Are litigation-support services -- process serving, obtaining records via deposition on written questions, courthouse research, filing motions, taking witness statements, and appearing in court on an attorney's behalf -- subject to Texas sales tax?

Plain-English summary

A litigation-support company described, in detail, seven categories of services it provides to attorneys, individuals, and non-litigating companies:

1. Obtaining and serving subpoenas (from a county courthouse, or issuing deposition subpoenas) on witnesses.
2. Preparing a "deposition on written questions," serving it on a state agency's records custodian to obtain confidential/legal records, then having a notary conduct the deposition, obtain the records in admissible form, and file copies with the district court.
3. Traveling to the courthouse to obtain certified court copies of case files, or reviewing case facts and providing an attorney a summary/brief of the litigation.
4. Traveling to the courthouse to file a new case or motion, having the clerk issue a citation, and serving process on a defendant/respondent — including temporary restraining orders, protective orders, original petitions, and amended motions/petitions.
5. Contacting a witness at an attorney's request, taking a statement, transcribing it into admissible affidavit form, filing the original with the court, and sending a copy to the attorney.
6. Appearing in court before a judge, on an attorney's behalf and at their direction, on uncontested docket matters — getting orders signed or motions granted, filing with the court clerk, and serving opposing counsel and all parties of record.
7. Setting and "posting" matters for hearing on the court's docket with the court administrator's office.

The Comptroller's answer: all of these described services are not taxable. The company does, however, have to pay sales tax on any taxable items (supplies, equipment) it purchases to perform these nontaxable services — the exemption covers the service itself, not the company's own input purchases.

What this means for you

Process servers and litigation-support companies

A broad range of court-related support services — process serving, records retrieval via deposition, courthouse filing and research, witness statement-taking, and court appearances on an attorney's behalf — can be provided without charging Texas sales tax, per this letter. Remember you still owe tax on your own supply and equipment purchases used to perform the work.

Law firms and attorneys hiring litigation-support vendors

Expect these categories of process-serving and litigation-support services to come without Texas sales tax added, consistent with this letter.

Accountants and tax professionals

This letter offers a useful, fact-detailed reference list of specific litigation-support activities the Comptroller has confirmed as nontaxable — helpful when classifying a new vendor's mixed service offering in the legal-support space.

Common questions

Q: Is process serving (subpoenas, citations, TROs, etc.) taxable in Texas?
A: No, per this letter.

Q: Are courthouse research, filing, and witness statement-taking services taxable?
A: No, per this letter — these and several related litigation-support activities were all confirmed nontaxable.

Q: Does the litigation-support company pay tax on anything?
A: Yes — per this letter, it must pay sales tax on taxable items (supplies, equipment) it purchases to perform these nontaxable services.

Citations and references

No specific Tax Code section or Comptroller rule number is cited in this letter; the Comptroller applied its general nontaxable-service classification to these facts.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9808768L

Original ruling text

August 17, 1998

Dear Ms. **:

Thank you for your recent letter describing in detail the services your company
provides when providing litigation support for attorneys and individuals or
non-litigating companies.

You describe the services your firm provides as follows:

1. Attorney calls or faxes our office to have an individual served a subpoena.
   Our firm obtains Subpoena from ** County Courthouse or issues
   deposition Subpoena and service of process is made upon witness to appear in
   Court or at deposition.

2. Attorney or law firm calls and request our firm to obtain confidential or
   legal records from a State Agency, (i.e.) Department of Human Services, Child
   Protective Services. We prepare Deposition on Written Questions and serve on
   Custodian of Records for agency. Notary Public from our office travels to
   records custodian after ten days and conducts deposition and obtains records in
   admissible form, files copies with District Court of County of jurisdiction.

3. Travel to Courthouse and obtain certified Court copies of case file or
   review facts of case for attorney and provide summary / brief of litigation.

4. Travel to Courthouse, file new case or motion for attorney and have clerk of
   the Court issue Citation for service on defendant / respondent. Serve process
   on defendant / respondent, Temporary Restraining Order, Protective Order,
   Original Petition, Amended Motion or Petition, etc.

5. Attorney calls and request our firm contact a witness in a case, meet with
   witness and take statement, transcribe and transfer to admissible Affidavit
   form, file original with Court and send copy to attorney.

6. Appear in Court before Judge, on behalf of, and at direction of attorney on
   uncontested docket matters, have orders signed or Motions Granted, file with
   Clerk of Court and serve on opposing Counsel and all parties of record.

7. Set and "post" matters for hearing on the docket of the Court with
   administrators office.

Answer: The services described above are not taxable. Your company is required
to pay sales tax on all taxable items used in providing these nontaxable
services.

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 1-800-531-5441, extension 3-4683 if you have any
questions or need more information. The direct line is 512/463-4683. You may
also write to Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Eddie C. Washington
Tax Policy Division