Facility managers moving programs into Texas are often surprised to see sales tax on a repair or cleaning invoice. It is not a mistake. Texas treats many services to commercial buildings as taxable, and vendors are expected to collect the tax. This guide covers the basics. It is general information, not tax advice, so confirm specifics with your own tax adviser or the Texas Comptroller.
Nonresidential repair is taxable
Under the Comptroller’s rule on real property repair and remodeling (34 Texas Administrative Code §3.357), labor to repair, restore or remodel nonresidential real property is a taxable service. A drywall patch in a store, a door closer adjustment at an office, or a roof patch on a warehouse all fall in that group. New construction is treated differently, and residential repair generally is not taxed.
Building cleaning is taxable too
Janitorial work, porter service, window washing and other cleaning of buildings and grounds are “real property services” under 34 TAC §3.356. They are taxable whether the building is commercial or not.
How much
The state rate is 6.25 percent. Cities, counties, transit authorities and special districts can add up to 2 percent more, so the combined rate tops out at 8.25 percent. The local rate is based on where the work happens.
When a resale certificate applies
Many facility-management companies resell a vendor’s service to their own client. In that case the facility-management company can give the vendor a Texas Sales and Use Tax Resale Certificate (Form 01-339), and the vendor does not charge tax on that invoice. The facility-management company then collects tax from its client. Without a certificate on file, the vendor has to charge tax.
What to check on a vendor invoice
- The vendor’s Texas taxpayer number for sales and use tax
- Tax shown as its own line, based on the job site’s local rate
- Taxable and non-taxable items split out where both appear
- No tax charged when your resale certificate is on file
We keep resale certificates on file by client and apply them automatically. Ask for our Texas taxpayer number through the compliance page.