Was a customized, computer-generated diet plan taxable when an independent dealer collected the questionnaire and fee and the diet company sent materials to the client?

Plain-English summary

The customized diet plan was taxable to the dealer's clients.

The independent dealer distributed questionnaires and brochures. A client completed the questionnaire and returned it with a processing fee; the dealer forwarded both to the diet company. The company then sent the client computerized menus, shopping lists, and instructional material.

The Comptroller directed the dealer to collect the tax and report and remit it on quarterly returns.

What this means for you

Under this 1992 letter, routing a client's questionnaire and payment to a diet company did not make the customized plan nontaxable. The dealer remained responsible for collecting and remitting the tax.

Common questions

What did the client receive? Computerized menus, shopping lists, and instructional material based on the questionnaire.

Who collected the client's processing fee? The independent dealer, who forwarded the fee and questionnaire to the diet company.

Was the custom diet taxable? Yes.

Who had to report the tax? The dealer, on quarterly returns to the Comptroller.

Citations and references

The letter cited no specific statute or administrative 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/9204L1169E04

Original ruling text

April 16, 1992

Dear **:

Thank you for your letter regarding the taxability of the service you will be
selling to the public.

I understand that you are in business for yourself as an independent dealer for
a diet company. You will be distributing questionnaires and brochures for a
computerized personal diet plan. Your client completes the questionnaire, then
sends the completed questionnaire to you, along with the processing fee. You
then forward the questionnaire and required fee to the diet company. The diet
company sends computerized menus, shopping lists and instructional material
directly to the client. You asked if your service is taxable.

This custom diet is taxable to your clients. You must collect the tax and
report and remit it on your quarterly returns to this office.

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

If you have any questions, please don't hesitate to write the Tax
Administration Division or call one of our tax specialists toll free at
1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division