Was an armored-car provider's entire charge taxable when it arranged New York pickup, commercial air transport, and final Texas delivery?

Plain-English summary

The provider arranged armored pickup in New York, unaccompanied commercial-airline transport to Texas, and final armored delivery to the Texas customer. Although the air charge could be separately identified, the provider billed the customer for the complete movement.

The Comptroller said the entire charge—including New York armored transport, commercial air transport, and Texas armored delivery—was subject to use tax. The rate was determined by the delivery point.

If the customer instead contracted with and paid the airline directly, only the armored transportation in New York and Texas was subject to Texas use tax.

What this means for you

The historical result depended on who sold the air segment. Separately stating the provider-arranged airline cost did not remove it from the taxable complete service; a direct customer-airline contract did.

Common questions

Was the separately identifiable air segment exempt when the armored carrier arranged it? No.

What parts were taxed in that arrangement? The New York armored leg, air leg, and Texas armored leg.

How was the rate determined? By the point of delivery.

What if the customer contracted with the airline directly? The air portion was outside the armored provider's taxable charge, while both armored legs remained taxable.

Citations and references

• No statute or rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8709L0832A06

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS

STATE OF TEXAS

AUSTIN, 78774

September 16, 1987

Dear **:

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

** provides armored car services within the state of Texas, and we agree that all such service is taxable. However, in addition to ground transportation, **'s arranges for the delivery of valuables into the state by way of commercial airlines. For example, a **'s armored car in New York City would transport valuables to the cargo area of a commercial airline. The container holding the valuables would then be loaded into the cargo hold of the airplane. The airplane would then fly from New York to Texas. No **'s employee or security of any kind would accompany the airplane on its flight to Texas. Once in Texas, the valuables would be loaded into a **'s armored car and delivered to its destination in Texas.

We submit that the armored car ground transportation in Texas from the airport to the customer's premises is subject to the sales tax. However, an issue arises with respect to the air transportation in the commercial airline. It is our contention that the air transportation portion of the service provided to our customer via the commercial airline is not a provision of a "security service" because no **'s employee is present during the flight and no security type of service is being applied. Although the bill sent to our customer would include charges for the entire service from pick up, for example, in New York City, to the final destination in Dallas, Texas, the air transportation portion of the bill can be readily identified and billed as a separately stated amount to our customer.

Response: The entire charge, including armored transportation in New York, the charge for air transportation to Texas and the armored transportation to the customer, is subject to use tax. The tax rate would be determined based on point of delivery.

If the customer were to contract with the airline directly and pay them separately, only the armored transportation in New York and in Texas would be subject to Texas use tax.

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 me at 1-800-252-5555 toll free from anywhere in Texas. The regular number is 512/463-4600. You may write me at the Tax Policy Division.

Sincerely,

Al Van Allen

Tax Policy Division