Ezel / Tax Rulings / TX
TX 8902L0925G13 Sales and/or Use Tax (State,Local,MTA) 1989-02-23

Were art appraisals taxable when performed for insurance purposes, and did the result change for sale, authenticity, or market-value appraisals?

Short answer: Insurance-related appraisals were taxable insurance services. Appraisals performed only for a sale, authenticity check, or market-value decision were not taxable.

Apply this to your situation

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

The Comptroller said that art appraisals were taxable insurance services when performed to obtain insurance coverage or settle an insurance claim.

An appraisal performed for a noninsurance purpose was not taxable. The letter gave examples of valuing art for a sale, checking whether a work was fake, or deciding whether a buyer was paying too much.

Common questions

Was an appraisal for insurance coverage taxable? Yes.

Was an appraisal for settling an insurance claim taxable? Yes.

What about a sale, authenticity check, or market-value appraisal? Those noninsurance appraisals were not taxable under the letter.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 23, 1989

Dear ****:

Thank you for inquiring about the applicability of sales tax to
appraisals on art. Pat Ramirez has asked me to respond to your letter. Both
of the services you ask about are taxable.

Appraisals are taxed as an insurance service when they are done for the
purpose of obtaining insurance or for settling a claim. I am sending you rule
3.355 on Insurance Service. Please notice the first two definitions of
insurance services.

The first insurance definition says ... "appraisal activities performed
prior to damage or loss... are not considered loss or damage appraisal". This
is sometimes misunderstood to say that it is not an insurance service. The
second definition does say..."to survey or value property in connection with
the furnishing of insurance coverage, or any other similar activity" is an
insurance service.

An appraisal is not taxable if it is not for insurance purposes. If, for
example, you are asked to appraise a piece of art because it is going to be
sold, or if someone wants to be sure they're not buying a "fake" or paying too
much, then the appraisal is not taxable.

If you have other questions or need more information, please call me at
463-4600 or
1-800-252-5555. My extension is 3-4675.

Sincerely,
Tom Soto
Tax Correspondence

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