Are public-records research, lien searches, and ad valorem tax checks taxable information services in Texas, and is document filing taxable?

Plain-English summary

A company that performs public-records research and related services asked for a written ruling on how Texas sales tax applies. Its services were:

• I. Public Records Research — title reports (updates from the current owner forward); UCC and financing-statement searches; judgment and tax-lien searches; county, federal, and district court suit searches; and ordering certified copies of those documents on request.
• II. Filing client-prepared documents with the County Clerk.
• III. Checking on payment of ad valorem (property) taxes.

The Comptroller's holdings:

• The Public Records Research and the ad valorem tax check are taxable information services.
• However, the company may exclude, from the taxable base, the fees it paid for documents obtained under the Open Records Act — but only if it separately identifies those open-records fees when it collects tax from the customer.
• Filing documents with the County Clerk is not a taxable service.

The Comptroller enclosed Rule 3.342 on information services.

What this means for you

Title, lien-search, and public-records companies

Your core records research — lien searches, UCC searches, title updates, court-suit searches — and your property-tax status checks are taxable information services in Texas. Collect sales tax on those charges.

Pass-through Open Records fees can come out of the tax base

You can exclude the government document fees you paid under the Open Records Act from the amount you tax — but you must separately state those fees on the customer's bill. Bundle them in and you lose the exclusion.

Document filing is different

Charges for filing prepared documents with the County Clerk are not taxable services. Keep those separate from your taxable research charges.

Common questions

Q: Are lien searches and public-records research taxable in Texas?
A: Yes. The Comptroller treats public-records research (including UCC, judgment, and tax-lien searches and title reports) and ad valorem tax checks as taxable information services.

Q: Can I avoid taxing the government document fees I paid?
A: You may exclude fees paid for documents obtained under the Open Records Act from the tax base, but only if you separately identify those fees when collecting tax.

Q: Is filing documents with the county clerk taxable?
A: No. The Comptroller stated that charges for filing documents with the County Clerk are not taxable services.

Q: Can I rely on this 1988 letter today?
A: Treat it as guidance only. It is based on the facts presented and can change with different facts; on the STAR system it binds the Comptroller only as to the taxpayer it was issued to and may no longer reflect current policy.

Citations and references

• 34 Tex. Admin. Code Rule 3.342 — information services; enclosed with the letter as the basis for taxing public-records research and the ad valorem tax check (and for the separately stated Open Records fee exclusion).

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8807L0902C13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

BOB BULLOCK
Comptroller July 1, 1988

Dear ****:

Thank you for your request for a written ruling on the ****
services you provide.

You describe the services You provide as follows.

I. Public Records Research
a. Title Reports - updates from current owner forward
b. UCC and financing statements searches
c. Judgement and tax lien searches
d. County, Federal and District court suit searches
e. Order certified copies of above documents if requested

II. File with County Clerk prepared documents at the request of
clients.

III. Check on payment of ad valorem taxes.

The Public Records Research and check on ad valorem taxes are taxable
information services. However, you may exclude fees you paid for
documents
obtained under the Open Records Act from the tax base when you collect
tax
from your customer. You must separately identify the fees for open
records
information in order to exclude the fee from tax.

The charges for filing documents with the County Clerk are not included
as
taxable services. I am enclosing the rule on Information Services
Rule 3.342.

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 Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Tom Soto
Tax Correspondence