Are genealogy research, book sales, teaching, and notarial services provided by a genealogy business subject to Texas sales tax?

Plain-English summary

A genealogy business asked the Comptroller how sales tax applies to the range of services and products it offers: solving specific genealogical problems, organizing client-furnished data into a finished report, researching and writing genealogies and family histories, teaching genealogy classes, notarial services, and selling genealogy books it authored.

The Comptroller drew a clear line based on whose information is being used. If the business researches and compiles genealogical data by pulling from its own maintained database -- information it also provides to other clients -- that's a taxable information service, because the information isn't proprietary to any one client. But if the business organizes data furnished by the client by entering it into a computer, compiling or manipulating it, and returning a finished report, that's a taxable data processing service instead. Either way, tax applies. The one carve-out: if the genealogy compiled is proprietary and exclusive to a particular client -- meaning the business will not resell or reuse that information for other clients -- it is not taxable, citing the proprietary-information exclusion in Rule 3.342(d)(1).

Book sales are taxable on the full sales price, not merely the markup or profit portion -- both the instructional genealogy book and the family history books the business sells are taxable tangible personal property.

By contrast, separately stated charges for advice on solving specific genealogical problems, genealogy classes, and notarial services are not taxable at all. The letter also draws an analogy to income tax return preparation: preparing a tax return using a computer is not data processing under Rule 3.330(a), and it's not a taxable information service either because the preparer doesn't reuse the client's information for other clients -- the same logic that makes proprietary, client-exclusive genealogy work non-taxable.

What this means for you

Genealogists and family-history researchers

If you maintain your own genealogical database and pull records from it to prepare reports for clients, that research is a taxable information service. If instead you're organizing data a client hands you (entering it, compiling it, producing a report), that's taxable data processing. The only way to avoid tax on the research itself is if the compiled information is proprietary to that one client and won't be shared or resold to anyone else.

Business owners selling genealogy books or other tangible items

Tax is due on the full sales price of any book or item you sell, not just your profit margin. This applies even to books you wrote yourself.

Accountants and tax professionals

Separately stated charges for advice, teaching/classes, and notarial services are not taxable -- make sure invoices break these out from the taxable research, data processing, and book-sale charges so exempt services aren't swept into the tax base unnecessarily.

Common questions

Q: Do I owe sales tax on the full price of the books I sell, or just my markup?
A: The full price. Sales tax is due on the total consideration paid for a taxable item, not just the portion representing profit.

Q: I research genealogy using information I keep on file and reuse for multiple clients -- is that taxable?
A: Yes, that's a taxable information service, because the information isn't proprietary to any single client (you provide copies of the same records to other clients as needed).

Q: What if I compile genealogy information exclusively for one client and never reuse it for anyone else?
A: That's not taxable -- it falls under the proprietary-information exclusion in Rule 3.342(d)(1), similar to how tax return preparers don't owe tax on preparing a client's proprietary tax return.

Q: Are my genealogy classes, individualized advice, and notary services taxable?
A: No. The letter states that separately stated charges for advice on solving specific genealogical problems, genealogy classes, and notarial services are not taxable.

Citations and references

Statutes and rules:

• 34 Tex. Admin. Code § 3.342 (Information Services), subsection (d)(1) (proprietary client-specific information exclusion)
• 34 Tex. Admin. Code § 3.330(a) (Data Processing Services)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9205L1172G08

Original ruling text

May 26, 1992

Dear ***:

Your letter concerning the taxability of your genealogy services and sales of
books has been assigned to me for review and response. I appreciate your
patience and apologize for the delay in responding.

The services provided by your company include:

1. Advice as to how to solve specific genealogical problems
2. Organization of client-furnished data into finished form
3. Research/writing of genealogies and family histories
4. Teaching of classes in how to do genealogy
5. Notarial services
6. Sales of books

a. *** (genealogical instruction book prepared by **)
b. Family history books written by ****

Questions that you have concerning your sales and services are restated below
followed by my response:

1. I know that I will need to collect sales tax on the books I sell. Do I
   collect tax on the entire price, or that portion of the price that represents
   my profit?

Response: Sales tax is due on the total consideration paid for taxable items,
not just the mark-up. The book *** is taxable. The family history
books appears to be taxable. However, if this is a sale of genealogy gathered
or compiled on behalf of a particular client and is of a proprietary nature to
that client (i.e., may not be sold to others by (*****), then the
information would not be taxable. See section (d)(l) of the enclosed Rule 3.342
Information Services.

2. I collect information relative to genealogy and family history; such
   information as people's names and the dates/places of their
   births/marriages/divorces/deaths/burials. These pieces of information are made
   known to the clients who commissioned the research, and copies of the same
   information are retained in my files to be provided to such other clients as
   may need the same information. This process of storage and retrieval of
   information can be done by hand, by typewriter, by computer, or by a
   combination of methods. If my reasoning is correct, my use of a computer would
   be non-taxable for the same reason that the hypothetical income tax return
   preparation narrated on Form 94127 would be non-taxable. Is my reasoning
   correct?

Response: The preparation of an income tax return is not considered data
processing when a computer is used to facilitate the performance of that
service. [See Rule 3.330 (a)]. Neither is the preparer providing a taxable
information service to the client since the information is proprietary (i.e.,
the tax preparer will not use the information provided by the client for
another client).

When you prepare a genealogical report, you are providing a taxable information
service rather than data processing if you take data from a genealogical
database that you maintain. The information that you maintain is not
proprietary in nature since you provide copies of the same information to other
clients.

When you organize data furnished by a client, by inputting the data into a
computer, compiling or manipulating the data and furnish a completed report,
you are performing a taxable data processing service.

Separately stated charges for advice on solving specific genealogical problems,
genealogy classes, and notarial services are not taxable.

Enclosed is a Sales and Use Permit Application and a chart with the various tax
rates in Texas, as you requested. Complete and return the application so that
you may have a venue for collecting and reporting tax collected on sales of
taxable items.

This opinion is based on the facts presented. Other facts though similar may
provide a different result. If you have other questions or need more
information, you may call 512/463-4600, or 1-800-252-5555 from outside Austin.
You may write to Tax Administration Division.

Sincerely,

Gilbert Zamora
Tax Administration Division