If you're an independent insurance adjustor, an inspector, an actuarial analyst, an appraiser, an investigator, a claims processor, or a loss prevention consultant, you should be collecting sales and use taxes.
You should collect state tax, plus any local (city, county, special purpose district, or transit) taxes, from your customer on the total amount you bill for your insurance service.
Taxable Insurance Services
Here are some general descriptions to use as guidelines:
- Claims Adjustment or Processing: Tax is due when you settle, adjust or pay claims or losses. Supervising claims adjustment, settlement or payment also is taxable.
- Inspections: Tax is due when you evaluate risks or property value in connection with insurance coverage.
- Insurance Damage and Loss Appraisals: Tax is due when you evaluate property for loss or damage.
- Investigations: Tax is due when you determine whether someone is eligible for insurance coverage, or for payment of benefits.
- Actuarial Analysis or Research: Tax is due on charges for calculating premiums, reserves, rates, refunds, dividends, or benefits.
- Insurance Loss Prevention Service: Tax is due when you identify potential accidents. Tax also is due on your charges for eliminating or controlling risks.
Services for Out-of-State Customers
Even if your customer is not based in Texas, tax is due on your insurance service if your customer is doing business in Texas and if the person or property you are inspecting, appraising, investigating, etc., also is in Texas.
Materials, Supplies and Equipment
You should pay tax on all materials, supplies, and equipment used to perform the service.
Reselling an Insurance Service
At times, you may subcontract with a third party to do an insurance service for you. These folks will bill you. You, in turn, will bill your customer. You may give the third party a resale certificate in lieu of tax on the service. You will then collect tax from your customer on your total charge.
Need More Information?
Please see Rule 3.355 - Insurance Services.