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Ezel / Tax Rulings / TX
TX 9103L1131E03 Sales and/or Use Tax (State,Local,MTA) 1991-03-15

Was upholstery labor included in the taxable sales price when a company bought chair frames, hired another company to upholster them, and sold completed chairs?

Short answer: Yes. Texas said tax applied to the completed chair's full sales price, including upholstery labor whether or not separately stated; resale certificates could cover inputs.

Apply this to your situation

This page answers the general question as of 1991. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1991
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 Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

A corporation bought chair frames from one company, hired another company to upholster and finish them, and issued resale certificates for both transactions. When it sold a completed chair, Texas sales tax applied to the full sales price, including upholstery labor whether or not the labor was separately stated.

What this means for you

Initial fabrication or finishing labor became part of the taxable price of the manufactured item sold to the customer. Separately stating that labor did not remove it from the tax base.

Common questions

Was the upholstery labor taxable in the completed chair sale? Yes.

Did separately stating the labor change the result? No.

What rule did the letter cite? Rule 3.300(b)(1) on manufacturing and fabrication.

Citations and references

  • 34 Tex. Admin. Code Rule 3.300(b)(1) — manufacturing, custom manufacturing, fabricating, and processing

Source

Original ruling text

March 15, 1991

Dear *****:

Thank you for your letter regarding the taxability of a chair being
sold by your corporation.

You indicate that your corporation purchases the chair frame from
one company and contracts with another company to upholster and
complete the chair. With each transaction, your corporation issues
a resale certificate.

When your corporation sells this chair, tax is due on the full sales
price of the chair, including the charge for labor, whether or not
separately stated. I am enclosing a copy of Rule 3.300, Manufacturing;
Custom Manufacturing; Fabricating; Processing. See section (b)(1).

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

If you have any questions, please feel free to call toll free at
1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division

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