Which expedited filing, document retrieval, UCC search, and public-record services were taxable, and could government record fees be excluded?

Plain-English summary

The company provided four kinds of specialized paralegal services. The Comptroller's final executive decision treated expedited filing of client-prepared documents as nontaxable. The other services were taxable information services: retrieving government documents, searching UCC records and supplying copies, and obtaining UCC, tax-lien, or judgment searches and preparing client reports.

The letter reasoned that the latter services obtained public information for clients, even when a new search was performed for each specific request rather than publishing or subscribing multiple users.

Separately stated charges imposed by a government agency for records subject to the Open Records Act and requested for a particular client could be excluded from the provider's price.

Because of prior agency conversations, the company was not held liable for tax that otherwise should have been collected between October 1 and the November 13 letter date.

What this means for you

The historical distinction separated the act of filing client-prepared papers from obtaining and supplying public information. Specific-client work was not automatically proprietary or nontaxable when the underlying information was public.

Common questions

Were expedited filing services taxable? No.

Was retrieving certificates and government documents taxable? Yes.

Were UCC and lien searches taxable even when performed for one client? Yes. The Comptroller treated the underlying information as public.

Could government record charges be excluded? Yes, when they were for specifically requested Open Records Act records and separately stated.

Was the requester liable back to October 1, 1987? The final letter granted this requester relief through November 13 because of the prior conversations.

Citations and references

• Texas Open Records Act — historical law referenced for government-record charges.
• The October letter refers to an attached emergency information-services rule but does not identify it by number in the body.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8712L0847A11

Original ruling text

BOB BULLOCK
COMPTROLLER OF PUBLIC ACCOUNTS
Austin, Texas 78774

November 13, 1987

Dear ***:

After our last conversation, several more meetings took place with
various information service providers. These companies raised a number
of serious questions concerning the taxability of these type fees. These
problems were discussed with Jack Roberts.

As a result, a final executive decision has been made to reaffirm my
original letter to you which initially taxed all of your services except
your service provided in filing papers for your clients.

An additional decision was made which may be of assistance to you.

It has been decided that any charges by a governmental agency for pro-
viding records subject to the open records act pursuant to a specific
request for a client may be excluded from your price to your client if
they are separately set out.

You, of course, will not be held liable for any taxes which should have
been collected between October 1 and the date of this letter in light of
our conversation.

Sincerely,
Wade Anderson
Executive Counsel

BOB BULLOCK
Comptroller of Public Accounts
Austin, Texas 78774

October 5, 1987

Dear ***:

I apologize for not answering your letter sooner. The tax policy
committee was unable to meet and discuss the questions you raised until
this morning.

I will not restate your questions in your letter but will answer them by
reference.

The answer to your first question is that expedited filing services are
not taxable.

The answer to all three of the remaining questions is that the services
you perform in obtaining documents and information for your clients is
taxable.

I have attached a copy of our emergency rule concerning information
services. As you will see when reading the rule, we have made a distinc-
tion between obtaining and selling information which is proprietary
in nature and information which is obtained and sold to the public.

Clearly, the information outlined in your letter in questions (2), (3),
and (4) is all public information, and your company is being paid for
its service in obtaining this information.

Should you have any further questions, please don't hesitate to call me.

Sincerely,
Wade Anderson
Executive Counsel

September 28, 1987

Mr. Wade Anderson
General Counsel
Comptroller of Public Accounts HAND DELIVER
Austin, TX

Dear Mr. Anderson:

CORP ABC is engaged in the business of providing specialized
paralegal services, primarily to law firms and lending institutions.
With
the expansion of the sales tax to encompass certain "services" beginning
Oct.
1, 1987, we have become concerned about the possible applicability of the
sales tax to our business.

The types of services we typically provide to our clients are primarily
as
follows:

1) The expedited filing of documents, which usually have been pre-
pared by our clients, with state or county agencies. This in-
volves delivering documents to the filing officer, making neces-
sary corrections or changes, advancing fees, and returning the
filed document to the client. Examples include articles of in-
corporation, corporate merger, and UCC financing statements.

2) Retrieving documents from governmental agencies and forwarding
them to our client. Typical examples are Certificates of Good
Standing, Existence Certificates, certified copies of corporate
charter documents, and copies of pending litigation.

3) Searching the Uniform Commercial Code filings records maintained
by the Secretary of State. These searches are performed on a
specific request basis, and are intended for use by the request-
ing party only, i.e., they are not published for dissemination to
multiple users and there are no subscriptions to this service.
When a search request is received by us, we access the computer-
ized database index maintained by the Secretary of State to locate
filing numbers, and then make copies of those filings, generally
from microfilm purchased from the Secretary of State and kept in
our offices.

4) Obtaining UCC, tax lien, and judgment index searches from filing
officers or independent contractors in other states and counties,
preparing a summary report of these filings, attaching copies,
and providing this information to a specific client.

It is important to note that if a later request for the same document or
information is made, we would conduct a new search or request a new copy
or
certificate.

We would greatly appreciate a ruling as to the taxability of these
services.
We believe these services fall outside the intended scope of the new tax
on
services, and we would hope to avoid its retroactive application to
services
we performed in the good faith belief that they are non-taxable. Unless
we
receive a contrary ruling prior to October 1, 1987, we will proceed on
the
assumption that the services are not taxable.

Thank you very much for your prompt attention to this matter.

Sincerely,
John H. Robinson