Ezel / Tax Rulings / TX
TX 8802L0863E12 Sales and/or Use Tax (State,Local,MTA) 1988-02-04

Was a property owners' association's single annual fee taxable when the association bought taxable items and services for members?

Short answer: No. The association's annual fee charged to property owners was not taxable. The association instead had to pay tax when buying taxable tangible personal property and taxable services.

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. It says the opinion may change if the facts differ and cites no statute or rule. STAR's caption names cable television, landscaping, and garbage pickup, but the operative body does not separately classify those services; it decides only who pays tax on taxable purchases and whether the single annual association fee is taxable. The governing 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 STAR documents may no longer represent current policy even when not marked superseded.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 charged each owner one annual fee. The Comptroller said the fee itself was not taxable.

The association was the purchaser responsible for paying tax on taxable items it bought, including taxable tangible personal property and taxable services.

What this means for you

This historical letter treated the association as the consumer of its taxable purchases rather than treating the undivided annual charge to property owners as a taxable sale. It did not separately decide whether cable television, landscaping, garbage pickup, or any other named service was taxable.

Common questions

Was the annual association fee taxable? No.

Who paid tax on taxable property or services? The association paid tax on its taxable purchases.

Did the letter classify particular services? No. The operative text referred generally to taxable services without identifying which services qualified.

Citations and references

The letter cites no numbered statute or rule.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

February 4, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you will accept my apology for the delay
in
answering your question concerning 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 affect businesses. In many instances, an answer to a
question
just wasn't available when the question was arrived.

The property owners' association charges one fee per year. The
association
should pay tax on all taxable items, including taxable services as well
as
tangible personal property. The fee assessed property owners is not
subject
to tax.

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 1-800-531-5441 or phone 512/463-4600.

Sincerely,
Adina Whittemore
Tax Policy Division

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