Which pest, insurance, and general real-estate inspection services were taxable under Texas's 1988 rules?

Plain-English summary

Structural pest-control services included identifying insects and other pests, inspecting and evaluating the nature and extent of an infestation, reporting results, and performing control services. Inspections reporting whether pests were present were taxable.

Structural or mechanical-system inspections were also taxable when performed for an insurance carrier, insured, policyholder, or another person to value property in connection with insurance coverage.

General real-estate inspections of building components such as plumbing, wiring, air conditioning, heating units, and roofs were not taxable under the new-law treatment described in the letter. The provider was told to identify each inspection type clearly on the invoice and tax it accordingly.

What this means for you

The same activity label—inspection—could produce different results based on purpose. Pest identification and insurance valuation were taxable; a general real-estate condition inspection was not.

Common questions

Was a pest-infestation inspection taxable? Yes.

Was an insurance property inspection taxable? Yes.

Was a general building-condition inspection taxable? No, under the described 1988 rule.

Citations and references

• 34 Tex. Admin. Code Rules 3.355 and 3.356, enclosed for insurance and real-property services.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0855B14

Original ruling text

February 17, 1988

Dear***:

Thank you for your recent letter requesting information on the taxability of inspection
services.

Inspection services may be taxed under more than one type of taxable service. Two primary
examples are insurance services and real property services. I am enclosing Rule 3.355 and
Rule 3.356 for your review.

Structural pest control services include the identifying of insects and other pests, and
other related activities. Included are activities such as inspection and evaluation concerning
the nature and extent of an infestation, reports or performance of services to control pest and
insect infestation. Inspections you perform which report the presence or lack of presence of
insect or pest infestation are taxable.

The inspection of structures, their components, and mechanical systems are taxable if performed
for an insurance carrier, its insured, its policyholders or others when the purpose is to value
property in connection with furnishing of insurance coverage or any other similar activity.

Real estate inspections, the checking of structural components of a building such as plumbing,
electrical wiring, air conditioning and heating units, roofs, etc., are not taxable under the
new tax law changes.

You should carefully identify on each invoice the type of inspection being performed and add
tax accordingly. 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