Was coin wrapping taxable when offered by a security-services provider, and how were the wrapping supplies treated?

Plain-English summary

The Comptroller said coin wrapping did not fall within the statutory or regulatory definitions of security services. It was nontaxable when the provider separately stated the coin-wrapping charge from taxable security services.

The provider had to pay sales tax on all supplies used to perform the wrapping service.

STAR now adds a 2019 alert concerning private security consultants and guard-dog companies. That later change concerns which providers are taxable security services, not whether separately stated coin wrapping itself was taxable in this letter.

What this means for you

Under the historical ruling, invoice separation preserved nontaxable treatment for an unrelated service offered by a licensed security provider.

Common questions

Was coin wrapping taxable? No, when separately stated.

Could it be bundled without separation? The letter requires separation from taxable services for the nontaxable result.

Did the provider pay tax on supplies? Yes.

Citations and references

• 34 Tex. Admin. Code Rule 3.333(g), cited for unrelated services.
• Texas Occupations Code § 1702.102 and SB 616 § 5.028, identified in STAR's 2019 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/8802L0867C10

Original ruling text

ALERT – Services provided by private security consultants and guard dog companies are no longer considered a taxable security service. SB 616 (section 5.028) amended the Occupation Code 1702.102 to remove these entities from the license requirements. Comptroller Rule 3.333 is based upon this Occupation Code. 86th Legislative Session, effective 09/01/2019.

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

February 5, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you will accept my apology for the delay
in answering your question about changes in the sales tax law. This
isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law, and to draft rules
which
will not adversely impact businesses. In many instances, an answer to a
questions just wasn't available when the question arrived.

Your client's coin wrapping service does not fall within any of the
definitions of security services as defined in the statutes or the rules.
I refer you to enclosed copy of Rule 3.333, Security Services, and in
particular subsection (g) covering unrelated services provided by a
person
licensed under the Private Investigators and Private Security Agencies
Act.

Coin wrapping is a nontaxable service, and no tax is due if the charge
for
coin wrapping is separately stated from taxable services. But your
client
must pay tax on all supplies used in performing the wrapping service.

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 our
toll-free number 1-800-531-5441. The regular number is 512/463-4600.
You may write me at the Tax Policy Division.

Sincerely,
Al Van Allen
Tax Policy Division