34 TAC §3.306
The Comptroller of Public Accounts adopts an amendment to §3.306,
concerning sales of mobile offices, portable buildings, prefabricated buildings,
and ready-built homes, with changes to the proposed text as published in the
November 18, 2005, issue of the
Texas Register
(30
TexReg 7691).
The adopted amendments implement legislative changes by the 70th Legislature,
Second Called Session, that made delivery charges taxable as part of the sale
of tangible personal property, including a portable building, whether the
delivery charge is separately stated. The amendments also implement changes
by the 73rd Legislature that made mobile offices subject to the limited sales
and use tax instead of motor vehicle sales and use tax. New subsection (a)(1)
is added, and the remaining paragraphs of subsection (a) are renumbered accordingly.
New subsections (b)(1) and (b)(2) are added, and the former subsection (b)(2)
is deleted. Non-substantive changes are made for clarity.
We received a comment from the Texas Motor Transportation Association that
the amendments as drafted in subsections (b)(1) and (b)(2) might be interpreted
to mean that delivery charges by for-hire motor carriers are subject to sales
and use tax. To address the concern, clarifying language was added to these
subsections to indicate that only delivery charges charged by the seller of
a mobile office or portable building are taxable. Third-party delivery charges
are not subject to sales and use tax under current law.
This amendment is adopted under Tax Code, §111.002, which
provides the comptroller with the authority to prescribe, adopt, and enforce
rules relating to the administration and enforcement of the provisions of
Tax Code, Title 2.
The amendment implements Tax Code Chapter 151.
§3.306.Sales of Mobile Offices, Portable Buildings, Prefabricated Buildings, and Ready-Built Homes.
(a)
Definitions. The following words and terms when used in
this section shall have the following meanings, unless the context clearly
indicates otherwise.
(1)
Mobile Office--A trailer designed to be used as an office,
sales outlet, or work place.
(2)
Portable building--A self-contained transportable structure
that does not require attachment to a foundation or to realty in order to
be functional. An example of a portable building is a tool shed.
(3)
Prefabricated building--A structure, not designed to be
a residential dwelling, built at a location other than its permanent site,
and that is later transported in one or more sections and affixed to realty.
(4)
Ready-built home--A structure that does not bear a label
or decal issued by the Texas Department of Licensing and Regulation or the
U.S. Department of Housing and Urban Development, but that is designed to
be a residential dwelling constructed precut, partially assembled, or fabricated
in whole or in part at a location other than the home site and later transported
in one or more sections and assembled on a permanent foundation.
(5)
The terms mobile home, ready-built home, prefabricated
building, and portable building do not include a house trailer, as defined
in and subject to the provisions of Texas Tax Code, Chapter 152, or a manufactured
home, as defined in and subject to the provisions of Texas Tax Code, Chapter
158. See §3.72 of this title (relating to Farm Machines, Timber Machines,
and Trailers) and §3.481 of this title (relating to Imposition and Collection
of Tax).
(b)
Application of the sales tax.
(1)
A sale of a mobile office is a taxable sale of tangible
personal property. Sales tax is due on the total sales price charged by the
seller, including delivery charges.
(2)
A sale of a portable building is a taxable sale of tangible
personal property. Sales tax is due on the total sales price charged by the
seller, including delivery charges.
(3)
A contract to sell a prefabricated building or a ready-built
home is considered a contract for an improvement to realty when the seller
is required to build, transport, and affix the structure to a permanent site.
See §3.347 of this title (relating to Improvements to Realty). If the
contract requires the seller to perform services such as preparing the foundation,
plumbing, sewer hookup, septic tank preparation, supporting, blocking, or
leveling, the seller's sales tax responsibilities are determined by whether
the contract separates charges for materials from charges for labor. See §3.291
of this title (relating to Contractors).
(4)
The sale of a ready-built home or a prefabricated building
that is not at the time of sale affixed to its permanent site is a taxable
sale of tangible personal property if sold to a person responsible for affixing
the structure to realty.
(5)
A sale of a structure that is affixed to realty is nonetheless
a taxable sale of tangible personal property if the purchaser is obligated
to remove the structure from its site.
(6)
An "in-place" sale of items such as fixtures, machinery,
and equipment is considered a sale of tangible personal property if the seller:
(A)
is a lessee of the real estate or building to which the
items are affixed; and
(B)
has the present right to remove the items either as trade
fixtures or under the express terms of the lease. Sales tax is due on that
portion of the total consideration allocable to the in-place items without
regard to the fact of their physical attachment to real property.
(c)
Parts and accessories added to manufactured housing by
the retailer. Limited sales or use tax is due on parts or accessories installed
by the retailer in a manufactured home.
(1)
If the retailer sells the home for a lump sum amount that
includes both the home and parts, the retailer should not collect limited
sales or use tax on the lump sum charge. The retailer must pay limited sales
or use tax on the parts at the time of purchase.
(2)
If the retailer separates the charge to the customer into
one charge for the home and a separate charge for the additional parts, the
retailer must collect limited sales tax on the amount charged for the parts.
The retailer may issue a resale certificate in lieu of tax when purchasing
the parts.
(3)
If a third party sells and installs the items, the installer's
sales tax responsibilities are determined by whether the contract separates
charges for materials from charges for labor. See paragraphs (1) and (2) of
this subsection.
This agency hereby certifies that the adoption has been
reviewed by legal counsel and found to be a valid exercise of the agency's
legal authority.
Filed with the Office of
the Secretary of State on April 18, 2006.
TRD-200602213
Martin Cherry
Chief Deputy General Counsel
Comptroller of Public Accounts
Effective date: May 8, 2006
Proposal publication date: November 18, 2005
For further information, please call: (512) 475-0387