Was a real-estate multiple-listing information service taxable, and how were the printed listing-book materials treated?

Plain-English summary

The multiple-listing system was a taxable information service for services provided to Texas customers on or after October 1, 1987. No tax was due when the service was sold to an out-of-state customer.

For materials bought before October 1, 1987 and used to produce the books in Texas, sales or use tax was due even on books sent out of state. The Comptroller viewed the book as incidental to the service and rejected the requester's cited use, manufacturing, out-of-state-shipment, and export arguments.

The letter then said no tax was due on materials purchased in or outside Texas for listing books when care, custody, and control of the book transferred to the customer. STAR now places an alert above the letter directing readers to Rule 3.285, amended November 1, 2017, for specific guidance on that issue.

What this means for you

The historical service and material rules changed at the October 1, 1987 transition and depended on customer location and transfer of the physical book. The later STAR alert makes current Rule 3.285 essential before applying the material-cost statement.

Common questions

Was the multiple-listing information service taxable? Yes for Texas customers for service provided on or after October 1, 1987.

What about an out-of-state customer? The letter said no tax was due on the service.

Were pre-October materials used in Texas taxable? Yes, including materials used in books sent out of state.

Did the letter allow untaxed material purchases later? It did when care, custody, and control of the book transferred to the customer, but STAR directs readers to the 2017-amended Rule 3.285 for specific guidance.

Citations and references

• Tex. Tax Code § 151.011(e) (use)
• Tex. Tax Code § 151.318 (manufacturing)
• Tex. Tax Code § 151.330(a) (out-of-state shipment)
• Tex. Tax Code § 151.307 (constitutional and export limitation)
• 34 Tex. Admin. Code Rule 3.285 (STAR's 2017 care, custody, and control alert)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8710L0839A12

Original ruling text

ALERT: For specific guidance relating to the care, custody and control of TPP when providing a taxable service, please see Rule 3.285, Resale Certificates; Sales for Resale amended 11/01/2017.

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

October 16, 1987

Dear ****:

Thank you for your letters concerning the taxability of material which is
used in the multiple listing service books and the taxability of your client's
service under the new taxable services provision.

Texas sales/use tax is due on the materials purchased both in this state
or in another state prior to October 1, 1987 and which are used in the multiple
listing service books. This includes the books which are sent out of state.

Your client is providing a service where the essence is that service and
not the selling of tangible personal property. Your client is making use of the
material in Texas by producing the book (the medium of the service) in Texas.
The material could only be considered for the exemptions you cite if the
transaction was a sale of
tangible personal property.

In your letter, you cite Sec. 151.011(e). The material is not excluded
from the definition of use in that information is exported out of state, the
book is only incidental.

You also cite Sec. 151.318. Here, your client is not a manufacturer, they
are service providers and there is no tangible personal property for sale.

You also cite Sec. 151.330(a). Here again, this is a service transaction
and any tangible personal property shipped out of state is incidental.

Finally, you cite Sec. 151.307. Since the material is used in Texas, I
see no reason why taxing it is prohibited by the U.S. or Texas Constitution or
evidence that there is tangible personal property being exported beyond the
territorial limits of the United States.

Under our new provision, the multilist information system service
provided by your client has been determined to qualify as an Information
Service and thus taxable effective October 1, 1987. Your client should bill tax
for any service provided on or after that date. No tax is due if your client
sells the service to an out of state customer.

No tax is due on materials which are purchased in Texas or another state
when used in the multilisting book so long as the care, custody and control of
the book is transferred to customer.

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,
Curt Swenson
Tax Policy Division