Were cemetery grounds-maintenance labor and the materials used in that work taxable in Texas?

Plain-English summary

A cemetery association did not qualify as an exempt organization under Rule 3.322. Ordinarily, lawn and grounds maintenance had become taxable real-property services on October 1, 1987.

The Comptroller nevertheless described a cemetery-specific policy excluding caretaker and grounds-maintenance services from tax. The exclusion was retroactive to October 1, 1987 and applied only to labor.

Materials and supplies remained taxable. The letter specifically taxed chemical weed killers, mower replacement parts, and marble used to repair the cemetery entrance, even when used only for cemetery maintenance or repair.

What this means for you

The cemetery association's labor treatment did not make it an exempt purchaser generally. The ruling separated nontaxable maintenance labor from taxable tangible materials.

Common questions

Was the cemetery association an exempt entity? No.

Was cemetery grounds-maintenance labor taxable? No under the policy described in the letter.

How far back did that labor treatment apply? To October 1, 1987.

Were weed killer and mower parts taxable? Yes.

Was marble used to repair the entrance taxable? Yes.

Citations and references

• 34 Tex. Admin. Code Rule 3.356 (real property services)
• 34 Tex. Admin. Code Rule 3.322 (exempt organizations)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9011L1056E06

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

BOB BULLOCK
Comptroller November 13, 1990

Dear *:

I am responding to your letter of October 25, 1990, regarding the
application of Texas sales tax to purchases by a cemetery associa-
tion such as ****. Mr. Rogers had determined previously that
you are not considered an exempt entity but that you are not re-
quired to pay sales tax for caretaker services or charges to main-
tain the Cemetery grounds.

In clarifying what caretaker and grounds maintenance services
mean, I will start with an explanation of a law change that became
effective on October 1, 1987. As of that date the legislature
expanded the sales tax base to include the taxability of real
property services. Among other things, real property services
includes building and grounds keeping services, and landscaping
and lawn maintenance services. Consequently, if someone hires a
lawn company to maintain their lawn, they pay tax for these
services on both the labor and the materials. See the enclosed
Rule 3.356 on real property services.

A policy decision was made shortly after the law changed to
exclude the taxability of these services when performed for a
Cemetery association. The exemption is retroactive to October 1,
1987 and it applies to the labor only. Materials and supplies
were taxable before the law change and they are still taxable.
Therefore, if you are purchasing chemical weed killers and mower
replacement parts, they are taxable even if they are used
exclusively to maintain or repair Cemetery grounds. This also
holds true for the piece of marble you purchased to repair the
Cemetery entrance. That is, the marble is tangible personal
property and is taxable.

The above opinion is based on the facts presented. Additional or
different facts may cause this opinion to change.

If you have any further questions please contact Tax
Correspondence. You may write to the above address or call toll
free 1-800-252-5555.

Sincerely,
Brad Gabbart
Tax correspondence

COMPTROLLER OF PUBLIC
ACCOUNTS
STATE
OF TEXAS
BOB BULLOCK AUSTIN, TX
78774
Comptroller

October 18, 1990

Dear *:

The *** does not meet the requirements for exemption as set
forth in the enclosed Sales Tax Rule 3.322.

Some nonprofit organizations that perform services which may be chari-
table or educational in nature are not charitable or educational with-
in the meaning of the sales tax law.

If you believe the organization is exempt from the state sales tax un-
der Section 501(c)(3), (4), (8), (10) or (19) of the Internal Revenue
Code, please provide a copy of the determination letter.

Nonprofit professional groups or clubs, mutual benefit or social groups,
trade or labor unions, cemeteries, homeowner, political, bar or medical
associations are some that do not qualify for exempt status.

Although cemetery associations are not exempt when they purchase taxable
items, they are not required to pay sales tax for caretaker services or
charges to maintain the cemetery grounds.

If we can be of further assistance, please write to us or call toll free
from anywhere in the United States at 1-800-252-5555. Our regular number
is 512/463-4600.

Sincerely,
Harry F. Rogers
Exempt Organizations