Is Texas sales tax due on charges for faxing advertising materials, like coupons and flyers, to a list of recipients?

Plain-English summary

A taxpayer asked the Comptroller's office about the tax treatment of a service that sends advertising materials — coupons and flyers — by fax to a list of recipients. The question came out of a phone conversation and follow-up fax sent to the Comptroller's office.

The Comptroller responded that charges for electronically transmitting fax messages are taxable as telecommunications services. Advertising services on their own are not subject to sales tax. However, when a business charges to send advertising information by facsimile, that charge is taxable — not because the advertising content is taxed, but because the charge is for the telecommunications transmission (the faxing itself).

What this means for you

Businesses that fax advertising materials to customers

If you charge customers (or charge for a service) to fax coupons, flyers, or other advertising materials to a list of recipients, the charge for that fax transmission is taxable as a telecommunications service, even though advertising services themselves are not taxable in Texas.

Advertising and marketing companies

Don't assume that because "advertising services" are generally not subject to Texas sales tax, a fax-based advertising delivery charge escapes tax too. The Comptroller draws a line between the (non-taxable) advertising service and the (taxable) telecommunications charge for transmitting that advertising by fax.

Accountants and tax professionals

When structuring or reviewing invoices for fax-based advertising distribution, separately consider whether a line item reflects a telecommunications transmission charge (taxable) versus a pure advertising/creative service charge (not taxable), since this letter confirms the two are treated differently.

Common questions

Q: Is Texas sales tax due on charges for faxing coupons or flyers to a list of recipients?
A: Yes. Charges for the fax transmission are taxable as telecommunications services.

Q: Are advertising services themselves subject to Texas sales tax?
A: No, advertising services are not in and of themselves subject to sales tax.

Q: Why is a fax advertising charge taxable if advertising isn't taxed?
A: Because the charge being taxed is for the electronic transmission of the fax message (a telecommunications service), not for the advertising content itself.

Citations and references

No specific statutes or administrative rules are cited in the text of this letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9410L1325E09

Original ruling text

October 5, 1994

Dear **:

This is in response to our phone conversation and the information you
faxed me on October 4, 1994.

Charges for electronic transmission of facsimile messages are taxable as
a telecommunications services. Advertising services are not in and of
themselves subject to sales tax, however, charges for sending advertising
information by facsimile are taxable as telecommunications services.

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

You may call me toll free at 1-800-531-5441, ext. 3-4680. The direct line
is 512/463-4680. You may also write to Tax Administration, Comptroller of
Public Accounts.

Sincerely,

Al Van Allen
Tax Administration Division

NOTE: Previous Accession Number 9410756L