Ezel / Tax Rulings / TX
TX 9709717L Sales and/or Use Tax (State,Local,MTA) 1997-09-17

Is a fee charged to businesses for posting their printable coupons on a website subject to Texas sales tax as data processing?

Short answer: Yes. Charging businesses a fee to place their coupons on your website — where visitors can print and redeem them — is taxable as data processing, because the service involves entering, scanning, creating, storing, and manipulating the client's coupon data. The website operator must obtain a sales tax permit and collect and remit tax on the total charge to its business customers.

Apply this to your situation

This page answers the general question as of 1997. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1997
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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.

Plain-English summary

A website operator charged businesses a fee to place their coupons on the operator's website; site visitors could print the coupons and redeem them at the participating business's location. The operator asked whether it needed to collect sales tax on that fee, noting it had received conflicting information previously.

The Comptroller confirmed the service — entering, scanning, creating, storing, and manipulating a client's coupon — is taxable as data processing. The Comptroller apologized for any earlier conflicting guidance and clarified the operator needs to obtain a sales tax permit and collect and remit tax on the total charge billed to its business customers.

What this means for you

Website operators offering coupon-hosting or similar data-entry/display services

If your business model involves taking a client's content (coupons, listings, data) and entering, formatting, storing, and displaying it on your website for a fee, that fee is taxable as data processing — get a sales tax permit and collect tax on your customer charges, regardless of whether the end consumer (the coupon-redeeming site visitor) pays anything.

Common questions

Q: Is charging businesses to post coupons on a website taxable?
A: Yes — it's taxable as data processing, since the service involves entering, storing, and manipulating the client's coupon data.

Q: Does the website operator need a sales tax permit for this?
A: Yes, and it must collect and remit tax on the total charge to its business customers.

Q: Can another website operator rely on this exact letter?
A: No. This is a Texas STAR letter ruling binding on the Comptroller only for the taxpayer it addresses (34 Tex. Admin. Code Rules 3.1, 3.10); confirm your own facts with a tax professional.

Source

Original ruling text

September 17, 1997

Dear **:

Thank you for your letter of August 28, 1997. You asked if you would be
required to collect tax on the fee you charge your customers to advertise their
coupons on your web site.

As I understand it, you charge businesses to place a coupon on your web site.
Visitors to your web site can print the coupon and redeem it at your customer's
place of business.

Response: The service to enter, scan, create, store, and manipulate a client's
coupon is taxable as data processing. I apologize if you received conflicting
information. You will need to obtain a sales tax permit and collect and remit
tax on the total charge to your customer.

This opinion is based on the facts presented. If there are any additional or
different facts, the opinion may change.

You may call me toll free at 1-800-531-5441, ext. 5-0037. The direct line is
512/475-0037. You also may write to Sales Tax Policy Division, Comptroller of
Public Accounts.

Sincerely,

Lindey Osborne
Sales Tax Policy Division

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