Which city's local sales tax applies when an itinerant janitorial service vendor (no fixed place of business) performs services at a homebuilder's job site?

Plain-English summary

A taxpayer asked which local sales tax applies to a janitorial service performed by an itinerant vendor at a new-construction site outside the Houston city limits, for a homebuilder. The events described happened before October 1, 1995, the effective date of a statutory change relevant to this situation. The janitorial provider had no place of business where it received orders for services -- not even at the provider's home -- and instead received its orders for services at the job site (the subdivision) itself.

Because the provider had no fixed order-taking location, it met the definition of an "itinerant vendor" under Rule 3.374 (Collection and Allocation of the City Sales Tax). The Comptroller confirmed that, as an itinerant vendor, local tax on this janitorial service is due based on the job site.

What this means for you

Mobile/itinerant service providers (janitorial, construction-site, and similar services)

If your business has no fixed location where you receive customer orders -- and orders instead come in at each job site -- you're an itinerant vendor under Rule 3.374, and local sales tax is sourced to that job site rather than to a home address or any other business location.

Homebuilders and general contractors hiring itinerant subcontractors

Local tax due on services performed at your job sites by itinerant vendors is based on the job site's jurisdiction, which matters for verifying your subcontractors are charging the correct local rate.

Common questions

Q: How is local sales tax sourced for a service provider with no fixed place of business?
A: Per this letter, if the provider receives orders at the job site itself (meeting the "itinerant vendor" definition in Rule 3.374), local tax is sourced to that job site.

Q: Does it matter that the job site was outside the Houston city limits?
A: The letter describes that fact but the sourcing rule is the same regardless of location -- local tax follows the job site under the itinerant-vendor rule.

Citations and references

Rules:

• 34 Tex. Admin. Code Rule 3.374 (Collection and Allocation of the City Sales Tax; itinerant vendor)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9701242L

Original ruling text

January 29, 1997

Dear **:

Thank you for your letter concerning the appropriate local tax to be applied to
taxable services performed by a janitorial service.

Your situation is that an itinerant vendor performed janitorial services at a
new construction site outside the city limits of Houston. The services were
performed for a homebuilder. These services were performed prior to October 1,
1995 (the effective date of a statute that change affected this situation). It
is understood that the janitorial service provider has no place of business at
which orders for services are received. Orders are not received at the
providers home. The janitorial service receives orders for services at the job
site (subdivision). The janitorial service provider meets the definition of
itinerant vendor as described in Rule 3.374, Collection and Allocation of the
City Sales Tax. You asked what local tax is due on this service.

Because the service provider is considered an itinerant vendor, local tax is
due based on job site.

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

If you have any questions, please don't hesitate to write the Tax Policy
Division or call one of our tax specialist toll free at 12-800-252-5555.

Sincerely,
Curt Swenson
Tax Policy Division