Ezel / Tax Rulings / TX
TX 9004L0996A13 Sales and/or Use Tax (State,Local,MTA) 1990-04-09

Were lump-sum bulldozer charges taxable for digging a new pond, preparing a home site, or clearing land and building roads for a new subdivision?

Short answer: No. Those activities were treated as new construction or site preparation, so lump-sum charges were not taxable. Landscaping was different: it was a taxable service, and tax applied to the total charge.

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Using a bulldozer to clear land and dig a new pond was new construction, so a lump-sum charge to the customer was not taxable.

Clearing a lot so a contractor could build a house was nontaxable site preparation for new construction. Clearing land and then building roads for a new subdivision was likewise new construction with a nontaxable lump-sum charge.

Landscaping was different. The letter treated landscaping as a taxable service and required tax on the total charge.

Common questions

Was digging a new pond taxable? A lump-sum charge was not taxable.

Was clearing a homebuilding lot taxable? No, as site preparation for new construction.

Was landscaping taxable? Yes, on the total charge.

Source

Original ruling text

April 9, 1990

Dear ****:

We received your letter questioning the taxability of your bulldozer
services.

Using a bulldozer to clear the land and dig the hole for a pond is
considered new construction; therefore, a lump sum charge to your customer is
not taxable. See the enclosed Rule 3.291 relating to contractors.

Site preparation for new construction is not taxable; therefore clearing
a lot for a contractor to build a house is not taxable. However, landscaping is
a taxable service. If you are performing landscaping services, you should
collect tax on your total charge. See the enclosed Rule 3.356 relating to
landscaping services.

Clearing land and then building roads for a new subdivision is also
considered new construction. A lump sum charge to your customer is not taxable.
See the enclosed Rule 3.291 relating to contractors.

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

If you have any questions you may call or write 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

Get today's answer for your situation

You just read a 1990 ruling on this question. Ezel checks current Texas tax law and answers your specific situation, with citations.

Opens in Ezel Pro. Every answer cites the authority it relies on.