Was a service that photographed personal property and maintained descriptive records for possible insurance claims taxable in Texas?

Plain-English summary

The business photographed a client's goods, supplied copies of the photographs, and produced a computer report listing information such as manufacturer, model, and serial numbers for possible future insurance claims.

The entire charge for photographing the goods and supplying the photo copies was taxable. Because the business manufactured the photographs, it could issue an exemption certificate for film and film processing under Rule 3.300(d)(3)(A).

Storage and maintenance of the records was also taxable as data processing. The business could give its supplier a resale certificate for the computer paper used to print the report transferred to the client.

What this means for you

Dividing the product into photography, written inventory data, and record maintenance did not make the service nontaxable. The input treatment depended on whether an item qualified for the manufacturing exemption or was transferred to the customer for resale.

Common questions

Was the photography charge taxable? Yes, in full.

Was record storage and maintenance taxable? Yes, as data processing.

Could the business buy film and processing exempt? Yes, because the letter treated it as a manufacturer of the photographs.

Could report paper be bought for resale? Yes, when used for the report given to the client.

Citations and references

• Comptroller Rule 3.300(d)(3)(A) — manufacturers
• Comptroller Rule 3.330(a) — data processing services
• Comptroller Rule 3.330(c)(1) — transferred report paper

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9010L1064F04

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TEXAS 78774

October 29, 1990

Dear ****:

We received your letter questioning the taxability of your
record keeping service. According to your letter, your service consists of
photographs containing descriptive written information, and storage and
maintenance of records. You photograph clients' goods, then provide your
clients with copies of the photographs and a computer printout which includes
descriptive information, such as, the manufacturer, model and serial numbers
for the goods. This in-formation can be used for possible future insurance
claims.

Your entire charge to photograph your client's goods and
provide the client with copies of the photographs is taxable. You may is-sue an
exemption certificate for the film and the film processing because you are
considered a manufacturer of the photographs. See section (d)(3)(A) of the
enclosed Rule 3.300 relating to manufac-turers.

The storage and maintenance of records is also taxable as a
data processing service. See section (a) of the enclosed Rule 3.330 relating
to data processing services. You may issue your supplier a resale certificate
for the computer paper you use to print the report which you give to your
client. See section (c)(1) of Rule 3.330.

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 you may call or write Tax
correspon-dence. You may call toll free 1-800-252-5555, or our regular num-ber
is 512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence