Did maintenance of legally required environmental or energy-conservation equipment have to be essential to manufacturing to qualify for the Section 151.338 exemption?

Plain-English summary

This letter corrected an earlier statement about contracts to maintain oil-mist eliminators. The equipment did not have to be necessary and essential to a manufacturing process for the maintenance service to qualify for the exemption described in Section 151.338.

The Comptroller explained that the section exempted maintenance, repair, remodeling, or restoration of tangible personal property when a statute, ordinance, regulation, or similar governmental requirement required the service to protect the environment or conserve energy.

Common questions

Did the equipment have to be essential to manufacturing? No.

What had to require the service? A statute, ordinance, regulation, or similar governmental mandate for environmental protection or energy conservation.

What services did the letter identify? Maintenance, repair, remodeling, and restoration of tangible personal property.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8903L0926E01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller March 20, 1989

Dear **:

This letter is to clarify my October 4, 1988 letter to you
concerning the taxability of contracts to maintain oil mist
eliminators. (copy attached)

I had indicated that maintenance of equipment which is necessary
and essential to a manufacturing process because the equipment is
required by law or regulation for purposes of pollution control or
public health will not be taxable. The equipment does not have to
be necessary and essential to a manufacturing process for the
maintenance to qualify for this exemption.

Section 151.338 of the sales tax law exempts maintenance, repair,
remodeling, or restoration of tangible personal property if the
service is required by statute, ordinance, regulation, etc. of any
commission,......., or quasi-governmental entity in order to protect
the environment or to conserve energy. (copy enclosed)

Please accept my apology for any inconvenience this may cause
you.

Please feel free to contact me if you have any additional questions.
You may write me, call toll-free 1-800-531-5441 from anywhere in the
United States or phone 512/463-4685.

Sincerely,
Julie Pesl
Tax Correspondence