| (A) A service provider may issue a properly completed
resale certificate instead of paying sales or use tax on the purchase
of tangible personal property that is integral to repairing, remodeling,
maintaining, or restoring tangible personal property belonging to
another and is transferred to the care, custody, and control of the
purchaser of the taxable service. See §3.285 of this title (relating
to Resale Certificate; Sales for Resale).
(B) A person holding tangible personal property for
sale, lease, or rental may issue a properly completed resale certificate
in lieu of paying sales or use tax on the purchase of labor and tangible
personal property used to repair, remodel, maintain, or restore that
tangible personal property. Refer to §3.285 of this title and §3.294
of this title (relating to Rental and Lease of Tangible Personal Property).
(3) A service provider working under an agreement that
provides that the purchaser of the service will furnish the tangible
personal property required for the service must collect sales or use
tax on the charge for the service.
(4) A service provider may accept a properly completed
exemption certificate instead of collecting sales or use tax when
performing a taxable service for a purchaser who is exempt from sales
and use tax under Tax Code, Chapter 151, or when performing services
on tangible personal property that is exempt from sales and use tax.
Refer to §3.287 of this title (relating to Exemption Certificates).
(c) Consumable supplies and equipment. Sales or use
tax must be paid by the service provider on consumable supplies and
equipment that are purchased for use in the performance of a service
that are not transferred to the care, custody, and control of the
customer.
(d) Warranties. For information on warranties for the
repair of motor vehicles, refer to §3.290 of this title. For
information concerning warranties for the repair of aircraft, refer
to §3.280 of this title.
(1) Manufacturer's written warranty or recall campaign.
No sales or use tax is due on tangible personal property or labor
furnished by the manufacturer to repair tangible personal property
under a manufacturer's written warranty or recall campaign.
(A) Records must be kept by the service provider to
document that the service and tangible personal property were used
in repairing an item under a manufacturer's written warranty or recall
campaign.
(B) The service provider may purchase tangible personal
property to be used in repairs under a manufacturer's written warranty
or recall campaign tax-free by issuing an exemption certificate to
the seller.
(2) Extended warranty or service policy.
(A) Sales or use tax is due on the sale of an extended
warranty or service policy.
(B) The warrantor may issue a resale certificate in
lieu of paying sales or use tax on the purchase of taxable items used
in performing the services covered by the contract as long as the
taxable items are integral to performing the service and the taxable
items are also transferred to the care, custody, and control of the
purchaser. Refer to §3.285 of this title.
(C) If the warrantor uses a third-party service provider
to perform the service, the third-party service provider may accept
a resale certificate from the warrantor in lieu of sales or use tax.
(D) The warrantor must collect sales or use tax on
any charge to the purchaser for labor or tangible personal property
not covered by the extended warranty or service policy.
(E) If the warrantor uses a third-party service provider
to fulfill the warranty and the service provider charges the warrantor
or the purchaser for tangible personal property or labor not covered
under the warranty, the service provider must collect sales or use
tax on such charges.
(3) Replacements and reimbursements.
(A) Trade-in. If the warrantor is a seller of tangible
personal property, and if the terms of a manufacturer's or extended
warranty agreement provide for either the replacement or the repair,
remodeling, maintenance, or restoration of tangible personal property,
then tangible personal property accepted by the warrantor under the
terms of the warranty in exchange for, or towards the purchase of,
tangible personal property of the type sold by the warrantor in the
regular course of business will be considered a trade-in. The provisions
of Tax Code, §151.007(c)(5) ("Sales Price" or "Receipts") apply
to such a transaction and any amount or credit provided for the trade-in
reduces the taxable amount of the sale of the replacement item.
(B) The sale of a contract that provides that a warrantor
will reimburse a purchaser for payments made to replace, repair, remodel,
maintain, or restore faulty, damaged, lost, or stolen tangible personal
property, including the amount of any sales and use tax, is not taxable.
In addition, the amount reimbursed to the purchaser of the faulty,
damaged, lost, or stolen tangible personal property by the warrantor
under such a contract is not taxable.
(e) Services performed on real property. Persons who
build new improvements to real property, or repair, restore, or remodel
residential real property belonging to others, should refer to §3.291
of this title (relating to Contractors). Persons who repair or remodel
nonresidential real property belonging to others should refer to §3.357
of this title (relating to Nonresidential Real Property Repair, Remodeling,
and Restoration; Real Property Maintenance).
(f) Fabricating or processing tangible personal property.
Persons who fabricate or process tangible personal property belonging
to another should refer to §3.300 of this title (relating to
Manufacturing; Custom Manufacturing; Fabricating; Processing).
(g) Exemption for disaster areas.
(1) Labor to repair, restore, remodel, or maintain
tangible personal property is exempt if:
(A) the amount of the charge for labor is separately
stated from any charge for tangible personal property on the invoice,
contract, or similar document provided by the service provider to
the purchaser; and
(B) the service is performed on tangible personal property
that was damaged within a disaster area by the condition that caused
the area to be declared a disaster area.
(2) The exemption does not apply to tangible personal
property transferred from the service provider to the purchaser as
part of the repair.
(3) In this subsection, "disaster area" means:
(A) an area declared a disaster area by the Governor
of Texas under Government Code, Chapter 418 (Emergency Management);
or
(B) an area declared a disaster area by the President
of the United States under 42 United States Code, Chapter 68 (Disaster
Relief).
(h) Repair services required to protect the environment
or conserve energy.
(1) Labor to repair, remodel, maintain, or restore
tangible personal property is exempt if:
(A) the repair, remodeling, maintenance, or restoration
is required by statute, ordinance, order, rule, or regulation of any
commission, agency, court, or political, governmental, or quasi-governmental
entity in order to protect the environment or to conserve energy;
and
(B) the charge for the labor is itemized separately
from the charge for materials furnished.
(2) The exemption in paragraph (1) of this subsection
does not apply to a lump sum charge for labor and materials.
(3) Sixty-five percent of a lump-sum charge for labor
and materials for the repair, remodeling, maintenance, or restoration
of tangible personal property is exempt if:
(A) the repair, remodeling, maintenance, or restoration
is required by statute, ordinance, order, rule, or regulation of any
commission, agency, court, or political, governmental, or quasi-governmental
entity in order to protect the environment or to conserve energy;
and
(B) the labor and materials are purchased for a health
care facility (Health and Safety Code, §108.002) or oncology
center.
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