Ezel / Tax Rulings / TX
TX 8802L0859A09 Sales and/or Use Tax (State,Local,MTA) 1988-02-01

Did a property owners' association have to collect Texas sales tax from members on an undivided maintenance charge?

Short answer: No, on the described facts. The association consumed the services covered by the maintenance charge, so there was no sale to members. If it did not separately state member charges, it paid tax on its own taxable purchases and did not collect tax from members.

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 February 1988 Texas Comptroller letter applying the facts and law then presented. It says the opinion may change if the facts differ. STAR's caption names cable television, landscaping, and garbage pickup, but the operative body does not separately classify those services; it decides only the association's consumer status and an undivided maintenance charge. Bundling, association-fee, and taxable-service 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 STAR documents may no longer represent current policy even when not marked superseded.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 property owners' association consumed the services provided under its “maintenance charge.” Because the association was the consumer, the Comptroller found no “sale” to members within the historical definition in Section 151.005(3).

If the association did not separately state charges to members, it could pay sales tax on its own purchases of taxable items and services and did not have to collect sales tax from members.

What this means for you

The result depended on the association acting as the consumer and presenting members with an undivided charge. The letter did not separately classify cable television, landscaping, garbage pickup, or any other underlying service named only in STAR's caption.

Common questions

Was the maintenance charge a taxable sale to members? No, on the facts described.

Who paid tax on taxable inputs? The association paid tax on its purchases.

What condition did the letter state? The association did not separately state charges to members.

Citations and references

  • Tex. Tax Code § 151.005(3) — historical definition of “sale” cited by the letter.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 1, 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.

From the description of your client's (Property Owners Association or
POA)
activities, I would concur that the services provided (pursuant to the
"Maintenance charge") are consumed by the POA. Consequently, there would
be no "Sale" within the meaning of Sec. 151.005(3) of the Act.

If POA does not separately state any charges to members of the
association,
then POA may pay sales tax on its purchases of taxable items and services
and is not required to collect sales tax from members.

This opinion is based upon the facts you presented. If there are addi-
tional 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,
Julie Pesl
Tax Policy Division

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