🧪 TEST MODE ACTIVE Use test card: 4242 4242 4242 4242
Ezel / Tax Rulings / TX
TX 8611L0772A14 Sales and/or Use Tax (State,Local,MTA) 1986-11-24

How did Texas reclassify motor-vehicle undercoating after an administrative hearing had treated it as processing for earlier audit years?

Short answer: The processing classification remained correct for the 1979–1983 audit period, but effective February 12, 1986 Texas treated undercoating as protection or maintenance under Rules 3.292 and 3.312.

Apply this to your situation

This page answers the general question as of 1986. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1986
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 1986 Texas Comptroller letter explains a classification change after Hearing No. 16,000: processing for the 1979–1983 audit period, but protection or maintenance beginning February 12, 1986. It does not separately state the resulting tax computation. Undercoating, protection, maintenance, processing, repair, administrative-hearing, and local-tax rules may have changed. STAR documents may no longer represent current policy even when not marked superseded. Identities 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

The Texas Comptroller said the administrative law judge correctly treated the taxpayer's undercoating as processing for the January 1979 through June 1983 audit period.

The classification changed effective February 12, 1986. From that date, undercoating was considered protection or maintenance under Rules 3.292 and 3.312 rather than processing under Rule 3.300.

What this means for you

The letter preserves the old classification for the closed audit period while applying the newer rule prospectively. It does not itself calculate the tax due under the protection-or-maintenance classification.

Common questions

Was the earlier processing classification wrong? No, not for the audit period ending June 1983.

When did the classification change? February 12, 1986.

What was the new classification? Protection or maintenance.

Citations and references

  • Comptroller Rule 3.300 — the earlier processing rule.
  • Comptroller Rule 3.292 — repair and maintenance rule applied after the change.
  • Comptroller Rule 3.312(c) — protection and maintenance provision effective February 12, 1986.

Source

Original ruling text

November 24, 1986

Gentlemen:

You recently received the final decision in Hearing No. 16,000. That hearing
covered the periods from January 1, 1979 through June 30, 1983. In the hearing
decision the Administrative Law Judge ruled that your undercoating activities
were processing activities. That was correct for the period of time covered by
the audit.

This letter is being written to let you know that as of February 12, 1986
undercoating activities are considered to be protection or maintenance. Rather
than being covered by Rule 3.300, these activities are now covered by, Rules
3.292 and 3.312. Please refer to section (c) of Rule 3.312 which became
effective February 12, 1986.

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 512/463-4633.

Sincerely,

(Mrs.) Wanda Hutcheson
Tax Administration Division

Get today's answer for your situation

You just read a 1986 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.