When were roustabout or work-as-directed company charges taxable repairs, fabrication, or property sales rather than nontaxable supervised personnel services?

Plain-English summary

A service company independently responsible for producing a repair, fabrication, software, or other specific result had to collect tax on the full charge. Personnel working as continuously supervised quasi-employees might instead provide a nontaxable personnel service.

Invoice labels or segmentation did not decide taxability. The actual work relationship and transaction did.

Independent taxable work

Fabrication included constructing by combining or assembling, such as assembling machinery, making goods from customer-supplied material, or painting new customer-owned property. Repair included restoring, renovating, or remedying tangible personal property.

When the service provider used its own expertise and was independently responsible for the customer's specified result, the entire sale, fabrication, or repair charge was taxable regardless of when requested or how billed.

The ruling also treated computer software as tangible personal property under the law then in effect.

Potential quasi-employee relationship

Tax might not be collected when the customer hired personnel to supplement its own workforce and continuously directed their work rather than buying an independent result.

Relevant factors included whether the customer:

• integrated the workers with regular employees;
• controlled assignments, priorities, hours, lunch, and breaks;
• provided facilities and equipment;
• trained or supervised the workers; and
• provided employee-like fringe benefits.

No single label controlled; the agreement and actual facts had to establish the relationship.

Records and shared liability

Providers performing taxable and nontaxable work needed detailed personnel records to support the taxable portion. If tax on a taxable transaction was not collected and remitted, both provider and customer remained liable until it was paid.

Common questions

Q: Could separately billing labor make an independent repair nontaxable?

A: No.

Q: Was every work-as-directed arrangement nontaxable?

A: No. The quasi-employee result depended on supervision and integration facts.

Q: Did the ruling exempt all repairs returned out of state?

A: It described a specific exclusion when repaired property was returned by common carrier or the repair dealer's vehicle; other conditions still mattered.

Citations and references

• La. R.S. 47:301(12)-(14) and 47:301(16) — sale, sales price, taxable services, repair, and tangible-property definitions
• La. R.S. 47:302, 47:321, and 47:331 — sales, use, lease, rental, and service tax provisions
• Black's Law Dictionary repair definition cited in the ruling
• LAC 61:III.101.C — Revenue Ruling authority and reliance statement

Source

• Landing page: Louisiana Department of Revenue Policies
• Original PDF: LA Revenue Ruling 01-010

Original ruling text

Revenue Ruling
No. 01-010
October 10, 2001
Sales and Use Tax
Sales, Repair Services, Fabrications made by Roustabout, “Work as Directed”
Service Providers may be Sales Taxable
The purpose of this Revenue Ruling is to clarify the state sales collection and remittance liability
of general service companies whose personnel, often called “roustabouts”, provide a variety of
services while temporarily “working as directed” by customers of the service companies.
Louisiana Revised Statute Title 47, Sections 302(A)(1) and (A)(2), 321(A)(1) and (A)(2), and
331(A)(1) and (A)(2) authorize the levy of sales tax or use tax on the sales price or cost price of
each item or article of tangible personal property when sold at retail, used, consumed,
distributed, or stored for use or for consumption in Louisiana. La. R.S. 47:302(B), 321(B) and
331(B) levy the sales tax on the lease or rental within Louisiana of each item or article of
tangible personal property. Similarly, La. R.S. 47:302(C), 321(C), and 331(C) levy the sales tax
on all sales of services, as defined in the law.
In contrast to the broad tax imposition on the sale or use of tangible personal property, sales tax,
as applied to services, is levied only on the eight types of services that are enumerated in the law.
These include the furnishing of sleeping rooms by hotels; the furnishing of vehicle parking
services; the furnishing of admissions to places of amusement and access to amusement,
entertainment, athletic or recreational facilities; the furnishing of cold storage space and the
furnishing of the service of preparing tangible personal property for cold storage; the furnishing
of telecommunication services; the furnishing of printing services; the furnishing of laundry
services; and the furnishing of repair services to tangible personal property.
When a seller or service provider engages in a transaction for the sale, lease, or rental of tangible
personal property, or for the furnishing of taxable services, the sales tax must be collected and
remitted. Each transaction for the sale, use, lease, or rental of tangible personal property is
taxable. The only exceptions are those transactions that are specifically exempted or excluded by
law.
General service companies whose personnel work as directed by customers are liable for the
collection and remittance of the state sales tax on all taxable transactions, the same as other
dealers. These businesses should be particularly aware that taxable transactions include both the
fabrication and repair of tangible personal property by their personnel for customers.
Definitions of terms
•

“Fabrication”: This term is not defined in the sales tax law. In its administration, the
department follows the generally accepted meaning of the term: to construct by combining
or assembling. The term encompasses a variety of commercial services, including, for
example, the assembly of machinery that is sold in an unassembled state, the making of

issued under Section 61:III.101(C) of the Louisiana Administrative Code to apply principles of law to a
specific set of facts. A Revenue Ruling does not have the force and effect of law and is not binding on the
public. It is a statement of the department's position and is binding on the department until superseded or
modified by a subsequent change in statute, regulation, declaratory ruling, or court decision.

Revenue Ruling No. 01-010
Page 2 of 3

window draperies or clothing using fabrics supplied either by the fabricator or the customer,
and the painting of new not previously painted customer-owned tangible personal property.
•

“Repair”: “to mend, remedy, restore, renovate. To restore to a sound or good state after
decay, injury, dilapidation, or partial destruction.” – Black’s Law Dictionary, 6th Ed. 1990,
pg. 1298

•

“Sale”: “any transfer of title or possession, or both, exchange, barter, conditional or
otherwise, in any manner or by any means whatsoever, of tangible personal property, for a
consideration, and includes the fabrication of tangible personal property for consumers who
furnish, either directly or indirectly, the materials used in fabrication work, and the
furnishing, preparing or serving, for a consideration, of any tangible personal property,
consumed on the premises of the person furnishing, preparing or serving such tangible
personal property. A transaction whereby the possession of property is transferred but the
seller retains title as security for the payment of the price shall be deemed a sale.” – La. R.S.
47:301(12)
“Sales Price”: (in pertinent part) “the total amount for which tangible personal property is
sold, less the market value of any article traded in including any services, except services for
financing, that are a part of the sale valued in money, whether paid in money or otherwise,
and includes the cost of materials used, labor or service costs, except costs for financing
which shall not exceed the legal interest rate and a service charge not to exceed six percent
of the amount financed, and losses; provided that cash discounts allowed and taken on sales
shall not be included, nor shall the sales price include the amount charged for labor or
services rendered in installing, applying, remodeling or repairing property sold.” – La. R.S.
47:301(13)
“Tangible Personal Property”: (in pertinent part) “includes personal property which may
be seen, weighed, measured, felt or touched, or is in any other manner perceptible to the
senses.” – La. R.S. 47:301(16)

•

•

When is tax collection required?
The collection and remittance of sales taxes is required on all sales of Tangible Personal Property
and taxable services. The tax must be collected and remitted on the “Sales Price" of the property.
Computer software is considered to be Tangible Personal Property. Tax must be collected on any
computer software.
Both the repair and routine servicing of all kinds of Tangible Personal Property are considered
taxable repair services. All repairs performed within Louisiana to Tangible Personal Property are
taxable, unless a statutory exemption or exclusion applies to a specific transaction. One
exclusion applicable to repairs is provided by La. R.S. 47:301(14)(g)(i) for repair services that
are rendered to Tangible Personal Property that is returned to a customer in another state by
common carrier or by the repair dealer's vehicle.
When an individual or company is hired to independently perform a repair to or fabrication of
Tangible Personal Property, or to develop and provide property to be sold to the customer such
as computer software, and is expected to use its expertise to achieve a specific result desired by
the customer independently of any supervision or advice given by customer personnel in the
achievement of those results, the entire charge for the sale, repair or fabrication is subject to the

Revenue Ruling No. 01-010
Page 3 of 3

sales tax. The tax will be due, regardless of whether the sale, fabrication or repair is requested
prior to or during the independent company's period of service to the customer, and regardless of
how the various elements of the independent company's charges are segmented on the billing to
the customer. The sales tax liability on a transaction is not determined by the method of billing.
Very often general service providers furnish both taxable and non-taxable services. These
companies must prepare and retain work records for their service personnel that are sufficiently
detailed to enable proper tax collection on the taxable portion of the sales and services that their
personnel provide.
When tax might not be collectible
The tax liability may be different when a general service provider or other company at armslength with the customer is hired to furnish personnel to work as directed under the continuing
direct supervision of the customer, where the company's personnel are intended to supplement
the expertise of the customer's regular employees, and are not independently responsible for the
achievement of a specific results. Depending upon the facts surrounding each transaction, the
personnel of the service provider might, for sales tax purposes, become leased or “quasi
employees” of the customer. If the facts surrounding the transactions show that this type of
relationship has been established in the agreement between the parties, tax collection might not
be required. Factors that indicate this type of relationship include:

•

The customer assimilates the personnel of the independent company into the corps of the
customer's own employees, having them perform all or some of the functions performed by
regular employees.

•

The customer determines the daily routine of the personnel of the independent company,
including assignment, priorities, starting and ending work times, lunch times, and breaks.

•

In the performance of their tasks, the personnel of the independent company use the
customer's facilities and equipment.

•

The personnel of the independent company receive training and/or supervision from the
customer or the customer's personnel.

•

The customer provides all or some of the same fringe benefits to the personnel of the
independent firm that are provided to employees, including paid vacations, sick pay,
pensions, and bonuses.

In any case where personnel of the general service providers engage in taxable transactions, the
service providers are liable for the collection and remittance of the tax and their customers are
liable for the payment of the tax. If tax is not collected properly when invoices for services are
rendered, and remitted to the Department of Revenue on or before the deadlines provided by law,
both service providers and their customers will remain liable for the tax until it is paid.
Cynthia Bridges
Secretary
By:

Raymond Tangney
Senior Policy Consultant
Policy Services Division