How did Texas tax swimming-pool maintenance, transferred chemicals, service equipment, lifeguard charges, and purchases by qualifying exempt organizations?

Plain-English summary

Swimming-pool maintenance was taxable on the total charge, including materials, labor, transportation, and incidentals, whether billed lump-sum or separately.

Chemicals transferred to the customer could be purchased with a resale certificate. Equipment used by the provider, such as suction hose, was taxable to the provider when purchased.

Lifeguard services were not taxable, but Rule 3.356(h)(3) required them to be separately identified. If bundled without separation, the entire amount was taxable.

An organization exempt from federal income tax under § 501(c)(4) still had to apply to the Comptroller for Texas sales-tax exemption. After qualification, it could give an exemption certificate for taxable purchases furthering its exempt purpose.

What this means for you

Under the 1988 guidance, separately stating the nontaxable lifeguard service and distinguishing transferred chemicals from provider equipment were essential.

Common questions

Was pool maintenance taxable? Yes, on the total charge.

Could chemicals be bought for resale? Yes, when transferred to the customer.

Was provider equipment exempt? No.

Were lifeguard services taxable? No, if separately identified.

Citations and references

• 34 Tex. Admin. Code Rules 3.356, 3.285, 3.322, and 3.287.
• Internal Revenue Code § 501(c)(4), referenced for the organization's federal status.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0855B04

Original ruling text

February 5, 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
business. In many instances, an answer to a question just wasn't available when the
question arrived.

Swimming pool maintenance is taxable. Your total charge for material, labor, transportation
and other incidentals is taxable whether a lump sum or separated charge. Any materials
transferred to your customer i.e. chemicals, may be purchased tax free with a resale
certificate. Equipment and items such as suction hose used in performing the service
would be taxable to you and you should pay tax to your supplier. I am enclosing Rule 3.356
and Rule 3.285 for your information.

The provisions of lifeguard services is not taxable as a real property service or as any
other taxable service. However, Rule 3.356 (h)(3) states that the charges for these
unrelated services must be separately identified in the invoice or contract to the
customer. If not separately identified, the entire amount is taxed.

Organizations which have qualified as exempt from federal income taxes under Section 501
(c)(4), Internal Revenue Code must apply to the Comptroller to be exempted from the sales
taxes. See Rule 3.322. After meeting these requirements, these organizations may issue a
properly completed exemption certificate in lieu of the tax for taxable items purchased
which further the exempt purpose of the organization. Rule 3.287 is enclosed.

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

You may write me at the Tax Policy Division.

Sincerely,

Tax Policy Division