Janitorial servies are taxable in Texas. The sales side has a bit less complexity than other services, however what purchase to pay sales tax on is one of the more complicated areas. We'll provide some direct resources on this, but it's something that should be reviewed by a professional.
Sales
The initial taxable determination comes directly from the Texas sales tax statute.
Sec. 151.0048. REAL PROPERTY SERVICE.
(a) Except as provided by Subsection (b), "real property service" means: >(...) >(4) building or grounds cleaning, janitorial, or custodial services; So whenever a company cleans a building (note there is no residential/commercial distinction, it's everything) it's taxable.
Sales Exemptions
There are pretty standard sales exemptions for these services and one curveball. Let's go through them with an example each.
1. Resale Exemption Generally the only type of entity that would be able to issue this would be another cleaning service company permitted for Texas sales tax. Commonly a larger janitorial firm may subcontract out specific job sites, such as an office building, to a contractor team. The larger firm may issue a resale certificate to the contractor and charge tax to the customer.
2. Exempt Entity In Texas, certain organizations may apply for a Tax exempt status. If received, they may issue an exemption certificate instead of paying tax on certain types of transactions, like cleaning services. For example, if a church is contracting out the cleaning of their buildings or grounds, they may provide the contractor an exemption certificate to not pay sales tax. Additionally, all political subdivisions of Texas (Cities, Counties, ISDs, etc.) are exempt from sales tax by statute.
3. HomeBuilders Homebuilders can get the services tax free, however builders of nonresidential (commercial) property cannot. Below is the plaintext of the rule. Texas Tax Rule 3.291
(b)(7) Real property services. A contractor is not required to pay tax on real property services that are purchased as part of the construction of a new residential structure or as part of an improvement that is located immediately adjacent to the new structure and that is used in the residential occupancy of the structure. The contractor must issue a properly completed exemption certificate or other acceptable documentation to the service provider. If the comptroller subsequently determines that the work is taxable, then the contractor will be liable for all taxes, penalties, and interest that accrue upon such purchases.
For the purposes of this paragraph, "contractor" includes a builder, developer, speculative builder, or other person who acts as a builder to improve residential real property. So, a homebuilder may have a cleaner do a final clean before a property goes up for sale, and sales tax is not due **IF** they provide a fully filled out exemption certificate. Do be aware explicitly the Comptroller does have multiple policy statements that are very clear commercial property does not receive this treatment. So overall, pretty simple compared to some of the other areas of tax. If you have any questions, feel free to reach out.
Sources
https://statutes.capitol.texas.gov/Docs/TX/htm/TX.151.htm - Sales Tax Statute
https://statutes.capitol.texas.gov/Docs/TX/htm/TX.151.htm#151.310 - Exempt Organization Section of Sales Tax Statute
https://statutes.capitol.texas.gov/Docs/TX/htm/TX.151.htm#151.30) - Political Subvision Exemption Section of Sales Tax Statute
https://texreg.sos.state.tx.us/public/readtac$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=34&pt=1&ch=3&rl=291 - Contractor Rule of Texas Adminstrative Tax Code
https://star.comptroller.texas.gov/view/200005336L - Private Letter Ruling on rough clean/finish out cleaning
https://star.comptroller.texas.gov/view/200005336L - Another Private Letter Ruling on rough clean/finish out cleaning
