Does a trucking company owe Texas sales tax on satellite-tracking data fees, fuel-card billing fees, or a work-injury medical services retainer, and how should it apportion its Interstate Motor Carrier (IMC) tax?

Plain-English summary

This is a 1993 Comptroller letter answering four separate questions from a trucking company (it's also cross-indexed as an Interstate Motor Carrier Tax document, STAR 9304003L).

Satellite tracking (Situation 1): The company's trucks carry satellite tracking units that send location updates and short messages to a California company's computer every thirty minutes, and the company already pays Texas sales tax on the toll telephone charges for those calls. The question was whether the California company's separate monthly fee for collecting and maintaining that information is also taxable. The Comptroller said the California company is performing a "telecommunications service," and here that service is not subject to Texas tax because the transmissions apparently do not originate in Texas. But the letter adds a condition: if the trucks transmitting the data are located in Texas, and the transmissions are made under licenses issued to the telecommunications provider, the charges would be subject to Texas sales tax.

Fuel charge cards (Situation 2): The company gets daily (rather than monthly) computerized billing statements from its fuel charge card company because of transaction volume and its need for fuel-tax-return data, and pays a flat monthly fee for that daily billing service. The Comptroller ruled this fee — for receiving daily computerized billings from the company extending the fuel-purchase credit — is not subject to sales tax.

Medical/injury services (Situation 3): The company pays a monthly retainer, based on employee headcount, to a health/medical services provider that treats and evaluates workplace injuries and also provides injury-prevention/safety consultation. The Comptroller ruled these services are not taxable unless they are performed pursuant to a policy of insurance, citing Rule 3.355(b).

IMC tax mileage apportionment (Situation 4): The company registers all its tractors in Texas (its IMC base state) and asked whether it can compute its apportionment factor using total fleet miles of all tractors over Texas miles of all tractors. The Comptroller said no — fleet miles cannot automatically be used. Only miles driven by interstate truck-tractors and interstate commercial motor vehicles that actually operate in Texas go into the ratio; miles from vehicles that never operate in Texas, and miles from vehicles that operate exclusively in Texas, are both excluded.

The letter closes with the standard caveat that it is based on the facts submitted and that other, similar facts may yield different results.

What this means for you

Trucking and logistics companies

If you pay a third party to collect and relay data from in-cab tracking or telematics devices, whether that service is taxable in Texas can turn on where the transmission actually originates and whether it's made under a telecom license — not simply on where your headquarters or the vendor's data center sits. If your trucks are transmitting from Texas under a licensed telecom provider's service, expect the charge to be taxable.

Companies using fuel charge cards

A separate fee just for getting your billing data faster or more frequently (daily instead of monthly, delivered electronically) was treated as a nontaxable part of the credit/billing service in this ruling, not a taxable data or information service.

Employers with workplace injury/safety programs

A retainer paid to a medical provider for treating and evaluating injured employees, plus safety consulting, was ruled nontaxable — unless the arrangement is really performed under an insurance policy, in which case Rule 3.355(b) governs.

IMC (Interstate Motor Carrier) tax filers

Don't use simple fleet-wide mileage in your apportionment factor. The numerator and denominator must be built only from the miles that interstate truck-tractors and commercial motor vehicles actually drove in Texas — exclude vehicles that never enter Texas and also exclude mileage from vehicles that run exclusively within Texas (those aren't "interstate" miles for this ratio).

Common questions

Q: Is a satellite-tracking or telematics data service always exempt from Texas sales tax?
A: Not always. In this letter it was exempt because the transmissions apparently did not originate in Texas. The Comptroller said the same service would be taxable if the trucks transmitting the data are located in Texas and the transmissions are made under licenses issued to the telecommunications provider.

Q: Is a fee for faster or more frequent billing statements from a fuel-card company taxable?
A: In this ruling, the flat monthly fee for receiving daily computerized billing statements from the company extending fuel-purchase credit was not subject to sales tax.

Q: Are medical services for treating work-related injuries taxable in Texas?
A: In this ruling, they were not taxable, unless performed pursuant to a policy of insurance — in which case Rule 3.355(b) applies.

Q: How do I calculate my IMC tax apportionment factor?
A: Use only the miles that interstate truck-tractors and interstate commercial motor vehicles actually drove in Texas, over their total interstate miles. You cannot simply use total fleet miles of all tractors, and you must exclude both vehicles that never operate in Texas and vehicles that operate exclusively in Texas.

Q: Can I rely on this exact letter for my own business?
A: No. This ruling is based on the specific facts the requesting company submitted, and the letter itself says other, similar facts may yield different results. Under STAR's own rules, it can only be the basis of a detrimental-reliance claim for the taxpayer it was issued to.

Citations and references

Rules cited:

• 34 Tex. Admin. Code Rule 3.355(b) (taxability of services tied to an insurance policy)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9403003L

Original ruling text

NOTE: This document is also indexed as a Interstate Motor Carrier Tax document, STAR 9304003L.

April 8, 1993

Dear **:

Thank you for your recent letter which is restated in part with responses

below.

Situation 1: We have satellite tracking units installed on several of our truck

tractors. These tractors travel the continental U. S. While the tractors are in

service, the tracking units transmit signals to a location in California where

the information is maintained. We can also use the tracking units to send and

receive short messages between us and the driver via the computer. Our computer

calls the California location and downloads the information every thirty

minutes. This is a toll call and we pay Texas sales tax on the telephone

charges. We receive any messages from drivers at the same time as the location

updates. We send messages through the computer. The message is typed into the

computer. Our computer calls the computer in California. This again is a taxed

telephone call. The computer at the company in California then sends a signal

to the driver indicating the message. The message and information service is

performed in California by a California corporation. They never send us a hard

copy of the information. We pay sales tax every time we update the information

or send a message by telephone. Is any part of the California company's monthly

fee for collecting the information subject to sales or use tax? If so, what

portion?

Response: The California company is performing a telecommunications service. In

this situation, their charges are not subject to Texas tax because the

transmissions apparently do not originate in Texas. However, if the trucks

transmitting the data are located in Texas and if the transmissions are made

under licenses issued to the telecommunications provider, the charges are

subject to Texas sales tax.

Situation 2: Our drivers use fuel charge cards to purchase fuel all over the

U.S. and Canada. Because of the volume of transactions and because we use

information from the fuel transactions to create reports and to file fuel tax

returns the fuel charge card company sends us daily billings instead of monthly

billings. They send these billings via computer rather than by mail. They

charge us a flat monthly fee for providing daily billing statements. Is this

monthly fee subject to sales and use tax?

Response: The charge for receiving daily computerized billings from the company

extending credit for the fuel purchases is not subject to sales tax.

Situation 3: We have contracted with a health/medical services provider to aid

with work related injuries. They provide medical services in the treatment and

evaluation of individuals involved in work related injuries. They also provide

consultation services to help reduce the incidence of injuries and increase

workplace safety. I have enclosed information from the provider describing the

services provided. We pay them a monthly retainer based on the total number of

employees in our firm. Since this is a medical service, is any portion of their

fee subject to sales or use tax?

Response: These services are not taxable unless performed pursuant to a policy

of insurance. Please refer to Rule 3.355(b).

Situation 4: I would also like clarification of the computation of our IMC tax.

Texas is our base state and we register all our tractors in Texas. All tractors

are delivered to us in Texas. We pay IMC tax on all tractors when delivered. We

compute the apportionment factor as follows:

Total Texas Miles of all Tractors = Apportionment Miles of all Tractors Factor

Do we need to determine the apportionment by some other means?

Response: Fleet miles cannot automatically be used to compute the mileage

ratio. Only miles driven by interstate truck-tractors and interstate commercial

motor vehicles that actually operate in Texas are used. You may not use miles

driven by vehicles that do not operate in Texas or miles generated by vehicles

that operate exclusively in Texas.

This opinion is based on the facts you submitted. Other facts, though similar,

may yield different results.

If you have questions or need more information, please call or write. You may

reach me by calling toll free, (800) 531-5441 (ext. 34680). My direct line

number is (512) 463-4680. The number for FAX transmissions is (512) 475-0900.

You may write to me in care of Tax Administration Division.

Sincerely,

Al Van Allen

Tax Administration Division