How does Texas sales and use tax apply to the packing supplies, equipment, and moving vans a moving company uses for local, intrastate, interstate, and international moves?

Plain-English summary

This letter is a response from the Texas Comptroller's Sales Tax Policy section (written by John Fitzgibbons, addressed to audit supervisor Terry Zaruba) analyzing how sales and use tax applies to a moving company's supplies, equipment, and moving vans. The taxpayer moves household goods locally, intrastate, interstate, and internationally from a Texas location. The Comptroller frames the analysis around two key facts: how the mover purchases its supplies (tax paid, or tax-free with a resale certificate) and how it bills its customers.

Supplies the mover keeps possession of (blankets, padding, dollies, piano movers, etc.):

• If these items are shipped into Texas or the mover takes delivery of them in Texas, the mover should pay or accrue tax on them.
• If the mover takes possession of the items outside Texas and then brings them into Texas, Texas use tax is due on those items — but the mover can take credit for any sales or use tax legally paid to another state.

If the mover buys supplies tax paid (and the cost is reflected in what it bills the customer):

• Interstate, intrastate, and local moves: no additional tax is due — the customer has effectively already paid through the tax-paid cost built into the bill.
• International moves: sales tax would not be due on these moves, so the mover can take a credit for the tax it paid on the supplies; this also applies to pass-through international moves.
• Sale of packing supplies (sold outright to the customer): sales tax should be collected on the sale, and the mover can take credit for sales tax it already paid on those supplies.

If the mover buys supplies tax-free using a resale certificate:

• Interstate, intrastate, and local moves: the mover should accrue and pay sales tax itself on its use of the supplies.
• International moves: sales tax would not be due, and this also applies to pass-through moves.
• Sale of packing supplies: sales tax should be collected on the sale.

Packing supplies loaded on trailers: taxability is determined by how the supplies are actually used — local, intrastate, or interstate — following the same rules described above.

The letter cross-references a related ruling, noted as 9505387L.

What this means for you

Moving companies operating in Texas

Your tax treatment for packing supplies and equipment hinges on two things: (1) whether you paid tax when you bought the supplies or bought them tax-free with a resale certificate, and (2) the type of move (local/intrastate/interstate vs. international) or whether you're selling the supplies outright to the customer. Track your purchase method and how each move is billed so you can apply the right treatment.

Movers that pay sales tax on supplies up front

If you already paid tax on supplies and the tax-paid cost is passed through to the customer, you don't owe additional tax on interstate, intrastate, or local moves. But because international moves aren't subject to Texas sales tax, you can take a credit for the tax you already paid on supplies used in those moves.

Movers that use a resale certificate to buy supplies tax-free

You must self-assess (accrue) and pay sales tax on supplies used in interstate, intrastate, and local moves, since you didn't pay tax at purchase. No tax is owed on supplies used in international moves.

Movers who sell packing supplies directly to customers

Regardless of how you purchased the supplies, if you sell packing supplies outright (rather than using them in performing the move), you must collect sales tax on that sale — taking credit for any tax you already paid when you bought them.

Movers bringing supplies into Texas from another state

If you take possession of moving supplies outside Texas and then bring them into the state, Texas use tax applies, but you can credit any sales or use tax you legally paid to the other state.

Common questions

Q: Does a moving company owe tax on blankets, dollies, and padding it uses on jobs?
A: Yes, generally. If those items are shipped into Texas or the mover takes delivery of them in Texas, the mover should pay or accrue tax on them.

Q: What if the mover takes possession of supplies outside Texas and brings them into the state?
A: Texas use tax is due on those items, but the mover can take credit for any sales or use tax legally paid to another state.

Q: Is tax owed on supplies used for international moves?
A: No — sales tax is not due on international moves (including pass-through international moves), so if the mover paid tax on those supplies, it can take a credit.

Q: If a mover buys supplies with a resale certificate, does it ever pay tax on them?
A: Yes. For interstate, intrastate, and local moves, the mover must accrue and pay sales tax on its use of resale-certificate supplies. Only international moves are exempt from this.

Q: What if the mover sells packing supplies directly to the customer instead of using them on the move?
A: Sales tax should be collected on that sale of packing supplies, regardless of whether the mover bought them tax paid or under a resale certificate (with credit taken if tax was already paid on purchase).

Q: How is tax determined for packing supplies loaded onto trailers?
A: Taxability follows how the supplies are actually used — local, intrastate, or interstate — under the same rules that apply to other supplies.

Citations and references

No statutes, regulations, or case law were cited in this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9505L1361A01

Original ruling text

Date: May 15, 1995

To: Terry Zaruba, Supervisor, ** Audit

From: John Fitzgibbons, Sales Tax Policy, Tax Administration, **

RE: Taxability of moving supplies, equipment and moving vans.

The taxpayer is a moving company that provides moving services locally,
intrastate, interstate and internationally from its location in **.

Significant considerations are how does the taxpayer purchase its supplies
either for resale or tax paid and how does it bill its customers.

Supplies that the taxpayer retains possession

For items [blankets, padding, dollies, piano movers, etc.], that the mover has
shipped into Texas or takes delivery of in Texas, the taxpayer should pay or
accrue tax on these items. I assume that the taxpayer does not bring items into
Texas, store them and ship them out of Texas without any use.

When the taxpayer takes possession of these items outside of Texas and then
brings them into Texas, Texas use tax is due on these items. The taxpayer can
take credit for any legally paid sales or use tax to another state.

Taxpayer purchases supplies tax paid

1) Interstate, intrastate and local moves - The taxpayer bills the customer and
the taxes have been paid.

2) International moves - Sales tax would not be due on these moves, so the
taxpayer could take credit for taxes paid. This would also apply to pass-thru
international moves.

3) Sale of packing supplies - Sales tax should be collected on sales of packing
supplies and credit taken for sales tax paid.

Tax purchases supplies with a resale certificate

1) Interstate, intrastate and local moves - The taxpayer should accrue and pay
sales tax on supplies use

2) International moves - Sales tax would not be due on these moves. This would
also apply to pass-thru moves.

3) Sale of packing supplies - Sales tax should be collected on sales of packing
supplies.

Packing supplies on trailers

Taxability of supplies would be determined by use - local, intrastate or
interstate as previously discussed.

NOTE: 9505387L