Was labor to repair a lightning-damaged security system exempt under Texas's natural-disaster real-property repair rule?

Plain-English summary

Texas law required alarm-system companies and installers to be licensed. Rule 3.333 therefore classified their licensed work as security services.

Rule 3.357 exempted labor repairing real property damaged by a natural disaster, explosion, or fire. But repairing a security system struck by lightning was a security service rather than real-property repair, so that labor exemption did not apply.

What this means for you

The cause of the damage did not control by itself. The classification of the service—licensed security work rather than repair to realty—prevented use of the disaster-repair labor exemption.

Common questions

Did lightning count as the type of event covered by Rule 3.357? The letter focused instead on the service classification and held that the exemption did not apply.

Why was the repair treated as a security service? Alarm companies and installers performed work requiring a license under the cited security-agency law.

Citations and references

• Article 4413 (29bb) § 13, Texas Civil Statutes
• 34 Tex. Admin. Code Rule 3.333, Security Services
• 34 Tex. Admin. Code Rule 3.357, Real Property Repair and Remodeling

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9203L1163D01

Original ruling text

March 10, 1992

Dear ***:

Thank you for your fax transmission of March 10, 1992, concerning
the taxability of labor to repair a security system that was
damaged by lightning.

Article 4413 (29bb) Section 13, Texas Civil Statutes (Private
Investigators and Private Security Agencies Act) (the Act)
requires alarm systems companies and alarm systems installers to
be licensed. Under rule 3.333 - Security Services, a company that
performs services that requires a license under the Act is
performing security services.

The exemption from sales tax on the labor involved in repairing
real property damages by a natural disaster, explosion, or fire
is found in Rule 3.357 - Real Property Repair and Remodeling.
The repair to a security system damaged by lightning is the
performance of a security service, not a repair of real property.
Thus, the exemption provided under Rule 3.357 for labor to repair
realty damaged by natural disasters, fires, or explosions does
not apply to security services.

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

You may call toll free 1-800-252-5555 if you have any questions
or need more information. You may write to Tax Administration
Division, Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Administration Division