When was specialized cleaning or waterblasting of Texas storage tanks, cooling towers, buildings, pools, and parking garages taxable?

Plain-English summary

This internal guidance distinguished taxable building-and-grounds cleaning from nontaxable specialized maintenance of industrial real property.

Cleaning residences, commercial buildings, swimming pools, and parking garages was taxable. Storage facilities holding more than 500 barrels were real-property improvements, but scheduled, recurring, or periodic cleaning needed for safe and continuous operation qualified as maintenance. Specialized cleaning of a refinery or chemical-plant cooling tower was also not taxable even when unscheduled because it was neither repair or remodeling nor the kind of janitorial service the Legislature taxed.

The memo characterized specialized cleaning of working industrial machinery and equipment—such as a large petroleum storage tank—as a nontaxable real-property maintenance category.

Common questions

Was ordinary building or pool cleaning taxable? Yes.

Was specialized cleaning of a large storage tank taxable? The memo treated qualifying cleaning as nontaxable maintenance.

Did tank cleaning have to be scheduled? Scheduled recurring work fit the maintenance definition, while the memo also treated certain specialized refinery or cooling-tower cleaning as maintenance even when unscheduled.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9004L1018G08

Original ruling text

DATE: April 12, 1990

TO: Julie Pesl

FROM: Gilbert Zamora VIA: Martin Cherry

SUBJECT: Cleaning/Waterblasting or Storage Tanks

This is in response to your request for guidance in distinguishing between
repair and maintenance on storage tanks, residences, swimming pools, commercial
buildings, cooling towers and parking garages.

The cleaning of residences, commercial buildings, swimming pools, and parking
garages are taxable as real property service under SECTION 151.0048(4),
"building or grounds cleaning, janitorial, or custodial services;". SECTION
151.0047 Real Property Repairs and Remodeling, (1) and (2) specifically exclude
residential structures and improvements immediately adjacent to a structure
(i.e., swimming pools, parking garages, etc.).

**'s letter to the Texas Chemical Council (fiche #894A01-STAR 8808L0894AO1) generally
sets the policy we are following regarding the treatment of cleaning services
performed on chemical plants, refinery equipment and oil storage tanks.

Although they are not buildings, storage facilities with a capacity of more
than 500 barrels are considered to be improvements to real property and fall
under SECTION 151.0047. The cleaning of these facilities would be considered
maintenance if it is scheduled, recurring, or periodic and is necessary to
sustain or support safe, efficient, continuous operations or to keep in good
working order by preventing the decline, failure, lapse or deterioration of the
improvement. (See 3.357(c)(2) and also fiche #894A01-STAR 8808L0894AO1).

The cleaning of a cooling tower in a refinery or chemical plant by specialized
methods is not taxable. Even if the cleaning is not performed on a scheduled
basis, it simply does not fit the definition of repair or remodeling. You can
analogize it to replacing the motor oil in a motor vehicle. If you change the
oil every three months or only once a year you are still only performing
maintenance on the vehicle, not repairing it. Cleaning a real property storage
tank is similar.

What this means is that even though the refinery or chemical plant is real
property, specialized cleaning activities performed on this kind of facility
are not treated as janitorial services under the real property services tax.
Neither are they taxed as repair or remodeling services. By default and by the
process of elimination, what is left is a category of maintenance on real
property that the legislature did not tax. This category is somewhat unique in
that it applies mostly to the type of property that is working machinery and
equipment. We applied the policy to elevators, air conditioning systems, etc.,
from 10-1-87 to 1-1-88. During that time we recognized that there was some
maintenance type activity on real property that was not taxable as a real
property service even though it could have reasonably and arguably been
included as a "custodial service". Since your friendly neighborhood janitorial
service company will not likely undertake to clean a refinery or an 80,000
barrel petroleum product storage tank, we don't feel that this type of cleaning
is what the legislature intended to tax when they imposed the tax on building
and grounds cleaning.