In the state of Texas, some professional services are subject to sales tax. This includes cable television services, entertainment services, waste collection services, floral services, construction services (provided that materials are charged separately), mobile telecommunications services, fixed communication services, natural gas and electricity services, and repair and remodeling services for non-residential real estate. Additionally, the reception and transmission of telephone messages by a human operator is a taxable telephone answering service. Massage parlours are also taxable, as well as debt collection services and credit reporting services.
When a service provider combines Internet access with a taxable service, such as telecommunications service or cable television service, the service provider should not collect taxes on the amount allocated to Internet access if the service provider can establish, through its books and records, a reasonable allowance for the taxable service and for untaxable Internet access. The satellite TV service provided directly to the customer's premises is exempt from local sales and use tax. The federal law included an old clause for state and local governments, including Texas, that imposed a tax on Internet services before October 1.Simply using a computer as a tool to help perform a professional service is not a data processing service. However, using a computer to process texts, enter data, produce, compile, store, or manipulate is a taxable data processing service.
Taxable security services also include computer forensic services that constitute the analysis of computer data, in particular hidden, temporary, deleted, protected or encrypted files, in order to discover information related (generally) to the causes of events or the conduct of individuals; as well as computer repair and support services that include the review of computer data in order to investigate possible criminal or civil matters. It is important to note that all labor and material charges to rebuild, replace, alter, modify, or improve existing non-residential real estate are taxable. Be sure to check if your business is subject to sales tax in the state of Texas. It is also important to consult with a sales tax professional to determine if the services your business provides should be taxable.
