TX 8801L0882C08 Sales and/or Use Tax (State,Local,MTA) 1988-01-13

How did Texas tax elevator and escalator installation, modernization, maintenance contracts, and repair orders in new or existing buildings?

Short answer: New-building installation labor was nontaxable. Installation or modernization in existing nonresidential buildings and repair orders were taxable on the total charge. Maintenance of real property was nontaxable for existing, new, and renewed contracts.

Apply this to your situation

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

Disclaimer: This is a taxpayer-specific January 1988 Texas Comptroller letter applying a nonresidential repair-and-remodeling change effective January 1, 1988. It says the opinion may change if the facts differ. The maintenance citation is printed as 'Rule 3.3057' while the same letter separately cites Rule 3.357; this page preserves the printed citation rather than silently correcting it. Elevator, escalator, new-construction, modernization, maintenance, repair, contractor, and real-property 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 STAR documents may no longer represent current policy even when not marked superseded.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 classified six elevator and escalator situations:

Installation in a new building was nontaxable labor. The contractor continued as a lump-sum contractor under Rule 3.291 and paid tax on materials.
Installing a new elevator or escalator in an existing nonresidential building was taxable remodeling beginning January 1, 1988, with tax on the total customer charge under Rule 3.357.
Modernizing elevators or escalators in nonresidential buildings was taxable on the total charge.
Maintenance of real property was nontaxable for already-signed contracts.
New and renewed maintenance contracts received the same nontaxable answer.
Repair orders for nonresidential property were taxable on the total charge.

What this means for you

The historical distinction followed project type: new construction, existing-building remodeling, modernization, maintenance, or repair. The letter rejected the requester's assumption that new or renewed maintenance contracts became taxable.

Common questions

Was new-building elevator installation labor taxable? No.

Was existing-building installation taxable? Yes, for an existing nonresidential building.

Were maintenance contracts taxable? No, including new and renewed contracts under the answer.

Were nonresidential repair orders taxable? Yes.

Citations and references

34 Tex. Admin. Code Rule 3.291 — historical lump-sum contractor rule.
34 Tex. Admin. Code Rule 3.357 — historical real-property repair and remodeling rule.
34 Tex. Admin. Code Rule 3.3057(a)(3), (c)(2) — maintenance citation as printed in the 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/8801L0882C08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller January 13, 1988

Dear ***:

Your letter to Anna Bustamante concerning real property repair and
remodeling
was forwarded to me for a written response.

The taxability of the situations you listed is as follows.

Installation of elevators and escalators in new buildings - the new
tax
will not apply. We will continue to pay tax on material cost.

Response: The charge for installation in new building is not taxable.
You
may continue to operate as a lump-sum contractor subject to the
provisions
of Rule 3.291.

Installation of elevators and escalators in existing buildings - new
tax will apply and tax will be on total billing billed to the customer.

Response: The labor to install a new elevator or escalator in an existing
nonresidential building is taxable effective January 1, 1988 as
remodeling
of real property. The total charge to your customer is subject to tax.
Please see Rule 3.357.

Modernizations - new tax will apply and tax will be billed on total
billing to the customer.

Response: Remodeling of elevators and escalators in nonresidential
buildings
is taxable effective January 1, 1988. The total charge to the customer
is
subject to tax.

Maintenance contracts - existing contracts now signed and on file -
the
new tax will not apply until January 1, 1990. We will continue to pay
tax on material cost.

Response: Contracts for maintenance of real property are not taxable.
Please
see sections (a)(3) and (c)(2) of the enclosed Rule 3.3057.

New maintenance contracts - on new contracts and renewed contracts,
the
new tax will apply and tax will be billed to the customer on the total
billing amount.

Response: See #4 above.

Repair orders - the new tax will apply and tax will be billed to the
customer on the total billing amount.

Response: Correct. Repairs of nonresidential property are taxable.

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

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