TX 9109L1129A03 Sales and/or Use Tax (State,Local,MTA) 1991-09-11

Was a photocopier charge based on the number of copies made taxable when it was billed separately from the machine's other rental and service charges?

Short answer: Yes. The per-copy or meter-click charge was taxable as part of the photocopier rental price because it adjusted the rent according to actual use. Separate billing did not change the result.

Apply this to your situation

This page answers the general question as of 1991. Ezel answers yours, under current Texas tax law, with citations.

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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

A business rented a photocopier under an agreement that included parts and labor. The rental company also charged a monthly amount based on the machine's copy count, described as meter clicks.

The Comptroller said the meter-click amount was taxable rent. It changed the rental price according to how much the renter used the machine, and billing it separately from other rental, maintenance, or repair charges did not change that treatment.

What this means for you

A usage-based equipment charge can remain part of taxable rent even when it appears as a separate line item. The economic role of the charge—adjusting the rental price for actual use—controlled here.

Common questions

Was the monthly meter-click charge taxable? Yes.

Why? It was part of the charge for renting the photocopier and varied with actual use.

Did separate billing make it nontaxable? No.

Citations and references

The letter did not identify a specific statute or rule for this conclusion.

Source

STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
Opinion: https://star.comptroller.texas.gov/view/9109L1129A03

Original ruling text

September 11, 1991

Dear ***:

Thank you for your recent letter. According to your facts,
you rent a canon NP 40OF photocopier from *. The
rental agreement includes all parts and labor on the machine.
You supply the copy paper and resell it to your customers
at a rate of $ .10 per copy plus sales tax. * charges
your company a monthly fee for "meter clicks" on the machine,
which is a count of the number of copies printed through the
machine each month. You ask whether or not you owe tax on
the "click" charge.

This click charge is taxable as part of ****'s charge for
renting the photocopier to you. The click charge is their
way of adjusting the rental price according to the customer's
actual use of the machine. The more the renter uses it, the
more he or she pays. This is true even if the click charge
is billed separately from other rental, maintenance or repair
charges.

Innovative should have been collecting sales tax on the click
charge all along.

This opinion is based on the facts presented. Different facts,
though similar, might lead to different answers. If you have
further questions, feel free to write or call me at
1-800-252-5555, ext. 3-3889.

Sincerely,

John Christian
Attorney
Tax Administration

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