Were public-street cleaning charges taxable, and did fixed-price contracts signed before December 6, 1991, receive transition relief?

Plain-English summary

This letter corrected the Comptroller's February 7, 1992 advice about prior contracts.

A business did not have to collect tax on receipts from parking-lot or sidewalk cleaning contracts signed before December 6, 1991, if the contract legally bound the business to a fixed price that could not be changed. That protection lasted only until the contract was renewed, extended, or renegotiated.

The letter separately clarified that charges for sweeping or otherwise cleaning public roads and public streets were not taxable.

What this means for you

Cleaning contractors

Historical transition relief depended on a genuinely binding, unchangeable price—not merely on work beginning before the effective date. Any renewal, extension, or renegotiation ended the protection.

Accountants and tax professionals

Treat this as a correction to the earlier February 7 advice. The public-road rule was separate from the prior-contract rule for parking lots and sidewalks.

Common questions

Was public-street sweeping taxable? No.

Which old contracts qualified for relief? Parking-lot or sidewalk cleaning contracts signed before December 6, 1991, with legally binding fixed prices that could not change.

When did the protection end? On renewal, extension, or renegotiation.

Citations and references

The letter cited no specific statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9202L1153F12

Original ruling text

February 12, 1992

Dear *****:

This is a follow-up to my previous letter dated February 7, 1992.

Please disregard the information in my February 7th letter concerning
prior contracts. Any business that has contracts with customers to clean
parking lots and/or sidewalks signed before December 6, 1991, where the
business is legally bound to provide this service for a set price that cannot
be changed, will not be required to collect sales tax on the receipts received
from these contracts until the contracts are renewed, extended, or
renegotiated.

As a clarification, charges for sweeping and otherwise cleaning public
roads and public streets are not subject to sales tax.

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

You may call me toll free at 1-800-252-5555, ext. 5-0030. The direct
line is 512/475-0030. You may also write to Tax Administration, Comptroller
of Public Accounts.

Sincerely,

David Somerville
Tax Administration Division