Were historical books exempt when a nonprofit society distributed books published by others, and how did Texas tax work on registered historic buildings?

Plain-English summary

A qualifying 501(c)(3) historical organization sold two historical books for which it had exclusive distribution rights. One was published by a local bank and the other by an individual. The Comptroller said the society had to collect sales tax because exempt sales of writings required the exempt organization to both publish and distribute them.

The letter separately addressed work on commercial or residential structures listed in the National Register of Historic Places. Labor to repair, remodel, or restore residential real property was exempt, as was scheduled-maintenance labor on both commercial and residential real property. A person repairing, remodeling, or restoring a registered building could purchase the labor tax-free with an exemption certificate, but still had to pay tax on materials. New-construction labor was not taxable, while separately stated materials were taxable.

What this means for you

Exclusive distribution rights did not satisfy the writings exemption when someone else published the books. For historic-property projects, the letter distinguished labor from materials and existing-property work from new construction.

Common questions

Were the book sales exempt? No. The society distributed but had not published them.

Was qualifying historic-building labor exempt? The letter allowed the identified repair, remodeling, restoration, and maintenance labor treatment, including use of an exemption certificate where stated.

Were materials exempt? No.

How was new construction treated? Labor was not taxable; separately stated materials were taxable.

Citations and references

• 34 Tex. Admin. Code § 3.299 (exempt writings)
• 34 Tex. Admin. Code § 3.291 (construction)
• 34 Tex. Admin. Code § 3.357 (real-property repair and remodeling)
• National Register of Historic Places (status specified in the question)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9102L1078A12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

JOHN SHARP
Comptroller February 26, 1991

Dear *:

Thank you for your recent letter which is restated in part with
responses below.

Facts: *** is a 501(c)(3) non-profit organization.
There are two publications which we sell that we would like clarifi-
cation on, relating to sales tax. Both books are hardback books
which were published several years ago, one by a local bank and one
by an individual. We now have exclusive rights to distribute both
books. Both are of a historical nature and relate to the purpose of
our organization.

Question: Are these books subject to sales tax?

Response: Sales of periodicals and writings are exempt from tax
if they are published and distributed by an exempt organization
other than an educational organization. Our records show that
*** qualifies to make such exempt sales.
But, because these books are not both published and distributed
by your organization, you must charge tax on their sales. I am
enclosing a copy of rule 3.299 dealing with exempt writings for
your review.

Question: Is an individual or business that owns a historic
structure (commercial or residential) listed in the National
Register of Historic Places required to pay sales tax on
materials used in the restoration, remodeling, repair, or
maintenance of that structure if they present an exemption
certificate to the seller? Are they required to pay sales tax on
the labor? Is new construction relating to the structure subject
to tax on materials or labor?

Response: Labor to repair, remodel, or restore residential real
property is exempt from sales tax. Labor to perform scheduled
maintenance is exempt on both commercial and residential real
property. A person remodeling, restoring, or repairing
buildings listed in the National Register of Historic Places may
purchase the labor tax free by issuing the workman an exemption
certificate. The purchaser must pay tax on the materials charge.

New construction labor is not subject to tax, while separately
stated charges for materials are taxable. I am enclosing a copy
of rules 3.291 dealing with construction and 3.357 dealing with
real property repair and remodeling for your review.

This opinion is based on the facts you presented. Other facts,
though similar, may yield different results.

If you have questions or need more information, please call our
toll-free number 1-800-531-5441. My direct line number is 512-
463-4680 [FAX (512) 475-0900]. You may write to me in care of
Tax Administration Division.

Sincerely,
Al Van Allen
Tax Administration Division