Was a labor-only direct-mail preparation and delivery service subject to Texas sales tax?

Plain-English summary

The business supplied human labor to meter, stamp, label, insert, bundle, sort, and deliver direct-mail pieces to the post office. Customers supplied the mail pieces and either postage stamps or a check payable to the postmaster, while the post office supplied bags, ties, and rubber bands.

The Comptroller said this was a mailing service unconnected with the sale of taxable items and therefore was not taxable.

What this means for you

On these historical facts, a provider did not owe sales tax merely for preparing and delivering customer-supplied direct mail when the service was not tied to a taxable-item sale. The letter does not decide arrangements in which the provider sells printed materials, supplies, or other taxable items.

Common questions

Was the described mailing service taxable? No.

What work did the provider perform? Metering, stamping, labeling, inserting, bundling, sorting, and delivering direct-mail pieces to the post office.

Who supplied the mail pieces and postage? The customers.

Did the letter decide mailing work connected with a taxable-item sale? No. Its answer depended on the service not being connected with such a sale.

Citations and references

• No statute or rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8709L0839D02

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

September 8, 1987

Dear ***:

Thank you for your recent letter questioning whether or not ***
is exempt from the collection of sales tax.

Below is your description of the services provided by ***
and our response.

*** is a new business. We provide the labor to meter,
stamp, label, insert, bat, tie, sort and deliver direct mail pieces to
the post office. The post office provides the bags, ties, and rubber
bands. Our clients provide the pieces to be mailed as well as the
postage stamps or a check written to the U.S. Postmaster to their postal
accounts. Our business is 100 percent human labor. Our employees run
mailing equipment and hand match components for direct mail campaigns.

Response: This is a mailing service which is not connected with sale of
taxable items. The service is therefore, not taxable.

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,
Jo Ann Dieck
Tax Policy Division