Is tree care service taxable as a landscaping/real property service in Texas, even for trees in a commercial fruit or nut orchard?

Plain-English summary

A taxpayer asked the Comptroller's office whether tree care services are taxable. The Comptroller confirmed that, as a general rule, tree care services are taxable as a real property service. Comptroller Rule 3.356(a)(4) defines "landscaping" as arranging or modifying land, natural scenery, and other areas for aesthetic effect, and specifically lists arborist services, tree planting or removal, tree surgery, tree pruning, and tree spraying as examples of taxable landscaping.

There is an exception, though: caring for trees in a commercial fruit or nut orchard (peaches, pears, oranges, pecans, etc.) is not a landscaping service when the care is provided to a person who raises those fruits or nuts for sale in the regular course of business. In that situation, the tree care service is an agricultural operation, not landscaping, and is not taxable.

To support that exempt treatment, the tree care provider must clearly document in its own records (invoices, etc.) that the services were performed on trees in a commercial orchard as part of an agricultural operation selling fruit or nuts. No exemption certificate is required from the orchard operator, although one may be used to help document the nontaxable nature of the service. The letter cautions that tree care for fruit or nut trees in other settings — such as a person's yard — remains taxable even if the fruit or nuts are eaten or occasionally sold, and that exemption certificates claiming an agricultural operation cannot be accepted from anyone who does not operate a commercial orchard selling fruit or nuts.

The letter also carries a standing alert: the Tax Code was later amended by H.B. 268 (82nd Regular Legislative Session, 2011), which, effective January 1, 2012, required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a Comptroller-issued registration number. That amendment may affect how this 1993 letter applies today.

What this means for you

Tree care and landscaping businesses

If you provide tree care services — planting, removal, surgery, pruning, or spraying — those services are generally taxable landscaping under Rule 3.356(a)(4). The one carve-out is tree care performed on trees in a commercial fruit or nut orchard for a customer who raises and sells the fruit or nuts as part of a business. To treat that work as nontaxable, keep clear documentation in your own invoices and records showing the service was for a commercial orchard's agricultural operation.

Commercial orchard owners and farmers

Tree care you purchase for a commercial fruit or nut orchard that you operate to sell fruit or nuts should not be taxed as landscaping, but you are not required to furnish an exemption certificate — although providing one can help your service provider document the exempt sale. Keep in mind this exemption does not extend to fruit or nut trees that are not part of a commercial orchard operation (for example, backyard trees), even if you occasionally sell the produce.

Accountants and tax professionals

Because this letter predates the 2012 agricultural/timber exemption registration-number requirement created by H.B. 268 (82nd Reg. Session, 2011), confirm whether your client's documentation practices also satisfy the current registration-number requirement before relying on this letter's 1993 guidance for agricultural exemption purposes.

Common questions

Q: Is tree care service generally taxable in Texas?
A: Yes. Tree care is taxable as a real property landscaping service under Rule 3.356(a)(4), which specifically includes arborist services, tree planting or removal, tree surgery, tree pruning, and tree spraying.

Q: Is tree care for a commercial fruit or nut orchard taxable?
A: No, as long as the trees are part of a commercial orchard operated by a person who raises the fruit or nuts for sale in the regular course of business, and the service provider documents that fact in its own records.

Q: Does the orchard owner need to give the service provider an exemption certificate?
A: No exemption certificate is required, but one may be used to help document that the service was nontaxable.

Q: Is tree care for fruit or nut trees in someone's yard exempt?
A: No. Tree care for fruit or nut trees outside of a commercial orchard operation is taxable, even if the fruit or nuts are eaten or occasionally sold.

Citations and references

• 34 Tex. Admin. Code Rule 3.356(a)(4) (Real Property Service — definition of landscaping)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9409L1314E11

Original ruling text

ALERT: This document may be affected by changes to the Tax Code which was amended by H.B. 268, 82nd Reg. Legislative Session, 2011. The amendment required persons claiming a sales tax exemption for certain agricultural and timber products to apply for and provide a registration number issued by the Comptroller, effective 01/01/2012.

September 23, 1993

Dear **:

Thank you for your letter concerning the taxability of tree care services.

Tree care services are taxable as a real property service. The enclosed Rule
3.356(a)(4) on real property services defines landscaping as the activity of
arranging and modifying areas of land, natural scenery and other areas, for
aesthetic effect, considering the use to which the land is to be put. Examples
of landscaping include arborist services, tree planting or removal, tree
surgery, tree pruning, and tree spraying.

However, the care of trees in a commercial fruit or nut orchard for a person
who raises the fruit and nuts (peaches, pears, oranges, pecans, etc.) for sale
in the regular course of business is not a landscaping service. The tree care
service provider must clearly document in his or her records (invoices, etc.)
that tree care services were provided to trees in a coral orchard as part of an
agricultural operation that sells fruits or nuts. There is no exemption
certificate required from the commercial orchard farmer, but one may be used in
order to help in documenting that a nontaxable service was performed. Several
exemption certificates are enclosed. Please note that tree care services to
fruit or nut trees in other situations (a person's yard, etc.) are taxable even
if the fruit or nuts from the trees are eaten or occasionally sold. Exemption
certificates claiming an agricultural operation cannot be accepted from persons
who do not operate a commercial orchard selling fruits or nuts.

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 9409570L