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Ezel / Tax Rulings / TX
TX 9209L1191G14 Motor Vehicle Tax 1992-09-14

Were dealer-preparation or make-ready charges included in the Texas motor vehicle sales-tax base?

Short answer: Yes. The Tax Administration Division said dealer-preparation and make-ready charges were subject to motor vehicle sales tax because § 152.002(a) included labor or service costs in total consideration.

Apply this to your situation

This page answers the general question as of 1992. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1992
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 Tax Administration letter issued on one 1992 dealer-charge question. It predates modern Private Letter Ruling reliance terms and cannot bind the Comptroller for unrelated taxpayers. Section 152.002(a), total consideration, dealer preparation, make-ready services, separately stated charges, and labor treatment may have changed. 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

The Texas Tax Administration Division said dealer-preparation and make-ready charges were subject to motor vehicle sales tax.

Texas Tax Code § 152.002(a) included the cost of labor or services in total consideration.

What this means for you

Motor vehicle dealers and dealership accountants

The historical tax base included the preparation charge rather than treating it as a separate nontaxable service.

Vehicle buyers

Separately describing dealer preparation did not remove it from the stated tax base.

Common questions

Q: Were make-ready charges taxable?

A: Yes.

Q: Why?

A: Labor and service costs were included in total consideration under the cited section.

Citations and references

  • Texas Tax Code § 152.002(a) — cited for labor and service costs in total consideration.

Source

Original ruling text

September 14, 1992

Dear **:

This is to follow-up our recent conversation concerning the taxability of
dealer preparation or make-ready charges.

Dealer preparation or make-ready charges are subject to motor vehicle sales
tax. This interpretation is based on Sec. 152.002(a) of the Texas Tax Code
which includes the cost of labor or service in the definition of total
consideration.

Please do not hesitate to call if we may be of assistance.

Sincerely,

Curt Swenson
Tax Administration Division

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