Were a property-tax consultant's client-specific research, monitoring, appeal, and appraisal services taxable information services in Texas?

Plain-English summary

The described consultants reviewed appraisal-district values, advised clients about excessive valuations, filed protests, represented property owners in conferences and hearings, checked tax statements, and sometimes prepared appraisal reports or obtained them from independent appraisers.

The Comptroller said information gathered or compiled for a particular client was nontaxable when it was proprietary to that client and could not be sold to others. If a consultant instead gathered information and made it available to the public for a fee, the consultant could be providing a taxable information service.

The letter separately stated that services performed under a self-insured plan or for third-party administrators of self-insured plans were nontaxable under Rule 3.355(b).

What this means for you

The historical distinction was between confidential, client-specific work and information sold more broadly. The letter does not hold that every property-tax research or monitoring service is taxable, despite the STAR caption.

Common questions

Were proprietary reports prepared for one client taxable? The letter said no when the information was gathered or compiled for that client, was proprietary, and could not be sold to others.

Could publicly offered information be taxable? Yes. The letter said information gathered and made available to the public for a fee could be a taxable information service.

Did the letter address appraisal reports? Yes. It described consultants sometimes preparing them for administrative appeals and sometimes obtaining them from independent appraisers, then applied the proprietary-information rule to the described services.

What did it say about self-insured plans? It said services performed under a self-insured plan or for third-party administrators of self-insured plans were nontaxable under Rule 3.355(b).

Citations and references

• 34 Tex. Admin. Code Rule 3.342(d)(1) — historical information-services provision quoted in substance by the letter.
• 34 Tex. Admin. Code Rule 3.355(b) — historical insurance-services provision described by the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8712L0849C05

Original ruling text

December 10, 1987

Dear **:

Thank you for your letter of November 30, 1987 concerning the taxability of
various services provided by property tax consultants.

You indicated that tax consultants of this type represent clients in connection
with the property tax valuations on their respective properties, generally, on
an ongoing basis from year to year. The consultant's responsibilities include
reviewing appraisal district records to determine the proposed valuations for
the client's properties; advice to the client as to whether such values are
excessive: filing protests respect to those properties on which the appraisal
district has placed an excessive valuation; representing the property at
informal conferences with appraisal district personnel and, if necessary,
formal appraisal review board hearings; reviewing property tax statements
issued with respect to the represented properties and confirming to the client
that such statements are correct.

From time to time, property tax consultants will prepare appraisal reports in
connection with the administrative appeal functions noted above. In other
instances, necessary appraisal reports are obtained from independent
appraisers.

The services described in the preceding paragraph are not taxable when
performed for a particular client by a tax consultant. Section (d)(1) of the
new Rule 3.342 Information Services states that information which is gathered
or compiled on behalf of a particular client that is of a proprietary nature to
that client and which may not be sold to others is not taxable.

If a property tax consultant gathered information which he then made available
to the public for a fee, he could be considered a provider of a taxable
information service.

I have also enclosed a copy of the latest version of Rule 3.355 on insurance
services. Section (b) states that service performed pursuant to a self-insured
plan or for third party administrators of self-insured plans are 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,

Julie Pesl
Tax Policy Division