Were client-specific financial-planning and investment-advisory information services taxable in Texas?

Plain-English summary

The requester described counseling clients to develop financial plans based on their goals, directing them to needed products or services or selling those products directly, monitoring market developments, and occasionally sending affected clients an update.

The Comptroller treated the provided information service as nontaxable under Rule 3.342(g). The quoted rule excluded information gathered or compiled for a particular client when it was proprietary to that client and could not be sold to others.

What this means for you

The historical answer rests on the financial-planning information being prepared for a particular client and not resold. The letter does not separately analyze the tax treatment of any products or other services the adviser might sell after developing the plan.

Common questions

Was the described client-specific financial planning taxable? No. The letter applied the Rule 3.342(g) exclusion.

Why was it excluded? The information was gathered or compiled for a particular client, was proprietary to that client, and could not be sold to others.

Did occasional market-update letters change the result? The requester described them, and the Comptroller still said the provided information service fell within the exclusion.

Did the letter decide whether products sold to clients were taxable? No. It mentioned that the adviser might sell products but did not analyze their tax treatment.

Citations and references

• 34 Tex. Admin. Code Rule 3.342(g) — historical information-services exclusion quoted in the letter.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8712L0847G13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

November 30, 1987

Dear ***:

Thank you for your recent letter regarding the taxability of your
services as
a Registered Investment Advisor.

In your letter you stated:

"Our job is to sit and council with people to develop a financial plan of
action based on their goals. This is much like a lawyer would sit with an
individual to develop a plan of action for making a will. After a plan
of
action is developed we can either tell the client where to go to obtain
the
products of services they need to accomplish their goals or to help them
directly by selling those products to them ourselves.

We do try to keep an eye on what's happening in the market place so that
we
can give good advice to our clients. Every several months or so if an
important development comes up which will affect certain clients we may
write
them a letter to share the effects of these new development."

The information service which you provide is exempted in Rule 3.342(g):

"The sale of information which is gathered or compiled on behalf of a
particular client that is of a proprietary nature and may not be sold to
others is not subject to tax. Examples include opinion polls, management
consultant reports, polygraph tests, geophysical services, and charges to
a
person by a financial institution for account balance information."

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 toll free form anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Julie Pesl
Tax Policy Division