Was furnishing and finishing installation of a marble whirlpool tub a sale or an improvement to realty?

Plain-English summary

Company A manufactured or purchased marble whirlpool tubs, placed each tub and motor in the bathroom, returned after the purchaser's plumber and electrician completed their work, attached the motor to the tub, and sealed the tub skirt to the wall and floor. The Comptroller classified that arrangement as an improvement to realty rather than a sale and installation.

The described invoice listed only a "Marble whirlpool tub with system." If that billing document controlled, Company A was a lump-sum contractor. It paid tax to its supplier on the materials and did not charge tax to the customer.

Common questions

Did the customer's plumber and electrician change the classification? No; the stated overall transaction was still an improvement to realty. Was this a sale-and-installation transaction? No. Who paid tax under the stated lump-sum billing? Company A paid its supplier and charged no tax to the customer.

Citations and references

The letter says an appropriate rule was enclosed but does not identify or reproduce it.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8506L0648A09

Original ruling text

June 26, 1985

Dear ***:

Thank you for your recent letter which is restated in part with response
below.

SITUATION

Our client (Company A) is in the business of manufacturing
and installing marble vanity tops, shower walls and whirlpool
bath tubs. He purchases and manufactures various styles' of
whirlpool bath tubs which they install in bathrooms. Initially,
Company A simply delivers and places the bathtubs and motors
in the bathroom. The purchaser's plumber then attaches the
plumbing to the tub and the purchaser's electrician runs the
electricity to the motor. Company A returns at a later date
and attaches the motor to the tub and seals the skirt of the
tub to the wall and floor.

EXAMPLE BILLING

Marble whirlpool tub with system

QUESTIONS

1. Does the above situation and billing qualify as an improvement
   to realty or a sale and installation?

Response: An improvement to ready.

2. If the sale qualifies as a sale and installation what is the
   taxability to the seller using the above situation and example billing?

Response: This is not a sale and installation.

3. If the sale qualifies as an improvement to realty what is the taxability
   to the seller using the above situation and example Billing?

Response: If the billing were the controlling document, your client would
be acting as a lump sum contractor. He would pay tax to his supplier on the
purchase price of materials but would charge no tax to his customer.

I am enclosing an appropriate rule for your use.

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

If you have any questions or need more information, 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 Policy Section
Tax Administration Division