A commercial bank asked the Comptroller to run through the sales-tax treatment of a whole list of products and services it purchases: training seminars, delivery charges, armored car/courier services, UCC lien searches, printing, appraisals, pest control, books/subscriptions, audit/loan-review/401(k) administration, software maintenance, and repossession services. Which of these are taxable?

Plain-English summary

A commercial bank asked the Comptroller a single letter's worth of taxability questions covering a dozen different products and services it purchases. The STAR system's own subject-matter heading for this letter is just "Lien Searches" — but that's only one of many items the letter actually addresses; this page's subject_title has been corrected to reflect the letter's real scope (the url_slug is left unchanged so the stub's identity stays stable).

Item by item:

• Training seminars: not taxable.
• Delivery services charged by the seller of a taxable item: taxable (Rule 3.303) — e.g., a computer seller charging a delivery fee.
• Armored car and courier services: taxable security services (Rule 3.333) if a license from the Board of Private Investigators and Private Security Agencies is required to perform them; courier services that don't require that license are not taxable.
• UCC lien searches: taxable as information services or credit reporting services (Rule 3.342). Effective October 1, 1999, 20% of the charge for information services is exempt. A separately stated charge for the fee paid to obtain records from a governmental entity is not taxable.
• Printing services: taxable, per Tex. Tax Code §§ 151.005(5) and 151.051(a).
• Appraisal services: not taxable when determining market value of property, but taxable when performed to determine value for insurance purposes (Rule 3.355(a)(2) and (b)).
• Pest control services: taxable real property services (Rule 3.356(a)(8) and (b)).
• Books: taxable items. Subscriptions to online information services (Rule 3.342) and credit reporting services (Rule 3.343) are taxable. Magazine subscriptions for semi-annual or longer periods are exempt if mailed as second-class mail (Rule 3.299(b)).
• Audit, loan review, and 401(k) administration services: generally not taxable, unless the service qualifies as a data processing service (Rule 3.330(a)).
• Software maintenance fees: taxable when the maintenance is performed by the person who sold the software (Rule 3.308(b)(3)).
• Repossession services: taxable debt collection services (Rule 3.354).

The letter also notes Rule 3.286(e)(1): if a seller fails to add or collect tax on a taxable item, the purchaser is responsible for accruing and paying that tax directly to the Comptroller.

What this means for you

Banks and other financial institutions purchasing a mix of professional/support services

This letter is a handy checklist for exactly the kind of vendor mix a bank typically buys — expect training, delivery, security, printing, and several information/reporting services (like lien searches) to carry sales tax, while core financial-review services (audit, loan review, 401(k) administration, market-value appraisals) generally don't, unless they cross into data processing or insurance-valuation territory.

Vendors selling into this space (couriers, appraisers, software vendors)

Whether YOUR specific service is taxable often turns on a licensing technicality (courier/armored car: does the job require a private security license?) or on the PURPOSE of the service (appraisal for market value vs. for insurance) rather than the service category alone.

Accountants and tax professionals

This letter is a useful single-source checklist across a dozen distinct taxable-service categories (Rules 3.303, 3.333, 3.342/3.343, 3.355, 3.356, 3.299, 3.330, 3.308, 3.354) — worth bookmarking as a quick-reference matrix for financial-institution vendor taxability questions, while remembering it binds the Comptroller only as to this specific taxpayer.

Common questions

Q: Are UCC lien search fees taxable in Texas?
A: Yes, as information services or credit reporting services under Rule 3.342 — with 20% of the charge exempt (effective 10/1/1999) and separately stated government-records fees excluded.

Q: Are training seminars taxable?
A: No.

Q: Is a delivery charge taxable?
A: Yes, when charged by the seller of the taxable item being delivered (Rule 3.303).

Q: Are appraisal services taxable?
A: Not when appraising market value, but yes when the appraisal is for insurance purposes (Rule 3.355).

Q: Is software maintenance always taxable?
A: Only when performed by the same company that sold the software (Rule 3.308(b)(3)).

Q: Can I rely on this letter for my own bank's or vendor's specific service mix?
A: No. This opinion is based on the facts presented, and additional or different facts may change the opinion; it can be relied on only by the taxpayer it was issued to.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.005(5) and § 151.051(a) (printing services taxable)
• 34 Tex. Admin. Code Rule 3.303 (transportation/delivery charges)
• 34 Tex. Admin. Code Rule 3.333 (security services)
• 34 Tex. Admin. Code Rule 3.342 (information services)
• 34 Tex. Admin. Code Rule 3.343 (credit reporting services)
• 34 Tex. Admin. Code Rule 3.355(a)(2) and (b) (insurance services)
• 34 Tex. Admin. Code Rule 3.356(a)(8) and (b) (real property services, incl. pest control)
• 34 Tex. Admin. Code Rule 3.299(b) (newspapers and magazines)
• 34 Tex. Admin. Code Rule 3.330(a) (data processing services)
• 34 Tex. Admin. Code Rule 3.308(b)(3) (computer hardware and software maintenance)
• 34 Tex. Admin. Code Rule 3.354 (debt collection services)
• 34 Tex. Admin. Code Rule 3.286(e)(1) (purchaser's accrual duty when seller fails to collect tax)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200001983L

Original ruling text

January 14, 2000

<**>

Subject: Taxability of Certain Services Products

Dear **:

Thank you for your recent e-mail concerning the taxability of purchases of
certain products and services by a commercial bank.

Training seminars are not taxable.

Delivery services charged by the seller of a taxable item are taxable. For
example, ABC Computer sells a computer and charges a fee for delivering it
[Rule 3.303 concerning transportation charges].

Armored car services and courier services for which a licensed is required from
the Board of Private Investigators and Private Security Agencies to perform the
services are taxable security services [Rule 3.333 concerning security
services]. Courier services that do not require a license from the Board of
Private Investigators and Private Security Agencies are no taxable.

UCC lien searches are taxable information services or credit reporting
services. [Rule 3.342 concerning information services]. Effective October 1,
1999, twenty percent (20%) of the charge for information services are exempt.
Please note that separately stated charges for the fee paid for obtaining
records from governmental entities is not taxable].

Printing services are taxable. See Texas Tax Code Sections 151.005(5) and
151.051(a).

Appraisal services for determining the market value of property are not
taxable. However, an appraisal performed to determine the value of property for
insurance purposes is taxable [Rule 3.355(a)(2) and (b) concerning insurance
services].

Pest control services are taxable real property services [Rule 3.356(a)(8) and
(b) concerning real property services].

Books are taxable items. Subscriptions to online information services [Rule
3.342] and credit reporting services [Rule 3.343] are taxable. Subscriptions to
magazines for semi-annual or longer periods are exempt if mailed as second-class mail
[Rule 3.299(b) concerning newspapers and magazines].

Audit, loan review, and 401k administration services generally are not taxable
unless the service qualifies as a data processing service under Rule 3.330(a)
concerning data processing services.

Software maintenance fees are taxable when the maintenance is performed by the
person who sold the software [Rule 3.308(b)(3) concerning computer hardware and
software].

Repossession services are taxable debt collection services [Rule 3.354
concerning debt collection services].

Rule 3.286(e)(1) concerning seller's and purchaser's responsibilities state
that persons who purchase taxable items upon which the seller fails to add or
collect the tax is responsible for accruing and paying the tax directly to the
comptroller.

The referenced Comptroller rules are available at:
.

You may view or down load the sales tax law at: and
then click on the following:

1. State Government
2. Texas Statutes
3. Tax Code
4. Chapter 151
5. Scroll down to the referenced statutory section

You may view or down load a sales and use tax application at
and then click on the following:

1. Tax Forms
2. Sales & Use Tax
3. AP-201 (Texas Application for Sales and Use Tax Permit)

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

You may call me toll free 1-800-531-5441, extension 3-4683 if you have any
questions or need more information. You may write to Tax Policy Division,
Comptroller of Public Accounts. My e-mail address is
.

Sincerely,

Eddie C. Washington
Tax Policy Division