Were forensic-engineering investigations connected with insurance claims taxable as insurance services in Texas?

Plain-English summary

A consulting firm specializing in forensic engineering and applied sciences performed work connected with insurance claims. Texas concluded that services relating to a claim against an insurance policy were taxable insurance services, even when the firm's customer was not itself an insurance carrier.

The letter relied on Tax Code § 151.0039 and Rule 3.355(b). It also said the issue was being sent to the policy committee for additional review, so the short answer was not presented as the final word on any broader classification question.

What this means for you

Forensic engineers and claims consultants

Technical work can be classified by the transaction it supports. Under this letter, accident, fire, or structural-damage investigation connected with an insurance claim was treated as an insurance service rather than merely as engineering work.

Insurers, insureds, and claimants

The letter says the tax treatment did not turn on whether the direct customer was the insurance carrier. The link between the work and a claim against a policy controlled the stated result.

Common questions

Q: Is forensic-engineering work always taxable in Texas?
A: The letter does not say that. It addresses services provided in connection with a claim against an insurance policy.

Q: Does the customer have to be an insurance company?
A: No. The letter says the insurance-related services were taxable even when provided for another customer.

Q: Was this conclusion final?
A: The letter gave a taxable answer but also said it was being referred to the policy committee for additional review.

Q: Can I rely on this 1988 letter today?
A: Treat it as historical guidance. It was based on the stated facts, and the letter itself said different facts could change the opinion.

Citations and references

• Section 151.0039
• Section (b) of Rule 3.355

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8806L1131F03

Original ruling text

June 3, 1988

Dear *:

Thank you for your letter of May 16, 1988, concerning the taxability of
Section 151.0039 to the services provided by your client, a consulting
firm specializing in forensic engineering and applied sciences.

Insurance services are taxable when performed on behalf of an insurance
carrier, its insured, its policyholders, or others pertaining to a
policy or policies of insurance. Section (b) of Rule 3.355. Insurance
services are taxable even when provided for a customer other than an
insurance carrier. These services are taxable as insurance services
when they are provided by your client for its customer related to a
claim against an insurance policy.

Your letter is also being referred to the policy committee for addition-
al review.

This opinion is based on the facts presented. If there are additional
or different facts, the opinion may change.

If we can be of further assistance, please write to us or call toll
free from anywhere in Texas at 1- 800-252-5555. Our regular number is
512/463-4600.

Sincerely,

Eddie C. Washington
Tax Policy Division