Was an annual fee taxable when clients received monthly economic-research reports, telephone answers, and personal presentations from a shared database?

Plain-English summary

The provider gathered current and historical economic-trends information from various sources and used the same general database to compile material sold to each client. The Comptroller treated that work as an information service under Rule 3.342.

Each client paid one annual fee for three things: a monthly written research report, telephone availability to answer questions, and personal presentations. Because taxable and nontaxable services were sold for one charge, Rule 3.342 presumed the entire charge taxable.

What this means for you

The historical letter focused on reusable information drawn from a common database and on a single bundled price. It did not separately classify the telephone answers or presentations because they were not separately priced.

Common questions

Why was the research treated as an information service? The provider gathered and compiled economic information and used the same general database for material sold to multiple clients.

Did the presentations and phone access make only part of the fee taxable? No. The Comptroller said the single charge for taxable and nontaxable services was presumed taxable.

Would separately stated charges change the result? The letter does not answer that question.

Citations and references

• 34 Tex. Admin. Code Rule 3.342 (information services and bundled taxable/nontaxable services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8711L0850F01

Original ruling text

November 16, 1987

Dear **:

Thank you for your letter requesting taxability information on financial
services publications.

I am enclosing a copy of Rule 3.342 in which information services are defined
as furnishing general or specialized news or other current information,
including financial information. Information which is gathered, maintained, or
compiled and made available by the provider of the information service to the
public or to a specific segment of industry for a consideration is subject to
sales tax. The rule continues by listing examples and discussing the
responsibilities of providers of information services.

Based on your letter and information obtained through telephone conversations
with you and * on November 10 and November 12, you gather information,
from various sources, about current and past economic trends and provide this
to your clients for their use. The same general data base is used to compile
information sold to each client. Therefore, you are providing information
services.

You also stated you charge each client one fee per year for, 1) a written
research report sent out each month to your clients, 2) telephone availability
to answer questions and 3) personal presentations. Rule 3.342 explains that
when taxable and non-taxable services are sold for a single charge, the total
charge is presumed to be 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,

Eddie C. Washington
Tax Policy Division