Was labor to repair or remodel a tenant-only laundry room in an apartment complex subject to Texas sales tax?

Plain-English summary

The requester had received conflicting advice about tax on repair and remodeling work in apartment-complex laundry rooms.

The Comptroller said areas not open to nonresidents, including a laundry room for tenants and guests, were residential real property for repair-and-remodeling purposes. Labor to repair or remodel those areas was therefore not taxable. The letter distinguished that classification from the separate fact that electricity used in the requester's apartment laundry rooms was considered commercial rather than residential use.

For tax already paid to contractors, the Comptroller enclosed assignment-of-refund forms. Each contractor was to sign an assignment with a summary of reporting periods, amounts, and local jurisdictions. The requester also was advised to amend returns for tax it had accrued, and the refund claim might require audit verification.

What this means for you

Under this letter, access to the common area mattered. A tenant-and-guest-only laundry room was treated as residential real property even though the laundry operation's electricity was described as commercial use.

Common questions

Was repair-and-remodeling labor taxable? No, for a laundry room limited to tenants and guests.

Did commercial treatment of the electricity change the real-property result? No. The letter treated those as separate questions.

Could the requester seek a refund of tax paid to contractors? Yes, using signed assignment-of-refund forms and supporting schedules.

Was audit verification possible? Yes. The Comptroller said an auditor might need to verify the claim.

Citations and references

• The letter did not cite a numbered statute, regulation, or case.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9105L1109D01

Original ruling text

May 13, 1991

Dear *****:

Thank you for writing to resolve the conflicting information you have
been given by our office concerning the taxability of repair and remodeling to
laundry rooms in apartment complexes.

Areas not open to non-residents in an apartment complex, including a
laundry room for tenants and guests, are considered residential real property
for purposes of repair and remodeling work. The labor to repair and remodel
those areas is not taxable. Perhaps the incorrect information you were given
was based partly on the fact that the electricity in the laundry rooms that you
operate in those apartments is for "commercial" rather than "residential" use.

As you requested I am enclosing an assignment of refund form that you may
use to obtain a refund directly from the comptroller for the tax you paid to
the contractors. You may reproduce the form and have each of the contractors
that charged you tax complete and sign the form. Each assignment should
include a summary schedule of reporting periods amounts, and local
jurisdictions to which tax was reported.

I asked ** , who supervises the credits verification section,
if we could refund the tax you accrued without your having to amend the
returns. He said there were many possibilities but that making simple
amendments to copies of your returns is probably the simplest way to do it.
It may also be necessary that an auditor verify your refund claim. In any
case, **** said that if you would call him he would work with you
to make your refund claim as simple as possible for you. His number is
1-800-531-5441, ext. 3-4548.

This opinion is based on the facts presented. Other facts though similar
may provide a different result.

If you have other questions or need more information please call or write.
The toll-free number is 1-800-531-5441; my extension is 3-4675. The
regular number is (512) 463-4675.

Sincerely,

Tom Soto
Tax Administration