Ezel / Tax Rulings / TX
TX 9110L1140D13 Sales and/or Use Tax (State,Local,MTA) 1991-10-23

Was a monthly fee for access to a computer database of found animals taxable when people reporting found pets supplied information for free?

Short answer: Yes. The monthly fee paid by owners of lost pets for access to the found-animal database was taxable as an information service under Rule 3.342.

Apply this to your situation

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

Currency note: this ruling is from 1991
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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 business compiled and maintained a computer database of lost and found animals. People who found pets supplied information at no charge, while owners searching for lost pets paid a monthly fee to access the found-animal records.

The Comptroller said the monthly access charge was taxable as an information service under Rule 3.342.

What this means for you

The fact that contributors supplied the underlying records for free did not make customer access nontaxable. The paid product was access to the compiled information.

Common questions

Was the lost-pet owner's monthly fee taxable? Yes. Did it matter that found-pet reports were submitted for free? No different treatment was provided. What category applied? Taxable information services.

Citations and references

  • Rule 3.342 (information services)

Source

Original ruling text

October 23, 1991

Dear **:

Thank you for your recent letter regarding the taxability of the
information service provided by your new business, **.

You stated in your letter that your business compiles and maintains
a computer data base of lost animals. Persons that find
lost animals supply you with information regarding the lost pet
and the information is entered on your computer at no cost to
that person. Persons having lost a pet pay your business a monthly
fee for access to the information about "found animals". You
have specifically asked if the charge to owners of lost animals
is subject to sales tax.

The service is taxable as an information service as provided for
in the enclosed Rule 3.342, Information Services.

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

If you have any questions or need more information, you may call
me toll free at 1-800-252-5555, extension 5-0330. The regular
number is 512/463-4600 or write Tax Administration Division.

Sincerely,

Bettie U. Peterson
Tax Administration Division

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