Were all charges for uniformed security officers taxable in Texas when roughly 80% of the price covered employee wages and benefits?

Plain-English summary

A company providing uniformed security officers said about 80% of its customer charges represented employee wages and benefits. The Comptroller said the total charges would be taxable effective October 1, 1987.

Section 151.007(a)(1)-(2) defined sales price or receipts as the total amount charged for a taxable item without deducting the item, materials, labor, services, interest, losses, or other expenses.

What this means for you

The historical letter did not allow a security provider to remove employee wages, benefits, or other business costs from the taxable customer charge.

Common questions

Were only the provider's nonlabor charges taxable? No. The total charge was taxable.

Did it matter that wages and benefits were about 80% of the charge? No deduction was allowed for labor, services, or other expenses.

When did the stated treatment begin? October 1, 1987.

Citations and references

• Texas Sales and Use Tax Law § 151.007(a)(1)-(2) — total sales price or receipts without expense deductions.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8709L0830A12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

September 11, 1987

Dear ***:

Thank you for Your letter regarding the taxability of security services
effective October 1, 1987.

You stated that your company provides uniformed security officers and
that
approximately 80 percent of your charges consist of wages and benefits
you
pay your employees. You questioned the taxable portion of these charges
to
your customers.

The total charges to your customers for uniformed security officers will
be
taxable effective October 1, 1987. Section 151.007 (a)(1) and (2) of the
Texas Sales and Use Tax Law states:

(a) "Sales price" or "receipts" means the total amount for which a
taxable item is sold, leased, or rented, valued in money, without a
deduction for the cost of:
(1) the taxable item sold, leased, or rented;
(2) the materials used, labor or service employed, interest,
losses or other expenses;

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

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Julie Pesl
Tax Policy Division