Ezel / Tax Rulings / TX
TX 9610L1436A02 Sales and/or Use Tax (State,Local,MTA) 1996-10-08

Is a fee-based Internet dating service that maintains a database of interested persons taxable as an information service in Texas?

Short answer: Yes, taxable. The Comptroller ruled that charging a fee for individuals to access a database of interested persons built for an Internet dating service constitutes an information service, and charges for it are subject to sales tax -- though customers located outside Texas may give an exemption certificate instead of paying tax.

Apply this to your situation

This page answers the general question as of 1996. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1996
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Subject

Dating Services

Plain-English summary

A taxpayer wrote to the Comptroller asking about the tax treatment of an Internet dating service. In a follow-up phone call, the taxpayer explained the business model: build a database of interested persons and charge a fee for individuals to access that data.

The Comptroller ruled that this setup constitutes an information service, and charges for it are subject to Texas sales tax. The letter notes a rule on Information Services was enclosed for reference, and points out that customers located outside Texas may give the business an exemption certificate in lieu of paying tax.

The Comptroller also gave practical next steps: the taxpayer could download a sales tax permit application from the state's website, and immediate permit service was available at the Comptroller's Houston area Enforcement Offices. As with other letter rulings, the opinion is based on the facts presented and could change if the facts differ.

What this means for you

Internet dating service operators (and similar database/matching services)

If your business charges people a fee to access a database of interested persons -- the model described here -- the Comptroller treats that as a taxable information service. You need a Texas sales tax permit and must charge sales tax on those fees to Texas customers.

Businesses serving out-of-state customers

The ruling notes that customers located outside Texas may provide an exemption certificate instead of paying tax on these charges, which matters if your dating/database service has a national or online customer base.

Accountants and tax professionals

This letter is a useful data point for classifying fee-based access to a database of persons or contacts as a taxable "information service" under Texas sales tax rules, rather than as a nontaxable personal or dating service.

Common questions

Q: Is an Internet dating service taxable in Texas?
A: Based on this ruling, charging a fee for individuals to access a database of interested persons is a taxable information service, and the charges are subject to sales tax.

Q: Do I need a sales tax permit to run this kind of service?
A: The letter directs the taxpayer to download a sales tax permit application from the state's website (www.window.state.tx.us) and notes immediate permit service was available at Houston area Enforcement Offices.

Q: What if my customers are outside Texas?
A: The letter states that customers located outside Texas may give the business an exemption certificate in lieu of tax.

Q: Could this outcome change under different facts?
A: Yes -- the letter says the opinion is rendered based on the facts presented, and the opinion may change if there are additional or different facts.

Source

Original ruling text

October 8, 1996

Dear ***:

Thank you for your recent letter regarding the tax
treatment of an Internet dating service.

In our telephone conversation, you said that you were
building a data base of interested persons and would charge a fee for
individuals to access the data. This constitutes an information service, the
charges for which are subject to sales tax. I am enclosing a copy of the rule
on Information Services for your reference. Customers that are located outside
Texas may give you an exemption certificate in lieu of tax.

You may download an application for a sales tax permit at
www.window.state.tx.us. You would then click on the following:

Texas Taxes
Tax Forms On-line, and
Texas Application for Sole Owner, Sales/Use Tax Permit
You may begin the download by clicking on the image.

We offer immediate service on permits at all of our Houston area Enforcement
Offices.

This opinion is rendered 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. 3-4680. The direct line is
512/463-4680. You may also write to Tax Policy, Comptroller of Public
Accounts. My Internet address is [email protected].

Sincerely,

Al Van Allen
Tax Policy Division

NOTE: Previous Accession Number 9610675L

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