Is a postpartum home-care service (breastfeeding help, parental support, light cleaning, laundry, errands, education) taxable in Texas?

Plain-English Summary

A person planning to offer postpartum home-care services asked the Texas Comptroller whether the service was taxable. The service would help new parents transition from hospital to home after the birth of a child, covering breastfeeding assistance, parental support, light cooking and cleaning (minimal), laundry (one load per visit), errands, organizational/time-management help, and education — with no medical assessment, advice, or intervention.

The Comptroller ruled that the service is a mixed bag: the housecleaning and laundry components are taxable services under Texas law, while the breastfeeding assistance, parental support, errands, organizational help, and education components are not taxable.

The tricky part is how billing affects the whole contract. If the provider charges one lump sum covering both the taxable (cleaning/laundry) and nontaxable services, the entire lump-sum charge is presumed taxable. The provider can avoid taxing the whole contract only by separately stating and identifying the charge for the taxable cleaning/laundry services apart from the charge for the nontaxable services — in that case, tax is due only on the separately stated taxable portion. The Comptroller's letter recommended the provider do exactly that: break out the taxable charges from the nontaxable charges on the bill.

What This Means For You

Home-care and postpartum-service providers

If your service bundles cleaning or laundry work together with non-taxable personal-care, education, or support services, do not bill it as one flat fee. Break your invoice into a line for taxable services (cleaning, laundry) and a line for nontaxable services (breastfeeding support, errands, education, etc.). Otherwise, the Comptroller can treat the entire charge as taxable.

Cleaning and laundry service businesses generally

This letter is a reminder that Texas treats cleaning and laundry services as taxable regardless of the context (here, a postpartum-care package) in which they're delivered. Pairing a taxable service with nontaxable services in one price does not make the taxable service disappear — and can make the nontaxable services taxable too if not separately billed.

Accountants and tax professionals

When advising clients who bundle taxable and nontaxable services, confirm that invoices and contracts separately state and identify the charges for each category. A single lump-sum price for mixed services creates a presumption that the whole charge is taxable, shifting the burden to the taxpayer to prove otherwise.

Q&A

Q: Is a postpartum home-care service taxable in Texas?
A: Only in part. The cleaning and laundry portions are taxable; breastfeeding assistance, parental support, errands, organizational help, and education are not.

Q: What happens if the provider charges one lump-sum fee for the whole package?
A: The entire lump-sum charge is presumed taxable, because it includes taxable services (cleaning and laundry) without distinguishing them from the nontaxable services.

Q: How can a provider avoid taxing the entire contract?
A: By separately stating and identifying, in the contract or billing, the charge for the taxable services (cleaning/laundry) apart from the charge for the nontaxable services. Then tax applies only to the taxable-services charge. The Comptroller specifically recommended this approach.

Citations

No specific statutes or administrative rules were cited in the text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9407L1307G03

Original ruling text

July 6, 1994

Dear **:

I have received your letter regarding the taxability of the postpartum
home care service you are planning.

Facts: After the birth of a woman's child, the new parents will contract
for your services. You will furnish someone (either yourself, your
partner, or a contracted individual) to service the family from start to
finish. The services provided are intended to make the transition from
hospital to home to new parent more comfortable; but no medical
assessment, advice or intervention will be provided. Your services will
include: general assistance with breast feeding, parental support, light
cooking/cleaning (minimal), laundry (one load per visit), errands,
organizational skills/time management, and education.

Question: You ask if this postpartum care service is taxable.

Response: Part of the services you perform (the cleaning and laundry
services) are taxable; the remaining services you described are not
taxable services. A contract (or billing in absence of a contract) that
contains a lump-sum charge for both taxable and nontaxable services is
presumed to be taxable unless the charges for the portion relating to
the taxable services is 5% of the total charge, the entire contract is
taxable. If the contract (or billing in absence of a contract)
separately states and identifies the charges for taxable services from
charges for all other nontaxable services, then tax is only required to
be collected on the charges for taxable services. We recommend that you
separate the charge for the taxable services from the charge for
nontaxable services.

This opinion is based on the facts you submitted. If there are
additional or different facts, the opinion could change.

You may call me toll free at 1-800-531-5441, Ext. 34663. The direct line
is 512/463-4663. You may also write to Tax Administration, Comptroller
of Public Accounts.

Sincerely,

Joan Hale
Tax Administration Division