| (1) Persons who repair, restore, and remodel real property
may issue a resale certificate in lieu of tax to suppliers of tangible personal
property only if the tangible personal property will be incorporated into
the customer's realty. For example, a repairman or remodeler purchases paint
to repaint a repaired or remodeled area. The paint is transferred to the customer
as a part of the finished job. The repairman or remodeler may purchase the
paint tax free by issuing a resale certificate. Tax is due on the total amount
that is charged the customer, including amounts that are charged for the paint
and for the services. A resale certificate may not be issued for materials
and supplies used or consumed by the repairman or remodeler that are not incorporated
into the customer's realty.
(2) A resale certificate may be issued for a service if the
buyer intends to transfer the service as an integral part of taxable services.
A service will be considered as an integral part of a taxable service if the
service purchased is essential to the performance of the taxable service and
is of a type without which the taxable service could not be performed. Examples
of services for which a resale certificate may be issued in lieu of tax are
landscaping and surveying services if the landscaping or surveying is performed
upon the property that is remodeled.
(f) Local taxes. Local taxes (city, county, transit authority,
city transit department, and special purpose districts) apply to services
in the same way as they apply to tangible personal property.
(1) Generally, service providers must collect local sales taxes
if their place of business is within a local taxing jurisdiction, even if
the service is actually provided at a location outside that jurisdiction.
(2) Transit sales taxes do not apply to services that are provided
outside the boundaries of a transit area.
(3) If the service provider's place of business is outside
a local taxing jurisdiction but the service is provided to a customer who
is located within a local taxing jurisdiction, then local use taxes apply
and the service provider is required to collect the local taxes.
(4) For information on the collection and reporting responsibilities
of providers and purchasers of taxable services, see §3.374 of this title
(relating to Collection and Allocation of the City Sales Tax), §3.375
of this title (relating to City Use Tax), §3.424 of this title (relating
to Collection and Allocation of Transit Sales Tax), and §3.425 of this
title (relating to Transit Use Tax).
(g) Use tax. If a seller of a service is not engaged in business
in Texas or in a specific local taxing jurisdiction, and is not required to
collect Texas tax, then the Texas customer must report and pay the use tax
directly to the Texas comptroller.
(h) Enterprise project. An entity that qualifies as an enterprise
project may qualify to claim a refund of sales tax that is paid on the total
charge for nonresidential repair, restoration, or remodeling. See §3.329
of this title (relating to Enterprise Projects, Enterprise Zones, and Defense
Readjustment Zones).
(i) Prior contracts. Prior contracts that are signed before
the effective date of a statutory change that affects nonresidential real
property repair, remodeling, and restoration shall be governed by the provisions
of §3.319 of this title (relating to Prior Contracts).
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