Is soil aeration (core plugging) performed on golf courses and athletic fields by an independent contractor a taxable service in Texas?

Subject

Soil Aeration In Golf Courses Or Athletic Fields Is Taxable Lawn Maintenance

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9305L1239D07

Plain-English Summary

This May 1993 letter ruling addresses a corporation that uses a deep core machine to excavate plugs of soil, 6 to 16 inches deep, from golf courses and athletic fields, working as an independent contractor. The corporation's sole task is to excavate the plugs and leave holes — it does not participate in what happens afterward. The golf course or athletic field owner (through its own employees or a different contractor) then scrapes up and removes the plugs and fills the holes with sand, seed bed mix, peat moss, or other material.

The taxpayer described two purposes for this process: aeration (filling the holes with porous material so they don't collapse, letting gases escape and air and water reach the root zone over time) and changing the soil profile (repeatedly coring in different directions to gradually remove unwanted clay, "blacklayer," or fines without having to dig up and replace the whole surface at once).

The taxpayer asked the Comptroller to confirm that this activity is not subject to sales, excise, or use tax. The Comptroller disagreed: punching holes in the soil is "lawn maintenance" as defined in 34 Tex. Admin. Code Rule 3.356(a)(5), and the act of punching holes itself constitutes soil aeration that maintains the culture of the turf — even if the contractor never fills the holes. As a result, the contractor's charges to its customers are taxable, unless the customer is an exempt entity, such as a public school district or a municipally owned and operated golf course.

What This Means For You

If you provide soil aeration or core-plugging services

Under this ruling, coring or punching holes in turf at golf courses, athletic fields, or similar properties is treated as taxable lawn maintenance, even if your work is limited to excavating plugs and you never fill the holes or otherwise finish the job. You generally need to collect sales tax on these charges.

If your customer is a governmental or exempt entity

The ruling specifically calls out that charges are NOT taxable when the customer is an exempt entity, such as a public school district or a municipally owned and operated golf course. If you contract with a private country club or privately owned athletic facility, however, the exemption would not apply.

If you are a golf course, school, or municipality purchasing this service

Confirm your exempt status with your contractor and be prepared to provide exemption documentation, since the taxability of the service turns on who the customer is, not just what the service is.

If you are structuring a multi-step landscaping contract

This ruling shows the Comptroller looks at the underlying activity (aeration of turf), not how narrowly a subcontractor's role is defined. Splitting the coring step from the fill-and-finish step did not change the outcome — the coring step alone was still lawn maintenance.

Q&A

Q: Does core aeration have to include filling the holes to be taxable?
A: No. The ruling states that punching holes in the soil constitutes soil aeration and acts to maintain the culture of the turf "even if no other action is taken to fill the holes."

Q: What rule does the Comptroller rely on?
A: 34 Tex. Admin. Code Rule 3.356(a)(5), which defines lawn maintenance.

Q: Are there any customers for whom this service is not taxable?
A: Yes. Charges are not taxable if the customer is an exempt entity, such as a public school district or a municipally owned and operated golf course.

Q: Does it matter that the contractor doesn't remove the plugs or fill the holes?
A: No. The contractor's sole task was to excavate plugs and leave holes, and the Comptroller still classified this as taxable lawn maintenance.

Q: Can the taxpayer rely on this letter for a different customer's project?
A: The ruling itself notes it "is rendered based on the facts you submitted. Other facts, though similar, may yield different results," so it applies most directly to the facts described and the taxpayer to whom it was issued.

Q: Who signed this ruling?
A: Al Van Allen of the Tax Administration Division.

Original ruling text

May 28, 1993

Dear ****:

Thank you for your recent letter which is restated in part with response
below.

A corporation uses a **** deep core machine similar to that
shown in the enclosed photograph to excavate plugs, 6 to 16 inches
deep, from golf courses and athletic fields. The corporation
performs this task as an independent contractor. The corporation
does not participate in what is done after the plugs are extracted
by the machine.

The owner of the golf course or athletic field, either through its
employees or through a different independent contractor, scrapes up
and removes the plugs and fills the holes with sand, seed bed mix,
peat moss, or other material. The sole task of the **
contractor is to excavate material and leave holes.

The purposes of the process are:

Aeration. The hole is filled with porous material such as sand,
so that the holes do not collapse. Over a period of time,
gases within the soil are released through the holes and air and water
penetrate into the root zone.

Change of Soil Profile. If a golf course or athletic field has
compacted, or has too much clay or other material, the soil can be
replaced. ** machine cores holes 6 to 16 inches deep
in one direction all across the surface. These holes are filled
with the desired material. The direction of the machine is changed
a few degrees and the process is repeated until, over a period of
time, the soil process is changed. This makes it possible to remove
unwanted clay, blacklayer, or fines, without going through the
alternative of digging up and replacing the surface all at one
time.

I ask you to confirm that we are correct in our opinion that the
above-described activity is not subject to sales, excise or use tax.

Response: Your client is performing lawn maintenance which is defined in
Rule 3.356(a)(5). The act of punching holes in the soil constitutes soil
aeration and acts to maintain the culture of the turf even if no other
action is taken to fill the holes. Your client's charges to its customers
are taxable unless the customer is an exempt entity such as a public
school district or municipally owned and operated golf course.

This opinion is rendered based on the facts you submitted. Other facts,
though similar, may yield different results.

If you have questions or need more information, please call or write. You
may reach me by calling toll free, (800) 531-5441 (ext.34680). My direct
line number is (512) 463-4680. The number for FAX transmissions is (512)
475-0900. You may write to me in care of Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division

NOTE: Previous Accession Number 93070025.7 and/or 9307025L