Is a computer-generated wake-up call service sold to private duty nurses subject to Texas sales tax as a telecommunications service?

Plain-English summary

A taxpayer operated a service that placed computer-generated wake-up calls to private duty nurses: the computer played a recorded message and instructed the nurse to confirm receipt by pressing "1" on the phone keypad. The taxpayer asked the Comptroller how Texas sales and use tax applied to this service.

The Comptroller ruled that this is a telecommunications service, and the charges for it are subject to Texas sales tax. On the local-tax side, the provider (located in San Antonio) had to collect San Antonio city sales tax on calls placed to any location within Texas, but not on calls placed to locations outside Texas. Separately, because the San Antonio Metropolitan Transit Authority (MTA) does not impose its local tax on telecommunications services at all, no MTA tax applied to any of the calls, regardless of destination.

The ruling notes it was based on the specific facts presented by the taxpayer, and that other, similar fact patterns could produce different results.

What this means for you

Businesses offering automated call/reminder services

If your business places automated, computer-generated phone calls to customers (wake-up calls, reminder calls, notification calls, and similar recorded-message services), this ruling indicates the Comptroller will likely treat the service as a taxable telecommunications service rather than as a nontaxable data-processing or information service. Charges to Texas customers should generally include state sales tax.

Businesses with San Antonio-area operations

If you're based in a city (like San Antonio) that imposes local sales tax, you generally must collect that city's local sales tax on telecommunications charges billed to locations within Texas, but not on calls to out-of-state locations. Separately, check whether the local MTA that serves your area taxes telecommunications services — the San Antonio MTA specifically did not, at least as of this 1994 letter, so no MTA-level tax applied here even though state and city tax did.

Healthcare staffing and private duty nursing agencies

If you use or resell an automated wake-up/reminder-call service to communicate with private duty nurses or other staff, expect the vendor to charge you sales tax on the service as a telecommunications charge, not as an exempt professional or medical service.

Common questions

Q: Why is a recorded wake-up call treated as a "telecommunications service" rather than something else, like an information service?
A: The ruling doesn't spell out its full reasoning, but it characterizes the service — placing a phone call that delivers a recorded message and captures a keypad response — as a telecommunications service, meaning the charge for the call itself is taxable, similar to other telephone-based services.

Q: Does local city sales tax apply to every call made under this service?
A: Only to calls placed to locations within Texas. Calls placed to locations outside Texas are not subject to local (city) tax.

Q: Does the San Antonio MTA transit tax apply to these calls?
A: No. The ruling states the San Antonio MTA does not impose local tax on telecommunications services, so MTA tax did not apply regardless of where the call was placed.

Q: Can another taxpayer with a similar but not identical service rely on this letter?
A: Not directly. The letter itself cautions that it is rendered based on the specific facts submitted, and that other, similar facts may yield different results. Under STAR's own rules, only the taxpayer who received the letter can rely on it for detrimental-reliance protection.

Citations and references

• Tex. Tax Code § 151.0103 (definition and taxability of telecommunications services)
• Tex. Tax Code Ch. 321 (local sales and use tax, city tax sourcing)
• Tex. Tax Code Ch. 322 (metropolitan transit authority (MTA) sales and use tax)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9404L1300F05

Original ruling text

April 25, 1994

Dear **:

Thank you for your recent letter regarding the tax treatment
of providing computer generated wake up calls to private
duty nurses. The computer plays a recorded message to the
nurse and instructs the individual to respond by pressing one
on the keypad.

You are providing a telecommunications service, the charges
for which are subject to sales tax. You will collect San
Antonio city tax on all calls placed to locations in Texas.
Local tax is not due on calls placed to locations outside
Texas. The San Antonio MTA does not impose local tax on
telecommunications services.

This opinion is rendered based on the facts you submitted.
Other facts, though similar, may yield different results.

If you have questions or need more information, please call
or write. You may reach me by calling toll free, (800) 531-
5441 (ext. 34680). My direct line number is (512) 463-4680.
The number for FAX transmissions is (512) 475-0900.
You may write to me in care of Tax Administration Division.

Sincerely,

Al Van Allen
Tax Administration Division

NOTE: Previous Accession Number 9404338L