200511480L



November 11, 2005

Dear **************: 

This is in reply to your e-mail concerning whether Texas sales tax is due on 
the inspection and repair of survival rafts used on aircraft.

A charge to inspect survival rafts is not taxable since this is not a taxable 
service.  The repair, remodeling, or maintenance of tangible personal property, 
such as a survival raft, is a taxable service.  See Rule 3.292 concerning that 
taxable service.  The service provider is required to collect sales tax on the 
total charges for parts and for labor.

However, survival rafts that are attached to aircraft (even if they can be 
removed for use or for repair) are regarded as components of the aircraft and 
the taxability of the charges depends on the circumstances as explained below.  

Texas sales tax is not due on the labor to inspect, repair, remodel, or 
maintain aircraft (including aircraft components such as survival rafts used on 
aircraft).  However, sales tax is due on all parts and materials used in the 
repair, remodeling, or maintenance of an aircraft or aircraft components such 
as survival rafts, unless an exemption applies and the purchaser gives the 
service provider a properly completed exemption certificate claiming a valid 
reason for exemption (e.g., aircraft owned or operated by a person using the 
aircraft as a FAA licensed or certificated carrier or by a person using the 
aircraft to provide FAA recognized flight instruction).  

In Texas, the labor to repair, remodel or maintain a private aircraft or a 
component of an aircraft belonging to another is not subject to sales or use 
tax.  Only the parts and materials used to repair, remodel or maintain an 
aircraft or components of an aircraft are subject to tax.  The tax 
responsibilities of persons performing such services on aircraft or components 
of an aircraft are determined by the type of contract (lump-sum or separated) 
the person has with their customer.  

A person who repairs, remodels or maintains a private aircraft or components of 
an aircraft for another under a lump-sum contract (a single price for the 
entire job that does not separately state labor from materials) does not 
collect sales or use tax from the customer on the lump-sum charge or any 
portion thereof.  Under a lump-sum contract, the repairman is the ultimate 
consumer of all supplies, tools, equipment, parts and materials incorporated 
into the private aircraft or components of an aircraft and must pay sales tax 
on those parts and materials to its suppliers at the time of purchase.  

A person repairing, remodeling or maintaining private aircraft or components of 
an aircraft under a separated contract (separate charges for parts and labor) 
is considered to be a seller of the parts and must collect tax from the 
customer on the separate price for the parts.  The charge for labor is not 
taxable.  The separate price for the parts cannot be less than what the 
repairman paid to its suppliers for those same parts.  See Comptroller’s Rule 
3.292(j) Repair, Remodeling, Maintenance, and Restoration of Tangible Personal 
Property.  

A component is defined in Webster's Ninth New Collegiate Dictionary as a 
"constituent part."  "Constituent" is defined as “serving to form, compose, or 
make up a unit or whole."  Therefore, component parts of an aircraft include 
any and all equipment or parts that make up the aircraft as a whole, i.e. 
tangible personal property necessary to the proper operation of the aircraft 
pursuant to FAA rules and regulations that are attached or permanently affixed 
to the aircraft (an item may be removed temporarily from the aircraft for 
servicing.) component parts of an aircraft include but are not limited to: 
engines, seats, radar equipment or other electronic devices used for 
navigational or communications purposes, and air cargo containers, food carts, 
fire extinguishers, survival raft, etc. that are secured or attached to the 
aircraft while in flight.  Items such as pillows, blankets, trays, ice for 
drinks, kitchenware, toilet articles, etc. are not components of an aircraft 
for sales tax purposes.

Texas sales tax is not due on tangible personal property (including repair and 
maintenance parts or component parts such as survival rafts) that is 
permanently affixed or attached as a component part of an aircraft used as a 
licensed and certified carrier of persons or property or an aircraft used to 
provide certified flight instruction recognized by the FAA and designed to lead 
to a pilot certificate or rating issued by the FAA. See Texas Tax Code Sec. 
151.328 (b) and (e) and Rule 3.297, Carriers. 

A licensed and certificated carrier is any entity authorized by the Federal 
Aviation Administration (FAA) to operate an aircraft as a common or contract 
carrier in transporting persons or property for hire in the regular course of 
business. For example, an air charter service licensed and certificated under 
Part 135 of the FAA Regulations qualifies as a licensed and certificated 
carrier for sales tax purposes. See Rule 3.297 Carriers.

For online access to the sections of the Texas Tax Code and Rules noted above 
go to: www.window.state.tx.us/taxinfo/sales/index.html. Scroll down to either 
"Statutes" or "Rules" and click to open. 

This opinion is based on the facts you submitted. Other facts, though similar, 
may yield different results. I hope this information helps. If you have further 
questions, please e-mail me at tax.help.cpa.state.tx.us, or you may reach me by 
phone at 1-800-531-5441, ext. 3-4986. 

Our goal is to provide you with prompt, professional service. Please take a 
moment to complete our on-line survey at 
http://aixtcp.cpa.state.tx.us/surveys/tpsurv/

Sincerely,


Ken Koch
Tax Policy Division




From: **************
Sent: Friday, November 04, 2005 3:20 PM
To: tax.help@cpa.state.tx.us
Subject: 05311773-Survival Rafts for Aircrafts

Are survival raft inspection used on aircrafts taxable. Inspection and repair.


**************

Hook 'Em Horns!!!




ACCESSION NUMBER: 200511480L
SUPERSEDED: N
DOCUMENT TYPE: L
DATE: 11/11/2005
TAX TYPE: SALES