How did Texas apply the new insurance-services tax to independent adjusters working in Texas for in-state and out-of-state insurance companies?

Plain-English summary

The Comptroller confirmed all six points in the independent adjuster's proposed tax plan, with one clarification: when the insurance company had no Texas office, the adjuster's services had to be performed in Texas.

The confirmed plan used the adjuster's Arlington office rate rather than the inspected property's or insurer's location, taxed the total amount of all billing categories, collected both state and Arlington city tax, reported quarterly, and applied beginning October 1, 1987. The request described appraisals and adjustments of property losses for insurance companies.

What this means for you

This historical transition letter confirmed the requester's detailed implementation plan rather than stating a general modern sourcing rule. The Texas location of performance mattered for work billed to companies without a Texas office.

Common questions

Were the adjuster's insurance services taxable? Yes.

Was the entire service bill taxed? The confirmed plan taxed all billing categories and the total service amount.

What about an insurer with no Texas office? Tax applied under the confirmed point only when the services were performed in Texas.

Which local rate did the plan use? Arlington, the adjuster's office location.

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/8710L0843B07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller October 29, 1987

Dear ***:

Thank you for your letter of September 22, 1987, concerning the
October 1, 1987 change in the sales tax law which taxes insurance
services.

The six items of information outlined in your letter which you say
were provided by our Fort Worth office are correct. The information
in #2 is correct, but the services must be performed in Texas.

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,
Eddie C. Washington
Tax Policy Division

September 22, 1987

Comptroller of Public Accounts
Capitol Station
Austin, Texas 78711

ATTENTION: Mr. Wayne McDonald
Policy Dept.

RE: TEXAS STATE SALES TAX (FORM LETTER-6411B)

We are independent insurance adjusters who handle appraisals
and adjustments of property losses, in the Dallas/Fort Worth
Metroplex, for insurance companies. We send our reports to
companies that do not have a physical claim department in
Texas as well as those that do.

Enclosed is one of our standard billing sheets that shows the
categories of our service charges.

I have been in touch with your Fort Worth Office and they
inform me that:

(1) YOUR TAX REVENUE WILL BE CHARGES ON THE RATE FOR
ARLINGTON, TEXAS, THE LOCATION OF OUR OFFICE, RATHER
THAN THE LOCATION OF THE PROPERTY WE INSPECT OR THE
LOCATION OF THE OFFICE OF THE COMPANY THAT WE ARE DOING
THE INSPECTION FOR.

(2) YOU WILL REQUIRE TAX ON COMPANIES THAT WE ARE DOING
WORK FOR BUT DO NOT HAVE A OFFICE LOCATED IN THE STATE
OF TEXAS.

(3) YOU WILL REQUIRE TAXATION ON ALL CATEGORIES OF OUR
BILLING, THAT IS THE TOTAL AMOUNT OF OUR SERVICES.

(4) YOU WILL REQUIRE THAT WE COLLECT BOTH THE CITY SALES TAX
(1% IN ARLINGTON) AND THE STATE SALES TAX (6%).

(5) YOU WILL REQUIRE THAT THE TAX COLLECTED, BOTH CITY AND
STATE, WILL BE FORWARDED TO YOU AN THE QUARTERLY BASIS.

(6) YOUR TAX PROGRAM WILL BE EFFECTIVE BEGINNING OCTOBER 1,
1987.

Your Fort Worth Office believes the above to be correct but
suggested that we write you for confirmation. We would
appreciate your confirming of the above, whether it is
correct or not, so that we may implement the tax program,
obligation under this tax law.

Sincerely,