Were full-time peace officers acting as independent contractors required to collect Texas sales tax on guard services?

Plain-English summary

The Comptroller explained why full-time law-enforcement personnel working as independent-contractor security guards were not required to collect sales tax on the facts described.

The sales-tax statute defined a taxable security service by reference to services requiring a license under the Private Investigators and Private Security Agencies Act. Full-time peace officers acting as independent contractors did not have to be licensed under that Act when providing guard service. Because the described work did not require the referenced license, their charges were not taxable.

What this means for you

The 1991 conclusion depended on both the worker's status as a full-time peace officer and the licensing exemption for the particular guard service. It does not say that every off-duty security arrangement is nontaxable.

Licensing statutes and the sales-tax definition may have changed since 1991. Verify current law and the worker's actual licensing status before applying this historical letter.

Common questions

Were the described guard-service charges taxable? No.

Why not? The taxable security-service definition depended on whether the service required a license, and the full-time peace officers described did not need that license for guard work.

Did the letter apply to every private security provider? No. It specifically addressed full-time peace officers acting as independent contractors.

Did the letter cite a numbered Tax Code section? No. It referred generally to the sales-tax statute and named the Private Investigators and Private Security Agencies Act.

Citations and references

• Private Investigators and Private Security Agencies Act — named as the licensing law incorporated into the sales-tax definition of security service.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9108L1127C13

Original ruling text

August 9, 1991

Dear ****:

Thank you for your letter asking why law enforcement personnel are not
required to collect sales tax when they work as security guards.

The reason is found in the law itself. The sales tax statute defines
security service as a service that requires a license under the Private
Investigators and Private Security Agencies Act.

Full-time peace officers acting as independent contractors are not
required to be licensed under the Private investigators and Private
Security Agencies Act when they provide guard service, so their charges
are not taxable.

Let me know any time I can be of service to you.

Sincerely,

JOHN SHARP
Comptroller of Public Accounts