(a) A contractor is the consumer of tangible personal property furnished by him and incorporated into the property of his customer if the contract between the contractor and his customer contains a lump-sum price covering both the performance of the service and the furnishing of the necessary incidental material.
(b) A contractor is the seller of tangible personal property furnished by him and incorporated into the property of his customer, from whom he shall collect the tax, if the contract between the contractor and his customer contains separate amounts for the performance of the service and for the furnishing of the necessary incidental material. The tax rate is applied to the price of the materials as agreed in the contract or the price of the materials to the contractor, whichever is the greater.

Terms Used In Texas Tax Code 151.056

  • Contract: A legal written agreement that becomes binding when signed.
  • Fair market value: The price at which an asset would change hands in a transaction between a willing, informed buyer and a willing, informed seller.
  • Improvement: means :
    (A) a building, structure, fixture, or fence erected on or affixed to land;
    (B) a transportable structure that is designed to be occupied for residential or business purposes, whether or not it is affixed to land, if the owner of the structure owns the land on which it is located, unless the structure is unoccupied and held for sale or normally is located at a particular place only temporarily; or
    (C) for purposes of an entity created under § 52, Article III, or § 59, Article XVI, Texas Constitution, the:
    (i) subdivision of land by plat;
    (ii) installation of water, sewer, or drainage lines; or
    (iii) paving of undeveloped land. See Texas Tax Code 1.04
  • Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
  • Personal property: All property that is not real property.
  • Personal property: means property that is not real property. See Texas Tax Code 1.04
  • Property: means real and personal property. See Texas Government Code 311.005
  • Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
  • Real property: means :
    (A) land;
    (B) an improvement;
    (C) a mine or quarry;
    (D) a mineral in place;
    (E) standing timber; or
    (F) an estate or interest, other than a mortgage or deed of trust creating a lien on property or an interest securing payment or performance of an obligation, in a property enumerated in Paragraphs (A) through (E) of this subdivision. See Texas Tax Code 1.04
  • Tangible personal property: means personal property that can be seen, weighed, measured, felt, or otherwise perceived by the senses, but does not include a document or other perceptible object that constitutes evidence of a valuable interest, claim, or right and has negligible or no intrinsic value. See Texas Tax Code 1.04

(c) If a contractor has paid the sales tax to his supplier when the tangible personal property is purchased, the contractor may credit the amount of the tax paid to the supplier against the tax imposed as provided in Subsection (b) of this section with respect to a subsequent sale of the property.
(d) In this section, “contractor” means a person who makes an improvement on real estate and who, as a necessary or incidental part of the service, incorporates tangible personal property into the property improved.
(e) This section does not apply to the use or consumption of tangible personal property as a necessary or incidental part of a taxable service.
(f) A contractor is not eligible for the exemption provided by § 151.318 on items used in the performance of a contract to improve real property.
(g) In this subsection, “ready mix concrete contractor” means a person who manufactures or produces ready mixed concrete for construction purposes and incorporates the ready mixed concrete in the property improved. A ready mix concrete contractor performing a contract must separate and individually invoice the customer for each yard of ready mixed concrete produced and consumed for the improvement of real property and collect and remit the tax imposed under this chapter on the ready mixed concrete produced and consumed. The tax rate is applied to the price of the materials determined by the greater of the invoice price or fair market value of ready mixed concrete incorporated into the project. This subsection does not apply to an invoice submitted by a ready mix concrete contractor for a public works project.

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