TX 8803L0874G09 Sales and/or Use Tax (State,Local,MTA) 1988-03-31

Was tenant showroom finish-out in a decades-old warehouse converted into a design center taxable remodeling or nontaxable new construction?

Short answer: It was taxable remodeling under Rule 3.357(a)(6). The total charge to the tenant was taxable, and tenants who had not paid tax were told to pay the remodeler or the state.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Disclaimer: This is an official 1988 Texas Comptroller of Public Accounts letter applying Rule 3.357(a)(6), published on STAR. Its conclusion concerns showroom finish-out in a former warehouse and does not address the manufacturing-facility or television-studio uses named only in STAR's broader caption. Verify current commercial finish-out and remodeling rules before applying it today. Letters on STAR can support detrimental reliance only for the taxpayer directly issued the letter and may no longer represent current policy. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.

About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A building more than thirty years old had operated as a warehouse until extensive renovation converted it into showrooms for business-furniture manufacturers and representatives.

The Comptroller classified the tenant showroom finish-out as remodeling, not new construction, under Rule 3.357(a)(6). The total charge to each tenant was taxable.

Tenants that had not paid tax to the remodeler were instructed to pay the remodeler or remit tax directly to the state on the total remodeling price.

What this means for you

Extensive conversion of an existing warehouse did not make the later tenant finish-out new construction under this 1988 letter. The body decides only the showroom facts and does not discuss STAR's captioned manufacturing or television-studio uses.

Common questions

Was the showroom finish-out new construction? No.

Was the total charge taxable? Yes.

What if a tenant had not paid tax? The letter directed payment to the remodeler or directly to the state.

Citations and references

34 Tex. Admin. Code Rule 3.357(a)(6), cited for remodeling.

Source

STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
Opinion: https://star.comptroller.texas.gov/view/8803L0874G09

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 31, 1988

Dear ***:

Thank you for your letter concerning taxability of labor to finishout
showrooms for tenants located in the Contract Design Center.

As I understand, the building was built over thirty years ago and up
until
last year served as a warehouse. Extensive renovation has transformed
the
space into showrooms for business furniture manufacturers and reps.

The finishout described above is remodeling and the total charge to the
tenant is taxable. Please refer to Rule 3.357(a)(6).

Those tenants who did not pay tax to the remodeler, should now pay tax to
the
remodeler or directly to the state on the total remodeling price.

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

If you have nay 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,
(Mrs.) Jo Ann Dieck
Tax Policy Division

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