Ready-Mix Concrete Sales, Delivery and Pumping Services
Sales of Ready-Mix Concrete
Ready-mix concrete is a taxable manufactured product. Because ready-mix is processed with special equipment while being transported, the seller delivers the product to the buyer's job site. The seller should collect sales tax based on the total charge, which includes any transportation or delivery fee.
Delivery and Pumping Services
All transportation and delivery charges by a ready-mix company are part of the total charge for the product and thus taxable.
Charges for transportation and delivery by someone other than the ready-mix company are non-taxable services. These non-taxable services include the use of pumps and similar equipment to move the ready-mix from the seller's delivery trucks to the customer's forms.
Renting transportation or pumping equipment with an operator is a transportation service and not taxable. (Taxable rentals occur only when the charge does not include an operator, and the customer gets exclusive possession and operational control of the equipment. For more information on collecting tax on rentals, see the sections below on Motor Vehicle Rental Companies and Equipment Rental Companies.)
Motor Vehicle Sales Tax vs. Limited Sales Tax
Self-propelled concrete pumps are motor vehicles subject to motor vehicle taxes.
Towed concrete pumps may be considered either a motor vehicle or moveable specialized equipment. For tax purposes, if the pump is mounted on a trailer, it's classified as a motor vehicle and subject to motor vehicle sales or use tax. The pump is considered moveable specialized equipment subject to limited sales and use tax if mounted on a chassis specifically manufactured for it.
The state limited sales tax is 6-1/4 percent, with up to 2 percent local taxes. Motor vehicle sales and use tax is 6-1/4 percent. Motor vehicle rental tax is 6-1/4 percent for periods more than 30 but less than 181 days, and 10 percent for 30 days or less. Agreements for more than 180 days are non-taxable leases.
Motor Vehicle Rental Companies
A motor vehicle rental company must have a motor vehicle rental permit, and collect and report motor vehicle rental tax.
Companies with more than five rental vehicles can purchase them tax free, but incur a minimum rental tax liability equivalent to the motor vehicle sales tax that would have been paid. This tax liability is neither increased nor decreased if the vehicles are used for non-rental purposes, such as pumping services.
Companies with less than five rental vehicles must pay motor vehicle sales tax at the time of registration, but can retain rental tax collections up to the amount of sales tax paid. No additional tax is due if the vehicles are used for purposes other than rentals.
Equipment Rental Companies
Moveable specialized equipment used exclusively for rental or lease can be purchased tax-free with a resale certificate. The rental company must collect limited sales tax on all rentals, including those to related entities.
If such equipment is used for other purposes, such as pumping services, tax is due either on the purchase price or on the fair market rental value for the period of divergent use. There is no maximum on the divergent use tax, which must continue to be paid even if it exceeds the amount- of sales tax due on the purchase price. Payment of the divergent use tax can be stopped, however, by paying sales tax on the purchase price, with no credit given for past payments of divergent use tax and rental tax.
Texas Emissions Reduction Plan (TERP) Surcharges
Beginning July 1, 2003, the TERP surcharge increases from 1 percent to 2 percent. The surcharge on sales, leases and rentals of off-road heavy-duty diesel equipment applies to diesel-powered pumpers but not to those mounted on motor vehicles or to charges for pumpers with operators.
The previous 1 percent rate continues to apply for the original term of rentals or lease agreements that begin before July 1, 2003. Renewals or extensions of such agreements on or after July 1, 2003 are subject to the new 2 percent rate.
There is a surcharge on sales or use of diesel-powered motor vehicles with a gross vehicle weight of more than 14,000 pounds. A new 1 percent surcharge applies on 1997 and newer models, while the surcharge on model years 1996 and older remains at 2.5 percent. The surcharge is in addition to the 6.25 percent motor vehicle sales and use tax.