Which construction consumables, supplies, and equipment used by a road construction contractor are taxable versus exempt — LP gas, slings and cables, safety stickers, safety chains, safety flags, rope and twine, marking paint, caulk and putty, sponges, tape, razor blades, snap ties, and various safety wear?

Plain-English summary

A tax preparer faxed the Comptroller's office a list of construction consumables, supplies, and equipment used by a taxpayer in the road construction business, asking which items are taxable and which are exempt. The Comptroller's office answered each item individually.

For the first group of items, the answers were: LP gas for site trailers is not subject to sales tax when used off-road; slings and cables are taxable as equipment if used more than once but exempt as consumables if used only once; safety stickers follow the same rule as slings and cables; safety chains and hooks are taxable as equipment; safety flags are taxable as equipment; rope and twine follow the same rule as slings and cables; marking paint (spray or can) is exempt as either a consumable or a building supply item; caulk and putty are exempt as building supplies; sponges and rubbing bricks are exempt as consumable supplies if used only once; duct tape and electrical tape are exempt as consumable supplies; razor blades are exempt as consumable supplies; and snap ties and rope clips are exempt as consumable supplies if used only once.

The requester also asked about a second group of items in terms of whether a "useful life under six months" made them taxable or exempt. The Comptroller replied that useful life is no longer relevant to exemptions for contractors, and that safety belts, steel-toed rubber boots, plastic rain coats, rubber knee pads, carpenter's aprons, safety vests, and safety glasses are all taxable.

What this means for you

Road construction and other contractors

Whether an item is taxable often turns on how many times it's used: items that function as reusable equipment (slings, cables, safety stickers, safety chains and hooks, safety flags, rope and twine used repeatedly) are taxable, while the same or similar items consumed in a single use (a sling, cable, or piece of rope and twine used only once) are treated as exempt consumables. Personal safety wear — safety belts, steel-toed rubber boots, plastic rain coats, rubber knee pads, carpenter's aprons, safety vests, and safety glasses — is taxable as equipment regardless of how long it lasts.

Accountants and tax professionals advising contractors

Don't rely on an item's "useful life" (e.g., under six months) to determine its tax treatment for a contractor — this letter states that useful life is no longer relevant to contractor exemptions. Instead, classify each purchase by whether it's consumed in a single use (exempt as a consumable) or used repeatedly as equipment (taxable), or whether it independently qualifies as an exempt building supply (like caulk, putty, or marking paint).

Purchasers of fuel and marking materials

LP gas used off-road (such as to power site trailers) is not subject to sales tax. Marking paint, caulk, and putty are exempt as building supplies or consumables, distinct from the "single use versus repeated use" test that applies to items like slings, cables, and rope.

Common questions

Q: Are slings and cables always exempt from sales tax?
A: No. They're taxable as equipment if used more than once, but exempt as consumables if used only once. The same rule applies to safety stickers and to rope and twine.

Q: Does a short useful life (under six months) make an item exempt for a contractor?
A: No. The letter states that useful life is no longer relevant to exemptions for contractors — items like safety belts, steel-toed rubber boots, plastic rain coats, rubber knee pads, carpenter's aprons, safety vests, and safety glasses are taxable regardless of their useful life.

Q: Is LP gas used at a road construction site taxable?
A: LP gas for site trailers is not subject to sales tax; the letter states LP gas is exempt if used off-road.

Q: What about tape, razor blades, and marking paint?
A: Duct tape and electrical tape, razor blades, and marking paint (spray or can) are exempt as consumable supplies or building supply items.

Citations and references

No specific statutes or administrative rules are cited in the text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9503185L

Original ruling text

March 29, 1995

Dear Mr. **:

This morning I received your fax concerning construction consumables, supplies,
and equipment used by a taxpayer which is in the road construction business.
The answers to your questions are as follows:

Are the following categories of purchases exempt?

1) LP gas for site trailers - not subject to sales tax. LP gas is exempt if
used off-road.
2) Slings & cables - taxable as equipment if used more than once, exempt as
consumables if used only once
3) Safety stickers - same answer as (2)
4) Safety chains and hooks - taxable as equipment
5) Safety flags - taxable as equipment
6) Rope and twine - same answer as (2)
7) Marking paint (spray or can) - exempt as either a consumable or building
supply item
8) Caulk and putty - exempt as building supplies
9) Sponges and rubbing bricks - exempt as consumable supplies if used only once
10) Duct tape and electrical tape - exempt as consumable supplies
11) Razor blades - exempt as consumable supplies
12) Snap ties and rope clips - exempt as consumable supplies if used only once

You also asked if the following items would be taxable or exempt with a useful
life under six months. The useful life is no longer relevant to exemptions for
contractors.

1) Safety belts - taxable as equipment
2) Steel-toed rubber boots- taxable
3) Plastic rain coats - taxable
4) Rubber knee pads - taxable
5) Carpenter's aprons - taxable
6) Safety vests - taxable
7) Safety glasses- taxable

I hope this satisfactorily answers your questions. Please feel free to contact
me should you have additional questions.

Sincerely,

Wade Anderson
Assistant Director Tax Administration

cc: Joe Galvan
Manager Tax Administration