For a fine-art and antiques handling company, which of its services (airport supervision, packaging/crating, moving, installation, and storage) are subject to Texas sales tax?

Plain-English summary

A company that handles and stores fine art works and antiques for museums, private collectors, art dealers, and other art-handling firms asked the Comptroller to confirm its own understanding of which of its services require charging clients sales tax. It listed each service along with its own "TAXABLE" / "NOT TAXABLE" determination for the Comptroller to check.

The Comptroller agreed with the company on every point:

• Airport supervision (supervising the loading/unloading of art during airline transfers, providing security officers) is TAXABLE, because it's a security service under Rule 3.333(e) — no manual labor is involved, just supervision and security.
• Packaging and crating (custom-packing art in the company's own tax-paid materials, sometimes repairing existing crates or using custom-built crates) is NOT TAXABLE — the company pays tax on the packaging materials themselves under Rule 3.314(c), and that tax-paid-materials treatment means the packaging/crating labor itself isn't separately taxed, even if materials are itemized on the client invoice.
• Moving (transporting art using company-rented trucks and equipment, with company laborers loading/unloading) is NOT TAXABLE — labor and equipment rental used to perform a service aren't themselves taxed (the company pays tax on its rental equipment).
• Installation (labor for rearranging and hanging art within buildings) is NOT TAXABLE, again because it's labor performed to provide a service.
• Storage (renting temporary or long-term storage space, occasionally reselling materials like moving blankets and pallets that become the client's property) is NOT TAXABLE, confirmed via direct conversation with the Houston Comptroller's Office.

On a follow-up question, the company asked whether it still needs to itemize materials (like specific plywood quantities) on invoices if packaging/crating is a nontaxable service — the answer is no requirement either way: since packaging/crating is a nontaxable service, whether or not materials are separately stated on the invoice doesn't change the nontaxable result; the company just needs to have already paid tax to its own suppliers on those materials.

Finally, the company had separately received a copy of Rule 3.292 (which taxes repair, remodeling, maintenance, or restoration of tangible personal property) and worried it might apply to their work. The Comptroller confirmed Rule 3.292 does NOT apply, because none of the company's services are repair, remodeling, maintenance, or restoration of tangible personal property.

What this means for you

Art handling, moving, and storage companies

This letter maps a useful taxability template for a multi-service handling business: security/supervision-type services are taxable, while packaging, moving, installation, and storage labor are generally not, as long as you're paying tax on your own materials and equipment purchases rather than reselling them untaxed. Keep this distinction in mind when structuring invoices and determining what to charge tax on.

Museums, collectors, and dealers hiring these services

Expect to be charged sales tax on airport/transfer supervision and security services, but not on packaging, moving, installation, or storage charges from a vendor operating under the same fact pattern as this letter.

Accountants and tax professionals

Rule 3.333(e) (security services), Rule 3.314(c) (materials used to perform a nontaxable service), and Rule 3.292 (repair/remodeling/maintenance/restoration of TPP) are the three rules doing the work here — useful reference points for any labor/service-heavy business handling tangible personal property for clients.

Common questions

Q: Is a security/supervision charge for overseeing an art shipment taxable?
A: Yes, per this letter, under Rule 3.333(e) — it's a taxable security service.

Q: Is custom packaging and crating of a client's art taxable?
A: No, per this letter, as long as the company pays tax on its own packaging materials under Rule 3.314(c); the labor/service itself isn't separately taxed.

Q: Does itemizing materials on an invoice make an otherwise nontaxable service taxable?
A: No — per this letter, whether or not materials are separately stated doesn't change a service from nontaxable to taxable.

Q: Are moving, installation, and storage of art taxable?
A: No, per this letter — all three are nontaxable services in this fact pattern.

Citations and references

Statutes and rules:

• 34 Tex. Admin. Code Rule 3.333(e) (security services — taxable)
• 34 Tex. Admin. Code Rule 3.314(c) (packaging materials used to perform a nontaxable service)
• 34 Tex. Admin. Code Rule 3.292 (repair, remodeling, maintenance, restoration of tangible personal property — confirmed inapplicable here)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9810892L

Original ruling text

October 20, 1998

Dear Ms. **:

This is in response to your request for a ruling to be sure that COMPANY A is
collecting appropriate sales taxes on the services that it provides.

You have outlined COMPANY A's primary services and have-stated, with each
service, your understanding of your responsibility for collecting sales taxes
from clients ("TAXABLE" and "NOT TAXABLE" below refer to client sales tax
payment).You asked that we review each service, note any corrections, and mail
back with any applicable rulings (you already have the three rulings referenced
below).

COMPANY DESCRIPTION

COMPANY A is a service company specializing in the handling and storage of fine
art works and antiques (referred to below as "art works") for the owners or
owners' representatives of these art works (referred to below as "clients").

CLIENT BASE

*Museums and Other Non-Profit Organizations

*Private Collectors

*Other Art Handling Companies

*Commercial Collectors

*Art Dealers

SERVICES PROVIDED

AIRPORT SUPERVISION: The company provides supervision over the airline transfer
(unloading and reloading of airplanes) of art works. Billable items:
supervision and security (officers).

TAXABLE because the company is providing a security service (based on State of
Rule 3.333(e)). No manual labor is
involved.

Response: Agree

PACKAGING AND CRATING: The company custom packages and crates art works for
shipping and storage purposes. Billable items: labor and crates (using
materials, on which the company has paid tax, to package either clients'
existing crates and boxes-occasionally making minor repairs to these crates-or
crates custom-built by Crate Works at the time of packaging.)

NOT TAXABLE because the company is paying tax on packaging materials that are
being used to perform a service (based on State of Texas Comptroller of Public
Accounts Rule 3.314(c)) on existing collections of art work.

Response: Agree

MOVING: The company arranges for the transportation of art works, using trucks
rented and operated by company employees and, occasionally, using
transportation brokers. In either of these truck scenarios, the company
provides laborers who use equipment rented by the company (i.e. tables and
forklifts) to load and unload trucks. Billable items: labor and equipment
rental (the company pays tax on rental equipment).

NOT TAXABLE because labor and equipment rental are being used to perform a
service.

Response: Agree

INSTALLATION: The company provides labor for rearranging and hanging art works
within buildings. Billable item: labor.

NOT TAXABLE because labor is being used to perform a service.

Response: Agree

STORAGE. The company rents to clients both temporary and long-term storage
space for art work. Billable items: storage and materials (rarely, the company
purchases, untaxed, and resells, with tax, materials, such as moving blankets
and pallets to a client for securing art works in the company's storage
facility. These materials then become the property of the client and can be
removed at the client's discretion.)

STORAGE NOT TAXABLE based on our conversation with Jeff (Houston Comptroller's
Office: 713-868-9112).

Response: Agree

STORAGE MATERIALS TAXABLE

On some invoices for packaging and crating services, we have itemized materials
used. If we determine that packaging and crating are, in fact, not taxable
services, do we need to stop listing specific materials (i.e. 24 4"x4"x8"
plywood ~ $***, etc.) on invoices?

Response: No. However, crating and packaging a client's art items is a
non-taxable service. You should pay tax to your suppliers for the materials
used to perform this nontaxable service. Whether you separately state the
charge for materials on your invoices to your clients, you will still be
performing a nontaxable service.

We received a copy of Rule 3.292 in the mail, possibly from one of your local
agents when we had asked for written clarification. I don't believe that our
services fall under any of these taxable categories repair, remodeling,
maintenance, or restoration-of tangible personal property. Possibly, someone
sent this copy because they misunderstood the nature of our work. Are our
services, in fact, outside of the categories on this ruling?

Response: From the information that you provided COMPANY A is not providing
the repair, remodeling, maintenance, or restoration-of tangible personal
property. Therefore, Rule 3.292 would not apply to COMPANY A's services.

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

I hope this information answers your questions. You may also write to Tax Policy
Division, Comptroller of Public Accounts. You may also e-mail our tax help section
at:

Sincerely,

Tax Policy Division