Could a club buy landscaping and repair services tax-free when maintaining a municipal park under contract with a city?

Plain-English summary

A club contracted with CITY M to care for and maintain PARK A. The Comptroller said real-property services such as landscaping and mowing on a government-owned park were not taxable, so the club could issue the service provider an exemption certificate instead of paying tax.

The same treatment applied if park maintenance included repair or remodeling of walkways, driveways, and jogging paths that the club constructed and the city approved and accepted as part of the municipal park. The certificate had to identify the services as purchased for PARK A, owned by CITY M.

If tax had already been paid, the refund had to be obtained from the service provider rather than claimed from the state on the club's sales-tax return. Only the entity that paid the tax to the provider could claim the refund, and the letter stated a four-year limitations period from the date the tax was due and payable.

What this means for you

The exemption followed the government-owned property and needed to be documented to the service provider. Refund rights belonged to the actual payer, not automatically to another party sharing or reimbursing the cost.

Common questions

Were mowing and landscaping taxable? No for the described city-owned park.

Could walkway and jogging-path repairs qualify? Yes, when the city had accepted them as part of the municipal park.

What had to be on the exemption certificate? Identification of the services as purchased for PARK A owned by CITY M.

Who issued a refund of tax already paid? The service provider, to the entity that paid it.

Citations and references

• No statute or administrative rule number was cited in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9106L1113D05

Original ruling text

June 5, 1991

Dear **:

Thank you for sending a copy of the contract that the club has
with the city of M for the care and maintenance of PARK A.

Real property services such as landscaping, mowing, etc.,
performed on parks belonging to a governmental entities are not
taxable. Therefore, an exemption certificate can be issued to the
service provider in lieu of the tax on services such as mowing and
landscaping.

If "maintenance of the Park" includes the repair or remodeling of
real property such as the walkways, driveways, and jogging paths
which you were required to construct and which the city approved
and accepted as part of the municipal park, these services can be
purchased tax free.

You must identify on the exemption certificate that the real
property services or repair or remodeling services are purchased
for PARK A owned by the CITY M.

Because the services are exempt, the tax refund must be obtained
from the service providers. A reimbursement cannot be claimed
from the state on your sales tax return. It appears from previous
correspondence, that tax was paid to the service providers on the
total charge. CITY M issued you an exemption certificate in lieu
of tax on their 1/2 reimbursement to you. Then, because the charge
to the city was not taxable, you took credit for 1/2 of the tax on
your claimed for the service provider only on 1/2 of the bill for
which reimbursement was not claimed from the state.

The tax refund can be claimed only by the entity that paid the tax
to the service provider. The statute of limitations limits
refunds to four years from the date on which the tax is due and
payable to this office.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

If you have any questions or need additional information, you may
call me toll free at 1-800-252-5555, extension 3-4666. You may
write to Tax Administration Division.

Sincerely,

Jo Ann Dieck
Tax Administration Division