How did Texas's early-1988 guidance classify labor and materials for vehicle repair, salons, property services, HVAC, sewing, boats, welding, and appliances?

Plain-English summary

The Comptroller gave a broad set of historical service classifications:

• Motor-vehicle repair labor was not taxable, but repair and replacement parts were.
• Beauty-salon and barber labor was not taxable, while sales of beauty or grooming products were.
• Maid and janitorial work, waste collection and hauling, and landscaping had become taxable on October 1, 1987.
• Consulting and engineering were generally nontaxable, but could become taxable when they were themselves a defined taxable service or part of another taxable service.
• Carpentry, plumbing, and central-HVAC repair on nonresidential realty became taxable on January 1, 1988; residential central-system repair was not. Window-unit repair, maintenance, and installation were taxable as personal-property work.
• Sewing and new-product welding were taxable manufacturing; garment mending, personal-property welding repair, boat or yacht repair, and appliance repair were taxable under the historical rules, subject to the stated vessel exemption.

The letter said sonar testing needed more facts: oil- or gas-production testing was not sales-taxable but might be subject to oil-well-servicing tax.

What this means for you

This source is a snapshot of many transition-era rules, not a current checklist. Each activity requires current-law verification and facts about the property and service context.

Common questions

Was salon labor taxable? No, but product sales were.

Was commercial carpentry or plumbing repair taxable? Yes, under the 1988 nonresidential real-property change.

Was residential central-air repair taxable? No; window-unit work was taxable.

Did the letter decide all sonar testing? No. It requested more context.

Citations and references

• 34 Tex. Admin. Code Rules 3.356, 3.357, 3.291, 3.300, 3.297, 3.312, and 3.330, cited across the service categories.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8802L0862F13

Original ruling text

February 2, 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.

Labor to repair motor vehicles is not taxable. Repair or replacement parts are
taxable.

Labor in beauty salons (barber shops) is not taxable. Sales of beauty or
grooming products are taxable.

Building maintenance (maid and janitorial services), waste collection and
hauling and landscaping services became taxable October 1, 1987. See Rule
3.356.

Consulting service for the most part is not taxable. However, consultation
provided by some businesses is taxable, for example, an arborist who simply
identifies an infestation on a tree and recommends treatment is required to
charge sales tax.

Engineering services are generally not taxable. Engineering services are
taxable if they are a part of another taxable service, e.g., engineering
services as a part of remodeling job on a hotel. See Rule 3.357.

Sonar testing service is an unclear area. Is this testing related to oil or gas
production? If so, it is not subject to sales tax but may be subject to oil
well servicing tax.

Carpentry services are taxable when provided in the context of repairing or
remodeling a non-residential structure. Non-residential remodeling and repair
became taxable January 1, 1988. Note: add-ons are considered new construction.
Refer to Rules 3.291 and 3.357 for additional information.

Plumbing labor and materials are treated the same as carpentry services. (See
Rule 3.291 and 3.357).

Repairs to aid conditioning systems (central systems) in non-residential
buildings are taxable as of January 1, 1988. Repairs to central systems in
residences are not taxable. Repairs and maintenance to window air conditioning
units are taxable regardless whether they are in a non-residential or
residential structure. Window units are personal property and repairs and
maintenance of personal property have been taxable since October 2, 1984.
Installation of central units as a part of a contract to build a new structure
is not taxable. Installation of a window unit is taxable for both residential
and non-residential purposes. See Rules 3.291 and 3.357.

Sewing labor and materials have always been taxable as manufacturing (See Rule
3.300). Mending, altering and patching garments is taxable as repair or
restoration and has been taxable since October 2, 1984.

Labor and materials to repair pleasure or recreational boats and yachts have
been taxable since October 2, 1984. Boats (vessels) which are exempt under
Section (a) of Rule 3.297 are exempt from the tax on repair labor and on
certain materials.

Welding labor and materials have always been taxable when a new product is
manufactured or fabricated (See Rule 3.300). Welding labor used in repairing
personal property has been taxable since October 2, 1984. Labor to repair
non-residential real property is taxable as of January 1, 1988. Materials used
in repairs have always been taxable.

Labor to repair an appliance is taxable as of October 2, 1984. The materials
have always been taxable.

The enclosed Rule 3.312 and 3.330 should provide answers to questions about
word processing and accountants.

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,

Eddie C. Washington
Tax Policy Division