Is a general contractor's charge to provide and install a temporary mobile office trailer, including wiring and security system installation, taxable in Texas?

Subject

Mobile Offices/Office Trailers — Installation/Wiring/Installing Security System

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9401L1282C08

Plain-English Summary

A general contractor was working under a lump-sum (cost-plus with a guaranteed maximum) contract to remodel a building for a customer. The customer issued a change order to "provide and install temporary office facilities," which meant renting and installing mobile office trailers on land next to the building being remodeled, so the customer's personnel would have somewhere to work while the remodel was underway. Providing the temporary offices also involved installing electrical wiring and a security system in the trailers. The same change order included some landscaping work to be done later when the trailers were removed, and the contractor billed the change order separately from the rest of the remodeling contract.

The contractor already understood that the landscaping labor and materials were taxable, and asked only whether the labor to provide and install the temporary office trailers was taxable.

The Comptroller explained that, effective October 1, 1993, mobile offices are treated as tangible personal property rather than motor vehicles. Because of that reclassification, the rental, sale, and repair of a mobile office is taxed under sales tax. The labor to install the mobile office itself, to install the wiring inside it, and to install its security system is also taxable. Since every component of this particular change order (installation, wiring, security system, plus the already-conceded taxable landscaping) was taxable, the Comptroller concluded that the total charge for the change order appeared to be taxable.

What This Means For You

If you are a contractor renting and installing mobile office trailers: Charge sales tax on the rental of the trailer itself, as well as on the labor to install the trailer, wire it, and install any security system in it. Mobile offices are no longer taxed as motor vehicles — they're treated as tangible personal property, so the normal sales tax rules for tangible personal property (including installation labor) apply.

If you bill this kind of work under a separately-priced change order: Bill and collect tax on the full change-order amount when all of its components — equipment rental, installation labor, wiring, security, and any related work — are themselves taxable. This ruling treated the entire change order as taxable because each piece of it was taxable.

If you're unsure whether your facts match: This opinion is based on the specific facts the contractor described. The Comptroller noted that different or additional facts could change the outcome, so if your contract structure differs (e.g., a true lump-sum contract without a separately stated change order), you may want your own ruling.

Q&A

Q: Are mobile office trailers taxed as motor vehicles in Texas?
A: No, not since October 1, 1993. Mobile offices are treated as tangible personal property, so their rental, sale, and repair are taxed under sales tax rather than the motor vehicle tax rules.

Q: Is the labor to install a mobile office trailer, wire it, and add a security system taxable?
A: Yes. The ruling states that the labor to install the mobile office, install the wiring in the mobile office, and install the security system in the mobile office is all taxable.

Q: If temporary office trailers and landscaping work are billed together on one change order, is the whole thing taxable?
A: In this case, yes — the Comptroller found the total charge for the change order (covering the mobile office rental/installation/wiring/security plus the landscaping) appeared to be taxable, since the contractor had already acknowledged the landscaping labor and materials were taxable and the mobile office components were taxable as well.

Original ruling text

January 6, 1994

Dear *****:

I apologize for the delay in providing the written response to your
letter. You explained that your company is a general contractor with a
lump-sum (cost-plus with a guaranteed maximum) contract to remodel a
building for a customer.

You have received a change order to "Provide and install temporary
office facilities" that included renting and installing mobile offices
(trailers) on land next to the facility that you are remodeling. These
temporary offices will be used to office your customer's personnel
until the remodel is complete. The provision of the temporary offices
included installing electrical and security for them. The change order
requiring the temporary offices also included some landscape work that
will be provided when the temporary offices are removed. The amount
for the change order must be separately billed from the other work.

You understand that the labor and materials for the landscaping work
are taxable, but asked whether the labor for the other work, providing
and installing temporary office trailers, is taxable?

Effective October 1, 1993, mobile offices are treated as tangible
personal property and are no longer taxed as motor vehicles. This
means that the rental, sale, repair, etc., is taxed under sales tax.
The labor to install the mobile office, install the wiring in the
mobile office, and to install the security system in the mobile office
is also taxed.

The total charge for the change order appears to be taxable.

This opinion is based upon the facts presented. If there are
additional or different facts, this opinion may change. You may
also write to Tax Administration Division, Comptroller of
Public Accounts.

Sincerely,

Tax Administration Division

NOTE: Previous Accession Number 9402027L.2 and/or 9402027L