Were charges to blade farm or ranch roads and terraces taxable, and how did maintenance or residential use affect the result?

Plain-English summary

The Comptroller said roads were not exempt farm or ranch machinery or equipment. Charges to blade farm or ranch roads were taxable real-property repair unless the work qualified as maintenance under Rule 3.357.

Repairing a road used exclusively for residential purposes was not taxable, regardless of its location. The letter defined that residential road as one connecting the residence to the public road. Terrace blading was also taxable unless it qualified as maintenance; new-terrace construction followed contractor rules.

STAR carries an official alert that a 2011 Tax Code amendment added registration-number requirements for certain agricultural and timber exemptions effective January 1, 2012. Current treatment must therefore be checked before relying on this 1989 letter.

Common questions

Was farm-road blading automatically exempt? No.

What exceptions did the letter identify? Qualifying maintenance and repair of an exclusively residential access road.

What about a new terrace? The letter directs the provider to the contractor rule rather than deciding it as repair.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8901L0921F13

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

January 4, 1989

Dear **:

Thank you for your telephone inquiry regarding the taxability of blading roads
and building terraces on farms and ranches.

Although machinery or equipment used exclusively on farms or ranches may be
exempt as indicated in the enclosed Comptroller's Rule 3.296 (Agriculture,
Animal Life, Feed, Seed, Plants, and Fertilizer), roads don't qualify as
machinery or equipment. Therefore, your charges to blade roads on a farm or
ranch are taxable as a real property repair unless the service qualifies as
maintenance under Rule 3.357 (which Wayne McDonald previously sent to you).
However, a charge to repair roads used exclusively for residential purposes is
not taxable regardless of their location. Specifically, a residential road is
one that connects the residence to the public road.

Furthermore, charges to blade terraces are also taxable unless your service
qualifies as maintenance (see Rule 3.357). However, you should consult Rule
3.291 (Contractors) regarding your tax responsibilities if you are constructing
a new terrace.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions, please contact Tax Correspondence. You may call
toll free 1-800-252-5555, or our regular number is 512/463-4600. My extension
is 3-4662.

Sincerely,

Bob Jeffcoat
Tax Correspondence