Is a 'For Sale By Owners' list compiled and faxed weekly to real estate companies for a fee subject to Texas sales tax?

Subject

Houses/Homes "For Sale By Owners" List — Compiled For Real Estate Companies

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9402L1287A13

Plain-English Summary

The taxpayer was contemplating starting a business directed at real estate companies: gathering and compiling a weekly list of "For Sale by Owners" homes in the companies' marketing areas and faxing that list to them for $14.99 a week. The Comptroller ruled that this service is taxable as an information service. Under the Comptroller's rules, information that is gathered, maintained, or compiled and made available to the public or to a specific segment of industry for a fee is subject to sales tax. Because this FSBO list would be compiled and sold to a specific industry segment (real estate companies) for a fee, it fell squarely within that taxable category.

The ruling also notes a practical collection point: if the taxpayer operates from only one business location, local sales taxes must be collected based on the tax rate at that single location.

What This Means For You

If you compile and sell property or listing information to a specific industry (real estate, insurance, legal, etc.) for a fee: That service is likely a taxable information service in Texas, whether delivered by fax, mail, or otherwise. The method of delivery does not change the taxability — what matters is that the information is compiled and made available for consideration.

If you operate your information-gathering business from a single location: Collect local sales tax at the rate applicable to that location, in addition to state sales tax, per Rule 3.342.

If your facts differ (e.g., free information, information not compiled/gathered by you, or a different type of service): This ruling is expressly limited to the facts presented — a paid weekly compiled FSBO list faxed to real estate companies. Different facts, even if similar, may produce a different result, so consult the full text of Rule 3.342 or a Texas tax professional for your specific situation.

Q&A

Q: Is a service that compiles a "For Sale By Owners" list and faxes it weekly to real estate companies for a fee subject to Texas sales tax?
A: Yes. The Comptroller ruled this is a taxable information service because the information is gathered, compiled, and made available to a specific segment of industry (real estate companies) for consideration ($14.99/week).

Q: Does it matter that the list is faxed rather than delivered some other way?
A: No. The ruling does not turn on the delivery method — it turns on the fact that information was gathered, compiled, and sold for a fee to an industry segment, which makes it taxable under Rule 3.342 (Information Services).

Q: What sales tax rate applies if the business operates from one location?
A: If you have only one location from which you provide the service, local sales taxes must be collected based on the tax rate at that location, per subsection (i) of Rule 3.342.

Citations

• 34 Tex. Admin. Code § 3.342 (Rule 3.342, Information Services), subsection (i)

Original ruling text

February 1, 1994

Dear**:

Thank you for your letter requesting information on the taxability
of a service that you are contemplating starting. The business will
be directed at real estate companies and would consist of gathering
and compiling a weekly list of the "For Sale by Owners" in the marketing
area of the companies and faxing the list to them. You will be charging
$14.99 a week for this service.

RESPONSE: Information which is gathered, maintained, or compiled
and made available by the provider of the information service to the
public or to a specific segment of industry for a consideration is
subject to sales tax.

Therefore, the service that you are considering providing is taxable
as an information service. If you have only one location from where you
provide this service, local sales taxes must be collected based on the
tax rate at that location. See also, subsection (i) of the enclosed
copy of Rule 3.342 Information Services.

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 1-800-531-5441, extension 3-4502. The regular number is
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 9402069L