Was a separately stated charge for laboratory analysis of diesel-engine lubricating oil taxable in Texas?

Plain-English summary

An internal Texas Comptroller Tax Policy memo said a separately stated fee for laboratory analysis of diesel-engine lubricating oil was not taxable.

The taxpayer sold and serviced heavy equipment and large trucks. Its written laboratory report identified impurities or contaminants in engine-oil samples. The nontaxable answer applied in all three described settings: when the customer sent in a sample for preventive maintenance, when the vehicle was in the shop for repairs unrelated to the engine, and when the analysis was used during engine repairs to diagnose a problem or contributing factor.

The condition stated in the answer was that the laboratory-analysis charge remain separately stated.

What this means for you

Heavy-equipment service businesses

Under this internal 1984 guidance, a separately billed diagnostic oil-analysis service was not absorbed into taxable repair work.

Laboratories

The memo addresses diesel-engine lubricating-oil analysis only. It does not decide the other testing categories listed in STAR metadata.

Accountants and tax professionals

This is internal historical guidance, not reliance-protected taxpayer advice. Verify current testing and repair-service rules.

Common questions

Q: Was standalone preventive-maintenance oil analysis taxable?
A: No, when separately stated.

Q: Was analysis during unrelated repairs taxable?
A: No, when separately stated.

Q: Was diagnostic analysis during engine repair taxable?
A: No, when separately stated.

Q: Did the body decide semiconductor, metal, or weld testing?
A: No.

Citations and references

• The memorandum cites no statute or administrative 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/8410L0598E06

Original ruling text

DATE: October 24, 1984

TO: Royce Manning, ** Field Office **

FROM: Eddie Washington, Tax Policy

SUBJECT: Taxability of Laboratory Analysis of Engine Oil

SITUATION: The taxpayer is in the business of selling and servicing heavy
equipment and large trucks. The engines on the equipment and trucks are
mainly diesel fuel powered.

The taxpayer provides a service of performing laboratory analysis on
diesel engine lubricating oil upon customer request. The lab analysis is
a written report showing any impurities or contaminates and identifying
such.

The service is normally provided in three methods:

1. Customer draws an oil sample from the engine and sends or carries the
   sample to the taxpayer for a lab analysis. This is used mainly in
   preventive maintenance.

2.Customer has the equipment or truck in the taxpayer's shop for repairs
unrelated to the engine. The customer requests an analysis of the engine oil.

3.Customer has the equipment or truck in the taxpayer's shop for engine
repairs. A lab analysis is made of the engine oil, sometimes at customer's
request and sometimes at the taxpayer's request to be used diagnosis of
problem or contributing factor to the problem.

In all instances, a separately stated fee for the lab analysis is indicated
on customer's invoice from the taxpayer.

QUESTION: Is the fee charged by the taxpayer for the laboratory analysis a
taxable item in any or all instances?

ANSWER: No, the charge for testing the engine oil is not taxable in any of
the instances as long as the charge for the analysis is separately stated.