| (1) Materials. Under a separated repair contract, the repairman of a motor vehicle is a retailer and may issue a resale certificate in lieu of tax to suppliers
for materials that will be incorporated into the motor vehicle of the customer; the repairman must then collect tax from the customer on the agreed contract price of the materials, which must not be less than the amount the repairman paid to suppliers. The repairman must obtain a tax permit to be able to issue a resale certificate in lieu of tax when materials are purchased. The repairman may also use materials from inventory upon which tax was paid to the supplier at the time of purchase. In these instances, tax will be collected from the customer on the agreed contract price of the materials as if the materials had been purchased with a resale certificate; however, the repairman will remit tax to the comptroller only on the difference between the agreed contract price and the price paid to the supplier. See §3.338 of this title (relating to Multistate Tax Credits and Allowance of Credit for Tax Paid to Suppliers). (2) Labor. Labor to repair motor vehicles is
not taxable. (3) Consumable supplies. A repairman of motor vehicles may issue a resale certificate in lieu of tax to suppliers for consumable supplies as well as materials incorporated into the motor vehicle. The repairman of a motor vehicle must then collect sales tax from customers on the charge for consumable supplies as well as the charge for materials. (4) Tools and equipment. A repairman of a motor vehicle is the ultimate consumer of tools and equipment used which are not incorporated into the motor vehicle being repaired. The repairman must pay tax to suppliers of these items at the time of purchase. The repairman may not collect tax from customers on any charges for these items. (5) Exempt customers. In repairing a motor vehicle belonging to an exempt customer under a separated contract, the repairman may accept an exemption certificate in lieu of collecting tax on materials incorporated into the motor vehicle.
(i) Responsibilities of remodelers. Remodelers of motor vehicles are providing taxable services and should refer to §3.292 of this title (relating to Repair, Maintenance, and Restoration of Tangible Personal Property). (j) Manufacturer's warranties. (1) No tax is due on parts or labor furnished by the manufacturer to repair a motor vehicle under a manufacturer's warranty or recall campaign. (2) Records must be kept by the repairman that show that the service and parts were used in repairing an item under a manufacturer's warranty or recall. (3) The repairman may purchase parts to be used in repairs under a manufacturer's warranty or recall tax free by issuing an exemption certificate to the supplier. (k) Extended warranties and service contracts. A repairman performing services under an extended warranty covering a motor vehicle must collect tax on
the parts as required under subsection (h) of this section. (l) Maintenance. Tax is not due on the labor to maintain motor vehicles. Refer to subsections (g) and (h) of this section for the repairman's responsibilities for tangible personal property used in maintenance. (m) Accessories and equipment added to motor vehicles. (1) The purchase of a motor vehicle and all accessories and equipment attached thereto at the time of sale is subject to the provisions of the Tax Code, Chapter 152 (motor vehicle sales and use tax). (2) The purchase of accessories and equipment for a motor vehicle attached after the time of sale of the motor vehicle is subject to the provisions of the Tax Code, Chapter 151 (limited sales, excise, and use tax). (3) The purchase of tangible personal property is subject to the provisions of the Tax Code, Chapter 151 (limited sales, excise, and use tax), if no item
can be identified as a motor vehicle even if the combination of items of tangible personal property becomes a motor vehicle. If items of tangible personal property are combined to produce a motor vehicle, the initial titling of the motor vehicle in the name of the person who produced the motor vehicle is not subject to the provisions of the motor vehicle sales and use tax. If, however, the motor vehicle is titled in any other person's name, the transfer is subject to the provisions of the motor vehicle sales and use tax. (4) For this purpose, the terms "accessories" and "equipment" include, but are not limited to, bodies, cement mixers, refrigeration units, fertilizer spreaders, and oil well servicing equipment. (n) Use of resale certificate. For the purposes of this section, the words "leased" and "rented" are defined by the Tax Code, Chapter 152 (motor vehicle sales and use tax law). (1) Items combined into a motor
vehicle. A limited sales tax resale certificate may be used in purchasing tangible personal property to be combined into a motor vehicle held for sale, lease, or rental in the purchaser's regular course of business. (2) Accessories and equipment attached to rental or lease motor vehicles. A limited sales tax resale certificate may be used in purchasing accessories and equipment that are attached to a motor vehicle held for sale, rental, or lease in the purchaser's regular course of business.
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