Is a service that posts a client's website link and information to other websites' free submission forms taxable in Texas?

Subject

Internet Services — Posting Submissions Of Web Sites For Owners

Plain-English summary

A taxpayer wrote to the Comptroller describing a service in which they find roughly 100 websites (a list that constantly changes) that accept free listings, and then submit a client's website link and information — such as name, email address, physical address, and description — to those sites, usually through the site's own submission form. Some sites only want a URL; others ask for more detail like a phone number or category. To some sites, the taxpayer simply emails the URL. None of the sites the taxpayer used charged a fee to be listed, and most of the target sites were located outside Texas, including some in other countries. The taxpayer described this as saving the website owner the hassle and time of submitting the site themselves, comparable to how listing sites (the letter gives Yahoo as an example) let visitors search by keyword.

The Comptroller's response was short and direct: "The service you are providing is not taxable."

What this means for you

Businesses that submit client websites to directories or listing services

If your business's activity is limited to gathering a client's site information and submitting it to free, third-party listing or submission sites on the client's behalf, this ruling supports treating that service as not taxable. The letter does not explain which category of taxable service this activity was checked against, so the reasoning behind "not taxable" is not spelled out — only the conclusion.

Accountants and tax professionals

Because the letter does not cite a statute or rule, and does not explain why the service is not taxable, treat this as a narrow, fact-specific answer rather than a general rule for all internet marketing or SEO services. A client offering a similar but not identical service (for example, charging site owners a fee, or performing additional work beyond submission) should not automatically assume the same "not taxable" result applies.

Common questions

Q: Is a service that posts a client's website to free listing sites taxable in Texas?
A: According to this letter, no — the Comptroller told the taxpayer, "The service you are providing is not taxable."

Q: Does it matter that most of the listing sites were outside Texas or in other countries?
A: The taxpayer mentioned this fact in describing the service, but the letter's response does not explain what weight, if any, it gave to the location of the listing sites.

Q: Did the taxpayer charge clients for this service?
A: The letter does not say what, if anything, the taxpayer charged its own clients — only that the listing sites themselves did not charge to be posted to ("Although some sites do require payment, we don't post to any such sites. All the sites we post to are free of cost.").

Q: Does this ruling explain the legal basis for the "not taxable" conclusion?
A: No. The letter states the conclusion without citing a statute, rule, or category of taxable service.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9609L1435G13

Original ruling text

September 13, 1996

Dear ***:

I apologize for the delay in responding to your e-mail. I missed some work
due to illness. Your facts are listed below followed by my response.

Facts: We obtain the names of 100 sites where we post submissions to simply
by searching the internet for these type of sites. The status of these 100
sites is always in flux. We usually, won't have the same 100 sites to post
to on a week by week basis.

Our client will receive a list of sites where his site was posted only upon
request. We have to type this list based on where we were able to post his
site at the time. We receive the client's link and site information (such
as name of the site, email address, physical address, and description) and
then visit an internet site that we post this information to. Usually, the
site has what is called a submission form. Anyone on the internet who has
a website, must post to such sites or the world will never know that his
site exists.

These sites we post to anticipate large amounts of submissions and their
websites are designed to post the information we submit similar to that of
an advertisement. Many offer search capabilities so that visitors to their
site will be able to look up another site by entering keywords or other
information. For example, visit http://yahoo.com

Although some sites do require payment, we don't post to any such sites.
All the sites we post to are free of cost. Some sites we post to only
request the URL information (i.e. http://...) others want to know more
information, such as telephone numbers and category that the site should
be listed under. To some sites we simply send an email message with the
URL in the body of the message.

The majority of sites we post are from outside the state of Texas. Some
are from other countries. We are simply a service and we save the website
owner the hassle and time of submitting the site themselves.

Response: The service you are providing is not taxable.

I hope this information is helpful. If you have any questions, please
do not hesitate to contact me. I can be reached by phone at 1-800-531-5441,
extension 5-0037, or by e-mail at [email protected].

Sincerely,

Lindey Osborne
Tax Policy Division

NOTE: Previous Accession Number 9609651L