Is a machinery moving company's charge to relocate equipment within or between facilities subject to Texas sales and use tax?

Subject

Furniture/Equipment — Assembly/Disassembly/Reassembly Into New Configuration — All Taxable — But Not If Only Moving Around

Plain-English summary

A machinery moving company asked the Comptroller whether Texas sales and use tax applies to its normal business of relocating a machine or piece of equipment within a plant or from one facility to another. The company explained that it does not own or sell the equipment it moves, and its customers tell it exactly where to place the equipment within the facility.

The Comptroller's answer: the moving service by itself is not taxable. However, if the moving company also repairs or reconfigures the equipment as part of the move, then the charges become taxable.

As with other letters of this era, the Comptroller notes the opinion is based on the facts presented and could change if the facts are different.

What this means for you

Machinery moving and rigging companies

If your business simply relocates machines or equipment for customers -- without repairing or reconfiguring the equipment -- your moving charges are not subject to Texas sales and use tax. But if the job also involves repairing the equipment or reassembling it into a different configuration, the whole charge can become taxable.

Manufacturers and plant operators hiring movers

If you hire a company to relocate equipment within your plant or to another facility, and the mover's work is limited to the physical move itself (with no repair or reconfiguration), you should not expect to see sales tax charged on that service. If the scope of work expands to include repair or reassembly into a new configuration, ask your vendor how that affects taxability.

Accountants and tax professionals

The key distinction in this letter is between a pure relocation service (nontaxable) and a relocation that also includes repair or reconfiguration of the equipment (taxable). Watch the scope of work on any moving contract to determine which side of that line a given job falls on.

Common questions

Q: Is a machinery moving company's relocation service subject to Texas sales tax?
A: No. Simply relocating a machine or piece of equipment within a plant or between facilities is not, by itself, taxable.

Q: When does a moving charge become taxable?
A: When the moving company also repairs or reconfigures the equipment as part of the move.

Q: Does it matter if the mover doesn't own or sell the equipment?
A: The letter notes the company does not own or sell the equipment it moves and that customers direct exactly where the equipment should be placed -- consistent with the service being a pure relocation, not a sale.

Q: Could this answer change under different facts?
A: Yes. The letter states the opinion is rendered based on the facts presented, and the opinion may change if there are additional or different facts.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9608L1429F10

Original ruling text

August 26, 1996

Dear *****:

Thank you for your letter regarding applicability of
the sales and use tax to a machinery moving company. You state:

Our normal job is to relocate a machine or piece of
equipment within a plant or from one facility to another. This equipment is
not owned or sold by us. It is typical that our customer tell us exactly where
to locate the piece of equipment within the facility.

Response: The moving service is not in and of itself
taxable. However, the charges will be taxed if your firm also repairs or
reconfigures the equipment as part of the move.

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

You may call me toll free at 1-800-531-5441, ext.
3-4680. The direct line is 512/463-4680. You may also write to Tax Policy,
Comptroller of Public Accounts. My Internet address is
[email protected].

Sincerely,

Al Van Allen
Tax Policy Division

NOTE: Previous Accession Number 9608548L