Was a lump-sum charge taxable when a business computer-printed standardized real-estate advertising postcards and mailed them for customers?

Plain-English summary

The Texas Comptroller said the postcard-mailing business had to collect sales tax on its total lump-sum charge.

The business bought blank postcards, computer-printed a message for independent realtors, and mailed the cards to nearby residents. The cards announced a home sale and solicited future listings. Texas treated the company as producing tangible personal property for customers and classified the postcards as standardized advertising.

The operative body did not separately address form letters, price lists, invitations, or the other document types in STAR's broader caption.

What this means for you

Describing the company as service-oriented and bundling labor, materials, and postage into one charge did not make the transaction nontaxable. The customer received standardized printed advertising property.

Common questions

Was the lump-sum charge taxable? Yes.

Why? The business produced tangible personal property for customers.

How did Texas classify the postcards? Standardized advertising.

Did the body decide every document type in the STAR caption? No.

Citations and references

• Comptroller Rule 3.308(d)(2) — computer hardware, software, services, and sales.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8612L0793C08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 15, 1986

Dear *:

Thank you for your request for a written verification of the taxability
of your client's business.

The facts as outlined in your letter are restated below.

a) The company is a service oriented business.

b) The company acquires blank postcards, prints a statement on the
postcard, and then mails the postcard to the general public (end user).

c) The company pays sales tax on the postcards when they acquire them.

d) The company bills for the service in a lump-sum. (No breakdown for
labor, materials, postage, etc.)

You indicated in our subsequent telephone conversation that your client
keeps a list of houses available for sale. He will print postcards using
a computer for independent realtors who want to notify individuals living
in
the area that a certain house has been sold by the realtor and that the
realtor would like to handle any future sales of the neighbor's houses.

Your client should collect sales tax on the total lump-sum charge. He is
producing tangible personal property for his customers as covered under
Section (d)(2) of the enclosed Rule 3.308 Computer Hardware, Software,
Services and Sales. The postcards are a standardized form of
advertising.

This opinion is based on the facts presented. If there are additional or

different facts, the opinion may change.

If you have any questions or need more information, please call me at
1-800-252-5555 tell free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Administration Division.

Sincerely,
Julie Pesl
Tax Policy Section
Tax Administration Division