Ezel / Tax Rulings / TX
TX 8802L0859B03 Sales and/or Use Tax (State,Local,MTA) 1988-02-05

How did Texas tax lump-sum rain-gutter installation on new or residential property versus replacement or repair on existing nonresidential property?

Short answer: For new or residential lump-sum work, the installer paid tax on materials and did not tax the customer. Existing nonresidential repair or replacement was taxable on the total charge.

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 5, 1988 Texas Comptroller of Public Accounts letter applying Rules 3.291 and 3.357, published on STAR. Its contractor and remodeler classifications are historical; verify current gutter and real-property rules before applying them today. STAR's caption also names radiant barriers and glass, but the body decides only rain-gutter installation, replacement, and repair, so this summary does not extend the holding. Letters on STAR can support detrimental reliance only for the taxpayer directly issued the letter and may no longer represent current policy. 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

Rain gutters were improvements to real property. Installing gutters in new construction or on residential property made the provider a contractor.

For a lump-sum contractor job, the installer paid tax on all materials and supplies and did not collect tax from the customer. Replacing or repairing gutters on existing nonresidential property made the provider a real-property repairer or remodeler; the total customer charge, including labor, was taxable, and job materials could be bought tax-free for resale.

What this means for you

Under the 1988 guidance, property use and whether the work was original installation or repair determined whether the provider paid tax on inputs or collected tax on the full customer charge.

Common questions

Was new-construction gutter installation taxed to the customer under a lump sum? No. The installer paid tax on materials.

Was residential gutter installation treated the same way? Yes.

Was existing commercial gutter repair taxable? Yes, on the total charge.

Citations and references

  • 34 Tex. Admin. Code Rule 3.291, applied to contractor work.
  • Rule 3.357, applied to existing nonresidential repair or remodeling.

Source

Original ruling text

February 5, 1988

Dear **:

On behalf of Mr. Bullock, I hope you will accept my apology for the delay in
answering your question about 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
attempt to interpret provisions of the new law, and to draft rules which will
not adversely impact businesses. In many instances, an answer to a question
just wasn't available when the question arrived.

Your client's installation of rain gutters are considered improvements to real
property. When he installs gutters on new construction or on residential
property he is acting as a contractor. When he replaces or repairs gutters on
existing nonresidential property he is acting as a repairer or remodeler of
real property.

As a contractor who bills lump sum, your client must pay tax on all materials
and supplies used in performing the contract. He should not collect tax from
the customer.

When acting as a repairer or remodeler of real property, you client must
collect tax on the entire charge made to the customer, including amounts
charged for labor. Materials used in a real property repair or remodeling job
may be purchased tax free.

I have enclosed copies of Rule 3.291, Contractors, and Rule 3.357, Real
Property Repair and Remodeling.

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,

Jo Ann Dieck
Tax Policy Division

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