Was pulling removable or cappable data and telecommunications cable through ceilings and walls of an existing building taxable?

Plain-English summary

The company installed data and telecommunications cable by pulling it through ceilings and walls to outlets. The cable could be removed or capped, wall demolition was generally unnecessary, and old wiring usually stayed in place.

The Comptroller nevertheless treated the work as taxable remodeling of real property because it replaced or upgraded part of an existing structure. The provider had to collect sales tax on the total customer charge.

What this means for you

Ease of removal and limited physical disruption did not keep this existing-building cable work outside taxable remodeling. The letter focused on the upgrade to the existing structure.

Common questions

Was cable-pulling labor taxable? Yes. Did it matter that walls were not demolished? No. Did removable cable avoid remodeling treatment? No. What amount was taxed? The total charge.

Citations and references

• September 1991 Texas Tax Bulletin on real-property repair and remodeling (enclosed with 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/9110L1135F13

Original ruling text

October 4, 1991

Dear **:

Your letter concerning the taxability of cable pulling services
provided by your company has been assigned to me for review and
response.

Your letter describes the services performed by ***
for its customers as follows:

• Install cables for data and telecommunications systems
• Cables are usually pulled through the ceiling and walls to
  wall outlets.
• Cable can easily be removed or capped.
• No demolition of walls are necessary to install cables
• In most cases, old wiring usually remains.

The charge for replacing or upgrading any part of an existing
structure is taxable as the remodeling of real property. You
should collect sales tax on the total charge to your customer
for services described in your example.

I have enclosed an edited copy of a recent taxability response
that outlines the tax responsibilities of persons doing cable
installation/pulling. I have also enclosed a copy of our September
1991 Texas Tax Bulletin on real property repair and remodeling.

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

If you have further questions or need more information, you may
call 512/463-4600, or 1-800-252-5555 from outside Austin. You
may write to Tax Administration Division.

Sincerely,

Gilbert Zamora
Tax Administration Division