When repairing property damaged in a governor- or president-declared disaster area (like tornado damage), does the Texas labor-to-restore-property exemption cover the cost of scaffolding or other equipment rented to do the repair work?

Plain-English summary

Someone doing tornado-damage repair work asked whether the equipment they rent — specifically scaffolding — to perform the repairs qualifies for a tax exemption, given that the repair work itself is being done in a governor- or president-declared disaster area.

The Comptroller pointed to Tex. Tax Code § 151.350, which does provide a real exemption — but a narrow one. The exemption covers only separately itemized charges for LABOR to repair real or tangible personal property, and only where the repair is to property damaged by the condition that caused the area to be declared a disaster area. The statute's own text (quoted in the letter) confirms two conditions: (1) the labor charge must be separately itemized, and (2) the restoration must be performed on property damaged within a disaster area by the condition that triggered the declaration. Critically, subsection (b) states the exemption does NOT apply to tangible personal property transferred by the service provider to the purchaser as part of the service.

Applying that to the facts: the exemption does not cover scaffolding rented and used to perform the repair work, or temporary air equipment used during the project — those are equipment/property costs, not labor. The letter also notes that treating a disaster-repair job like new construction (which would let a contractor separate labor from incorporated-materials charges) is limited to contracts that actually structure the billing that way.

What this means for you

Disaster-repair and restoration contractors

Don't assume "disaster area" work is broadly tax-exempt. Only the itemized labor charge for actual repair/restoration work qualifies under § 151.350 — equipment you rent to do the job (scaffolding, temporary air equipment, etc.) and materials you transfer to the customer remain taxable as usual.

Property owners hiring disaster repair services

Ask your contractor to separately itemize the labor charge on your invoice if you're in a declared disaster area — that's the piece eligible for the exemption. Equipment rental costs and materials passed through to you will still carry tax.

Accountants and tax professionals

This letter is a clean, statute-quoting confirmation that § 151.350's disaster-labor exemption is narrowly drawn: itemized labor only, property actually damaged by the disaster-triggering condition, and no coverage for equipment or transferred materials. Useful for setting client expectations after a declared disaster.

Common questions

Q: Does the disaster-area labor exemption cover equipment I rent to do repair work?
A: No — this letter specifically confirms scaffolding rented and used to perform the work, and temporary air equipment used during the project, are NOT covered by the § 151.350 exemption.

Q: What does the disaster-area exemption actually cover?
A: Only separately itemized labor charges to restore real or tangible personal property damaged by the condition that caused the area to be declared a disaster.

Q: Does the exemption cover materials I install as part of the repair?
A: No — § 151.350(b) explicitly excludes tangible personal property transferred to the purchaser as part of the service.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.350 (Labor to Restore Certain Property — itemized labor only, no coverage for equipment or transferred materials)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200005361L

Original ruling text

May 31, 2000

From: Bettie Peterson

To: **

Subject: Tornado Damage

Thank you for your recent email.

Texas Tax Code 151.350, provides an exemption for separately stated charges for
labor (only) to repair real or personal property only if the repair is to
property damaged by the condition that caused the disaster and is within an
area declared a disaster area by the governor or president. The exemption does
not apply to scaffolding rented and used to perform the work or temporary air
for use during the project. Treating the job like new construction is limited
to contracts that separate the labor charge from incorporated materials
charges. The Tax Code is restated below for your reference. If you wish to
contact me again with information about other services, I will address the
taxability of them.

Sec. 151.350. Labor to Restore Certain Property.
(a) Labor to restore real or tangible personal property is exempted from the
taxes imposed by this chapter if:
(1) the amount of the charge for labor is separately itemized; and
(2) the restoration is performed on property damaged within a disaster area by
the condition that caused the area to be declared a disaster area.
(b) The exemption under this section does not apply to tangible personal
property transferred by the service provider to the purchaser as part of the
service.

Referenced rules are available at
.

The State Tax Automated Research system, that provides viewing and downloading
of rules, edited letter rulings, hearings, AG Opinions, etc., may be accessed
on the Internet at: http://www.window.state.tx.us/

This opinion is based on the facts you submitted and current law. Other facts
though similar, may result in different answers.

If you have questions or need more information, I will be glad to help you. You
may call me toll free from anywhere in the United States at 1-800-531-5441,
extension 5-0330.