Is a personal errand service — shopping, transportation to appointments, picking up/returning videos or dry cleaning, charging a fee plus reimbursement for items bought — taxable in Texas?

Plain-English summary

Someone planning to start an errand-service business — shopping, transportation to and from appointments, picking up or returning videos, dry cleaning, and similar tasks — asked about their sales tax obligations. The business model: charge a service fee, and get reimbursed for the cost of any taxable items or taxable services purchased on the customer's behalf.

The Comptroller confirmed an errand service is not taxable when it functions as a transportation or delivery service. The letter's own example: a customer gives you a list of videos, you go rent them, then deliver them to the customer — no tax is due on your service fee for that. You pay the video store for the rental (plus sales tax), your customer reimburses you for both the item cost and the tax, and separately pays you a fee for performing the errand. The one ongoing obligation: you are responsible for paying tax to retailers on any taxable items or services you purchase for use in your own business (as opposed to items purchased on a customer's behalf for reimbursement).

What this means for you

Errand-service and personal-shopping business owners

Structure your billing to separate (1) your service fee, which is not taxable, from (2) the cost of items/services you buy on the customer's behalf, which the customer reimburses you for including the tax you paid. That structure keeps your fee out of the taxable base.

Personal concierge and delivery services

The "transportation or delivery service" framing is doing the work here — if your business model is fundamentally about fetching and delivering items a customer has already chosen (rather than, say, selecting or reselling merchandise yourself), your fee for that logistics work should be nontaxable under this letter's reasoning.

Accountants and tax professionals

This is a simple but useful precedent for gig-economy-style errand and concierge businesses: the service fee for transportation/delivery is nontaxable, while the underlying purchases remain taxable in the normal course (paid by the errand-runner to the retailer, then passed through to the customer as reimbursement).

Common questions

Q: Do I need to charge sales tax on my errand-service fee?
A: Not if your service functions as transportation or delivery — the fee itself is not taxable, though the underlying items you purchase and get reimbursed for remain subject to tax when you buy them.

Q: Who pays the sales tax on an item I pick up for a customer, like a video rental?
A: You pay the tax to the retailer at the time of purchase, and your customer reimburses you for both the item cost and that tax as part of settling up.

Q: Do I owe tax on supplies I buy for my own errand-service business (not for a specific customer)?
A: Yes — you're responsible for paying tax to retailers on taxable items or services you purchase for use in your own business operations.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200006383L

Original ruling text

June 2, 2000

From: Irene Cage

To: **

Subject: Re: Questions on Tax Permit Application

Dear **:

Thank you for your recent e-mail.

You plan to provide an errand service such as shopping, transportation to and
from appointments, picking up or returning videos, dry cleaning, etc. You will
charge a fee for the service and will be reimbursed for the cost of any taxable
items or taxable services purchased.

An errand service is not taxable if you are providing a transportation or
delivery service. For example, if your customer provides you with a list of
videos and you go to the video store, rent the movies, then deliver them to
your customer, no tax is due on your service. You should pay the retailer for
the video and the tax. Your customer will reimburse you for the item and tax
and pay a fee for your service under this transaction. You are responsible for
paying tax to the retailers on any taxable items you purchase for use in your
business.

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

If you have any questions or need additional information, you may call toll
free 1-800-531-5441, ext. 32995 or the regular Austin number is 512-463-2995.

Sincerely,

Irene Cage
Tax Policy Division