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Ezel / Tax Rulings / TX
TX 8802L0870B01 Sales and/or Use Tax (State,Local,MTA) 1988-01-22

Was leasing compiled lists of unfavorable tenants to multiple landlords a taxable Texas information service?

Short answer: Yes, on the described facts. Texas treated gathering current information about prospective renters, compiling it into lists, and leasing the lists to clients as a taxable information service. Creditworthiness data could also be taxable credit reporting.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a taxpayer-specific January 1988 Texas Comptroller letter applying an information-services amendment effective October 1, 1987. It says the opinion may change if the facts differ, and the enclosed information-service and credit-reporting rules were only proposed at the time. Tenant-screening, information-service, credit-reporting, subscription, and sourcing rules may have changed; verify current law. STAR documents may no longer represent current policy even when not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The company gathered information about prospective renters, assembled it into lists of “unfavorable tenants,” and leased those lists to landlords. The Comptroller said that activity appeared to be a taxable information service.

The letter relied on the then-new definition of an information service as furnishing general or specialized news or other current information, including financial information. It also warned that compiling information about a person's creditworthiness or credit standing might make the business a taxable credit-reporting service.

What this means for you

The historical result turned on collecting current information, compiling it, and providing the same lists for a fee to clients. The letter did not finally classify any additional credit-reporting activity; it said that classification might also apply.

Common questions

Were the tenant lists taxable? Yes, on the described facts.

When had Texas begun taxing information services? The letter says October 1, 1987.

Did the letter also classify the business as credit reporting? Only conditionally, if it compiled creditworthiness or credit-standing information.

Citations and references

  • Tex. Tax Code § 151.0038 (Vernon Supp. 1988) — historical definition of information service quoted by the letter.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

January 22, 1988

Dear ***:

On behalf of Mr. Bullock, I hope you'll accept my apology for the delay
in
answering your question involving changes in the sales tax law. This
isn't
the way we normally do business.

Our people were, and still are, swamped by a deluge of inquiries as they
attempted to interpret provisions of the new law and draft rules which
would
not adversely impact businesses. In many instances, an answer to a
question
just wasn't available when the question arrived.

As you have described your business, your company leases information to
landlords concerning "unfavorable tenants." The lists of tenants which
you
compile are available for lease to each of your clients.

On the facts as listed above it appears your business will be subject to
sales tax as an information service.

The amendments to the Tax Code made information services taxable on
October
1, 1987. The new law defines information service as furnishing "general
or
specialized news or other current information, including financial
information" TEX. TAX CODE ANN. Sec. 151.0038 (Vernon Supp 1988). As
your
company gathers information about prospective renters, assembles this
information into lists and provides it for a fee to your clients, you
appear
to be providing an information service.

If your business also compiles information on a person's creditworthiness
or
credit standing, your business might also be considered to be a credit
reporting service. This type of business is now subject to sales tax as
well.

I'm enclosing copies of the proposed Comptroller's rules concerning
information services and credit reporting services. These rules are not
final, but are simply being provided for your information.

This opinion is based upon the fact you presented. If there are
additional
or different facts, this opinion may change.

Please feel free to contact me if you have additional questions. You may
write me, or call toll free 1-800-252-5555 from anywhere in Texas or
phone
512/463-4600.

Sincerely,
Wayne McDonald
Tax Policy Division

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