Were regular elevator maintenance contracts taxable, who paid tax on included parts, and could older repair or remodeling contracts qualify for prior-contract relief?

Plain-English summary

Regular elevator service such as lubrication, adjustment, and inspection was maintenance of real property and not taxable under Rule 3.357.

Including replacement parts did not make the maintenance charge taxable. The maintenance provider was responsible for sales tax on all materials used, while repairs performed under the contract followed Rule 3.357(c)(2).

Because maintenance was nontaxable, it did not need grandfathering. A contract for taxable repair or remodeling signed on or before July 21, 1987 could qualify for the prior-contract exemption if it met Rule 3.319's guidelines.

What this means for you

The historical answer separated a nontaxable maintenance service from the provider's tax on materials and from taxable repair or remodeling that might have qualified for temporary prior-contract relief.

Common questions

Was regular elevator maintenance taxable? No.

Who paid tax on replacement parts or materials used in maintenance? The provider.

Could an older repair contract qualify for relief? Yes, if signed by July 21, 1987 and compliant with Rule 3.319.

Citations and references

• 34 Tex. Admin. Code Rule 3.357(a)(3), (c)(2) — historical real-property maintenance provisions.
• 34 Tex. Admin. Code Rule 3.319 — historical prior-contract rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8801L0864E14

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 15, 1988

Dear **:

Thank you for your letter concerning elevator service and/or repair.

The answers to your questions are as follows.

Question 1: Is a contract for regular service (lubrication, adjustment,
inspection, etc.) subject to sales tax?

Answer: A charge for maintenance of real property is not taxable. Please
review sections (a)(3) and (c)(2) of the enclosed Rule 3.357 on real
property repair and remodeling.

Question 2: If parts replacement is included in the service contract
does
that alter the tax status?

Answer: Persons providing maintenance on real property are responsible
for the tax on all materials used to provide the maintenance Please see
section (c)(2) for information on repairs performed under a maintenance
contract.

Question 3: If these services are taxable are they grandfathered/exempt
if
the contract was signed before July 21, 1987?

Answer: Maintenance contracts for real property are not taxable. If a
contract for taxable repair or remodeling of real property was signed on
or before July 21, 1987 it may qualify for a prior contract exemption if
it meets the guidelines set out in Rule 3.319 on prior contracts.

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 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,
Julie Pesl
Tax Policy Division