How did Texas tax monument builders that installed headstones or vaults compared with sellers that provided no installation?

Plain-English summary

The Texas Comptroller said monument builders acted as contractors when they installed headstones, vaults, and similar items.

For a lump-sum improvement-to-realty contract, the monument builder had to pay tax to its supplier on taxable items incorporated into the realty. It could not pass that tax to the customer as a separately identified tax, and the client described in the letter did not need a sales-tax permit for that activity.

When the monument builder sold a product without installation, the full charge was taxable. In that situation, the seller needed a sales-tax permit and had to collect and remit the tax.

What this means for you

Monument builders

Installation changed the business's role from retail seller to contractor under the facts of this letter.

Sellers of headstones and vaults

A product-only sale was taxable in full and carried ordinary permit, collection, and remittance duties.

Accountants and tax professionals

Separate installed lump-sum contracts from uninstalled retail sales because the point of tax collection differed.

Common questions

Q: Was an installed headstone treated as a retail sale?
A: No. The letter treated the installer as a contractor improving realty.

Q: Who paid tax on materials under the lump-sum installation contract?
A: The contractor paid the supplier on taxable items incorporated into the realty.

Q: Was a monument sold without installation taxable?
A: Yes. The entire charge was taxable, and the seller needed a permit to collect and remit the tax.

Citations and references

• The letter 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/8411L0632C10

Original ruling text

November 29, 1984

Dear ***:

Thank you for your letter of November 19, 1984 requesting information
on COMPANY ABC.

Monument builders are contractors when they install head stones, vaults
and similar items. A lump-sum contractor who performs an improvement
to realty must pay tax to the supplier on taxable items being
incorporated in realty. Tax may not be passed, as tax, to the customer.
Your client is not required to have a sales tax permit.

When a monument builder sells his product and no installation is provided,
the total charge for his product is taxable. In this situation, your client
would be required to have a sales tax permit, collect and remit the tax to
the Comptroller.

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

If we can be of further help, please call us at 1-800-252-5555 toll free from
anywhere in Texas. You may write us at the Tax Administration Division.

Sincerely,

Tax Administration Division