Does a maid/housekeeping business have to collect Texas sales tax on residential cleaning services?

Plain-English summary

The taxpayer ran a house-cleaning business starting in October 1987 and had registered the business name with the county and the Better Business Bureau. Early on, the Comptroller's office told her not to charge sales tax on house cleaning services. After she picked up a commercial customer (a medical office) in 1988, a 1990 audit of that commercial customer revealed she hadn't charged tax on that account, and the auditor told her to collect sales tax on cleaning done for commercial customers, but not for residential customers.

In 1993 someone else told her to collect sales tax on all her accounts, but a CPA friend checked with the Comptroller's office and was told residential accounts still didn't require tax collection. She got a sales tax permit anyway and began collecting tax on residential cleaning starting November 1, 1993. A Comptroller field office employee then told her to request a written ruling on the taxability of her residential cleaning services, which produced this letter.

The Comptroller explained that its policy of not taxing individuals who clean homes rests on an exemption in the sales tax law for services performed by an employee for an employer, where the employee receives a salary or wages — and that this exemption is applied when the same individual cleans the same home. However, the letter goes on to say that if the taxpayer and her partner both clean all the homes (or clean the same homes together) and split the revenue equally, neither of them can be considered an employee of the residential household. In that scenario, the company is required to collect sales tax on its residential cleaning services. The letter notes this opinion is based on the facts presented and could change if the facts differ.

What this means for you

Individual cleaners working alone

If you personally clean the same home(s) as an employee receiving wages, the Comptroller's letter indicates that arrangement can fall under an exemption for employee services performed for an employer/household — meaning sales tax may not need to be collected on that work.

Maid/housekeeping business owners with partners or crews

If you and a partner (or other workers) both clean homes and split the revenue, this letter indicates you cannot be treated as an "employee" of the household you clean for. According to the Comptroller, that kind of shared-revenue business arrangement is not an employer-employee relationship with the residential customer, so the business must collect sales tax on its residential cleaning services — not just on commercial accounts.

Accountants and tax professionals

This letter is a useful illustration of how the Comptroller draws the line between the "employee cleaning a home for wages" exemption and a business structure where cleaning is performed by co-owners/partners splitting revenue. The letter is explicit that the outcome depends on the specific facts, and it does not cite a statute or rule number, so it should be used as an illustrative data point rather than as binding authority for a different client's facts.

Common questions

Q: Does Texas sales tax apply to residential house-cleaning services?
A: It depends on the arrangement. The Comptroller's letter describes an exemption for cleaning services performed by an individual employee who is paid wages to clean the same home. But if the business is run by two or more people who clean homes together (or clean all the homes) and split the revenue equally, the letter says sales tax must be collected on those residential cleaning services.

Q: Why would a homeowner's individual maid not owe sales tax, but a maid service company would?
A: According to the letter, the exemption applies when the relationship is truly employer-employee (the individual cleans the same home for wages). Where two business partners share revenue from cleaning homes, the Comptroller says neither can be deemed an employee of the household, so that exemption doesn't apply to the business.

Q: Does it matter whether the customers are residential or commercial?
A: This letter is about residential cleaning specifically. It notes the taxpayer had already been instructed by an auditor in 1990 to collect tax on cleaning done for a commercial customer, while treating residential accounts differently — consistent with the exemption being tied to individual employee/household arrangements, which typically apply to private residences.

Q: Is this letter something a taxpayer other than the original recipient can rely on?
A: No. As with all STAR letters, this opinion is based on the specific facts presented by this taxpayer, and the letter itself states the opinion could change with different facts. Other taxpayers should not treat it as binding for their own situation.

Citations and references

The original letter does not cite any specific statute or rule by number. It refers only in general terms to "an exemption in the sales tax law that exempts services performed by an employee for an employer for which the employee receives a salary or wages."

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9404265L

Original ruling text

April 15, 1994

Dear **:

Thank you for your letter of March 21, 1994, concerning your Texas sales and
use tax responsibilities.

You started your business in October 1987. You registered your business name
with the county and the Better Business Bureau. Then, you checked with the
Comptroller's Office and were told not to charge sales tax on house cleaning
services.

One of your residential customers asked you to clean his medical office
beginning July 1988. This was your first commercial customer. The Comptroller
audited the commercial customer August 1990. The audit revealed that you had
not charged tax on the cleaning services performed for this commercial
customer. The commercial customer paid the tax liability. The auditor
instructed you to collect sales tax on cleaning services performed for
commercial customers, but not for residential customers.

In September 1993, you were contacted by ** who instructed you to
collect sales tax on all of your accounts. Your friend, a C.P.A., checked with
a local Comptroller's office and with someone in Austin, and was told you were
not required to collect sales tax on residential accounts. The C.P.A. advised
you to get a sales tax permit number and you did. You started collecting sales
tax on residential cleaning November 1, 1993.

Betty Hernandez of our ** field office instructed you to write a
letter requesting a written statement concerning the taxability of your
residential cleaning services.

Our policy of not taxing individuals who clean homes is couched in an exemption
in the sales tax law that exempts services performed by an employee for an
employer for which the employee receives a salary or wages. We apply this
exemption when the same individual cleans the same home.

Your company is required to collect sales tax on its residential cleaning
services if you and your partner both clean all the homes (or together clean
the same homes) and equally share the revenue. In such a case neither of you
can be deemed to be an employee of a residential household.

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

You may call toll free 1-800-531-5441, extension 3-4683 if you have any
questions or need more information. You may write to Tax Administration
Division, Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Administration Division

cc: Betty Hernandez, ** Enforcement
Carol Riddle, **** Audit Office