Was an annual membership fee taxable when a Texas service company only acted as the member's agent to secure a bail bond after a first-offense DWI arrest?

Plain-English summary

The requester charged the public an annual membership fee. If a member in good standing was arrested and jailed anywhere in Texas for a first-offense DWI charge, the company used a toll-free number and acted as the member's agent to secure a bail bond.

The company said it was neither an insurance company nor a bail-bonding company. Its only service was doing the legwork to obtain the bond, and that was the only service covered by the membership fee.

The Comptroller concluded that the annual fee was not taxable.

Common questions

Was the annual membership fee taxable? No.

What did the company provide? It acted as a member's agent and did the legwork to secure a bail bond after a first-offense DWI arrest and jailing in Texas.

Was the requester itself an insurer or bail-bonding company? No. The requester expressly said it was neither.

Did the letter decide the tax treatment of the bail bond itself? No. It answered whether the company's annual membership fee was taxable on the stated facts.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8609L0754C02

Original ruling text

September 2, 1986

Dear ***:

Thank you for your recent letter which is restated in part with response below.

We are a service company which solicits its membership from the general public.
We charge an annual fee of $***, and act as the Member's agent to
secure a bail bond via our toll free wats telephone number or any Member in
good standing who is arrested and jailed for a first offense D.W.I. charge
anywhere in the State of Texas. We are not an insurance company or a bail
bonding company; we simply do the "leg work" for a Member who is arrested
for such an unfortunate offense. This is the only service we offer, and
the only service the Member pays for with his annual membership fee. We are
a Texas corporation, with headquarters in CITY, Texas.

The annual fee is not taxable.

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

Please feel free to contact us if you have additional questions. You may write
us, call toll free 1-800-252-5555 from anywhere in Texas or phone 512/463-4600.

Sincerely,

Tax Policy Section
Tax Administration Division