Is a registered nurse's consulting service for attorneys — reviewing medical charts for malpractice cases — subject to Texas sales tax?

Plain-English summary

An accountant e-mailed the Comptroller on behalf of a client — a registered nurse starting a new business consulting for attorneys and reviewing medical charts for malpractice cases — asking whether the service is taxable for Texas sales tax purposes.

The Comptroller's answer turns entirely on who the nurse's services are performed for: the consulting is taxable if performed on behalf of an insurance carrier, its insured, its policyholders, or others pertaining to a policy or policies of insurance, under Rule 3.355(b). Tax Code § 151.0039 defines "insurance service" to include insurance loss or damage appraisal, insurance inspection, insurance investigation, insurance actuarial analysis or research, insurance claims adjustment or claims processing, or insurance loss prevention services, and § 151.0101(a)(9) makes insurance services a taxable service category under the Tax Code. The letter doesn't say the nurse's consulting is categorically taxable or categorically exempt — it identifies the insurance-policy connection as the deciding factor, meaning the same nurse's chart-review work could be taxable in one engagement (working for an insurance carrier defending a malpractice claim) and nontaxable in another (working directly for a plaintiff's or defense attorney with no insurance-policy connection).

What this means for you

Legal nurse consultants and similar medical-expert consulting businesses

Track who's actually paying for and benefiting from your consulting engagement. If your work is performed for an insurance carrier, an insured party, a policyholder, or otherwise regarding a policy of insurance, it's a taxable "insurance service" under § 151.0039/§ 151.0101(a)(9) and Rule 3.355. If there's no insurance-policy connection at all, this letter's framing suggests the service falls outside that taxable category.

Attorneys hiring nurse consultants or similar experts for malpractice cases

Ask your consultant whether their invoice needs to include sales tax — it depends on whether an insurance carrier or policy is involved in the underlying matter, not simply on the nature of the chart-review work itself.

Accountants and tax professionals

This is a useful reminder that Rule 3.355's insurance-services category is defined by the insurance-policy connection to the transaction, not by the professional credentials of the person performing the service (nurse, engineer, investigator, etc.) — the same test applies across very different professions.

Common questions

Q: Is a nurse's malpractice chart-review consulting for attorneys taxable in Texas?
A: Only if performed on behalf of an insurance carrier, its insured, its policyholders, or others regarding a policy of insurance.

Q: What if the nurse is hired directly by an attorney with no insurance company involved?
A: Based on the letter's framing, that would fall outside the taxable "insurance service" category, since the insurance-policy connection is what triggers taxability.

Q: What does Texas law define as a taxable "insurance service"?
A: Insurance loss/damage appraisal, inspection, investigation, actuarial analysis or research, claims adjustment or processing, and loss prevention services, per Tax Code § 151.0039, made taxable by § 151.0101(a)(9).

Q: Can other legal nurse consultants rely on this exact letter?
A: No. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10); confirm your own facts with a tax professional.

Citations and references

Statutes and rules:

• Tex. Tax Code § 151.0039 (definition of insurance service)
• Tex. Tax Code § 151.0101(a)(9) (insurance services as taxable services)
• 34 Tex. Admin. Code § 3.355(b) (Insurance Services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200009658L

Original ruling text

September 1, 2000

From: Gilbert Zamora

To: **

Subject: Sales tax question

Dear **:

Thank you for your e-mail inquiry requesting information on the taxability of a
service that one of your clients is starting up. I have a client that is a
registered nurse. She is going to start up a business in which she consults
for attorneys and reviews medical charts for malpractice. Is this a taxable
service for sales tax?

Response: Your client's services will be taxable if performed on behalf of an
insurance carrier, its insured, its policyholders, or others pertaining to a
policy or policies of insurance. See section (b) of Rule 3.355.

Section 151.0039 of the Texas Tax Code (tax code) defines "insurance service"
as "insurance loss or damage appraisal, insurance inspection, insurance
investigation, insurance actuarial analysis or research, insurance claims
adjustment or claims processing, or insurance loss prevention services."
(Emphasis added.) Section 151.0101 (a)(9) includes insurance services in the
definition of "taxable services."

A complete set of rules, along with the text of the Tax Code, and a wealth of
other information are available through our website at
through the "Texas Taxes" window.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, You may e-mail our tax help section at .
You may also call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts.

Date: Wed, 9 Aug 2000 15:35:42 -0500
From: **
Subject: Sales tax question

I have a client that is a registered nurse. She is going to start up a
business in which she consults for attorneys and reviews medical charts for
malpractice. Is this a taxable service for sales tax? Thank you for your
help.