How did Texas tax commercial pool repair or remodeling, new construction, and residential pool work beginning January 1, 1988?

Plain-English summary

Beginning January 1, 1988, repair or remodeling of nonresidential real property was taxable on the total charge, whether billed lump-sum or separated. Adding a heater to an existing hotel pool was the letter's example.

Labor was not taxable for building new structures, completing unfinished new structures, adding footage to existing structures, or building, repairing, or remodeling residences. Residences included rental homes, apartments, townhouses, and condominiums; adding a pool to a residential backyard was nontaxable labor.

The letter also stated a historical filing rule: reporting $1,500 or more of sales tax in one quarter caused automatic conversion to monthly filing.

What this means for you

Under the 1988 guidance, property use and whether the work was new construction or work on an existing nonresidential pool controlled the labor result. The filing threshold is obsolete historical procedure.

Common questions

Was hotel-pool heater installation taxable? Yes, as work on existing nonresidential real property.

Was a new residential backyard pool's labor taxable? No.

Were apartment and townhouse pool contexts residential? The letter included apartments and townhouses within residences.

Citations and references

• 34 Tex. Admin. Code Rule 3.357, applied to nonresidential repair and remodeling.
• Rule 3.291, applied to new construction and residential work.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0859D13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 3, 1988

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in
answering your question regarding the repair and remodeling of real
property.
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.

Beginning January 1, 1988, if you repair or remodel nonresidential real
property, you must collect sales tax on your total charge whether you
bill
lump-sum or separated. An example of this type of labor would be adding
a
pool heater to an existing pool at a hotel. Please see the enclosed Rule
3.357 for additional information.

Sales tax is not due on your labor charges if you build new structures,
complete unfinished new structures or add footage to existing structures
or
if you build, repair or remodel residences. Residences include, but are
not
limited to, rent homes, apartments, townhouses and condominiums. Adding
a
swimming pool to a residential backyard is an example of labor that is
not
taxable. The enclosed Rule 3.291 outlines your sales and use tax
responsibilities in these cases.

If you report sales taxes of $1500 or more in any one quarter, you will
automatically be converted to a monthly filer on our computer and will
receive a notice stating you will have to start reporting your taxes on a
monthly basis.

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 me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at Tax Policy Division.

Sincerely,
Sandi Skaggs
Tax Policy Division