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Ezel / Tax Rulings / TX
TX 8509L0664E10 Sales and/or Use Tax (State,Local,MTA) 1985-09-17

Were backhoe-with-operator charges connected with flowline repairs taxable in Texas?

Short answer: They were taxable when charged by the flowline repair company as part of its repair service, but nontaxable when a third party provided only the backhoe and operator.

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This page answers the general question as of 1985. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1985
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official 1985 Texas Comptroller taxpayer-response letter distinguishing a backhoe-with-operator charge made by the company repairing a flowline from the same equipment-and-operator service furnished alone by a third party. It expressly says the ruling did not affect downhole-service policy and that different facts could change the opinion. Current flowline, oilfield, repair, equipment-with-operator, third-party, and sales-tax rules may differ, and STAR documents may no longer represent current policy even when not marked superseded. Letters on STAR can support detrimental reliance only for the taxpayer to whom the letter was directly issued under 34 Tex. Admin. Code Rules 3.1 and 3.10. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

When the company repairing a flowline charged for using a backhoe with an operator, the charge was part of the taxable repair service whether or not separately stated.

When a third party provided only a backhoe with an operator and no other services, the charge was nontaxable. The ruling expressly did not change the Comptroller's policy for downhole services.

Common questions

Was the repair company's backhoe charge taxable? Yes.

Did separately stating it change the result? No.

Was a third party's standalone backhoe-and-operator service taxable? No.

Did the ruling affect downhole services? No.

Citations and references

The reproduced letter cites no numbered statute or rule.

Source

Original ruling text

September 17, 1985

Dear ***:

Thank you for your letter concerning the taxability of backhoe rentals
used in conjunction with a repair to flowlines.

I will re-iterate our policy on these charges.

Charges for the use of a backhoe (with operators) by a company who is
doing the repairs to a flowline is considered part of the taxable service
whether separately stated or not.

Charges by a third party for the use of a backhoe (with operator) with no
other services provided will be considered non-taxable.

This ruling has no effect on our policy governing downhole services.

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

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