How did Texas tax combined telephone-answering and secretarial-service charges?

Plain-English summary

Telephone-answering service became taxable October 1, 1991, including answering a customer's direct line installed in the provider's office. Ordinary secretarial services were nontaxable unless they constituted another taxable service, such as word processing.

A single monthly charge covering both categories was fully taxable when the answering portion exceeded 5% of the total. Separately stating the nontaxable services when performed kept those charges outside the tax base.

What this means for you

Providers should separately invoice answering and nontaxable secretarial work. A mixed monthly fee could pull the entire charge into tax under the letter's 5% test.

Common questions

Was answering service taxable? Yes. Were ordinary secretarial services taxable? No, unless they were another taxable service. What if answering exceeded 5% of one combined fee? The full fee was taxable.

Citations and references

The letter does not cite a specific statute or rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9201L1152A13

Original ruling text

January 14, 1992

Dear *****:

Thank you for your letter of November 21, 1991, concerning your
Texas sales and use tax responsibilities.

Telephone answering services became taxable October 1, 1991. The
service that you provide to answer a customer's direct telephone
line that is installed in your office is taxable.

The secretarial services that you provide are not taxable unless
the services constitute some other taxable service (e.g., word
processing).

If a single charge is made for providing both taxable telephone
answering services and nontaxable secretarial services, the total
monthly charge will be taxable if the portion of the charge that
pertains to telephone answering services constitutes over 5% of
the total monthly charge. However, the charge for the nontaxable
services will not be taxable if separately stated to the customer
at the time the services are performed.

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

You may call toll free 1-800-252-5555 if you have any questions or
need more information. You may write to Tax Administration Division,
Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Administration Division