Ezel / Tax Rulings / TX
TX 8802L0900A10 Sales and/or Use Tax (State,Local,MTA) 1988-02-05

Which ranch and oilfield jobs did Texas treat as new construction, taxable real-property repair, or taxable cleanup?

Short answer: New fences, tank pads, working pits, and qualifying new water-line ditches were new construction. Work on existing roads, locations, cellars, and reserve pits was taxable repair; tank-battery cleanup was taxable.

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 oilfield, ranch, road, pit, and cleanup classifications are historical; verify current real-property-service law before applying them today. Letters on STAR can support detrimental reliance only for the taxpayer directly issued the letter and may no longer represent current policy. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional.
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 Comptroller classified several jobs as new construction under Rule 3.291: putting a permanent fence around an existing working pit, building a new tank pad at an existing location, building a new working pit at an old location, and cutting a ditch for ranch water lines unless the work repaired or added to existing lines.

Taxable real-property repair included blading or watering existing ranch dirt roads unless the activity met Rule 3.357's maintenance definition, blading an existing location, breaking cement in an existing cellar, and covering an existing reserve pit.

Cleaning the area around an existing tank battery was a taxable real-property service.

What this means for you

Working at an existing location did not automatically make a newly created fence, pad, pit, or line ditch a repair. By contrast, work that altered or restored an existing road, location, cellar, or reserve pit was repair under this 1988 letter.

Common questions

Was a new tank pad at an existing location new construction? Yes.

Was blading an existing ranch road taxable? Yes, unless it qualified as maintenance.

Was tank-battery-area cleanup taxable? Yes.

Citations and references

  • 34 Tex. Admin. Code Rule 3.291, applied to new construction.
  • Rule 3.357, referenced for maintenance versus repair.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

February 5, 1988

Dear ***:

The following activities which you perform are considered new
construction
accordingly, taxation will be based on the criteria in Rule 3.291,
Contractors.

putting a permanent fence around an existing working pit
building a new tank pad on an existing location
building a new working pit at an old location
cutting a ditch for water lines on ranches (unless you are repairing
or adding to existing water lines)

Your charges for the following are taxable as real property repair.

blading and/or watering existing dirt roads on ranches regardless of
use (unless it fits the definition of maintenance in Rule 3.357)
blading an existing location
breaking up cement in an existing cellar
covering an existing reserve pit

Cleaning up the area around an existing tank battery, is taxable as a
real
property service.

This opinion is based on the facts presented. If there are additional or
different facts, the opinions 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,
Adina Whittemore
Tax Policy Division

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