Were house-cleaning services taxable when an individual cleaner was not an employee of a janitorial-service company?

Plain-English summary

The Comptroller said the individual's house-cleaning services were not taxable because the cleaner was not an employee of a janitorial-service company. For sales-tax purposes, the letter treated the cleaner as an employee of the people who hired the cleaner to clean their homes, and treated the earnings like wages.

For a refund of sales tax paid by mistake, the cleaner first had to show that the tax had been refunded to customers. The letter said records or tax worksheets identifying customers, a copy of the quarterly return, and cancelled checks showing the customer refunds should be sufficient. It enclosed Rule 3.325.

What this means for you

This was a fact-specific sales-tax classification. It did not say that every independent cleaning business was nontaxable, and it did not decide employment status for payroll, labor, or other laws.

Common questions

Were this individual's house-cleaning earnings subject to sales tax? No.

Why? The Comptroller treated the cleaner as the household customers' employee and the earnings as wages for sales-tax purposes.

Could the cleaner receive a refund of tax already paid? Yes, after refunding the tax to customers and documenting those refunds.

Citations and references

• 34 Tex. Admin. Code Rule 3.325 — cited for refunds.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0862D13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
Austin, Texas 78774

February 5, 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.

House cleaning services performed by an individual who is not an
employee of a janitorial service company are not taxable. In your case,
for sales tax purposes you are considered the employee of the persons who
hire you to clean their houses. Your earnings for your services are
treated more like wages and, as such, are not subject to sales tax.

In order to obtain a refund of taxes erroneously paid, you need to show
that you have refunded the tax to your customers. Copies of your records
or tax worksheets showing to whom tax was charged and a copy of your
quarterly return, plus copies of cancelled checks by which refunds were
paid to your customer should be sufficient. I am enclosing a copy of
Rule 3.325 on refunds for your information.

This opinion is based on the facts presented. If there are additional or
different facts, the 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,
Mona Ezell Shoemate
Tax Policy Division