SECTION 3.306. Sales of Mobile Offices, Oilfield Portable Units, Portable Buildings, Prefabricated Buildings, and Ready-Built Homes

(a) Definitions. The following words and terms when used in this section shall have the following meanings, unless the context clearly indicates otherwise.

(1) Bunkhouse--This term has the meaning given in §3.72 of this title (relating to Trailers, Farm Machines, and Timber Machines).

(2) Contract for the improvement to realty--A contract, as described in §3.347(a) of this title (relating to Improvements to Realty). Such a contract includes installation or set-up performed to permanently affix a structure defined in this section to real property.

(3) House trailer--This term has the meaning given in §3.72 of this title.

(4) Installation or set-up--Activities associated with either a contract for the improvement to real property or the temporary placement of a structure defined in this section, including, but not limited to, spotting the structure; preparing the foundation; connecting separate sections of the structure, if any; placing, blocking, leveling, and anchoring the structure; connecting sewer, water, electricity, and other utilities; and installing skirting, awnings, and steps.

(5) Manufactured home--This term has the meaning given in §3.481 of this title (relating to Imposition and Collection of Manufactured Housing Tax).

(6) Mobile office--A self-contained transportable structure built on a permanent chassis, with or without wheels, axles, and a towing device, that is designed to be used as an office, sales outlet, or other work place, such as a self-contained portable bathroom or a portable on-site dressing room. A food and beverage concession trailer is an example of a towable structure designed to be used as a sales outlet or other work place.

(7) Oilfield portable unit.

(A) A self-contained transportable structure built on a permanent chassis, with or without wheels, axles, and a towing device, designed to be used for temporary lodging or temporary office space that:

(i) does not require attachment to a foundation or real property to be functional;

(ii) is located exclusively upon, or immediately adjacent to, the lease premises or assigned acreage of an oil, gas, water disposal, or injection well located within an oil or gas lease, field, pooled unit, or unitized tract;

(iii) is used exclusively to provide sleeping accommodations, temporary office space, or any other temporary work space for employees, contractors, or other workers at an oil, gas, water disposal, or injection well; and

(iv) is not a travel trailer, camper trailer, or recreational vehicle.

(B) Examples of items that qualify as an oilfield portable unit when located and used exclusively as provided in this paragraph include, but are not limited to, a bunkhouse, trailer, semitrailer, park model, house trailer, and manufactured home. For more information regarding the taxation of travel trailers, camper trailers, and recreational vehicles, refer to §3.72 of this title.

(8) Park model--This term has the meaning given in §3.481 of this title.

(9) Portable building--A self-contained transportable structure that does not require attachment to a foundation or to realty in order to be functional. An example of a portable building is a tool shed.

(10) Prefabricated building--A structure, not designed to be a residential dwelling, built at a location other than its permanent site, and that is later transported in one or more sections and affixed to real property.

(11) Ready-built home--A structure that does not bear a label or decal issued by the Texas Department of Licensing and Regulation, the Texas Department of Housing and Community Affairs, or the U.S. Department of Housing and Urban Development, but that is designed to be a residential dwelling which is constructed, precut, partially assembled, or fabricated in whole or in part at a location other than the home site and subsequently transported, in one or more sections, to the home site, where it is assembled on a permanent foundation.

(12) Travel trailer or recreational vehicle--This term has the meaning given in §3.72 of this title.

(13) The terms mobile home, ready-built home, prefabricated building, and portable building do not include a house trailer, as defined in and subject to the provisions of Tax Code, Chapter 152, or a manufactured home, as defined in and subject to the provisions of Tax Code, Chapter 158. See §3.72 and §3.481 of this title.

(b) Application of the sales and use tax to mobile offices, oilfield portable units, portable buildings, prefabricated buildings, ready-built homes, and tangible personal property.

(1) Mobile offices. A sale, lease, or rental of a mobile office is a taxable sale of tangible personal property. Sales tax is due on the total sales price charged by the seller, including charges for delivery and installation or set-up, even if separately stated on the invoice issued to the purchaser. See §3.303 of this title (relating to Transportation and Delivery Charges) and §3.294 of this title (relating to Rental and Lease of Tangible Personal Property).

(2) Oilfield portable units. A sale, lease, or rental of an oilfield portable unit is subject to sales tax. Sales tax is due on the total sales price charged by the seller, including charges for delivery and installation or set-up, even if separately stated on the invoice issued to the purchaser. See §3.303 and §3.294 of this title.

(A) An oilfield portable unit that ceases to be used exclusively as an oilfield portable unit, as required by this section, and that meets the definition of a motor vehicle, pursuant to Tax Code, §152.001(3), is subject to tax imposed by Tax Code, Chapter 152. Examples include bunkhouses, trailers, semitrailers, park models, or house trailers. For more information regarding the application of the Motor Vehicle Sales Tax to oilfield portable units, refer to §3.72(c) of this title.

(B) The lease or rental of a manufactured home as defined in §3.481 of this title that ceases to be used exclusively as an oilfield portable unit as required by this section is subject to hotel occupancy tax as provided under Tax Code, Chapter 156.

(3) Portable buildings. A sale, lease, or rental of a portable building is a taxable sale of tangible personal property. Sales tax is due on the total sales price charged by the seller, including charges for delivery and installation or set-up, even if separately stated on the invoice issued to the purchaser. See §3.303 and §3.294 of this title.

(4) Prefabricated buildings and ready-built homes.

(A) A contract to sell a prefabricated building or a ready-built home is considered a contract for an improvement to real property when the seller is required to build, transport, and affix the structure to a permanent site. See §3.347 of this title. If the contract requires the seller to perform installation or set-up services, the seller's sales tax responsibilities are determined by whether the contract is a lump-sum contract or a contract that separately states charges for materials and labor. See §3.291 of this title (relating to Contractors).

(B) The sale of a ready-built home or a prefabricated building that is not at the time of sale affixed to its permanent site is a taxable sale of tangible personal property if sold to a person responsible for affixing the structure to real property.

(5) Structures deemed to be tangible personal property. A sale of a structure that is affixed to real property is nonetheless a taxable sale of tangible personal property if the purchaser is obligated to remove the structure from its site.

(6) Tangible personal property affixed to real property. An "in-place" sale of items such as fixtures, machinery, and equipment is considered a sale of tangible personal property if the seller:

(A) is a lessee of the real property or structure to which the items are affixed; and

(B) has the present right to remove the items either as trade fixtures or under the express terms of the lease. Sales tax is due on that portion of the total consideration allocable to the in-place items without regard to the fact of their physical attachment to real property.

(c) Application of limited sales and use tax to manufactured homes.

(1) Limited sales or use tax is due on parts or accessories installed in a manufactured home by the retailer of the manufactured home, whether the home is sold alone or as part of a contract for the improvement to realty. See §3.291 of this title.

(A) If the retailer sells the home for a lump sum amount that includes both the home and parts, the retailer should not collect limited sales or use tax on the lump sum charge. The retailer must pay limited sales or use tax on the parts at the time of purchase.

(B) If the retailer separates the charge to the customer into one charge for the home and a separate charge for the additional parts, the retailer must collect limited sales or use tax on the amount charged for the parts. The retailer may issue a resale certificate in lieu of tax when purchasing the parts.

(C) If a third party sells and installs the items, the installer's sales tax responsibilities are determined by whether the contract separates charges for materials from charges for labor. If the installer charges a lump-sum amount for materials and labor, the installer should not collect tax on the lump-sum charge, and the installer must pay limited sales or use tax on the parts at the time of purchase. If the installer separately states the charges for materials and labor, the installer must collect limited sales tax on the amount charged for the parts, and the installer may issue a resale certificate in lieu of tax when purchasing the parts.

(2) A manufactured home affixed to real property, including placement on a foundation and/or supporting, blocking, leveling, securing, anchoring, and connecting multiple sections, is presumed to be an improvement to real property for sales and use tax purposes.

(3) Repair, remodeling, restoration and maintenance.

(A) Sales or use tax is not due on labor for the repair, remodeling, restoration, and maintenance of a manufactured home affixed to real property and used for residential purposes pursuant to §3.291 of this title. Residential use of a manufactured home occurs when the building is occupied as a home or residence by the owner or by a tenant who occupies the building under a contract for an express initial term of more than 29 consecutive days. Absent a contract, only the period exceeding 29 consecutive days will be considered residential use, when supported by valid documentation, such as receipts or canceled checks.

(B) Sales or use tax is due on the repair, remodeling, and restoration of a manufactured home affixed to real property and used for nonresidential purposes pursuant to §3.357 of this title (relating to Nonresidential Real Property Repair, Remodeling, and Restoration; Real Property Maintenance).

(C) Sales or use tax is due on the repair, remodeling, restoration, and maintenance of a manufactured home temporarily affixed to real property pursuant to §3.292 of this title (relating to the Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property). A manufactured home temporarily affixed to real property is deemed to be tangible personal property if the owner of the home is a lessee of the real property to which the home is affixed and is obligated to remove the home from the real property under the express terms of the lease without regard to the home's attachment to the real property. For example, a manufactured home used exclusively to provide sleeping accommodations for employees, contractors, or other workers at a construction site is temporarily affixed to the real property.

Source Note: The provisions of this §3.306 adopted to be effective January 1, 1976; amended to be effective October 7, 1980, 5 TexReg 3842; amended to be effective October 13, 1982, 7 TexReg 3497; amended to be effective May 8, 2006, 31 TexReg 3717; amended to be effective November 14, 2013, 38 TexReg 7969