Ezel / Tax Rulings / TX
TX 9003L1019B12 Sales and/or Use Tax (State,Local,MTA) 1990-03-12

Were consulting fees taxable when a firm reviewed repair bids, recommended contractors, and advised savings and loan institutions about real-estate repairs and maintenance?

Short answer: No. The separately contracted consulting service was not taxable. The consultant had to pay tax to its suppliers on taxable items it used while providing the service.

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 consultant advised savings and loan institutions about repair and maintenance of residential and nonresidential real estate. It reviewed bids, recommended contractors, met with contractors about problems, and advised the institutions on further action.

The consultant billed a flat percentage of repair costs or an hourly rate, while the repair contractors billed the institution separately. On the assumption that the consulting and repair work were separately contracted, the consulting charge was not taxable.

The consultant had to pay tax to its own suppliers on taxable items used to provide the nontaxable service.

Common questions

Were the consulting fees taxable? No.

Did the repair contractors bill through the consultant? No, the facts said they billed the institution separately.

Did the consultant owe tax on its inputs? Yes, on taxable items used to provide the service.

Source

Original ruling text

March 12, 1990

Dear *****:

In your letter of February 28, you requested information regarding the
taxability of consulting services provided by your client, ***** (ABC).

You state that ABC will provide consulting services to savings and loan
institutions. ABC will consult with the institutions regarding the repair and
maintenance of their residential and nonresidential real estate. ABC will
review bids and make recommendations regarding the contractors to perform
repairs and maintenance. ABC will also meet the contractors regarding problems
and make recommendations to the savings and loan institution regarding further
action.

ABC will bill the savings and loan institution a flat fee based on the
percentage of total repairs or an hourly rate. The contractors who actually
perform the repairs and maintenance will bill the institution separately. I
presume that the services of ABC and the repairmen are contracted for
separately.

Charges for the consulting services performed by ABC aren't taxable. ABC must
pay tax to their suppliers on all taxable items used in providing this
nontaxable service.

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

If you have any questions, please contact Tax Correspondence. You may call
463-4600, extension 3-4662. You may write me at Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,

Bob Jeffcoat
Tax Correspondence

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