A retail-building developer had its lot cleared and several large liveoak trees removed, then replanted the trees elsewhere on the same lot to meet City of Austin environmental guidelines. Is the tree removal/replanting taxable as a landscaping service, and can it be billed separately from the (nontaxable) land-clearing work?

Plain-English summary

This letter is itself a correction of the Comptroller's own earlier December 1997 guidance to the same taxpayer. A retail-building developer had its lot cleared and several large liveoak trees removed to make way for construction; to meet City of Austin environmental guidelines, the trees were replanted elsewhere on the same property rather than destroyed. The landscaping company doing the work wasn't sure how to bill for tax purposes.

The Comptroller's substantive answer: landscaping services (which include arborist services) are generally subject to Texas sales tax. Clearing land for construction purposes is NOT taxable landscaping — but removing trees specifically for the purpose of replanting them IS a taxable arborist service. So in this fact pattern, the land-clearing portion of the job stays nontaxable while the tree removal/replanting portion is taxable.

The landscaper can separately state the nontaxable land-clearing charge from the taxable tree removal/replanting charge and only collect tax on the latter. But if the landscaper bills a single combined charge covering both clearing and tree removal/replanting, the ENTIRE charge becomes taxable. The letter's real news, though, is procedural: the Comptroller's prior (December 1997) letter had told this same taxpayer that separating taxable from nontaxable charges had to happen while the work was still in progress. That was wrong. Under Rule 3.356(i)(2), the service provider or purchaser can establish the nontaxable percentage of a bundled charge with documentary evidence AFTER the work is completed — separation doesn't have to happen in real time.

What this means for you

Landscapers and arborists billing combined jobs

Land clearing for construction and tree removal-for-replanting are taxed differently — clearing is not taxable landscaping, but removing trees to replant them is a taxable arborist service. Keep these charges separately stated on your invoices (or be prepared to document the taxable percentage after the fact) or risk having a single bundled charge become entirely taxable.

Property developers/owners paying for site clearing plus tree preservation

If your project involves both clearing land and preserving/relocating trees (e.g., to satisfy a city's tree-preservation ordinance like Austin's), expect the relocation/replanting piece to carry sales tax even when the broader land-clearing work does not.

Accountants and tax professionals

Note the procedural correction here: per Rule 3.356(i)(2), documentary evidence establishing the nontaxable percentage of a bundled charge can be assembled after the work is done — you don't need contemporaneous, in-progress separation of charges to preserve the nontaxable treatment of the unrelated portion.

Common questions

Q: Is clearing land for a construction project subject to Texas sales tax?
A: No — clearing land for construction purposes is not a taxable landscaping service.

Q: Is removing and replanting trees on the same property subject to Texas sales tax?
A: Yes — removing trees for the purpose of replanting them is a taxable arborist service, which falls under taxable landscaping services.

Q: What happens if the landscaper bills one combined charge for both clearing and tree removal/replanting?
A: The entire combined charge becomes taxable if it isn't separately stated.

Q: Do I have to separate the taxable and nontaxable charges while the work is happening?
A: No — per Rule 3.356(i)(2) (as corrected in this letter), the service provider or purchaser may establish the nontaxable percentage after the work is completed, using documentary evidence.

Q: Can I rely on this letter for my own landscaping project?
A: No. It's based on the specific facts presented, and the letter notes the opinion may change on additional or different facts.

Citations and references

• 34 Tex. Admin. Code Rule 3.356(i)(2) (documentary evidence may establish, after the fact, the nontaxable percentage of a combined/bundled charge)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9804140L

Original ruling text

April 22, 1998

Dear Ms. ***:

I have been reviewing my letter of December 30, 1997 and would like to make a
correction.
At that time I told you that the landscaper could separate its charges for
taxable arborist services from charges for non-taxable land clearing if the
work was in progress. In fact, the landscaper may separate non-taxable charges
from taxable charges using documentary evidence after the work has been
completed.

Here are the facts from your letter and my corrected response:

We are in the process of building a new retail building. In the process, we
have had to have our lot cleared and several large liveoak trees removed. To
meet City of Austin environmental guidelines, we replanted these trees on
another area of the same property.

The landscape company was unsure how to bill us tax wise. After we consulted
with your local tax assistance office, we were advised that the tree removal
and land clearing portion of the job might not be taxable, but that the
replanting might be.

Response: Landscaping services, which includes arborist services, are subject
to sales tax. Although, clearing land for construction purposes does not
constitute taxable landscaping services, removing trees for the purpose of
replanting them is an arborist service and subject to tax.

The landscaper may separately state and not collect tax on non-taxable charges
for construction clearing from taxable charges for removing and replanting
trees. The total charge is taxable if a single charge is made for clearing
land and removing and replanting trees. Rule 3.356(i)(2) states that if the
charge for the taxable portion of the services is not separately stated at the
time of the transaction, the service provider or the purchaser may later
establish for the Comptroller, through documentary evidence, the percentage of
the total charge that relates to nontaxable unrelated services.

I apologize for any inconvenience this may have caused.

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

You may call me toll free at 1-800-531-5441, extension 3-4680. The direct line
is 512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. The email address is .

Sincerely,

Al Van Allen
Tax Policy Division