Were a college security-training program director's services taxable as security services?

Plain-English summary

The Comptroller concluded that services performed as director of a college security training program were not taxable security services. Texas imposed tax on security services for which a license was required under Section 13 of the then-cited Private Investigators and Private Security Agencies Act, including guard-company services.

Training programs, however, were regulated under Section 20. The director was not in the business of furnishing watchman, guard, or patrol services to protect people or property under Section 2(4). The possibility that the licensing board might require the college to have a licensed guard company or security officer did not make the director's training-program services taxable.

The Comptroller said the director's sales-tax return would be amended to remove the college charges from taxable receipts and instructed the director to stop charging the college sales tax for that service.

Common questions

Were the director's services taxable? No.

Did possible licensing requirements for the college change the answer? No. The letter separated those requirements from the tax treatment of the director's own services.

What happened to the previously reported charges? The Comptroller said the return would be amended to delete the college charges from taxable receipts.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8902L0921G01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 1, 1989

Dear ***:

This letter is a follow-up to our telephone conversation of Janu-
ary 31, 1989, concerning the taxability of the services you pro-
vided to *** College as the director of their security pro-
gram.

After reviewing the Private Investigators and Private Security
Agencies Act, Sec. 13, Texas Revised Civil Statutes, Article 4413
(29bb) (hereafter referred to as the 'Security Act'), I can only
conclude that the services you provided are not taxable.

The sales tax law imposes a sales and use tax on security services
for which a license is required under Section 13 of the Security
Act. The sales tax is imposed on the services you perform as a
guard company for which a license is required under Section 13 of
the Security Act.

Training programs are regulated under Section 20 of the Security
Act. The services you provide as the director of security of
the college's training program are not taxable because you are
not engaging in the business of providing a watchman, guard, or
patrol service to protect persons or property as set out in Sec-
tion 2 (4) of the Security Act. The fact that the Board of Pri-
vate Investigators and Private Security Agencies may require the
college to have a guard company or security officer licensed under
Section 13 does not make the services subject to sales tax.

I am having your sales tax return amended to delete the charges
to ** College as taxable receipts. This means that you did
remit the proper amount of sales tax due and that you should no
longer charge the college sales tax on this service.

I apologize for any inconvenience getting this issue resolved may
have caused you.

Sincerely,
Eddie C. Washington
Tax Correspondence