected.
- Apply tint to customers autos (tax on materials was paid at time of our
purchasing it, and labor is not broken out separately on invoices).
Response 1: Tinting windshields of automobiles is considered maintenance of a
motor vehicle. You are not required to charge tax on your lump-sum billing.
- Apply tint to customers autos (tax on materials was not paid at time of our
purchasing it, and labor is not broken out separately on invoices).
Response 2: sales tax is not due on the lump-sum billing. You should pay tax on
the materials at the time of purchase.
- Apply tint to customers residence (tax on materials was paid at time of our
purchasing it, and labor is not broken out separately on invoices).
Response 3: sales tax is not due on the lump-sum billing. You should pay tax on
the materials at the time of purchase.
- Apply tint to customers residence (tax on materials was not paid at time of
our purchasing it, and labor is not broken out separately on invoices).
Response 4: sales tax is not due on the lump-sum billing. You should pay tax on
the materials at the time of purchase.
- Apply tint to commercial business (tax on materials was paid at time of our
purchasing it, and labor is not broken out separately on invoices).
Response 5: Sales tax is due on the lump-sum billing. You may give your
supplier a resale certificate in lieu of sales tax on the materials at the time
of purchase.
- Apply tint to commercial business (tax on materials was not paid at time of
our purchasing it, and labor is not broken out separately on invoices).
Response 6: Sales tax is due on the lump-sum billing. You may give your
supplier a resale certificate in lieu of sales tax on the materials at the time
of purchase.
- Sell and install alarms on autos (tax on materials was not paid at time of
our purchasing it, and labor is not broken out separately on the invoices).
Response 7: The total charge is subject to sales tax. You may give your
supplier a resale certificate in lieu of sales tax on the materials at the time
of purchase.
- Install customer owned alarm on auto - we are providing labor only.
Response 8: This is not a taxable service. The charge is not taxable.
- Remove customer owned alarm from auto - we are providing labor only.
Response 9: This is not a taxable service. The charge is not taxable.
- Replace alarm on auto. We do not charge the customer. We will be sending
the alarm to the factory for repair. The Factory does not charge us at all.
Should tax be charged?
Response 10: If no charge is made to any of the parties involved, no sales tax
is due.
- Labor charge only to remove customer owned alarm from one vehicle and
install it on another auto.
Response 11: This is not a taxable service. The charge is not taxable.
- Labor charge to repair customer owned alarm.
Response 12: We will treat the auto alarm as an accessory of a motor vehicle.
Separately stated charges for labor to repair these are not subject to sales
tax.
- Labor charge only to modify (by adding customer's materials) to a
customer's alarm.
Response 13: I need more information as to what is actually being done to the
vehicle in order to answer this.
- Add our materials to customer's alarms (materials and labor not broken out
on our invoices).
Response 14: I need more information as to what is actually being done to the
vehicle in order to answer this. However, if you are not remodeling the vehicle
in any given situation, you owe sales tax on the materials used to modify the
alarm system.
- Sell and install cellular phone in automobile (labor is not broken out
separately on invoices).
Response 15: The total charge is taxable.
- Install customer owned cellular phone in automobile.
Response 16: This is not a taxable service. The charge is not taxable.
- De-install customer owned cellular phone from one vehicle and reinstall on
a different vehicle (no materials provided, labor only).
Response 17: This is not a taxable service. The charge is not taxable.
- Labor only to repair a cellular phone.
Response 18: Cellular phones are not treated as components or accessories but
rather as equipment on motor vehicles. The labor to repair them is subject to
sales tax.
- Materials and labor to repair a cellular phone (labor is not broken out
separately on invoices).
Response 19: Cellular phones are not treated as components or accessories but
rather as equipment on motor vehicles. The labor to repair them is subject to
sales tax.
- Labor charge only to program existing phone.
Response 20: I need more information as to what is actually being done to the
phone in order to answer this.
- Sell and install additional phone features (such as antennas, microphones)
and labor is not broken out separately on invoices.
Response 21: The total charge is subject to sales tax.
This opinion is based on the facts you presented. Other facts, though similar,
may yield different results.
If you have questions or need more information, please call or write. You may
reach me by calling toll free, (800) 531-5441. My direct line number is (512)
463-4680. The number for FAX transmissions is (512) 475-0900. You may write to
me in care of Tax Administration Division.
Sincerely,
Al Van Allen
Tax Administration Division
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