Is plastic Visiqueen carpet protection, laid over rented trade-show carpet and later discarded, taxable to the rental company or purchasable tax-free for resale?

Subject

Plastic Protection Cover — Placed On Carpet As Part Of Rental To Exhibitors At Trade Shows — Considered Sold To Customers And May Be Purchased For Resale

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9403175L

Plain-English Summary

A company (Company A) that helps businesses exhibit at trade shows and conventions rents booth and aisle carpeting to exhibitors, along with signs, tables, drapes, displays, and other exhibit items. Before each rental, Company A cleans the carpet, delivers it to the exhibit area, and tapes it to the floor several days ahead of the show's opening. Company A then lays a clear plastic sheet called Visiqueen on top of the carpet to protect it from being soiled by vehicles, forklifts, and other materials while exhibitors are building their displays. Once the show is about to open, the Visiqueen covering exposed carpet is cut away; the rest is removed and thrown away by Company A's employees before or as the exhibit begins.

The company asked the Comptroller whether the Visiqueen should be treated as tax-free wrapping and packaging supplies, or alternatively, as being sold to its customers (which would also let it buy the Visiqueen tax-free for resale).

The Comptroller's response was narrower than either theory the company proposed, but it reached the same practical result: the Visiqueen is treated as sold to the customer as part of the carpet rental. Because it is considered a sale to the customer, Company A may purchase the Visiqueen tax-free from its own suppliers by issuing a resale certificate, instead of paying tax on it as a business supply. The Comptroller also noted this opinion was based on the specific facts presented, and that other, similar-looking facts could produce a different result.

What This Means For You

If you rent property to customers and use a disposable protective material as part of that rental (here, plastic sheeting protecting rented carpet during setup), that protective material may be treated as sold to the customer along with the rental, rather than as a taxable supply you consume in your own business. That distinction matters because items purchased for resale can be bought tax-free with a resale certificate, while items consumed in your own operations generally cannot.

If you are in the trade-show or exhibit-rental business, this ruling illustrates that the tax treatment of an ancillary item (like a protective cover) depends closely on how it is used and described — whether it is discarded as a business expense, treated as wrapping/packaging, or bundled into what the customer is paying for as part of the rental. The Comptroller emphasized that its answer rested on the specific facts submitted, so a materially different set of facts (for example, if the plastic were reused rather than discarded, or not itself considered part of what the customer is charged for) could lead to a different conclusion.

If you want to rely on a ruling like this for your own business, remember it was issued to a specific taxpayer based on specific facts. If your situation differs even in details that seem minor, it's worth confirming your own treatment with the Comptroller or a Texas tax professional rather than assuming this letter covers you directly.

Q&A

Q: Does the company have to pay sales tax on the Visiqueen plastic sheeting it buys from its suppliers?
A: No. Because the Visiqueen is considered sold to the customer as part of the carpet rental, the company may purchase it tax-free for resale from its suppliers.

Q: Did the Comptroller agree that the Visiqueen counts as tax-free "wrapping and packaging" supplies?
A: The ruling doesn't adopt that characterization. Instead, it resolves the question by treating the Visiqueen as sold to the customer as part of the rental, which independently supports tax-free purchase for resale.

Q: Can another trade-show rental company rely on this exact outcome for a similar plastic covering?
A: The Comptroller stated the opinion was based on the facts presented, and that other, similar facts might yield a different result — so companies with comparable but not identical facts should confirm their own treatment rather than assume this letter applies directly to them.

Original ruling text

March 22, 1994

Dear Mr. **:

Thank you for your letter requesting information on the taxability of Visiqueen
carpet protection provided by your client, ** (COMPANY A) to
customers as part of the rental of carpet.

COMPANY A rents carpet to exhibitors for use in their displays. Prior to the
rental COMPANY A cleans the carpet, delivers it to the exhibit area several
days prior to the opening of the show and attaches the carpet to the floor
temporarily with tape. COMPANY A then places the protective layer of Visiqueen
on top of the carpet. The Visiqueen is a clear plastic material which protects
the carpet from being soiled by vehicles, forklifts and other building
materials. Before the exhibit begins, the Visiqueen is removed by and discarded
by COMPANY A's employees. Per your conversation with Mr. Tom Soto, you
indicated that the rental of the carpet begins prior to the Visiqueen being
laid on the carpet. Your contention is that the Visiqueen should be considered
wrapping and packaging or in the alternative, as being sold to COMPANY A's
customers.

RESPONSE: The Visiqueen is considered sold to the customer as part of the
rental. Therefore, may purchase the Visiqueen tax-free for resale from its
suppliers.

This opinion is based on the facts present. Other facts though similar may
provide a different result.

If you have other questions or need more information, you may call me at
1-800-531-5441, extension 3-4502. The regular number is 512/463-4502. You may
also write to Tax Administration Division at the above address.

Sincerely,

Gilbert Zamora
Tax Administration Division

cc: Tom Soto, Tax Administration Division

VIA FACSIMILE

March 8, 1994

Comptroller of Public Accounts
Attn: Mr. Gilbert Zamora
Capitol Station
Austin, Texas 78744

Dear Mr. Zamora:

This letter is in regard to the taxability of Visiqueen carpet protection used
as described below:

Facts:

** (COMPANY A), located in **, Texas, is in the
business of assisting companies in exhibiting their products and services at
trade shows and conventions, including such events as automobile and truck
shows, home shows, etc. COMPANY A rents or sells everything needed by an
exhibitor to set up a booth, including signs, tables, drapes, booth and aisle
carpeting, displays, mock-ups of the customers' products, and a host of other
items too numerous to mention. Some of the property rented or sold by the
company is purchased ready-to-use from outside vendors. Other items, however,
are fabricated by COMPANY A according to its customers' specifications. COMPANY
A also provides the labor to set up and tear down its customers' exhibits.

The item in question, Visiqueen carpet protection is used in the following
manner:

COMPANY A rents carpet to exhibitors for use in their displays. COMPANY A owns
this carpet and cleans it each time prior to delivering it to its customers to
ensure that the property is in good condition. COMPANY A goes into the exhibit
area several days prior to the opening of the show and attaches the carpet to
the floor temporarily with tape. COMPANY A then places the protective lawyer of
Visiqueen on top of the carpet. The Visiqueen is a clear plastic material which
protects the carpet from being soiled by vehicles, forklifts and other
miscellaneous building materials while the exhibit is being constructed. The
Visiqueen remains attached to the carpet until time for the opening of the even
to ensure that the rented property remains clean while the exhibitors are
building their displays. The lease begins at the time that the show opens, and
the Visiqueen that is not covered by exhibits is cut away to expose the carpet
at that time. At the end of the exhibit the carpet is retrieved, and COMPANY A
cleans the carpet once more to prepare it for the next rental.

The cleaning process and the application of the Visiqueen is essential to
maintaining the property in a rentable condition. According to Letter Rulings
9110L1137B04 and 9308L1254A06 (copies attached), persons renting towels,
uniforms, etc., who must launder their merchandise before renting it are not
affected by the changes to the Tax Code concerning wrapping and packaging. The
"Rental Laundries" may continue to purchase their wrapping and packaging
supplies and washroom chemicals tax free by providing a resale or exemption
certificate in lieu of tax.

Based upon the discussion and the letter rulings presented above, we believe
that Visiqueen carpet protection should be exempt from Texas Sales/Use Tax when
used In the manner described above. Please confirm our position regarding the
taxability of this item with your signature on the statement below.

Very truly yours