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Ezel / Tax Rulings / TX
TX 9308L1253F13 Sales and/or Use Tax (State,Local,MTA) 1993-08-24

Is the fee for filing a lien on a delinquent debt a taxable debt collection service in Texas?

Short answer: Yes. **Filing a lien for a delinquent debt is a taxable debt collection service under 151.0036 of the Texas Tax Code**, whether it is billed alone or together with other debt collection services, and even if a retained attorney does the filing — attorneys must collect and remit tax when they provide debt collection services, unless they are collecting a judgment for a client they represented in the suit that produced the judgment.

Apply this to your situation

This page answers the general question as of 1993. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1993
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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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.

Subject

Lien Filing Fee For A Delinquent Debt Is A Taxable Debt Collection Service

Source

Plain-English Summary

A taxpayer asked the Comptroller whether filing a lien for a delinquent debt is a taxable debt collection service.

The Comptroller's answer is yes. Debt collection services are taxable in Texas under 151.0036 of the Texas Tax Code. The letter explains that a "debt collection service" means an activity to collect or adjust a delinquent debt, to collect or adjust a claim, or to repossess property subject to a claim. Filing a lien for a delinquent debt is an activity done in order to collect that debt, so it is itself a debt collection service — and it is taxable whether it is performed alone or performed together with other debt collection services. Billing the lien filing fee separately from other debt collection charges does not make the lien filing fee exempt.

The letter also addresses the taxpayer's use of a retained attorney for statutory notices: the lien filing fee is still taxable in that situation, because attorneys are required to collect and remit tax when they provide debt collection services. The letter does carve out one exception — the collection of a judgment by an attorney who represented the person in the lawsuit from which the judgment arose is not a debt collection service.

As with other Comptroller letters, the opinion is based on the facts presented, and the outcome could differ under additional or different facts.

What This Means For You

A lien filing fee for a delinquent debt is taxable on its own. You don't need to bundle it with other debt collection work to trigger tax — the letter states that filing the lien is itself a debt collection service if the lien is for a delinquent debt, and it's taxable "whether performed alone or performed with other debt collection services."

Separate billing doesn't create an exemption. If a lien filing fee is billed separately from other debt collection charges, the letter states that separate billing does not exempt the fee from tax.

Attorneys aren't automatically exempt from collecting this tax. The letter is explicit that attorneys must collect and remit tax when they provide debt collection services, including filing a lien for a delinquent debt — even when retained specifically to handle statutory notices.

There is a narrow attorney exception. The letter notes that collecting a judgment is not a debt collection service when done by the attorney who represented the person in the lawsuit that produced the judgment. That exception is limited to judgment collection by that same attorney — it does not appear to extend to lien filing fees generally.

Q&A

Q: Is filing a lien for a delinquent debt a taxable service in Texas?
A: Yes. The letter states that debt collection services are taxable in Texas, citing 151.0036 of the Texas Tax Code, and that filing a lien for delinquent debt is an activity to collect a delinquent debt, making it a taxable debt collection service.

Q: Does it matter if the lien filing fee is billed separately from other debt collection services?
A: No. The letter says that if the lien filing is performed with other debt collection services, separately billing the lien filing fee does not exempt it from tax.

Q: Is the lien filing fee still taxable if I use a retained attorney for statutory notices?
A: Yes. The letter states that although the taxpayer used a retained attorney for statutory notices, the lien filing fee is still taxable, and that attorneys are required to collect and remit tax if they are providing debt collection services.

Q: Are there any exceptions for attorneys?
A: Yes, a narrow one. The letter states that the collection of a judgment by an attorney who represented the person in the suit from which the judgment arose is not a debt collection service.

Q: What counts as a "debt collection service" under this letter?
A: The letter describes it as activity to collect or adjust a delinquent debt, to collect or adjust a claim, or to repossess property subject to a claim.

Q: Does this letter apply to every similar situation?
A: No. The letter states that the opinion is based on the facts presented, and that if there are additional or different facts, the opinion may change.

Original ruling text

August 24, 1993

Dear **:

Thank you for your letter concerning whether the filing of a lien for
a delinquent debt is a taxable debt collection service.

Debt collection services are taxable in Texas. See enclosed 151.0036
of the Texas Tax Code. Debt collection service means activity to
collect or adjust a delinquent debt, to collect or adjust a claim, or
to repossess property subject to a claim. Filing a lien for delinquent
debt is an activity in order to collect a delinquent debt. The
activity of filing the lien is a debt collection service subject to
sales and use tax whether performed alone or performed with other debt
collection services. If performed with other debt collection services,
the separate billing of the lien filing fee does not exempt the lien
filing fee. The filing of the lien in and of itself is a debt
collection service if the lien is for delinquent debts.

Although you use a retained attorney for statutory notices, the lien
filing fee is taxable. Attorneys are required to collect and remit tax
if providing debt collection services. Please note that the collection
of a judgment by an attorney who represented the person in a suit from
which the judgment arose is not a debt collection service.

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

You may call me toll free at 1-800-531-5441, ext. 5-0030. The direct
line is 512/475-0030 You may also write to Tax Administration,
Comptroller of Public Accounts.

Sincerely,

David Somerville
Tax Administration Division

NOTE: Previous Accession Number 93070079L.2 and/or 9307079L

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