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Ezel / Tax Rulings / TX
TX 9705440L Sales and/or Use Tax (State,Local,MTA) 1997-05-16

Are services to run temporary electrical drops and power temporary trailers at a new construction job site taxable in Texas?

Short answer: No. Services to run temporary electrical drops (so subcontractors can plug in power tools) and to connect electrical power to temporary trailers at a new construction job site are not taxable. The company performing this work should instead pay sales/use tax on all the materials it uses to perform the nontaxable service.

Apply this to your situation

This page answers the general question as of 1997. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1997
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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 company hired by subcontractors on a new-construction job asked whether its work -- running temporary electrical drops so subcontractors can plug in their power tools, and connecting electrical power to the job site's temporary trailers -- is taxable in Texas. The Comptroller ruled that these services are not taxable. Instead of collecting sales tax from the subcontractors or general contractor on the service charge, the company should pay sales/use tax itself on the materials (wiring, connectors, and similar supplies) it uses to perform the nontaxable work.

What this means for you

Electrical contractors and subcontractors on new-construction sites

Setting up temporary power at a job site -- for power tools or for temporary trailers -- is a nontaxable service. Don't charge tax to the general contractor or subcontractors for this work; instead, pay tax yourself when you buy the materials used to do it.

General contractors and subcontractors hiring this work out

Expect not to be charged sales tax on temporary job-site electrical hookup services -- the tax obligation sits with the electrical company on its own materials, not on the service charge to you.

Common questions

Q: Is running temporary electrical drops at a construction site for power tools taxable?
A: No, per this letter.

Q: Is connecting power to temporary job-site trailers taxable?
A: No, per this letter.

Q: Who pays the tax in this arrangement, if not the customer?
A: Per this letter, the company performing the service pays sales/use tax on the materials it uses to do the work.

Source

Original ruling text

May 16, 1997

Dear ***:

Thank you for your letter of May 13, 1997. You asked if services to connect
temporary power at a new construction job site are taxable.

As I understand it, your company is hired by subcontractors performing new
construction for the general contractor's customer. You are hired to run
temporary electrical drops where the subcontractors can plug in their power
tools. You also run electrical power to temporary trailers used on the job
site.

Response: Your services to run the electrical drops and connect power to the
temporary trailers are not taxable. You should pay tax on all materials used
to perform the nontaxable services.

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

You may call me toll free at 1-800-531-5441, ext. 5-0037. The direct line is
512/475-0037. You also may write to Sales Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Lindey Osborne
Sales Tax Policy Division

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