If a husband and wife run a residential cleaning business together, is their cleaning service exempt from sales tax as household employees, or must they collect tax as a business?

Plain-English summary

A taxpayer wrote to the Comptroller asking about the taxability of residential cleaning services performed by a husband-and-wife team, and specifically whether their arrangement could qualify for the exemption that applies to an individual who cleans a home as if they were the household's employee.

The Comptroller explained that Texas's policy of not requiring sales tax collection on residential cleaning rests on the sales tax exemption for services performed by an employee for an employer, where the employee is paid a salary or wages. That exemption applies when the same individual cleans the same home — essentially treating that person like a household employee. If a husband and wife each separately clean different homes (not the same homes together), they can each be treated as individually employed and fall under that exemption.

But if the husband and wife clean the same homes together and split the revenue equally, neither of them is treated as an employee of the household — the arrangement looks like a business partnership providing a service, not household employment. In that case, the company must collect sales tax on its residential cleaning services. The letter also clarifies that it doesn't matter whose name is on the sales tax permit (here, only the husband's); permit registration has no bearing on whether the underlying cleaning service is taxable.

What this means for you

Couples or family members running a cleaning business together

If you and a family member jointly clean the same homes and split the earnings, you are operating as a taxable business, not as individual household employees — you must collect and remit sales tax on your residential cleaning services, regardless of which of you holds the sales tax permit.

Individual house cleaners

If you personally and consistently clean the same home for the same homeowner, you may fall under the employee-of-household exemption and not need to collect sales tax on that arrangement — but this depends on the same person doing the same home's cleaning, not a shared or rotating arrangement.

Cleaning services collecting tax in error

If tax was collected in error from a homeowner under this exemption, the collector must first refund the tax to the homeowner before the state will refund the tax to the collector. See 34 Tex. Admin. Code § 3.325(b)(2) for the mechanics of that refund process.

Common questions

Q: My spouse and I both clean the same houses and split the money evenly. Do we owe sales tax?
A: Yes. When you and your spouse (or partner) both clean the same homes and equally share the revenue, neither of you is treated as an employee of the household, and your company must collect sales tax on the residential cleaning services.

Q: Does it matter that the sales tax permit is only in my husband's name?
A: No. The letter specifically states that the sales tax permit being in only one spouse's name has no bearing on whether the cleaning service is taxable.

Q: What if my husband and I each clean different homes, not the same ones?
A: The Comptroller would then treat you as individuals separately employed, which can support application of the exemption — the key distinction is whether the same individual cleans the same home, not whether you're married or in business together.

Q: I collected sales tax by mistake on an exempt cleaning job — can I get it back?
A: You must first refund the tax you collected to the homeowner before the state will refund it to you; see 34 Tex. Admin. Code § 3.325(b)(2).

Citations and references

• 34 Tex. Admin. Code § 3.325(b)(2) (referenced in the letter as the "enclosed Rule 3.325(b)(2)" governing refund of tax collected in error before the state will issue a refund to the collector)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9406L1305A12

Original ruling text

June 10, 1994

Dear **:

Thank you for your June 2, 1994, letter concerning the taxability of
residential cleaning services.

Our policy of not requiring an individual to collect tax if he or she
cleans a home is based on an exemption in the sales tax law that exempts
services performed by an employee for an employer for which the employee
receives a salary or wages. We apply this exemption when the same
individual cleans the same home. We would regard your husband and you as
individuals that are separately employed if you do not clean the same homes.

Your company is required to collect sales tax on its residential cleaning
services if you and your husband (partner) both clean all the homes (or
together clean the same homes) and equally share the revenue. In such a case,
neither of you can be deemed to be an employee of a residential household. The
fact that the sales tax permit is currently only in your husband's name has no
bearing on whether the cleaning service is taxable. This may have confused the
person who you spoke with from our office.

Please note that an individual cleaning homes, who collects tax in error
on his or her salary, must first refund the tax paid by the homeowner before
the state can refund the tax to the person who collected the tax. The enclosed
Rule 3.325(b)(2) has information regarding this. Remember the tax is paid by
the customer, collected by the service provider, and remitted to the state.

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

You may call me toll free at 1-800-531-5441, 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

NOTE: Previous Accession Number 9406406L