Does a Texas resume-writing and career counseling service have to charge sales tax on preparing a client's resume?

Plain-English summary

The Texas Comptroller's Tax Administration Division ruled on how sales tax applies to a resume and career counseling service. The taxpayer's typical engagement involved interviewing the client about work history and job objectives, counseling on the job-search process, preparing an original resume and cover letter, and coaching on interview etiquette and follow-up.

The Comptroller drew a line based on what the service actually produces:

• Consultation plus an original resume — not taxable, even if the resume is typed on a memory typewriter or computer, because the charge is for the consulting and writing work, not for processing data.
• Reformatting or reproducing a resume the client already brings in — taxable as data processing, because no original consulting or writing occurs; the service is just re-keying or reformatting existing information.

If a business provides both kinds of service in one engagement, it must separately state the taxable data-processing charge. If it doesn't separately state it, and the taxable portion is more than 5.0% of the total charge, the Comptroller treats the entire charge as taxable.

What this means for you

Resume-writing and career-counseling businesses

Structure your invoices so that consulting and original resume preparation are billed clearly as such. If you also offer straight reformatting or retyping of a client's existing resume, separately state that charge on the invoice — otherwise, if that taxable portion exceeds 5% of the total bill, your entire charge could become taxable.

Accountants and tax professionals advising these businesses

The test the Comptroller applied is whether the business is doing original consultative work (nontaxable) versus merely processing existing data the client already provided (taxable data processing). The 5% de minimis/bundling rule matters here: mixed engagements need separately stated charges to avoid the whole transaction being swept into taxable data processing.

Common questions

Q: Is writing a client's resume from scratch taxable in Texas?
A: No. If you interview the client and produce an original resume and cover letter from that consultation, the charge for both the consultation and the writing is not taxable, even if you use a computer or memory typewriter to produce it.

Q: What if a client just wants their existing resume retyped or reformatted?
A: That charge is taxable as data processing, because you're not providing original consulting or writing — just reproducing or reformatting data the client already has.

Q: What if I offer both consulting/writing and reformatting to the same client?
A: Separately state the charge for the taxable data-processing portion. If it isn't separately stated and the taxable services represent more than 5.0% of the total charge, the Comptroller presumes the entire charge is taxable.

Q: Does this ruling apply to my business specifically?
A: This letter is based on the facts the taxpayer presented and the Comptroller notes the opinion may change if the facts are different. It's addressed to a specific taxpayer; you should not rely on it for your own situation without independent advice.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9301753L

Original ruling text

January 13, 1993

Dear ***:

Thank you for your letter concerning your resume and career counseling service.

SITUATION: *** is a small resume and career counseling service that
began operation in 1992. The service provided to a typical customer consists of
the following:

An interview with the customer to collect work history, personal credentials,
and job objectives.

Counseling in the step by step process required for a successful job search.

Preparation of documents typically including a 2 or 3 page resume and cover
letter.

Coaching in the appropriate business etiquette for obtaining an interview,
business-like dress and personal presentation, and proper follow-up including
thank you letters and phone calls.

RESPONSE: If you consult with a client on what should be included in the
client's resume, and then you produce an original resume using the information
from the consultation, the charge for consultation and the production of the
original resume is not taxable even if written using a memory typewriter or a
computer.

If a client brings you a resume and asks you to reformat it or reproduce it on
a memory typewriter or computer, a charge for this service would be taxable as
data processing. If you provide both taxable data processing services and
nontaxable consulting services, you should separately state the charge to the
client for the taxable services. Otherwise, if the taxable services represent
more than 5.0% of the total charge, the total is presumed to be taxable.

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

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct line is
512/475-0030. You may also write to Tax Administration, Comptroller of Public
Accounts.

Sincerely,

David Somerville
Tax Administration Division