Two Texas banks want to outsource their 'live operator' telephone customer service reps to a third-party call center company, which will staff, train, and supervise operators who use a telephonic link into the banks' own data center to answer customer questions like account and loan balances. Is this outsourcing arrangement subject to Texas sales and use tax?

Plain-English summary

Two federally chartered national banks operating in Texas ran a telephone customer service system combining an automated voice response unit with "live" bank employees who answered questions about customers' accounts, loan balances, and similar banking-relationship information. To improve service, the banks planned to upgrade by leasing a call center and outsourcing their live-operator telephone representatives to a third-party company ("X") that operates call centers nationwide.

Under the proposed Service Agreement, X would supply the live operators, and would be responsible for adequately staffing, training, and supervising them. Each operator would use a telephone handset plus a personal computer with a telephonic link giving direct access to the banks' own customer account data. When a bank customer called in, the operator would look up and relay the requested account information.

The banks asked the Comptroller to confirm that X's services under this arrangement are not taxable services for Texas sales and use tax purposes. The Comptroller agreed — the described outsourced live-operator service is not a taxable service.

What this means for you

Banks and financial institutions outsourcing customer service call centers

Outsourcing live-operator phone support — where the outsourced operators simply access and relay your own institution's customer account information to callers — can be structured as a nontaxable service arrangement, based on this letter's facts.

Call center / BPO companies providing outsourced live-operator services to financial institutions

Providing staffed, trained, and supervised live operators who relay a client's own account data over the phone, without more, fits within this nontaxable service pattern — though your specific service agreement's terms should be checked against the facts here.

Accountants and tax professionals advising banks or call center operators

This is a short, clean confirmation letter with minimal legal reasoning shown — the Comptroller simply agreed with the taxpayer's own characterization. It's useful primarily as a factual precedent for a specific outsourced-live-operator-via-telephonic-data-link structure, not as a detailed statutory analysis.

Common questions

Q: Is outsourcing bank customer service call center operations to a third party taxable in Texas?
A: Not in this letter's fact pattern — providing live operators who relay the bank's own customer account information over the phone under a service agreement is not a taxable service.

Q: Does it matter that the operators use a computer link to access the bank's data center?
A: The letter doesn't separately analyze that point — it confirms the described arrangement as a whole is not taxable, without breaking out the technology component.

Q: Can I rely on this letter for my own outsourced call center arrangement?
A: No. This opinion is based on the facts presented, and other facts, though similar, may provide a different result; it can be relied on only by the taxpayer it was issued to.

Citations and references

No specific Tax Code section or Comptroller rule number is cited in this letter; the Comptroller confirms the taxpayer's own conclusion without quoting a statute or rule number in the response.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9901113L

Original ruling text

January 28, 1999

Dear Mr. **:

This is in response to your request for a written ruling on behalf of your
client, regarding whether Texas sales and use tax is due under the described
transaction. Your fact situation and question are restated below:

FACTS

Bank 1 and Bank 2 (collectively referred to as the "Banks") are federally
chartered national banks located in Texas which currently maintain a telephone
customer service system which includes the use of an automated voice response
unit as well as "live" bank employees for the purpose of providing bank
customers with information related to their banking relationship (e.g., account
balance, loan balance, etc.). In order to provide better service to their
customers, the Banks plan to upgrade their telephone customer service system by
leasing a call center and "outsourcing" their "live operator" telephone
customer service representatives.

In outsourcing their live operator telephone customer service representatives,
the Banks plan to enter into a Service Agreement (the "Agreement") with "X", a
company which operates numerous call centers throughout the United States,
under which X will provide the live operators to respond to the Banks'
telephone customers. Each live operator works with a telephone handset and a
personal computer which provides access direct to the Banks' customer account
information through a telephonic link between the call center and the Banks'
data center. When a call comes through from a bank customer, the live operator
provides the information requested by the customer. Under the Agreement, X is
responsible for adequately staffing, training and supervising the live
operators.

RULING REQUESTED

The services provided by X to the Banks under the Agreement are not taxable
services for purposes of Texas sales and use tax.

Response: I agree. The services provided by X, as described above, are not
taxable services.

This opinion is based on the facts presented. Other facts though similar may
provide a different result.

I hope this information answers your questions. If you need additional
information, please call me toll-free at 1-800-531-5441, extension 3-4502. The
direct line is 512/463-4502. You may also write to Tax Policy Division,
Comptroller of Public Accounts. You may also e-mail our tax help section at:

Sincerely,

Gilbert Zamora
Tax Policy Division