Is a video photographer's videotaping of depositions, testimony, and court proceedings exempt from Texas sales tax?

Plain-English summary

A video photographer wrote to the Texas Comptroller's Tax Policy Division asking whether the service of videotaping depositions and testimony would count as an exempt "court reporting service," and for an explanation of SB 737, a new law.

The Comptroller explained that SB 737, effective October 1, 1995, added Section 151.353 to the Tax Code, creating a specific exemption for court reporting services. That exemption covers the preparation of depositions or discovery documents, transcripts of testimony and statements of facts made from sales documents, and court records recorded on audio tape, video tape, or computer disc — plus the courtroom presentation of those items — when sold by a person performing court reporting services to a party participating in a suit (for example, a plaintiff, defendant, or attorney).

So, effective October 1, 1995, this video photographer's videotaping services would be exempt when provided to participants in a lawsuit. However, the letter is clear that the same services remain taxable when provided to someone who is not a party to the suit — in those cases the video photographer must continue to collect sales tax, though materials that get passed on to the customer (like video tapes or audio tapes) can be purchased tax-free for resale. Because the underlying service itself is nontaxable when sold to parties in a suit, the video photographer still has to pay sales tax on all taxable items purchased to perform that nontaxable version of the service.

The letter also notes that Rule 3.350 (Motion Pictures) was in the process of being amended by the Tax Policy Division to reflect this new exemption, with an opportunity for public comment when the proposed amendment was published in the Texas Register.

What this means for you

Video photographers and videographers who tape depositions or testimony

If you videotape depositions, testimony, or other court proceedings, whether your service is taxed depends on who's buying it. Sales to parties actually involved in the lawsuit (plaintiffs, defendants, or their attorneys) became exempt as of October 1, 1995, under the new court reporting services exemption. Sales to people who are not parties to the suit remain taxable.

Court reporters and related service providers

This letter reflects the rollout of a brand-new statutory exemption (SB 737 / Tax Code § 151.353) for court reporting services broadly, including preparation of depositions, discovery documents, transcripts, and statements of facts, whether captured on paper, audio tape, video tape, or computer disc. If your business performs any of these services for litigation participants, this exemption may apply to you as well, not just to video photographers.

Business owners buying supplies for exempt services

Even though the service sold to parties in a suit is nontaxable, you still owe sales tax on the taxable items you buy to perform that service — the exemption applies to what you sell, not automatically to everything you buy. When you sell to non-parties (a taxable sale), you can instead buy materials that you pass through to the customer, like tapes, tax-free for resale.

Common questions

Q: Is videotaping a deposition or testimony always exempt from Texas sales tax?
A: No. It's exempt only when sold to a party participating in the suit (such as a plaintiff, defendant, or attorney), and only as of October 1, 1995, under new Tax Code Section 151.353. Sales to non-parties remain taxable.

Q: What is SB 737?
A: SB 737 is the legislation that added Section 151.353 to the Tax Code, creating the court reporting services exemption described in this letter, effective October 1, 1995.

Q: Does the exemption cover audio tape and computer disc recordings too, or just video?
A: The letter describes the exemption as covering depositions, discovery documents, transcripts, and statements of facts recorded on audio tape, video tape, or computer disc, plus courtroom presentation of those items — not just video.

Q: Do I still pay sales tax on blank tapes and equipment?
A: Yes, for taxable (non-exempt) sales you must continue to pay tax on items used to perform the service, though you may buy tapes that you resell to the customer tax-free. For exempt sales to parties in a suit, the letter states you must continue to pay sales tax on all purchases of taxable items used to perform that service.

Q: Was there a related rule change?
A: Yes. The letter notes that Rule 3.350 (Motion Pictures) was being amended by the Tax Policy Division to reflect the SB 737 exemption, with a public comment opportunity when published in the Texas Register.

Citations and references

Statutes and rules:

• Tax Code § 151.353 (Court Reporting Services), added by SB 737, effective October 1, 1995
• Rule 3.350 (Motion Pictures) — noted as being amended to reflect the exemption

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9508L1365F14

Original ruling text

August 30, 1995

Dear *****:

Thank you for your letter asking whether your services would
be considered "court reporting services" as defined by our sales
tax policy section and thus not be taxable. You also asked for a
clearer explanation of SB 737.

SB 737, effective October 1, 1995, added Section 151.353
regarding Court Reporting Services to the Tax Code. This section
exempts court reporting services including the preparation of
depositions, or discovery documents, transcripts of testimony
and statement of facts from the sales documents, court
records on audio or video tape or computer disc, and to the
courtroom presentation of these items when sold by a person
performing court reporting services to a party participating in
a suit. Therefore, effective October 1, 1995, your services will
be exempt when you provide them to participants in a suit (i.e.,
plaintiffs, defendants, attorneys).

Since persons performing "court reporting services" are
providing a nontaxable service, you will continue to be required
to pay sales tax on all purchases of taxable items used to perform
your service. However, you should continue to collect tax when
court reporting services are provided to persons that are not
party to a suit. In these instances, you may purchase materials
that you will transfer to your customer (video tapes, audio tapes)
tax free.

Rule 3.350, concerning Motion Pictures, is in the process of
being amended by our Tax Policy Division to reflect the exemption
of court reporting services from sales tax as dictated by SB 737.
You will have an opportunity to comment on the proposed rule
amendment when it is published in the Texas Register.

I hope this satisfactorily answers your questions. Should
you require additional information, please contact Karey Barton,
Manager, Tax Policy, toll-free at 1-800-531-5441, extension 3-4987.

Sincerely,

Glen D. Hunt, Director
Research & Policy Development

NOTE: Previous Accession Number 9508406L