How did Texas tax lump-sum installation of concrete landscape curbing?

Plain-English summary

After reviewing the contractor's brochure, the Comptroller treated the concrete landscape curbing as a permanent improvement to real property.

For residential property or new construction under the described lump-sum contracts, the contractor was the consumer: it paid tax when buying items for the job and did not collect tax on the customer's lump-sum charge.

For repair, remodeling, or restoration of existing nonresidential property, the contractor collected tax on the total customer charge. Materials actually incorporated into the property could be bought with a resale certificate, but consumables and equipment remained taxable to the contractor.

Common questions

Was the curbing tangible personal property after installation? No. The letter treated it as a permanent real-property improvement.

Did a residential lump-sum contractor tax the customer? No; the contractor paid tax on its purchases.

What about existing commercial property? The total repair or remodeling charge was taxable.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8906L0950G05

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

June 27, 1989

Dear ***:

I received your brochure describing the concrete landscape curbing
yesterday.

The landscape curbing will qualify as a permanent improvement to
real property. You will be considered a contractor when working
on residential property or new construction contracts.

You indicated in your previous letter that you operate under lump-
sum contracts. Lump-sum contractors are the consumers of all items
used to complete the contract. You should pay sales tax at the time
of purchase and not collect any tax on the lump-sum charge to your
customer.

As I stated previously, if you repair, remodel, or restore existing
nonresidential property, you will collect tax on the total charge to
your customer. You may purchase materials that are actually incorpo-
rated into the customer's property tax-free with a resale certificate.
Consumables and equipment are taxable to you at the time of purchase.

This opinion is based upon the facts you presented. If there are ad-
ditional or different facts, this opinion may change.

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

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

June 20, 1989

Dear ***:

Thank you for your letter of June 14, 1989 concerning the
taxability of the concrete landscape curbing that you sell and
install on a lump-sum basis.

The brochure that you mentioned in your letter was not included.
Therefore, I cannot give you a definite ruling as to whether or
not your product is considered a permanent improvement to real
property.

If your product does qualify as a permanent improvement to realty,
you should follow the guidelines in Rule 3.291 Contractors when
working on residential property or new construction contracts.

If you remodel, repair or restore existing, nonresidential
property, then the total charge, including labor and materials, is
taxable. Please review Rule 3.357.

I've also enclosed a Texas Tax Bulletin on landscaping service
for your information.

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 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