|(a) Definitions. The following words and terms, when
used in this section, shall have the following meanings, unless the
context clearly indicates otherwise.
(1) Chapter 160 boat--A vessel not more than 65 feet
in length, measured from the tip of the bow in a straight line to
the stern, that is not a canoe, kayak, rowboat, raft, punt, inflatable
vessel, or other watercraft designed to be propelled by paddle, oar,
or pole, and that is subject to tax under Tax Code, Chapter 160 (Taxes
on Sales and Use of Boats and Boat Motors).
(2) Commercial vessel--A vessel that displaces eight
or more tons of fresh water before being loaded with fuel, supplies,
or cargo, and that is:
(A) used exclusively and directly in a commercial or
business enterprise or activity, including, but not limited to, commercial
(B) used commercially for pleasure fishing by individuals
who are paying passengers.
(3) Common carrier--A person who holds out to the general
public a willingness to provide transportation of persons or property
from place to place for compensation in the normal course of business.
(4) Licensed and certificated common carrier--A person
authorized through issuance of a license or certificate by the appropriate
United States agency or by the appropriate state agency within the
United States to operate a vessel, train, motor vehicle, or pipeline
as a common carrier. Certificates of inspection or safety do not authorize
a person to operate as a licensed and certificated common carrier.
(5) Locomotive--A self-propelled unit of railroad equipment
consisting of one or more units powered by steam, electricity, diesel
electric, or other fuel, designed solely to be operated on and supported
by stationary steel rails or electromagnetic guideways and to move
or draw one or more units of rolling stock owned or operated by a
railroad. The term includes a yard locomotive operated to perform
switching functions within a single railroad yard, but does not include
self-propelled roadway maintenance equipment.
(6) Marine cargo container--A container that is fully
or partially enclosed; is intended for containing goods; is strong
enough to be suitable for repeated use; and is specially designed
to facilitate the carriage of goods by one or more modes of transportation
without intermediate reloading. The term includes the accessories
and equipment that are carried with the container. The term does not
include trailer chassis, motor vehicles, accessories, or spare parts
for motor vehicles.
(7) Motor vehicle--A self-propelled vehicle designed
to transport persons or property upon the public highway and a vehicle
designed to be towed by a self-propelled vehicle while carrying property.
The term includes, but is not limited to: automobiles; motor homes;
motorcycles; trucks; truck tractors; trailers; semitrailers; house
trailers or travel trailers, as defined by §3.72 of this title
(relating to Trailers, Farm Machines, and Timber Machines); park models,
as defined by §3.481 of this title (relating to Imposition and
Collection of Manufactured Housing Tax); trailers sold unassembled
in a kit; dollies; jeeps; stingers; auxiliary axles; converter gears;
and truck cab/chassis. The term does not include a nonrepairable vehicle
and a salvage vehicle, as defined by §3.86 of this title (relating
to Destroyed and Repaired Motor Vehicles).
(8) Operating exclusively in foreign or interstate
coastal commerce--Transporting persons or property between a point
in Texas and a point in another state or foreign country. A vessel
that travels between a point in Texas and an offshore area or fishing
area on the high seas, or between two points in Texas, is not operating
exclusively in foreign or interstate coastal commerce.
(9) Railroad--A form of non-highway ground transportation
of persons or property in the normal course of business by means of
trains solely operated on and supported by stationary steel rails
or electromagnetic guideways, including but not limited to:
(A) high speed ground transportation systems that connect
(B) commuter or other short-haul rail passenger service
in a metropolitan or suburban area;
(C) narrow gauge shortline railroads, including tourist,
historical, or amusement park railroads; and
(D) private industrial railroads operated on steel
rails that connect directly to the national rail system of transportation,
but not a private industrial railroad operated on steel rails totally
inside an installation that is not connected directly to the national
rail system of transportation.
(10) Rolling stock--A unit of railroad equipment that
is mounted on wheels and designed to be operated in combination with
one or more locomotives upon stationary steel rails or electromagnetic
guideways owned or operated by a railroad. Examples include, but are
not limited to, passenger coaches, baggage and mail cars, box cars,
tank cars, flat cars, and gondolas. Rolling stock also includes self-propelled
trackmobile rail car movers and roadway maintenance equipment. Rolling
stock does not include equipment used for intra-plant transportation
or other nontraditional railroad activities and that is mounted on
stationary steel rails or tracks but that are not part of, or connected
to, a railroad. For example, cranes operated on steel rails or tracks
and used to load or unload ships are not rolling stock.
(11) Train--One or more locomotives coupled to one
or more units of rolling stock that are designed to carry freight
or passengers, are operated on steel rails or electromagnetic guideways,
and are owned or operated by a railroad.
(12) Vessel--A watercraft, other than a seaplane on
water, used, or capable of being used, for navigation and transportation
of persons or property on water. The term includes a ship, boat, watercraft
designed to be propelled by paddle or oar, barge, and floating dry-dock.
(b) Carriers generally.
(1) Use tax is not due on the storage or use of repair
or replacement parts acquired outside of Texas and actually affixed
in Texas to a self-propelled vehicle that is used by a licensed and
certificated common carrier. Trailers, barges, and semitrailers are
not considered to be self-propelled vehicles.
(2) Use tax is due on the storage or use of tangible
personal property brought into Texas to be assembled into a vehicle
used by a common carrier to transport persons or property from place
to place, unless the tangible personal property is otherwise exempt
from sales and use tax under this section.
(3) Sales tax is not due on the sale of tangible personal
property to a common carrier if the tangible personal property is
shipped to a point outside of Texas using the purchasing carrier's
facilities under a bill of lading, and if the tangible personal property
is to be used by the purchasing carrier in the conduct of its business
outside of Texas.
(1) Chapter 160 boats. The sale or use in Texas of
a Chapter 160 boat is subject to boat and boat motor sales or use
tax under Tax Code, Chapter 160, even if the vessel meets the definition
of a commercial vessel. The lease or rental of a Chapter 160 boat
is subject to limited sales, excise, and use tax under Tax Code, Chapter
151 (Limited Sales, Excise, and Use Tax). For information concerning
the imposition of the boat and boat motor sales and use tax, see §3.741
of this title (relating to Imposition and Collection of Tax).
(2) Commercial vessels. Sales or use tax is not due
on the sale by the builder of a commercial vessel that is not a Chapter
(3) Component parts. Sales and use tax is not due on
the sale or use of materials, equipment, and machinery that become
component parts of a commercial vessel or a marine cargo container.
A component part is tangible personal property that is actually attached
to and becomes a part of a commercial vessel or a marine cargo container.
For example, items such as radios, radar equipment, navigation equipment,
wenches, long-line fishing gear, and rigging equipment, that are attached
to the vessel by means of bolts or brackets, or are otherwise attached
to the vessel, including items required by federal or state law, are
component parts. Permanent coatings such as paint and varnishes are
also component parts. The term does not include furnishings of any
kind that are not attached to the vessel, nor does it include consumable
supplies. For example, it does not include bedding, linen, kitchenware,
tables, chairs, ice for cooling, refrigerants for cooling systems,
fuels, lubricants, first aid kits, tools, or polishes, waxes, glazes,
or other similar temporary coatings.
(4) Repair and maintenance. Sales and use tax is not
due on the labor to repair, remodel, restore, renovate, convert, or
maintain a commercial vessel or a component part of a commercial vessel.
Sales and use tax is due on the sale or use of machinery, equipment,
tools, and other items used or consumed in performing the non-taxable
service. For more information about the repair, remodeling, maintenance,
and restoration of vessels that are not commercial vessels, see §3.292
of this title (relating to Repair, Remodeling, Maintenance, and Restoration
of Tangible Personal Property).
(5) Vessels operating exclusively in foreign or interstate
(A) Sales or use tax is not due on the sale of materials
and consumable supplies, including items commonly known as ships'
stores and sea stores, to the owner or operator of a vessel operating
exclusively in foreign or interstate coastal commerce, if the materials
and consumable supplies are for use and consumption in the operation
and maintenance of the vessel, or if the materials and supplies enter
into and become component parts of the vessel.
(B) Operation of the vessel in a manner other than
in foreign or interstate coastal commerce will result in a loss of
the exemption for ships' stores and sea stores for the quarterly period
in which the nonexempt operation occurs.
(C) Any owner or operator of a vessel operating exclusively
in foreign or interstate coastal commerce shall, when giving an exemption
certificate, include on the certificate the title or position of the
person issuing the certificate and the name of the vessel on which
the items are to be loaded.
(D) Sales tax is due on sales made to individual seamen
operating these vessels.
(6) Closely associated service companies provide servicing
operations such as stevedoring, loading, and unloading vessels. Sales
or use tax is not due on the sale or use of materials and supplies
purchased by a person providing stevedoring services for a vessel
operating exclusively in foreign or interstate coastal commerce if
the materials and supplies are loaded aboard the vessel and are not
removed before its departure. This includes, but is not limited to,
such items as lumber, plywood, deck lathing, turnbuckles, and lashing
(d) Taxable uses of tangible personal property purchased
tax free. Sales and use tax is due when tangible personal property
sold, leased, or rented tax-free under a properly completed resale
or exemption certificate is subsequently put to a taxable use other
than the use allowed under the certificate. For more information refer
to §3.285 of this title (relating to Resale Certificate; Sales
for Resale) and §3.287 of this title (relating to Exemption Certificates).
(e) Rolling stock, locomotives, and trains.
(1) Sales or use tax is not due on the sale or use
of locomotives and rolling stock.
(2) Sales or use tax is not due on the sale or use
of fuel or supplies essential to the operation of locomotives and
trains, including items required by federal or state regulation. Examples
include, but are not limited to, telecommunication and signaling equipment,
rails, ballast, cross ties, and roadbed moisture barriers. Items of
tangible personal property used to construct, repair, remodel, or
maintain improvements to real property such as depots, maintenance
facilities, loading facilities, and storage facilities are not supplies
essential to the operation of locomotives and trains.
(3) Sales or use tax is not due on the amount charged
for labor or incorporated materials used to repair, remodel, maintain,
or restore locomotives and rolling stock. Sales or use tax is due
on the sale or use of machinery, equipment, tools, and other items
used or consumed in performing the non-taxable service.
(4) Sales or use tax is not due on the sale or use
of electricity, natural gas, and other fuels used or consumed predominately
in the repair, maintenance, or restoration of rolling stock. For more
information, see §3.295 of this title (relating to Natural Gas
(5) Sales or use tax is not due on the amount charged
for labor or incorporated materials, whether lump-sum or separately
stated, used for the construction of new railroad tracks and roadbeds.
For more information, see §3.291 of this title (relating to Contractors).
Sales or use tax is not due on the separately stated sales price of
incorporated materials used to repair, remodel, restore, or maintain
existing railroad tracks and roadbeds. Sales and use tax is due on
the sales price for labor to repair, remodel, restore, or maintain
existing railroad tracks and roadbeds as nonresidential real property
repair, remodeling, and restoration. For more information, see §3.357
of this title (relating to Nonresidential Real Property Repair, Remodeling,
and Restoration; Real Property Maintenance).
(f) Motor vehicles. The sale and use of motor vehicles
are taxed under the Tax Code, Chapter 152 (Taxes on Sale, Rental,
and Use of Motor Vehicles). For information on repairs to motor vehicles,
see §3.290 of this title (relating to Motor Vehicle Repair and
Maintenance; Accessories and Equipment Added to Motor Vehicles; Moveable