How did Texas tax repair or maintenance of automatic fire systems and periodic grease removal from kitchen exhaust systems?

Plain-English summary

The ruling body addressed service work, not installation in a new versus existing building despite the broader STAR subject label.

Repair or maintenance of an automatic fire system treated as tangible personal property rather than an improvement to realty was taxable regardless of service frequency.

Repair, restoration, or remodeling of an automatic fire system that was an improvement to realty in a nonresidential building also was taxable. Periodic scheduled work intended to prevent decline or deterioration could qualify as real-property maintenance under Rule 3.357(a)(3), but the provider had to keep a contract, maintenance schedule, or work order showing the work met that definition; otherwise tax had to be charged.

Removing grease from a kitchen exhaust system every 60 to 90 days was taxable real-property service under Rule 3.356(a)(1), comparable to routine floor cleaning. The exemption for certain legally required environmental or energy-conservation service on tangible personal property did not apply because the exhaust system was an improvement to realty.

Common questions

Did the source decide new-building installation? No; its operative discussion concerns service and maintenance.

Were repairs to an automatic fire system taxable? Yes under the classifications described.

Could scheduled preventive work qualify as maintenance? Yes, with records proving it met the rule's definition.

Was periodic kitchen-exhaust grease removal taxable? Yes.

Citations and references

• 34 Tex. Admin. Code Rule 3.347(a)
• 34 Tex. Admin. Code Rule 3.357(a)(3)
• 34 Tex. Admin. Code Rule 3.356(a)(1)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8909L0958A14

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller September 11, 1989

Dear ****:

Thank you for your letter of August 28, 1989, concerning your sales tax
responsibilities.

Services to repair or maintain automatic fire systems that are considered
tangible personal property (not improvements to realty as defined in section
(a) of Rule 3.347 - Improvements to Realty) are taxable, regardless of the
frequency the services are perform- ed. Services to repair, restore, or
remodel automatic fire systems that are considered improvements to realty in
non-residential buildings are taxable as real property repair or remodeling.

Periodic scheduled services performed on automatic fire systems that are
improvements to realty to prevent the decline or deterioration of the system
are considered real property maintenance as that term is defined in section
(a)(3) of Rule 3.357 requires the service provider to charge sales tax on the
services performed unless the service provider has a contract, maintenance
schedules, or work orders showing that the work meets the definition set out in
section (a)(3).

Services to remove grease from a kitchen exhaust systems every 60 to 90
days is taxable as a real property service under section (a)(1) of Rule 3.356,
just as the daily sweeping or cleaning or the floors are to prevent breeding of
germs.

The sales tax law exempts services to repair, restore, remodel, or
maintain tangible personal property if they are required by statute, ordinance,
rule, or regulation of any commission, agency court, or political,
governmental, or quasi-governmental entity to protect the environment or to
conserve energy. This provision does not apply to the services to remove
grease from kitchen exhaust systems because these systems are considered
improvements to realty.

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

If you have any questions or need more information, you may call
toll-free
1-800-252-5555, ext. 3-4683. The regular number is 512/ 463-4683. You
may write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Eddie C. Washington
Tax Correspondence