Is painting lettering on a store's windows a taxable service in Texas?

Plain-English summary

A taxpayer asked the Comptroller whether painting letters on the windows of a store — for example, lettering that might serve only a temporary purpose like advertising a sale — is a taxable service. The Comptroller answered that this window-lettering service is taxable as the remodeling of a nonresidential improvement to real property.

Because the service is taxable, the person performing it must collect and remit sales tax on the total amount charged to the store owner for painting the letters. At the same time, the letter notes that the painter may buy the paint used in the job tax-free from its supplier, by giving the supplier a properly completed resale certificate — since the paint is being resold as part of a taxable service to the customer. The Comptroller pointed to Rule 3.357, concerning nonresidential repair and remodeling, as the relevant rule, and said a copy of that rule would be enclosed with the letter.

What this means for you

Sign painters and businesses that paint window/wall lettering

If you paint lettering — even hand-painted, potentially temporary lettering like a sale announcement — on the windows, doors, or walls of a store or other commercial building, this letter indicates that service is taxable nonresidential repair and remodeling. You should charge and collect Texas sales tax on your total charge to the store owner. You can buy the paint itself tax-free from your supplier by issuing a resale certificate, since the cost of the paint is being passed through as part of a taxable service.

Store and commercial building owners

If you hire someone to paint lettering on your store's windows, doors, or walls, expect to be charged sales tax on the total invoice for that work, since the Comptroller treats it as taxable remodeling of your building rather than an exempt or nontaxable service.

Accountants and tax professionals

This letter is a straightforward application of the nonresidential repair and remodeling framework in Rule 3.357 to hand-painted window/wall lettering. It confirms that even seemingly temporary or cosmetic work (like advertising lettering) is treated as remodeling of real property, and it confirms the standard resale-certificate mechanism for the painter's own purchase of paint.

Common questions

Q: Is painting letters on a store's windows taxable in Texas?
A: Yes. The Comptroller ruled it is taxable as the remodeling of a nonresidential improvement to real property, and the painter must collect and remit sales tax on the total charge to the store owner.

Q: Does it matter that the lettering might only be temporary, like for a sale?
A: The letter notes the painted lettering may have only a temporary function, such as advertising a special sale, but that did not change the outcome — the service is still taxable.

Q: Can the painter buy the paint tax-free?
A: Yes. The letter states the painter may purchase the paint used in the taxable service tax-free by issuing the paint supplier a properly completed resale certificate.

Q: What rule governs this?
A: The letter references Rule 3.357, concerning nonresidential repair and remodeling, and notes a copy would be enclosed with the letter.

Citations and references

The letter references "Rule 3.357 concerning nonresidential repair and remodeling" by rule number, but does not cite any Texas Tax Code statute section.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9404L1295B03

Original ruling text

April 7, 1994

Dear **

Thank you for your March 5, 1994, letter concerning the taxability of painting
letters on the windows of a store. The painted lettering may have only a
temporary function, such as advertising a special sale.

The store window lettering service is taxable as the remodeling of a
nonresidential rmprovement to real property. You must collect and remit sales
tax on the total charge to the store owner for painting letters on the store
windows. You may purchase the paint used in the taxable service tax-free by
issuing the paint supplier a properly completed resale certificate. Rule 3.357
concerning nonresidential repair and remodeling will be enclosed with this
letter mailed to your address.

This opinion is based on the facts you submitted. Other facts, though similar,
may yield different results.

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct line is
512/475-0030. You may also write to Tax Administration, Comptroller of Public
Accounts.

Sincerely,

David Somerville
Tax Administration Division

NOTE: Previous Accession Number 904223L