Ezel / Tax Rulings / TX
TX 8901L0924C06 Sales and/or Use Tax (State,Local,MTA) 1989-01-23

Were services applying tax-law knowledge to a client's benefit plan taxable as data processing or insurance services?

Short answer: No. Texas revised its earlier answer and treated the work as nontaxable professional services similar to accounting, whether performed manually or by computer.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

After reviewing Internal Revenue Code Section 89 and reexamining the requested services, the Comptroller changed an earlier response and concluded that the provider was not furnishing taxable data-processing or insurance services.

The provider applied tax-law knowledge to a client's benefit plan. The Comptroller characterized that work as nontaxable professional service similar to accounting and said the result did not change merely because a computer was used.

Common questions

Were the services taxable data processing? No.

Were they taxable insurance services? No.

Did computer use make the professional service taxable? No. The letter gave the same answer whether the work was done manually or by computer.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller January 23, 1989

Dear **:

This letter is to change the response given in my January 4, 1989,
regarding the taxability of the services that you will be provid-
ing.

After reviewing Section 89 of the Internal Revenue Code and re-
examining the services you will be performing, we have concluded
that you are not providing taxable services. The services per-
formed are not classified as data processing services or insurance
services.

The services you perform are similar to accounting services which
are not taxable, whether done manually or with a computer. When
you take a client's benefit plan and apply your knowledge of tax
law, as it applies to benefit plans, you are providing nontaxable
professional services.

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

If you have any questions or need more information, you may call
toll-free 1-800-252-5555, ext. 3-4683. The regular number is
512/463-4600. You may write me at Tax Correspondence, Comptroller
of Public Accounts.

Sincerely,
Eddie C. Washington
Tax Correspondence

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