Is labor to install window and door screens taxable under Texas sales tax, and does it matter whether the job is new construction or repair/remodeling of residential versus nonresidential property?

Plain-English summary

A contractor who installs window screens (and, based on the letter's title, storm windows) asked the Comptroller's office how sales tax applies to the installation labor. The Comptroller explained that window and door screens are treated as permanent improvements to real property, and the tax treatment turns on the type of job.

The contractor is not required to charge tax on labor in four situations: installing screens in new structures; installing screens in unfinished structures before initial occupancy; installing screens in residential property such as homes, apartments, nursing homes, and retirement centers (hotels are excluded from this category); and installing screens as part of new additions to existing structures. In these jobs, if materials and labor are separately stated on the invoice, the contractor must still collect sales tax on the agreed contract price of the materials. If instead the contractor has a lump-sum contract with the customer, no tax is charged to the customer at all — the contractor instead pays sales or use tax on the cost of the materials when purchasing them.

The letter also addressed a specific invoice the contractor had submitted, which separately stated materials and labor; presuming that invoice was for new construction, the Comptroller advised the contractor to refund tax collected on the labor portion.

By contrast, labor to repair or remodel nonresidential real property is taxable, and the contractor must collect tax on the total charge — whether the invoice is a lump sum or has separated amounts — for installing new screens in an already-existing nonresidential structure, or for repairing, remodeling, or restoring screens in a nonresidential structure. In those cases, no refund of previously collected tax is due.

What this means for you

Window/door screen and storm window installers

Whether you charge sales tax on your labor depends on the job, not just the product. New construction, pre-occupancy installs, residential property, and new additions to existing buildings are non-taxable-labor jobs (materials are still taxed, either to the customer if separately stated or to you if lump sum). Installing or repairing screens on existing nonresidential buildings is taxable on the whole charge.

Contractors with lump-sum vs. separated-price contracts

If you bill a single lump-sum price for a non-taxable-labor job, don't charge your customer sales tax at all — you owe use tax on your own cost of materials instead. If you separately state materials and labor on that same type of job, you must collect sales tax on the materials portion only, and the labor stays untaxed.

Accountants and tax professionals reviewing refund claims

This letter shows the Comptroller's approach to a refund request tied to an invoice that separated materials and labor: assuming the job was new construction, only the labor-tax portion was refundable, because materials remain taxable regardless of contract type or job classification.

Common questions

Q: Is labor to install window screens taxable in Texas?
A: Not always. Labor is not taxable when screens are installed in new construction, unfinished structures before initial occupancy, residential property (except hotels), or new additions to existing structures. Labor is taxable when screens are installed or repaired in an already-existing nonresidential structure.

Q: Do hotels count as "residential property" for this purpose?
A: No. The letter specifically lists homes, apartments, nursing homes, and retirement centers as residential property where screen-installation labor is not taxable, but excludes hotels from that list.

Q: If I have a lump-sum contract, do I charge my customer sales tax?
A: Not on a non-taxable-labor job. With a lump-sum contract you don't charge tax to the customer; instead you pay sales or use tax on the cost of the materials when you buy them.

Q: What if I separately state materials and labor on the invoice?
A: On a non-taxable-labor job, you must still collect sales tax on the agreed contract price of the materials, even though the labor itself is not taxable.

Q: Is repairing screens on a commercial building always taxable?
A: Yes, per this letter — installing new screens in, or repairing/remodeling/restoring screens in, an already-existing nonresidential structure is taxable on the total charge, whether the contract is lump sum or has separated amounts, and no refund is due for such work.

Citations and references

No specific statutes or administrative rules are cited in the text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9410L1330E01

Original ruling text

October 28, 1994

Dear **:

I am responding to your letter concerning the installation of window
screens. I don't recall whether your jobs are new construction and
residential repair/remodeling or nonresidential repair/remodeling or both.
I have addressed both situations.

Window and door screens are considered permanent improvements to real
property. You are considered a contractor in the following situations:

• installing window and door screens in new structures
• installing window and door screens in unfinished structures prior to
  initial occupancy
• installing window and door screens in residential property including
  homes, apartments, nursing homes, and retirement centers (but not hotels)
• installing window and door screens in new additions to existing
  structures

Your labor is not taxable in the situations listed above. If you charge
separate amounts for materials and labor, you must collect sales tax on
the agreed contract price of materials. The invoice you enclosed shows a
separated amount for materials and labor. Presuming the invoice represents
new construction, you should refund tax on the labor portion only.

However, if you have a lump-sum contract with your customer, you will not
charge tax to your customer. You must pay sales or use tax on the cost
of materials at the time of purchase.

The labor to repair and remodel nonresidential real property is taxable.
You must collect tax on the total charge (whether lump sum or separated) to
your customers in these situations:

• installing new screens in an already existing nonresidential structure
• repairing, remodeling, or restoring screens in a nonresidential structure

If the work is nonresidential repair or remodeling, no refund is due.

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

You may also write to Tax Administration Division, Comptroller of Public
Accounts.

Sincerely,

Tax Administration Division

NOTE: Previous Accession Number 9410821L