Don’t Overlook Taxation of Services in Texas

By July 3, 2012 Uncategorized

When consulting with clients who provide services on a multistate basis, the focus of my discussion quickly turns to Texas.  This state appears to have the broadest reach of sales tax on services.  This always seems to catch clients off guard both when they provide these services and when they are in Texas as the purchaser of these services.  At a high level there appear to be about 20 specific services that Texas will tax when these are consumed in the state.  This does not include services like production labor, shipping, handling, and the like when they are included in the sales price of products.  Here is a quick list of some of the “business services” that companies should be aware of both as the provider and consumer of these services.  The broad reach of the real property services can pull in a lot of contractors who might otherwise think they are in good shape in Texas.   Texas also broadly taxes data processing and information services which can be troublesome. These are taxed only at 80% of the saeles price.

Credit reporting
Data Processing
Debt Collection
Information Services
Insurance Services
Internet Access
Vehicle storage fees
Nonresidential Property repair, restoration, and remodeling
Personal property maintenance
Pest control, garbage collection, landscaping service
Security Services
Telecommunications Services
All fabrication labor
Temporary staffing services under certain conditions

 Ned Lenhart, CPA
President