Are vibrating shaker screens used at a sand, gravel, and aggregate processing plant exempt from Texas sales tax as manufacturing equipment?

Plain-English summary

This letter from the Texas Comptroller's Tax Policy Division responds to a question about whether vibrating shaker screens used in an aggregate materials manufacturing plant qualify for the sales tax exemption available to manufacturing equipment. The taxpayer had explained that the shaker screens "separate the material being processed through stratification, creating more than one product by separation."

The Comptroller's answer turns entirely on where in the production line the screens are used, relative to when the aggregate material undergoes a physical or chemical change:

• Before any physical or chemical change (such as crushing) has been made to the aggregate material: shaker screens used at this stage are not part of the manufacturing process. They're used in preparation for manufacturing, which is specifically excluded from the manufacturing exemption. The sales price of screens used this way is taxable.
• After physical or chemical changes (such as crushing) have been made to the aggregate material: shaker screens used at this later stage are considered part of the manufacturing process itself. The sales price of screens used this way is exempt, provided a properly completed exemption certificate is issued in place of paying the tax.

The letter notes this opinion is based on the facts presented and could change if the facts are different.

What this means for you

Aggregate, sand, gravel, and concrete plant operators

Whether your shaker screens (or similar sorting/separating equipment) are taxable or exempt depends on their position in your process flow relative to crushing or other physical/chemical processing — not simply on the fact that the equipment "separates" or "processes" material in some general sense. Screens used to sort raw, unprocessed material before crushing are taxable preparation equipment. Screens used to sort material after it has been crushed are exempt manufacturing equipment.

Business owners buying or leasing screening equipment

If you want to claim the manufacturing exemption on shaker screens or similar equipment, be prepared to document exactly where in your production line the equipment operates, and issue a properly completed exemption certificate in lieu of tax for equipment used after the crushing/processing step.

Accountants and tax professionals

When advising aggregate-industry clients, map out the physical process flow (raw material intake → crushing/processing → sorting/screening → finished product) and classify each piece of equipment's tax treatment based on its position relative to the first physical or chemical change to the material, not by equipment type alone.

Common questions

Q: Are all shaker screens at an aggregate plant exempt as manufacturing equipment?
A: No. Only shaker screens used after the aggregate material has undergone a physical or chemical change, such as crushing, are exempt. Screens used before that point are taxable.

Q: Why are pre-crushing shaker screens taxable if they "process" the material?
A: Because they are used in preparation for the manufacturing process, and preparation equipment is specifically excluded from the manufacturing exemption, even though it separates or sorts material.

Q: What does a plant operator need to do to claim the exemption on qualifying screens?
A: Issue a properly completed exemption certificate in lieu of paying tax on the sales price of screens used after the material has been crushed or otherwise physically/chemically changed.

Q: Could this answer change?
A: Yes. The letter states the opinion is based on the facts presented, and it may change if there are additional or different facts.

Citations and references

No specific statutes or regulations are cited in the body of 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/9508L1364G13

Original ruling text

August 16, 1995

Dear ****:

I am responding to your letter asking whether vibrating shaker screens used in
an aggregate materials manufacturing plant qualified for exemption from sales
tax as manufacturing equipment. You stated, "the purpose of the shaker screens
in a plant is to separate the material being processed through stratification,
creating more than one product by separation."

Shaker screens used in the line of operations before any physical or chemical
changes (crushing, etc.) have been made to the aggregate materials are not a
part of the manufacturing process. These screens are taxable because they are
used in preparation forthe manufacturing process and are specifically excluded
from the exemption. The sales price of screens used in this manner is taxable.

Shaker screens used in the line of operations after physical or chemical
changes (crushing, etc.) have been made to the aggregate materials are included
in the manufacturing process. The sales price of screens used in this manner
is exempt when a properly completed exemption certificate is issued in lieu of
the tax.

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 Policy Division
Tax Administration Division

NOTE: Previous Accession Number 9508379L