Is an escort service, body guard service, or massage parlor subject to Texas sales tax, and what does someone need to do to legally operate one?

Subject

Escort Services, Body Guard Services, and Massage Parlors Are Taxable; Sales Tax Permit Required

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9308L1255A12

Plain-English Summary

A taxpayer wrote in asking how to legally run an escort and body guard service and a massage parlor, and requested a copy of Tex. Tax Code Chapter 151 and 42 U.S.C.A., along with information on the requirements to own and operate an escort service.

The Comptroller responded that sales tax is due on all services provided by massage parlors, Turkish baths, or escort services. The letter defines an escort service as a business that provides, for a fee, an employee as an escort, date, or body guard. Sales tax also applies to the utilities, equipment, towels, and machinery used to perform these personal services. A copy of Rule 3.317 - Massage Parlors, Escort Services, and Turkish Baths was enclosed with the letter.

The letter also notes that sales tax is due on charges for guarding or providing surveillance or security to property or persons in Texas, if a license is required under the Private Investigators and Private Security Agencies Act, 13 Texas Civil Statutes, Article 4413(29bb). The taxpayer was told to contact the State Board of Private Investigators to determine whether a license is required, and a copy of Rule 3.333 - Security Services was also enclosed.

To operate a massage parlor, escort, or guard service in Texas, the letter explains that a sales and use tax permit is required. There is no charge for the permit, although a bond may be required to be posted. The Comptroller sent a sales tax and bond application under separate cover, to be completed and returned to a field office in Dallas or mailed to the Comptroller's Capitol Station address in Austin. The taxpayer was also told to contact the City of Dallas and Dallas County for their own local requirements for operating these businesses.

The letter further advises that the business must maintain records on all services provided, referencing Rule 3.281 concerning Records Required; Information Required. A copy of Tex. Tax Code Chapter 151 was sent under separate cover; the Comptroller noted it does not maintain copies of 42 U.S.C.A. for distribution, and the taxpayer would need to contact a federal office for that publication.

The letter closes with the standard caveat that the opinion is based on the facts presented, and that other facts, though similar, may provide a different result.

What This Means For You

Escort, body guard, and massage parlor services are taxable services in Texas. If you provide, for a fee, an employee as an escort, date, or body guard — or you operate a massage parlor or Turkish bath — sales tax applies to the services you provide. It also applies to the utilities, equipment, towels, and machinery you use to perform those personal services.

Security and surveillance work may require a separate license. If your business involves guarding or providing surveillance or security to property or persons in Texas, sales tax is due on those charges if a license is required under the Private Investigators and Private Security Agencies Act. The letter directs businesses to check with the State Board of Private Investigators to determine whether they need to be licensed.

A sales and use tax permit is required to operate legally. There's no charge for the permit itself, though a bond may be required. Applications can be completed and returned to a Comptroller field office (Dallas was named in this letter) or mailed to the Comptroller's Capitol Station address in Austin.

Local requirements apply too. The letter reminds the taxpayer that operating an escort service, body guard service, or massage parlor may also require contacting the relevant city and county — in this letter's case, the City of Dallas and Dallas County — for their own licensing or operating requirements.

Recordkeeping obligations apply. Businesses providing these services must maintain records on all services provided, per Rule 3.281 concerning Records Required; Information Required.

Q&A

Q: Is sales tax due on escort services in Texas?
A: Yes. The letter states sales tax is due on all services provided by massage parlors, Turkish baths, or escort services.

Q: How does the letter define an "escort service"?
A: An escort service is defined as a business that provides, for a fee, an employee as an escort, date, or body guard.

Q: Does sales tax apply only to the fee for the service itself?
A: No. The letter states sales tax is also due on utilities, equipment, towels, and machinery used to perform the personal services.

Q: Do I need a permit to operate an escort, body guard, or massage parlor business in Texas?
A: Yes. The letter says you must obtain a sales and use tax permit to operate a massage parlor, escort, or guard service in Texas. There is no charge for the permit, although a bond may be required to be posted.

Q: Is a security license needed for guarding or surveillance work?
A: It may be. The letter states sales tax is due on charges for guarding or providing surveillance or security to property or persons in Texas if a license is required under the Private Investigators and Private Security Agencies Act, 13 Texas Civil Statutes, Article 4413(29bb), and directs the taxpayer to contact the State Board of Private Investigators to find out.

Q: Are there local requirements in addition to state sales tax rules?
A: Yes, according to the letter. The taxpayer was told to also contact the City of Dallas and Dallas County for their requirements for operating an escort service, body guard service, or massage parlor in their jurisdictions.

Original ruling text

August 27,1993

Dear **:

This is response to your letter requesting information on legally running
an escort and body guard service and a massage parlor. You are also
requesting a copy of Tex. Tax Code Chapter 151 and 42 U.S.C.A., and the
requirements or how one becomes eligible to own and operate an escort
service and who to contact in **, Texas regarding this endeavor.

RESPONSE: Sales tax is due on all services provided by massage parlors,
Turkish baths, or escort services. An escort service is defined as a
business that provides, for a fee, an employee as an escort, date, or
body guard. Sales tax is due on utilities, equipment, towels, and machinery
used to perform personal services. A copy of Rule 3.317 - Massage Parlors,
Escort Services, and Turkish Baths is enclosed. Sales tax is also due on
charges for guarding or providing surveillance or security to property or
persons in Texas, if a license is required under the Private Investigators
and Private Security Agencies Act, 13 Texas Civil Statutes, Article 4413
(29bb). You should contact the State Board of Private Investigators and
** to determine if you are required to be licensed under this
agency. I have enclosed a copy of Rule 3.333 - Security Services, for
your information.

In order to operate a massage parlor, escort or guard service in Texas
you must obtain a sales and use tax permit. There is no charge for this
permit, although a bond may be required to be posted. I am sending you a
sales tax and bond application under separate cover. Complete the
application and return it to one of our field offices in Dallas or mail it
to: Comptroller of Public Accounts, Capitol Station, Austin, Texas 78774.
You should also contact the City of Dallas and Dallas County for their
requirements for operating an escort service, body guard service or a
massage parlor in their jurisdictions.

You must maintain records on all services provided by your business. For
more detailed information about records required, see Rule 3.281 concerning
Records Required; Information Required (copy enclosed). Also under separate
cover I am sending you a copy of Tex. Tax Code Chapter 151. We do not
maintain copies of 42 U.S.C.A. for distribution, you may wish to contact a
federal office for this publication.

This opinion is based on the facts presented. Other facts though similar
may provide a different result.

If you have other questions or need more information, you may call me at
512/463-4502. You may also write to Tax Administration Division at the
above address.

Sincerely,

Gilbert Zamora
Tax Administration Division

NOTE: Previous Accession Number 93070140L.3 and/or 9307140L