Was a seller a lump-sum real-property contractor when it installed permanent on-ground pools, and did merely supervising customer installation receive the same treatment?

Plain-English summary

The on-ground pools were permanent improvements to real property because they had underground drain pipes, attached decks, and partially buried deep ends.

When the seller actually installed a pool under a lump-sum contract, it followed contractor treatment under Rule 3.291: the contractor owed tax on taxable items used to complete the job, and the customer paid no separately collected sales tax.

Merely supervising the customer's installation did not count as installation. In that arrangement, the seller was a supplier or materialman and had to collect sales or use tax on the total charge for materials transferred to the customer.

Common questions

Were the pools real-property improvements? Yes.

Actual lump-sum installer collects customer tax? No; it paid tax on its inputs.

Did supervision alone make the seller a contractor? No.

Supervisor-only seller taxed how? It collected tax on the transferred materials' total charge.

Citations and references

• Comptroller Rules 3.291 and 3.357.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9006L1027B07

Original ruling text

June 13, 1990

Dear *****:

Thank you for your letter dated May 31, 1990, concerning the "on-ground"
swimming pools that your client sells pursuant to lump-sum contracts.

You indicated that the pools range in size from 12'x 20'x 4' to 20' x 42' x
10'. Each has underground drain pipes and is attached to a deck. In most
cases, the deep end is actually 2' to 4' underground. These pools will be
considered permanent improvements to real property.

Your client should follow the guidelines for contractors given in Rule 3.291
when your client installs one of these pools for a customer. Lump-sum
contractors owe the sales or use tax due on all taxable items used to complete
the contract. No tax is due from the customer.

Please note that supervision of installation is not considered installation for
Texas sales and use tax purposes. If your client supervises the installation
of a pool for a customer, then your client is not considered a contractor.
Your client is a supplier or materialman and must collect sales or use tax on
the total charge to the customer for materials transferred to the customer.

I have also enclosed Rule 3.357 on repair and remodeling of realproperty for
your reference and an application for a Texas sales and use tax permit.

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- 252-5555 (ext. 34685) from anywhere in the
United States or phone 512/463-4685.

Sincerely,

Julie Pesl
Tax Correspondence