Ezel / Tax Rulings / TX
TX 9010L1050C04 Sales and/or Use Tax (State,Local,MTA) 1990-10-22

How did Texas tax lump-sum installation of burglar bars on residential and nonresidential buildings?

Short answer: Burglar bars were real-property improvements. Residential or new-construction lump sums were not taxed to the customer, but existing nonresidential installations were fully taxable.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

Burglar bars became improvements to real property when installed.

For new construction or residential remodeling, including homes and apartment complexes, the installer was treated as a contractor. Under the described lump-sum contract, the customer was not charged tax; the installer paid tax on materials incorporated into the realty.

Installing burglar bars on existing nonresidential real property was taxable repair or remodeling. The total customer charge was taxable, and the installer could buy incorporated materials with a resale certificate.

The letter directed contractors to the applicable rules for supplies, equipment, exempt customers, and separated contracts.

What this means for you

The identical burglar bars received different billing treatment depending on whether the job was new construction, residential remodeling, or remodeling of existing nonresidential property.

Common questions

Were burglar bars tangible property after installation? No. They qualified as improvements to realty.

Was a residential lump-sum installation taxable to the homeowner? No.

Who paid tax on materials for that residential lump sum? The installer.

Was installation on an existing commercial building taxable? Yes, on the total charge.

Could the commercial installer buy incorporated materials for resale? Yes.

Citations and references

  • 34 Tex. Admin. Code Rule 3.357 (real-property repair and remodeling)
  • 34 Tex. Admin. Code Rule 3.291 (contractors)

Source

Original ruling text

October 22, 1990

Dear **:

In your letter you requested information regarding the taxability of building
and installing burglar bars.

You indicate that you install the burglar bars under a lump-sum contract. You
also state that you pay taxes on materials when you purchase them.

Burglar bars qualify as improvements to realty. Therefore, you are treated as
a contractor for sales tax purposes when you install burglar bars on real
property that qualifies as "new construction" as defined in the enclosed
Comptroller's Rule 3.357 (Real Property Repair and Remodeling) or when you
install burglar bars on residential real property (since this is considered
remodeling of residential real property). In particular, residential real
property includes homes and apartment complexes. As a contractor, your tax
responsibilities depend on whether the contract between you and your customer
is a "lump-sum contract" or "separated contract" as defined in Comptroller's
Rule 3.291 (Contractors)

If the contract between you and your customer is a lump-sum contract (as
indicated in your letter), you are considered the consumer of the materials
incorporated into the realty. Accordingly, Your charges to your customer
aren't taxable. Instead, you owe tax on the materials incorporated into the
realty. If your customer is a tax exempt entity, you should consult Rule
3.291 regarding your tax obligations.

On the other hand, the total charge to repair or remodel nonresidential real
property is taxable as indicated in Rule 3.357. Therefore, if you install
burglar bars on existing nonresidential real property, your total charges are
taxable. Under these circumstances, you may issue a resale certificate to
your suppliers in lieu of tax on tangible personal property (such as materials)
incorporated into the customer's realty. If the customer is a tax exempt
entity, you should review Rule 3.357 regarding your tax responsibilities.

In either case, you should consult Rule 3.291 regarding the taxability of
supplies, equipment, and other tangible personal property used in performing
your contracts.

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 3-4662. You may write me at Tax Correspondence, Comptroller of Public
Accounts.

Sincerely,

Bob Jeffcoat
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.