Which plumbing labor, mileage, hauling, and equipment charges were taxable for residential, commercial, and new-construction work?

Plain-English summary

The plumber worked on commercial and residential real property. The Comptroller classified the charges as follows:

• Labor and mileage for repairing residential real property were nontaxable.
• Work related to new construction was nontaxable for both residential and commercial property.
• Water or sewer lines were treated as residential when the homeowner was responsible for their repair or maintenance.
• For repair or remodeling of nonresidential real property, the total charge—including mileage, labor, machinery hauling, and equipment—was taxable.
• Charges to organizations exempt from sales tax were nontaxable, but nonprofit water-supply corporations were not sales-tax exempt merely because they were nonprofit.

What this means for you

The historical result depended on residential status, whether the project was new construction, and whether the customer held an actual sales-tax exemption.

Common questions

Was residential plumbing repair labor taxable? No.

Was new-construction plumbing labor taxable? No, for residential or commercial property.

Were all charges for nonresidential repair or remodeling taxable? Yes, including the listed mileage, labor, hauling, and equipment charges.

Was a nonprofit water-supply corporation automatically exempt? No.

Citations and references

• 34 Tex. Admin. Code Rule 3.291 — historical contractor rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8801L0860C12

Original ruling text

January 28, 1988

Dear ****:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in answering your question involving changes in the sales tax law. This isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which would
not adversely impact businesses. In many instances, an answer to a question
just wasn't available when the question arrived.

You indicate that you do plumbing work on commercial real property and
residential real property.

Your labor and mileage charges are not taxable when you repair
residential real property (e.g., homes) or perform work related to new
construction on either residential real property or commercial real property
(e.g., stores or offices). Water lines or sewer lines would be considered
residential if the home owner were responsible for any repairs or maintenance.
Your responsibilities for these activities are addressed in Comptroller's Rule
3.291, Contractors, which I have enclosed for your review.

Your total charges including mileage, labor, machinery hauling, and
equipment charges for work in repairing or remodeling nonresidential real
property would be taxable. Charges to organizations exempt from sales tax are
not taxable. Nonprofit water supply corporations e.g., *** are not
exempt from sales tax.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions or need more information, please call our
toll-free number
1-800-531-5441. The regular number is 512/463-4600. You may write me at
the Tax Policy Division.

Sincerely,

Tom Soto
Tax Policy Division