If you're in the business of gathering and/or maintaining information for others, you may need to collect sales tax.
What is a Taxable Information Service?
Here are examples of taxable information services. This list does not include all information services, but it will give you some guidelines. If you have a question on a specific service, call our toll-free number, 1-800-252-5555, for help. The local number in Austin is 512/463-4600.
- Scouting reports and surveys
- Financial market reports
- Data retrieval and/or research (stock quotations, court cases or administrative hearings)
- News clipping services, wire reports
- Multiple listing services
- Mailing lists
- Polygraph tests
- Bank account balances
- Information sold to radio or television stations and most newspapers
- Medical lab tests
- Information gathered from direct scientific observation of physical phenomena
- Information furnished by homeowners associations of residential subdivisions and condominium developments to their members
Effective October 1, 1999, you should collect state sales tax, plus any city, county, transit tax or special purpose district tax on only 80 percent of the amount you bill for your information service.
Also effective October 1, 1999, Internet access service was excluded from the definition of information service and designated as a separate taxable service. The first $25 of the monthly charge for Internet access service is exempt from sales tax.
Materials, Supplies and Equipment
You should pay tax on materials, supplies and equipment you use to provide an information service. You may give your supplier a resale certificate in lieu of paying tax on a service that is an integral part of your information service or on materials or equipment that are transferred to the care, custody and control of your customer as a part of the information service. For example, a computer terminal placed in your customer's business may be purchased tax free with a resale certificate if the computer terminal is used by the customer to access the information service.
Reselling Information Services
You may need an information service from a third party so that you can sell that information service to your customer. You may give a resale certificate to the third party in lieu of paying tax on an information service sold to your customer. You will then collect tax on the total amount to your customer for the information service.