Was a charge to cut lumber for a customer taxable in Texas after October 2, 1984?

Plain-English summary

The Texas Comptroller said a charge to cut lumber for a customer was taxable after labor to repair, remodel, maintain, or restore tangible personal property became taxable effective October 2, 1984.

The result did not depend on when the cutting occurred. The charge was taxable whether the customer brought the lumber in to be cut or the seller cut it before the sale. The letter applied the same conclusion to cutting other tangible personal property.

What this means for you

Lumber sellers and fabricators

A separately identifiable charge to cut lumber was taxable under this 1984 letter, including cutting performed before the lumber was sold.

Repair and remodeling businesses

The letter treated cutting as taxable labor on tangible personal property after the October 2, 1984 change described by the Comptroller.

Accountants and tax professionals

Do not assume cutting is exempt merely because it occurs before delivery or as part of the sale. The letter says both customer-supplied and seller-supplied property received the same treatment.

Common questions

Q: Was cutting customer-owned lumber taxable?
A: Yes.

Q: Was the cutting charge taxable if the seller cut the lumber before selling it?
A: Yes.

Q: Did the letter limit its conclusion to lumber?
A: No. It said the charge to cut lumber, or any other personal property, was taxable.

Citations and references

• The letter identifies October 2, 1984 as the effective date when labor to repair, remodel, maintain, or restore tangible personal property became taxable; it does not provide a statute or rule number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8412L0602B12

Original ruling text

December 10, 1984

Dear **:

I am writing this letter to discuss an issue addressed in my letter
dated March 27, 1984, concerning the taxability of a charge for cutting
lumber for a customer.

In that letter I discussed the difference between processing and
remodeling for sales tax purposes. The 68th Legislature has decided
this issue for us. Effective October 2, 1984, the labor to repair,
remodel, maintain, or restore tangible personal property became
taxable. Therefore, the charge to cut lumber, or any other personal
property, is taxable. This is true whether the lumber is brought in to
be cut or if it is cut prior to the sale.

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,

F. Wayne McDonald
Tax Policy Section
Tax Administration Division