Ezel / Tax Rulings / TX
TX 8912L0966E01 Sales and/or Use Tax (State,Local,MTA) 1989-12-01

Were city electrical-permit fees taxable when a contractor passed them through to residential or commercial customers?

Short answer: No, if separately stated. This follow-up corrected the Comptroller's November 2 letter and said a city fee charged to the contractor remained nontaxable when passed to the customer, even on a taxable service job.

Apply this to your situation

This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

This December 1 letter corrected the Comptroller's November 2, 1989 response.

A city permit fee charged to a contractor was not taxable when the contractor passed it to the customer as a separately stated amount. That remained true even when the underlying job was a taxable service.

Common questions

Was the permit fee taxable? No, when separately stated.

Did a taxable underlying job change that result? No.

Which guidance controls within this source? The December correction, not the November 2 letter.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 1, 1989

Dear ****:

This is a follow-up to our November 20, 1989 telephone conversation where
I notified you that my November 2, 1989 letter to you was incorrect. You had
questioned the taxability of electrical permits on residential and commercial
properties. You acquire these permits and then pass the charge on to your
customers.

Fees charged by a city to a contractor are not taxable when passed on to
the customer as long as they are separately stated. This applies even when the
job is a taxable service.

I have enclosed a copy of Rule 3.294 relating to rentals and leases per
your request. This rule his not been updated recently so I have made a few
changes to the rule to reflect our current policy.

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
3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence

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