Is moving existing gas or telephone lines to accommodate a building addition treated as a taxable real property service, or as nontaxable relocation?

Plain-English summary

Someone asked about the tax treatment of moving utility lines. The Comptroller addressed the specific scenario of moving gas lines and telephone lines to make room for an addition to an existing building — this is treated as a relocation of the lines, and relocating gas and telephone lines is not taxable. The letter is brief and doesn't elaborate on other scenarios (such as extending lines to serve brand-new customers or new geographic areas), so its holding is limited to the addition-to-an-existing-building fact pattern presented.

What this means for you

Utility companies and contractors moving gas or telephone lines

If your work is moving existing gas or telephone lines to accommodate a building addition, that relocation work is not taxable. Keep in mind this letter doesn't address extending lines to reach entirely new customers or new service areas — that may be a different fact pattern requiring separate analysis.

Property owners adding onto an existing building

Utility relocation work needed to make room for your addition should not carry Texas sales tax.

Accountants and tax professionals

This is a narrow, fact-specific holding — treat it as covering utility-line relocation tied to an existing-building addition, not as a blanket rule for all utility line work (new-construction line extensions, new-customer hookups, or other utility service scenarios may be taxed differently and aren't addressed here).

Common questions

Q: Is moving a gas or telephone line to make room for a building addition taxable in Texas?
A: No. This is treated as a relocation of the lines, and relocating gas and telephone lines is not taxable.

Q: Does this cover extending lines to new customers or new areas?
A: The letter's subject references new customers/areas, but the body only directly addresses relocation for a building addition to an existing structure — treat extension-type scenarios as a separate question.

Q: Can I rely on this letter for my own utility relocation project?
A: No. This opinion is rendered based on the facts presented; other facts, though similar, may yield different results.

Citations and references

No Texas Tax Code section or administrative rule is cited by number in the original 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/200004237L

Original ruling text

April 28, 2000

Dear **:

Thank you for your recent e-mail regarding the taxability of relocating
utilities.

The moving of gas lines and telephone lines to make an addition to an existing
building is considered a relocation of the lines. Relocating gas and telephone
lines is not taxable.

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

If you have any questions or require additional information, you may call
1-800-531-5441, extension 6-5809. You may write to Tax Policy Division, P. O.
Box 13825, Austin, Texas 78711-3825. You may also submit inquiries to our tax
help Internet address at .

Sincerely

Emilio S. Lerma
Tax Policy Division