Is repairing semi trucks, heavy machinery, or overseas shipping containers taxable in Texas, and does having an ICC number change anything?

Plain-English summary

A repair business asked the Comptroller to walk through the sales tax treatment of repairing several categories of equipment: semi tractors/trailers over 26,000 lbs., overseas shipping containers, chassis trailers built to carry those containers, commercial trucks both under and over 26,000 lbs. (including dump trucks), and heavy machinery like bulldozers, forklifts, and backhoes. The taxpayer also asked whether having an ICC (Interstate Commerce Commission) number on a vehicle changed the tax treatment.

The Comptroller's answer: an ICC number has no effect on taxability. For ordinary motor vehicle and heavy machinery repairs (semi tractors/trailers, commercial trucks of any weight class, bulldozers, forklifts, backhoes), the general rule under Rule 3.90 applies — labor is not taxable, materials are taxable. How the materials tax actually gets collected depends on the contract type:

• Lump-sum contract: the repairman owes tax on the cost of all materials incorporated into the repair; no tax is collected from the customer on any part of the bill.
• Separated contract: the repairman buys materials tax-free from vendors using a resale certificate, then collects tax from the customer on just the materials portion of the bill (not the labor portion).

Overseas shipping containers and their chassis trailers get different treatment. Under Rule 3.292, the total charge to repair general tangible personal property (which would include the container/chassis) is taxable — no labor/materials split. But there's a specific carve-out: repairs to marine cargo containers themselves are exempt under Rule 3.297(b)(2)(A). The letter groups "chassis trailers (for overseas containers)" with the general motor-vehicle-repair answer (labor untaxed, materials taxed), rather than with the marine-container exemption — so the exemption is read narrowly to the container itself, not its transport chassis.

What this means for you

Truck, trailer, and heavy equipment repair shops

Don't assume an ICC number changes your tax obligations — it doesn't. Structure your invoices as lump-sum or separated depending on whether you want to absorb materials tax yourself or pass it through to the customer on a stated materials line; either way, labor stays untaxed and materials are taxed somewhere in the chain.

Marine/intermodal container repair businesses

Repairs to the marine cargo container itself are exempt from Texas sales tax under Rule 3.297(b)(2)(A) — but don't extend that exemption to repairs on the chassis trailer used to transport the container, which the Comptroller treats under the ordinary motor-vehicle-repair rule instead (labor untaxed, materials taxed).

Accountants and tax professionals

This letter is a clean, multi-category reference point distinguishing Rule 3.90 (motor vehicle/machinery repair — labor/materials split) from Rule 3.292 (general TPP repair — total charge taxable) from the Rule 3.297(b)(2)(A) marine cargo container exemption — useful when a client's fleet includes a mix of trucks, machinery, and intermodal equipment.

Common questions

Q: Does having an ICC number make vehicle repairs tax-exempt?
A: No. The Comptroller confirmed an ICC number does not affect the taxability of repair services on any of the vehicle or equipment types addressed.

Q: Is labor taxable when repairing a semi truck or bulldozer?
A: No — labor to repair motor vehicles and heavy machinery is not taxable. Materials used in the repair are taxable, collected either from the repairman (lump-sum contract) or from the customer on a separated materials charge.

Q: Are overseas shipping container repairs taxable?
A: The general rule for repairing tangible personal property (Rule 3.292) would tax the total charge, but repairs to marine cargo containers specifically are exempt under Rule 3.297(b)(2)(A).

Q: What about the chassis trailer that carries the container?
A: The letter treats chassis trailer repairs the same as ordinary motor vehicle repairs (labor untaxed, materials taxed) — the marine cargo container exemption doesn't extend to the chassis.

Q: Can I rely on this letter for my own repair shop?
A: Not directly. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10). Confirm your own equipment categories and contract structure with a tax professional.

Citations and references

Statutes and rules:

• Comptroller Rule 3.90 (motor vehicle repair — labor/materials treatment)
• Comptroller Rule 3.292 (repair of tangible personal property — total charge taxable)
• Comptroller Rule 3.297(b)(2)(A) (marine cargo container repair exemption)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200103115L

Original ruling text

March 21, 2001

Dear **:

This is in response to your recent letter concerning the taxability of repairs
to motor vehicles and heavy machinery. Your questions are restated below
followed by my response.

1. With an ICC number, is the repair of the following vehicles taxable in your
   state: a. Semi tractor and trailers over 26,000 lbs. Response: The taxability
   of a motor vehicle is not affected because a vehicle has an ICC number. The
   labor to repair a motor vehicle is not taxable. The materials are taxable. How
   the tax is paid or collected is determined by the type of contract, i.e.,
   lump-sum or separated.

Under a lump-sum contract, the repairman owes tax on his cost of all
incorporated materials. Tax will not be collected from the customer on any
portion of the lump-sum bill.

Under a separated contract, the repairman issues vendors a resale certificate
in lieu of tax on the incorporated materials and then collects tax from his
customer on the materials portion of the bill. Tax is not collected on the
labor portion of the bill. See Rule 3.90.

b. Overseas containers. Response: The total charge to repair tangible personal
property is taxable. See Rule 3.292. Repairs to marine cargo containers would
be exempt per Rule 3.297(b)(2)(A).

c. Chassis trailers (for overseas containers). Response: See answer to question

1. a.

d. Commercial trucks under 26,000 lbs. Response: See answer to question 1. a.

e. Commercial trucks non-semi over 26,000 lbs. (dump trucks). Response: See
answer to question 1. a.

f. Heavy machinery on and off load (bulldozers, fork lifts, backhoe. Response:
See answer to question 1. b.

2. If tax is applicable, is it on parts, labor, or both? Response: See answers
   above. There are no special forms or certificates required for the repair of
   motor vehicles or tangible personal property.

The State Tax Automated Research (STAR) system, which provides viewing and
downloading of our rules, the Tax code, edited letter rulings, hearings,
Attorney General Opinions, etc., may be accessed on the Internet at
.

This opinion is based on the facts presented. Other facts, though similar, may
provide a different result. I hope this information answers your questions.

If you have any questions or need more information, I'll be glad to help you.
You may call me toll-free at 1-800-531-5441, extension 5-0330. The direct line
is 512/475-0330. You may also write to Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Bettie Peterson
Tax Policy Division