Sales/Use/Indirect:
Texas: Ruling Says Various Online Services Constitute Taxable Data Processing Rather Than Nontaxable Advertising
Letter No. 202409012H, Tex. Comptroller of Public Accounts (9/16/24). In a ruling involving a legal research and publishing corporation that primarily offers its customers (attorneys, law firms, and public and private entities) electronic access to its various legal research products and services through subscriptions, the Texas Comptroller of Public Accounts (Comptroller) agreed with an administrative law judge (ALJ) in holding that the company provided more than just basic nontaxable advertising and marketing services and instead provided taxable data processing services. The ALJ had concluded that the disputed services were data processing services that provided content optimization, search engine optimization, web page designs or modifications, tracking data, monthly reports, automatic emails and phone calls, web chat features, “RSS fees,” and videos to increase ranking on search engine results, monitor traffic, and drive more traffic to a client’s website. According to the ALJ, the services at issue essentially functioned to upload, store, organize, and maintain digital data for access and download by customers, and such data processing services were not incidental but in fact constituted the essence of the transactions. Please contact us with any questions.
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