Which state, city, county, and transit taxes applied to a Texas City investigation firm's assignments in 1989?

Plain-English summary

The investigation firm was based in Texas City. The combined March 9 and March 27 letters said it collected the 6% state tax and 1% Texas City tax on its Texas services under the 1989 rates described.

When a Houston attorney assigned an investigation performed in Houston, the firm also collected the 1% Houston MTA use tax. The same result applied when that assignment also involved Austin and San Antonio; the Austin and San Antonio MTA taxes did not apply.

County or MTA/CTD use tax applied when services were provided to a customer in a jurisdiction imposing that tax. Total state and local tax was capped at 8%; county use tax dropped off first and MTA use tax next when necessary to stay within the cap.

These percentages and local-option details are historical 1989 guidance, not current-rate statements.

Common questions

Did the firm always collect Texas City tax? Yes, under the sourcing rule stated in the March 9 letter.

Did every city where investigators worked impose its MTA tax? No.

What was the historical total-tax cap? 8%.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8903L0935F07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

March 27, 1989

Dear ***:

Thank you for your letter requesting clarification of the local
sales and use tax applicable to your investigation services.

The information in our March 9, 1989, letter explains the local
taxes due on investigation services. However, you asked about
local taxes in two specific situations as summarized below.

In the situation where you go to an attorney's office in Houston
to receive a case or get the case over the telephone for an inves-
tigation done in Houston, the 6% state tax, the Texas City 1% city
sales tax, and the 1% Houston MTA use tax are due.

In the situation where you are called by a Houston attorney and
accept an assignment to do an investigation which is done in
Houston, Austin, and San Antonio, the 6% state sales tax, the
Texas City 1% city sales tax, and the 1% Houston MTA use tax are
due. The MTA use taxes for Austin, and San Antonio are not due.

If you provide investigation services to a customer within a county
that has the 1/2% county tax or within a MTA/CTD, the local use
taxes are due for the county or MTA/CTD and you are required to
collect them.

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, please call
toll free 1-800-252-5555. My extension is 3-4666. You may write
to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Jo Ann Dieck
Tax Correspondence

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

March 9, 1989

Dear ***:

Reference is made to your letter of March 2, 1989, concerning your sales
and
use tax responsibilities.

The following statements should clarify your problem.

1) There is a cap of eight (8) percent on sales and use tax in Texas.

2) You will always need to collect the six (6) percent state sales tax
on services you provide in Texas.

3) Texas City has a one (1) percent city sales tax. Your business is
located in Texas City; therefore, you must always collect the one
(1) percent city sales tax for Texas City regardless of where in
the state you provide services.

4) If you provide services in a county that has a county use tax or in
a Metropolitan Transit Authority (MTA), you must collect those use
taxes; however, there is a cap of eight (8) percent of total
receipts on the amount of state and local tax that must be charged.
In determining which taxes apply, county use tax and MTA use tax
drop off in that order. Enclosed are "Guidelines for Collecting
Local Taxes" and "Sales Tax Rates in Texas". These brochures
should help.

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 1-800-252-5555. The regular number is 512/463-4600. You may
write me
at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Bryon L. Otto
Tax Correspondence