Does a Texas company have to charge sales tax on monitoring fees and installation fees for a personal emergency response (medical alert) system?

Plain-English summary

The Texas Comptroller's office ruled that a company providing monitoring services for personal emergency response systems (commonly known as medical alert systems) did not have to charge sales tax on two specific charges: the ongoing fee for monitoring the equipment and the one-time installation fee.

The key fact behind this ruling was a determination by the Board of Private Investigators and Private Security Agencies that the company was not required to be licensed as a private security agency under Article 4413(29bb), Section 2, paragraph (25) of the Private Investigators and Private Security Agencies Act. Because of that licensing determination, the Comptroller concluded the monitoring fee and installation fee were not taxable.

The letter is short and fact-specific: the Comptroller notes the opinion is based on the facts presented, and that the outcome could change if the facts were different.

What this means for you

Businesses providing medical alert or emergency response monitoring services

If your company monitors personal emergency response equipment (such as medical alert pendants or similar devices) and, like the taxpayer here, is not required to hold a private security agency license under the Private Investigators and Private Security Agencies Act, this ruling suggests your monitoring fees and any one-time installation fee for that equipment may not be subject to Texas sales tax. However, this determination turned on the specific licensing status of the taxpayer who requested the ruling — if your company is required to be licensed as a security agency, the analysis may differ.

Accountants and tax professionals

This letter illustrates that for monitoring services tied to emergency response equipment, the taxability question in this era of Comptroller guidance hinged on whether the provider fell under the private security licensing regime, not on a Tax Code provision cited in the letter itself. No Tax Code section or Comptroller rule is cited in the original text — the analysis rests entirely on the Board of Private Investigators and Private Security Agencies' licensing determination.

Common questions

Q: Why weren't the monitoring and installation fees taxable?
A: Because the Board of Private Investigators and Private Security Agencies determined the company was not required to be licensed under the Private Investigators and Private Security Agencies Act. That non-licensure determination is the stated basis for treating the monitoring fee and installation fee as not taxable.

Q: Does this mean all medical alert monitoring services are tax-exempt in Texas?
A: Not necessarily. The Comptroller expressly says the opinion is based on the facts presented and could change with different facts, such as a different licensing status for the provider.

Q: What if the company is required to be licensed as a private security agency?
A: The letter doesn't address that scenario. The ruling's outcome is tied specifically to the non-licensure determination, so a licensed security agency's monitoring fees are not addressed by this letter.

Citations and references

No Tax Code statutes or Comptroller rules are cited in this letter. The only outside authority referenced is Article 4413(29bb), Section 2, paragraph (25) of the Private Investigators and Private Security Agencies Act, which is a licensing statute (not a tax statute), cited only to establish that the taxpayer was not required to be licensed as a private security agency.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9302L1224A10

Original ruling text

February 19, 1993

Dear ****:

Thank you for your letter of February 9, 1993, concerning
**** Texas sales and use tax responsibilities as a provider
of monitoring services for an emergency response system.

You specifically asked about the taxability of the charge made to
subscribers for monitoring the equipment and the one-time minimal
installation fee. The charge for monitoring the equipment and the
installation fee are not taxable. The Board of Private Investigators
and Private Security Agencies' determination that your organization is
not required to be licensed under Article 4413(29bb), Section 2,
paragraph (25) of the Private Investigators and Private Security Agencies
Act (the Act) means that the monitoring fee and installation fee are
not taxable.

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

You may call toll free 1-800-531-5441, extension 3-4683 if you have any
question or need more information. You may writer to Tax Administration
Division, Comptroller of Public Accounts.

Sincerely,

Tax Administration Division