When were lump-sum bookkeeping, bundled payroll data work, and separately stated computer-generated reports taxable in Texas?

Plain-English summary

A bookkeeping provider received original documents, decided how to allocate data to the general ledger, entered it, and delivered a trial balance and detailed general ledger. The Comptroller said one lump-sum fee for that bookkeeping service was not taxable.

The provider also entered employee data to generate employee lists, earnings records, W-2s, and Texas Employment Commission quarterly reports. When that work was not separately billed and represented 5% or less of the total bookkeeping charge, it was not taxed.

Separately stated charges for computer-generated employee lists, earnings records, or employer tax summaries requested for management purposes were taxable.

What this means for you

Under the 1988 letter, computer use did not automatically tax the core bookkeeping fee. Separate billing and the size of the computer-report component determined the treatment of the additional work.

Common questions

Was lump-sum bookkeeping taxable? No.

Was a bundled payroll-data component taxable at 5% or less? No.

Were separately stated computer reports taxable? Yes.

Citations and references

The letter did not cite a rule or statute by number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8803L0884B03

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

BOB BULLOCK
Comptroller March 9, 1988

Dear *:

Thank you for your letter of February 24, 1988, concerning your tax
responsibilities. I understand ** provides bookkeeping
services.

Question: "If **, in providing their professional services,
performs the following:

1. Obtains from the client original documents, including payroll check
   registers.

2. Determines how the data is to be allocated to the General ledger.

3. Inputs the data.

4. Provides the processed data in the form of a Trial Balance and
   Detailed General Ledger to the client.

then the professional fees charged for these services are not subject to
Texas Sales Tax."

Answer: If the fee for this bookkeeping services is one lump sum amount,
no tax is due on the service.

Question: "In addition to providing the above services, employee data
(i.e., name address, and social security number) is keypunched into the
computer in order to generate employee lists, employee earnings records, W-2
documents, and TEC Quarterly Reports. No sales tax is required to be charged
with regards to this service so long as the time and other cost (i. e. paper,
forms cost, etc. ) is not in excess of 5% of the monthly fee charge."

Answer: If this fee is not separated from the fee for bookkeeping
services, and is 5% or less of the total charge, then no tax is due on this
fee.

Question: "Where the client requests issuance of the employee list,
employee earnings records, employer tax summaries for management purposes, then
sales tax is due. This is true even if the time involved to provide these
documents is not in excess of 5% of the
monthly fee charge."

Answer: Tax is due on separately stated charges for computer generated
reports.

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 our
toll-free number 1-800-531-5441.The regular number is 512/463-4600.You may
write me at the Tax Policy Division.

Sincerely,
Adina Whittemore
Tax Policy Division