How did Texas tax aircraft repair labor and parts under lump-sum versus separately stated repair bills?

Plain-English summary

Labor for aircraft repair, maintenance, restoration, and remodeling was not taxable when performed by certificated airframe or power-plant mechanics or certificated repair stations.

• A lump-sum repairer was the consumer of the parts and paid tax to the supplier on the repairer's parts cost.
• A repairer that separately stated parts and labor acted as a retailer and collected tax on the parts price, but not on installation and repair labor.

What this means for you

Aircraft repairers had different parts-tax duties depending on whether the invoice separated parts from labor.

Common questions

Q: Was qualifying aircraft repair labor taxable? A: No.

Q: Who paid tax in a lump-sum repair? A: The repairer paid tax on its cost of the parts.

Q: What was taxed on a separated invoice? A: The parts price, not the installation and repair labor.

Citations and references

The letter does not cite a statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8409L0585E13

Original ruling text

September 4, 1984

Dear **:

Thank you for your letter for clarification of the changes on the tax of
repair, remodeling, maintenance and restoration services.

Labor for repairs, maintenance, restoration and remodeling of aircraft,
aircraft parts and accessories performed by certificated airframe or
power plant mechanics or certificated repair stations is not taxable.

The new law on taxable services will not change the way you have been
handling the sales tax on repairs. If you do not separate the price for
parts from the price for labor, you are a lump-sum repairmen and the
consumer of the parts used is the repair. As the consumer you owe tax
on your cost of the parts and should pay the tax to your supplier when
you buy the parts.

If you separately state the price of parts from the price of labor, then
you operate as a retailer who installs the parts and must collect tax on
the price for the parts but not the labor for installation and repair of
the aircraft parts.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/475-1931.

Sincerely,

Tom Soto
Tax Administration Division