Are transportation or mileage charges billed in connection with repairing a motor vehicle, its components, or accessories subject to Texas sales tax?

Subject

Transportation/Mileage Charges In Connection With Repair Of Motor Vehicles, Components, Or Accessories Vs. Equipment Attachments

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9307L1249A06

Plain-English Summary

A taxpayer wrote in asking whether transportation charges billed in connection with repairing a motor vehicle are taxable. The Comptroller's response draws several distinctions based on exactly what's happening.

Repairing a vehicle, a component, or an accessory: Labor to replace a defective or inoperative component or accessory on a motor vehicle counts as repair of the motor vehicle, and repair labor on motor vehicles is not taxable. Because the repair labor itself isn't taxable, the transportation charges billed in connection with that repair aren't taxable either — and that holds true whether the transportation is billed by the repairman or by an unrelated third party. Towing is specifically called out as not taxable.

Selling and installing a part, rather than repairing: If a vendor instead sells a component, accessory, or equipment attachment and installs it, the picture changes — the charge for the item itself and the installation labor are both taxable, whether they're separately stated or billed as one lump sum. In that scenario, transportation charges are taxable if the seller provides the transportation, but not taxable if an unrelated third party handles the transportation.

Repairing an equipment attachment: The letter treats repair of an equipment attachment (as opposed to a vehicle component or accessory) as repair of tangible personal property generally, which is taxable. Transportation charges billed by the repairman in that situation are taxable.

The letter closes with the Comptroller's standard caveat that the opinion is based on the facts presented and could change if the facts are different.

What This Means For You

The tax treatment turns on "repair" vs. "sale and installation." If you're doing labor-only repair work on a motor vehicle (replacing a defective or inoperative part), your labor and any related transportation/towing charges are not taxable. If instead you're selling a new component, accessory, or attachment and installing it, both the part and the installation labor become taxable, and so does any transportation charge you (the seller) bill for getting it there.

Who provides the transportation matters. For a taxable sale-and-install job, transportation billed by the seller is taxable, but the same transportation billed by an unrelated third party is not. This distinction did not come up for pure repair work — there, transportation is not taxable no matter who bills it.

Equipment attachments are treated differently from vehicle components/accessories when it comes to repair. While repairing a motor vehicle's component or accessory is non-taxable labor, repairing an equipment attachment itself is treated as repair of tangible personal property and is taxable — along with the repairman's transportation charges for that job.

This is a facts-specific opinion. The letter explicitly says the opinion is based on the facts presented and may change if the facts are different, so businesses in similar but not identical situations (e.g., different billing arrangements or different types of equipment) should not assume the same result automatically applies.

Q&A

Q: Is towing a motor vehicle taxable in Texas?
A: No. The letter states that towing is not taxable.

Q: Are transportation charges billed for repairing a motor vehicle component or accessory taxable?
A: No. Because labor to repair motor vehicles is not taxable, transportation charges billed in connection with that repair are not taxable, regardless of whether billed by the repairman or an unrelated third party.

Q: What if a vendor sells and installs a new accessory or component instead of repairing an old one?
A: Then the charges for the item and the installation labor are taxable, whether separately stated or billed lump-sum, and transportation charges are taxable if provided by the seller.

Q: Does it matter who provides the transportation in a sale-and-install situation?
A: Yes. Transportation charges provided by the seller are taxable, but transportation charges billed by an unrelated third party would not be taxable.

Q: Is repairing an equipment attachment treated the same as repairing a vehicle component?
A: No. The letter states that repair of equipment attachments is considered repair of tangible personal property and is taxable, and transportation charges provided by the repairman are taxable under those circumstances.

Q: Can this taxpayer rely on this letter if their facts are a little different?
A: Not necessarily. The letter says the opinion is based on the facts presented, and if there are any additional or different facts, the opinion may change.

Original ruling text

July 14, 1993

Dear ***:

Thank you for your letter of June 23,1993, regarding the taxability of
transportation charges. The charges are billed in connection with the
repair of a motor vehicle.

Charges for labor to replace a defective or inoperative component or
accessory are not taxable because this is a repair of a motor vehicle.
Labor to repair motor vehicles is not taxable; therefore, transportation
charges in connection with the repair are not taxable. The transportation
charges are not taxable regardless of whether billed by a repairman or an
unrelated third party. Towing is not taxable.

When personal property such as an accessory, component, or equipment
attachment is sold and installed by a vendor, the charges for the item and
the installation labor are taxable, whether separately stated or billed
lump-sum. Charges for transportation under these circumstances are taxable
if provided by the seller. Charges for transportation by an unrelated
third party would not be taxable.

The repair of equipment attachments is considered the repair of tangible
personal property and is taxable. Charges for transportation provided by the
repairman are taxable under these circumstances.

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

If you have any questions or need additional information, you may call
toll free 1-800-531-5441, ext. 50037. The regular Austin number is
512-475-0037. You also may write to Tax Administration Division.

Sincerely,

Lindey Osborne
Tax Administration Division

NOTE: Previous Accession Number 9308045L.2 and/or 9308045L