Ezel / Tax Rulings / TX
TX 8802L0854D11 Sales and/or Use Tax (State,Local,MTA) 1988-02-04

When was a construction manager's supervision of commercial repair or remodeling a taxable real-property service rather than nontaxable supervision?

Short answer: It was taxable when the manager was responsible for the overall job or contracted with subcontractors. Supervision alone was nontaxable when the manager had no responsibility for others' work.

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 an official February 4, 1988 Texas Comptroller of Public Accounts letter concerning supervision of one commercial repair and remodeling project, published on STAR. Its responsibility and subcontracting test is historical and fact-specific; verify current construction-management rules before applying it today. Letters on STAR can support detrimental reliance only for the taxpayer directly issued the letter and may no longer represent current policy. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional.
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

A construction manager supervised repair and remodeling of an existing commercial structure.

The supervision was a taxable real-property repair and remodeling service if the manager's contract made it responsible for the overall job or if the manager entered into contracts with subcontractors for specific services. It did not matter who actually paid the subcontractors.

An agreement limited to supervision was nontaxable when the manager had no responsibility for work performed by others.

What this means for you

Under the 1988 letter, the manager's contractual responsibility—not the label “supervision” or the payment path—determined whether the service became taxable project work.

Common questions

Was supervision taxable when the manager controlled the overall job? Yes.

What if the manager contracted with subcontractors? The service was taxable.

Was supervision-only work taxable? No, when the manager had no responsibility for others' work.

Citations and references

The letter did not cite a rule or statute by number.

Source

Original ruling text

February 4, 1988

Dear ***:

Thank you for your inquiry regarding the taxability of real property
repair
and remodeling services.

You state that you have a client who will supervise the repair and
remodel-
ing of an existing commercial structure. Your client's labor is taxable
as a real property repair and remodeling service if your client's
contract
with the property owner makes him responsible for the overall job or if
your client enters into contracts with the subcontractors for specific
services, regardless of who actually pays the subcontractor.

If your client enters into an agreement with the property owner for
supervision only and is in no way responsible for the work performed by
others, then your client could be considered to be providing a nontaxable
service.

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

Please feel free to contact me if you have additional questions. You may
write me, call toll free 1-800-252-5555 from anywhere in Texas or phone
512/463-4600.

Sincerely,
Tom Soto
Tax Policy Division

Get today's answer for your situation

You just read a 1988 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.