Is mowing, clearing brush, or cutting undergrowth on ranch or timberland a taxable real property service in Texas?

Plain-English summary

A company that manages large acreage tracts (mostly ranch land or timberland, much of it carrying agricultural or timber exemptions for property tax purposes) hired independent contractors to mow, clean, and clear brush and undergrowth from the land. It asked whether it owed sales tax on those services.

The Comptroller's answer: no -- cleaning, mowing, clearing, or brush-cutting of ranch land or timberland is not a taxable service under Rule 3.356 (Real Property Service).

ALERT: STAR flags that this document may be affected by a 2011 law (H.B. 268, 82nd Legislature), which required anyone claiming a sales tax exemption on certain agricultural and timber product purchases to apply for and provide a Comptroller-issued registration number, effective January 1, 2012. That's a separate requirement about claiming exemptions on purchases -- it doesn't undo this letter's core holding that the mowing/clearing service itself isn't a taxable real property service.

What this means for you

Ranch and timberland managers hiring land-clearing contractors

Mowing, brush-clearing, and undergrowth maintenance on ranch or timberland is not a taxable real property service under Rule 3.356 -- this letter's core holding should still apply.

Anyone claiming agricultural or timber sales tax exemptions on purchases

Since January 1, 2012, you need a Comptroller-issued registration number to claim these exemptions -- a separate, later requirement from the land-clearing service question this letter addresses. Don't confuse the two.

Common questions

Q: Is mowing or brush-clearing on ranch/timberland a taxable service in Texas?
A: No, per this letter -- it's not a taxable service under Rule 3.356 (Real Property Service).

Q: Does the 2011 law mentioned in the ALERT change this letter's holding on mowing/clearing services?
A: No -- that 2011 law (H.B. 268) is about registration numbers required to claim agricultural/timber sales tax EXEMPTIONS on purchases, a separate topic from whether the clearing/mowing service itself is taxable.

Citations and references

Rules and statutes:

• 34 Tex. Admin. Code Rule 3.356 (Real Property Service)
• H.B. 268, 82nd Regular Legislative Session (2011), eff. 01/01/2012 (agricultural/timber exemption registration-number requirement)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9911895L

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.

November 15, 1999

Dear **:

This is in response to your request for a ruling on the following fact
situation and question.

We manage large acreage tracts for various owners. Most of this acreage is
ranch land or timber land. Most of it has agricultural or timber exemptions for
property tax purposes.

When we employ independent contractors to clean, mow or cut brush (maintain and
clear land of undergrowth, should we have to pay sales tax on these services?

Response: The cleaning, mowing, clearing or brush cutting of ranch land or
timber land are not taxable services under Rule 3.356 - Real Property Service.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts. You may also e-mail our tax help section at:

Sincerely,

Gilbert Zamora
Tax Policy