Were investigation services performed under a self-insured plan taxable in Texas?

Plain-English summary

The letter said services performed under a self-insured plan were nontaxable under Rule 3.355. By contrast, activities covered by Rule 3.355(a)(5) were taxable when performed for an insurance company, a person pursuing an insurance claim, or an attorney representing either side.

Listed governmental entities were exempt on their purchases. For an out-of-state client, Texas tax still applied when the investigated person, property, or accident was in Texas and the client was an insurance carrier or was doing business in Texas.

Common questions

Were services under a self-insured plan taxable? No.

Were comparable insurance-claim investigations taxable? Yes, for the parties described in the letter.

Did an out-of-state client automatically avoid Texas tax? No. The location of the investigated person, property, or accident and the client's insurance or business status mattered.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8907L0946C12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller July 5, 1989

Dear *****:

Thank you for your letter requesting confirmation of the infor-
mation that you received in our telephone conversation on June
28, 1989 and our previous correspondence. My responses to your
statements A through E are listed below.

A. Activities which are covered by section (a)(5) of Rule 3.355
are taxable when performed for an insurance company, an indivi-
dual pursuing a claim against an insurance company, or an attor-
ney representing either an insurance company or a claimant.

B. Governmental entities listed in section (b) of Rule 3.322 are
exempt from paying sales tax on items purchased by the entity

C. Please refer to section (d) of Rule 3.355. Even if your client
is not located in Texas, Texas tax is due if the person, property
or accident investigated is in Texas and your client is an insur-
ance carrier or is doing business in Texas.

D. See section (b) of Rule 3.355. Services performed pursuant to
a self-insured plan are not taxable.

E. See answer A.

This opinion is based upon the facts you presented. If there are
additional or different facts, this opinion may change. Please feel
free to contact me if you have any additional questions. You may
write me, call toll-free 1-800-531-5441 from anywhere in the United
States or phone 512/463-4685.

Sincerely,
Julie Pesl
Tax Correspondence