How did Texas tax stand-alone business consulting, training, business evaluations, separately sold books, and books included in training?

Plain-English summary

Stand-alone personal or business consulting was nontaxable. Consulting related to the sale or lease of tangible personal property or another taxable service became part of the taxable item's total selling price.

Separately stated on-site training, training at the provider's facilities, seminars, and workshops were nontaxable.

Books sold separately were taxable, requiring a sales-tax permit for Texas customers. The provider could buy those resale books tax-free with a resale certificate. Books distributed as part of a training course were not treated as separately sold inventory, and the provider owed tax on items used to perform its nontaxable services.

A professional evaluation of a business's financial viability and potential did not appear taxable on the stated facts. The Comptroller enclosed Rule 3.342 and asked for more information or a sample report if the evaluation might involve taxable information services.

What this means for you

Consultants should separate training and stand-alone advice from taxable products or services and distinguish books sold as merchandise from course materials consumed in delivering training.

Common questions

Was stand-alone consulting taxable? No. Was separately stated training taxable? No. Were books taxable? Yes when sold separately. Could resale books be bought tax-free? Yes. Was the business evaluation definitively classified? It appeared nontaxable, but the letter requested more detail if information-service issues existed.

Citations and references

• 34 Tex. Admin. Code Rule 3.342
• 34 Tex. Admin. Code Rules 3.285 and 3.286

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9111L1142E12

Original ruling text

November 14, 1991

Dear ****:

Please accept my apology for the delay in responding to your letter
concerning your "business management company."

Personal or business consulting services on a stand-alone basis are not
subject to sales tax. If the consulting services are related to the sale or
lease of a taxable item (which includes taxable services as well as tangible
personal property), then the consulting charges are taxable as well. They are
considered a part of the total selling price of the item.

Separately stated charges for "on-site training" of client and client's
employees, training courses delivered at your facilities, seminars and
workshops are not taxable.

Sales of books are taxable. You should obtain a permit to collect Texas
sales tax from Texas customers if the books are sold separately and not
distributed as part of the training course. You will owe tax on all items used
to provide your nontaxable services. Books which are actually sold to
customers and not distributed as part of the training courses, may be purchased
tax free for resale. You may issue a resale certificate to your supplier in
lieu of paying the tax.

The last service that you listed, "professional evaluation of existing
business as to financial viability and potential," does not appear to be
taxable. I have, however, enclosed a copy of Rule 3.342-Information Services
for your review. If you have any questions about the taxability of the
information that you provide to your clients, please provide additional
information or a sample of the type of report your would provide.

I have enclosed copies of Rule 3.286 on sellers and purchasers
responsibilities, Rule 3.285 on sales for resale and a list of Comptroller
field offices. If you need a sales tax permit for your book sales, you may
visit one of our field offices or you can request that an application be mailed
to you.

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

Please feel free to contact me if you have any additional questions. You
may write me, call toll free, 1-800-252-5555, ext. 34685, from anywhere in the
United States or phone 512/463-4685.

Sincerely,

Julie Pesl
Tax Administration Division