Ezel / Tax Rulings / TX
TX 8803L0862E09 Sales and/or Use Tax (State,Local,MTA) 1988-03-14

Were post-completion punch-list charges for fixing scratches and dents or moving plugs taxable under Texas's 1988 real-property rules?

Short answer: Yes. Once original construction was complete, charges to fix scratches or dents or move plugs were taxable. On repair or remodeling contracts, labor performed after December 31, 1987 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 1988 Texas Comptroller of Public Accounts letter published on STAR. Its December 31, 1987 cutoff and treatment of post-completion real-property work are historical; verify current construction, repair, and remodeling 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 Letters on STAR can support detrimental reliance only for the taxpayer directly issued the letter and may no longer represent current policy.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

A project was substantially complete by December 31, 1987, but the contractor returned in January for punch-list work after the occupants had moved in. The examples were fixing a wall scratch or dent and moving an electrical plug.

The Comptroller said that once a contract for an original improvement to realty was complete, charges for those tasks were taxable. On a repair or remodeling contract, any labor performed after December 31, 1987 was taxable under the letter's historical transition rule.

What this means for you

The work did not remain part of nontaxable original construction merely because it related to the same project. Completion of the original contract and the nature and timing of the later work controlled the stated result.

Common questions

Was fixing a scratch after completion taxable? Yes.

Was moving a plug after completion taxable? Yes.

What did the letter say about repair or remodeling labor after 1987? It was taxable.

Citations and references

The letter did not cite a rule or statute by number.

Source

Original ruling text

COMPTROLLER PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

March 14, 1988

Dear ***:

Thank you for your recent letter which is restated in part with response
below:

Facts:

The project in question was substantially complete December 31, 1987.
However, there was work which extended into January, 1988. I spoke
with one of your associates last week, and he explained I would be
liable on the portion of the job which had extended into the new year.
I am billing the owner for this portion of work (for the taxes only),
and would appreciate some substantiation from your office should any
questions arise.

The work in question involved punch work, which is "odds and ends"
type of work. For example, the job is complete, the clients have
moved in, but the contractor needs to return to fix this scratch on
the wall, or move a plug, etc.

Response:

Once a contract for original improvement to realty is complete, charges
to fix scratches and dents or to move plugs is taxable. On a repair or
remodeling contract, any labor performed after December 31st is taxable.

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,
Al Van Allen
Tax Policy Division

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