Ezel / Tax Rulings / TX
TX 200004236L Sales and/or Use Tax (State,Local,MTA) 2000-04-28

Is a charge for an asbestos survey to determine whether asbestos is present in a building taxable in Texas?

Short answer: Generally not taxable. A charge for an asbestos survey (to determine if asbestos is present) is not taxable unless it's performed for an insurance investigation or claim under 34 TAC Rule 3.355 — in which case it becomes a taxable insurance service. Either way, the provider owes tax on all the supplies, materials, and equipment used to perform the survey.

Apply this to your situation

This page answers the general question as of 2000. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 2000
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Someone asked whether a charge for an asbestos survey — testing to determine if asbestos is present in a building — is taxable. The Comptroller gave a short, conditional answer: the survey charge is not taxable, unless it's performed for an insurance investigation or claim, which would instead classify it as a taxable insurance service under 34 TAC Rule 3.355. This mirrors the analysis Texas applies to other kinds of testing and forensic work (see, for example, the material stress-testing letter 200005285L from the same period): the insurance connection — not the underlying scientific work itself — is what triggers taxability.

Regardless of which category the survey falls into, the provider owes tax on all the supplies, materials, and equipment used to perform the service — testing equipment, sampling supplies, and similar consumables are taxable purchases for the provider either way.

What this means for you

Environmental testing, asbestos, and mold inspection companies

Your general survey/testing charges (property owner wants to know if asbestos or similar hazards are present) are not taxable — unless the work is tied to an insurance investigation or claim, which flips it into a taxable insurance service under Rule 3.355. Either way, you pay tax on your own testing equipment and supplies; that's not something you can pass through tax-free.

Insurance companies and policyholders commissioning testing

If you order an asbestos, mold, or similar environmental survey in connection with an insurance claim or investigation, expect that charge to be taxable as an insurance service, distinct from the same survey done for a non-insurance property owner.

Accountants and tax professionals

This is a compact companion to the broader insurance-services taxability doctrine (see also the forensic material-testing letter from the same batch of rulings): the presence or absence of an insurance-policy connection is the deciding factor for testing/survey services generally, not the specific subject matter (asbestos, mold, structural material) being tested.

Common questions

Q: Is an asbestos survey taxable in Texas?
A: Generally not, unless it's performed for an insurance investigation or claim, in which case it becomes a taxable insurance service under Rule 3.355.

Q: Does the testing company pay tax on its own equipment and supplies either way?
A: Yes. The provider owes tax on all supplies, materials, and equipment used to perform the service, whether the survey itself is taxable or not.

Q: Does this same rule apply to mold testing?
A: The letter's subject line groups mold and asbestos testing together, and the reasoning (insurance-connection triggers taxability as an insurance service) should apply the same way, though the body of this specific letter addresses asbestos survey work directly.

Q: Can I rely on this letter for my own testing business?
A: No. This opinion is based on the facts submitted and current law; other facts, though similar, may result in different answers.

Citations and references

Rules:

  • 34 TAC Rule 3.355 (Insurance Services)

Source

Original ruling text

Date: April 28, 2000

From: Bettie Peterson

To:

Subject:

Re: 193640 asbestos survey work

Thank you for your recent email.

A charge for an asbestos survey (to determine if asbestos is present) is not
taxable unless it is being performed for an insurance investigation or claims
under Rule 3.355.

The provider of the nontaxable service owes tax on all supplies, materials and
equipment used to perform the service.

Referenced rules are available at
.

The State Tax Automated Research system, which provides viewing and downloading
of rules, edited letter rulings, hearings, AG Opinions, etc., may be accessed
on the Internet at: http://www.window.state.tx.us/

This opinion is based on the facts you submitted and current law. Other facts
though similar, may result in different answers.

If you have questions or need more information, I will be glad to help you. You
may call me toll free from anywhere in the United States at 1-800-531-5441,
extension 5-0330.

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