Are charges for title searches, title plant information, and related wiring/fax fees taxable under Texas sales tax?

Plain-English summary

The Comptroller's Tax Policy Division responded to a firm's questions about the tax treatment of several services it performed. The firm's first question involved charges for title searches not related to the issuance of title insurance. In a follow-up phone conversation, the firm explained that this involved selling title information to attorneys doing foreclosure work — about 70 percent of the information came from the firm's own title plant, and the remaining 30 percent was purchased from other vendors (generally individual abstractors who obtain information directly from public records).

The Comptroller told the firm that it is providing information services to these attorneys and must collect sales tax on charges for information obtained from its own title plant. The public records research is also taxable; however, the firm may exclude, from the tax base on which it collects tax from its customer, the fees it paid for documents obtained under the Open Records Act — but only if those open records fees are separately identified. The letter notes the same treatment applies to sales of this information to people other than attorneys.

The firm also asked about bank wiring fees and fax fees charged for transmitting title insurance data to a title company to facilitate closing a loan. The Comptroller explained that charges for these transmission services are taxable or not taxable in the same manner as the information being transmitted. The letter also states that, as agency policy at that time, when one title company provides title information to another title company in return for a share of the title insurance premiums, that exchange is not taxable.

The letter closes by noting the opinion is based on the facts submitted, and that other, similar facts may yield different results.

What this means for you

Title search and abstract businesses

If you sell title search results, title plant data, or abstract information to attorneys, lenders, or others, the Comptroller treats this as a taxable information service. That is true whether the information comes from your own title plant or from research you perform using public records. You must collect sales tax on these charges unless a specific exclusion applies.

Using the Open Records Act exclusion

If part of your research fee reflects amounts you paid to obtain documents under the Open Records Act, you may be able to exclude those specific fees from the tax base — but only if you separately state (identify) the open records fee on your billing rather than bundling it into a single lump-sum charge.

Wiring, fax, and transmission fees; company-to-company sharing

Fees for wiring or faxing title insurance data to facilitate a closing follow the taxability of the underlying information being sent — if the information is taxable, the transmission fee is taxable, and if not, it isn't. Separately, the letter describes an agency policy that title information passed from one title company to another in exchange for a share of the title insurance premium is not taxable.

Common questions

Q: Is title search information taxable even if I didn't originate all of it myself?
A: Yes, based on this letter. The Comptroller found charges for information obtained from the firm's own title plant, as well as from public records research purchased from other abstractors, both taxable as information services.

Q: Can I avoid tax on the portion of my fee that covers what I paid for open records documents?
A: This letter says you may exclude those fees from the tax base, but only if you separately identify the open records fee — you cannot exclude it if it's folded into an undifferentiated charge.

Q: Are wiring or fax fees taxed differently from the information itself?
A: No. This letter states that charges for transmitting title insurance data are taxable or not taxable in the same manner as the information transmitted.

Q: Is sharing title information between title companies taxable?
A: According to the agency policy described in this letter, providing title information from one title company to another in return for a share of the title insurance premiums is not taxable.

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/9502L1338C14

Original ruling text

February 1, 1995

Dear **:

Thank you for your recent letter regarding the tax treatment of various
services performed by your firm.

Your first question involved charges for title searches not related to the
issuance of title insurance. In our phone conversation of January 31, 1995,
you said this involves title information sold to attorneys doing foreclosure
work. You said that approximately 70 percent of the information was obtained
from **'s own title plant and the remaining 30 percent was purchased
from other vendors, generally individual abstractors that obtain the
information directly from public records.

Your are providing information services to these attorneys and must collect
sales tax on your charges for information obtained from your title plant. The
public records research is also taxable, however, you may exclude fees you paid
for documents obtained under the Open Records Act from the tax base when you
collect tax from your customer. You must separately identify the fees for open
records information in order to exclude the fee from tax. The above also
applies to sales of such information to individuals other than attorneys.

You then asked about the tax treatment of bank wiring fees and fax fees. In
our phone conversation of February 1, 1995, you said that these were fees for
transmitting title insurance data to a title company to facilitate closing a
loan. Charges for these transmission services are taxable or not taxable in
the same manner as the information transmitted to the title company. Agency
policy at this time is that the provision of title information from one title
company to another in return for a share of the title insurance premiums is not
taxable.

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

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

Sincerely,

Al Van Allen
Tax Administration Division

NOTE: Previous Accession Number 9502974L