Were termite-protection plans, prepaid pest-control services, and included structural repairs taxable in Texas?

Plain-English summary

The Comptroller said pest-control services became taxable on October 1, 1987. A customer under a written contract entered before July 21, 1987 that continued beyond October 1 could issue a prior-contract exemption certificate for the remaining contract period. Any renewal or modification of that contract, and any new contract, was taxable after October 1.

The termite plan also included structural repairs for new termite damage at no additional charge. The letter said real-property repairs would become taxable January 1, 1988, except repairs to residential property. Taxable repair services and materials could be purchased tax-free with a resale certificate because they were resold as part of the taxable pest-control service.

What this means for you

The historical answer depended on the contract's date and whether it was renewed or modified, as well as whether included structural repairs involved residential property. The letter does not separately decide inspection or pest-identification services despite the broader STAR caption.

Common questions

When did pest-control services become taxable? October 1, 1987 under the letter.

Could an older contract remain exempt? A written contract entered before July 21, 1987 could qualify for the remaining period after October 1 if the customer issued a prior-contract exemption certificate.

What happened upon renewal or modification? The letter said any renewal or modification, and any new contract, was taxable after October 1, 1987.

Were included termite-damage repairs taxable? The letter said real-property repairs became taxable January 1, 1988, except repairs to residential property.

Could the provider use a resale certificate? Yes, for taxable repair services and materials resold as part of the taxable pest-control service.

Citations and references

• No statute or administrative rule is cited in the letter text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8712L0847G02

Original ruling text

December 2, 1987

Dear ***:

Thank you for your letter to Mona Shoemate concerning the taxability of
pest
control service in your client's business activity. Ms. Shoemate has
asked
that I respond to your inquiry.

You stated that your client is a pest control service and you asked,
whether
the "Termite Protection Plan" and annual billings for prepayment of pest
control service is taxable? You have included various protection plans,
agreement, guarantee, damage claim form and sample invoice.

Answer: Pest control services became taxable on October 1, 1987. Those
customers under written contracts prior to July 21, 1987 which extend
after October 1, 1987 may issue a prior contract exemption certificate
for the remaining period after October 1, 1987. However, any renewal
or modification of that existing contract and any new contract will be
taxable after October 1, 1987.

You also asked about taxability of repairs to the structure if new
termite
damage occurs. The repairs are provided as a part of the contract at no
additional cost to your client. Repairs to real property are taxable
effective January 1, 1988, except repairs to residential property.
Taxable
repair services and materials can be purchased tax-free by a resale
certificate since these services are for resale as part of your taxable
pest
control service.

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

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,

Tom Soto
Tax Policy Division