Ezel / Tax Rulings / TX
TX 8801L0859A12 Sales and/or Use Tax (State,Local,MTA) 1988-01-28

Were full-coverage roof warranties taxable for nonresidential and residential property, and was repair work taxed during the warranty?

Short answer: A warranty on a nonresidential roof was taxable, with no further tax on covered repair labor or materials when the warranty paid the total nonprorated repair cost. A residential roof warranty was nontaxable, but materials later used for residential repairs were taxable.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
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 a taxpayer-specific January 1988 Texas Comptroller letter, but it does not include the usual statement that different facts may change the answer and cites no statute or rule. The nonresidential result expressly assumes the warranty covers the total repair cost and is not prorated. Warranty, residential-property, nonresidential-property, repair, resale-certificate, material, and labor rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
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

The Comptroller distinguished warranties by property type.

For a roof installed on nonresidential property, the warranty sale was taxable. No additional tax was due on material or labor used for repairs during the warranty period when the warranty covered the total repair cost and was not prorated.

A roofing company separately reselling the warranty could give the warranty seller a resale certificate, but then had to collect tax from its customer.

A warranty covering residential property, including single-family homes and apartments, was not taxable. Materials later used to repair the residential roof were taxable.

What this means for you

The historical result shifted the point of tax: nonresidential coverage was taxed when the full warranty was sold, while residential warranty sales were nontaxable and repair materials were taxed later.

Common questions

Was a nonresidential roof warranty taxable? Yes.

Was covered nonresidential repair work taxed again? No, under the full-coverage, nonprorated assumption.

Was a residential roof warranty taxable? No.

Were residential repair materials taxable? Yes.

Citations and references

The letter cites no numbered statute or rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 28, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in
answering your question involving changes in the sales tax law. This
isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which
would
not adversely impact businesses. In many instances, an answer to a
question
just wasn't available when the question arrived.

The sale of warranty covering material or labor and material is taxable
in
many situations.

Anytime you sell the warranty for a roof which was installed on any
nonresidential property tax is due. No further tax is due on material or
labor if the roof is repaired during the warranty period. I am assuming
that the warranty will cover the total repair costs and is not prorated.

If the roofing company separately resells the warranty to their customer
they may issue you a resale certificate but then they must collect tax
from
their customer.

Any warranty covering a residential property (single family, apartments,
etc.) is not subject to tax. Any material later used to repair the
residential roof would be taxable.

If you have any questions or need more information, please call our
toll-free
number 1-800-531-5441. The regular number is 512/463-4600. You may
write me
at the Tax Policy Division.

Sincerely,
Curt Swenson
Tax Policy Division

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