Texas excludes certain services from taxes. These include professional services, such as those offered by doctors, lawyers, accountants, barbers and hairdressers, interior designers, and car repair services. Services such as shoe cleaning or repair, appliance repair, furniture restoration or upholstery, jewelry repair or cleaning, and dog grooming are taxable. The state of Texas does not usually collect sales tax on the vast majority of services provided.
However, there are some services that are taxable. Examples would be cable television services, entertainment services, garbage collection services, floral services, construction services (provided materials are loaded separately), mobile telecommunications services, landline telephone communication services, gas services natural and electricity and non-residential real estate property repair and remodeling services, This means that a web designer would not have to collect sales tax, while a florist could be required to collect sales tax. In the State of Texas, some professional services are taxable. Information services, photography and digital security, for example, are subject to sales tax.
Be sure to check if your business is subject to sales tax in the state of Texas. Some products are exempt from sales tax under Texas law. Examples include most unprepared foods, food stamps, and medical supplies. We encourage businesses to review the laws and regulations established by the Texas Comptroller of Public Accounts to understand what assets require sales tax collection and under what conditions.
Taxes must be paid on credit reporting services if the credit applicant's address is in Texas at the time of requesting a report, and the person who requested the credit report is in Texas or is doing business in Texas. Internet access service allows users to connect to the Internet to access information, email, and other online content. Taxes are due on the total charge of debt collection activities when the debtor's last known address on the creditor's records, at the time the account is placed for collection, is in Texas; and the creditor for whom the debt is collected is in Texas, or participates in business in Texas, in the time when the debt is remitted for collection. Exempt items include tangible personal property that becomes an integral part of the recording or transmission of qualifying film, video, or audio; cameras; films; film-developing chemicals; lights; accessories; sets; teleprompters; microphones; digital equipment; special effects equipment and supplies; audio or video routing switches located in a studio; certain services; and certain other equipment and tangible personal goods that are necessary and essential and used directly in production.
When a service provider bundles Internet access with a taxable service, such as a telecommunications service or a cable television service, the service provider should not collect taxes on the amount allocated to Internet access if the service provider can establish, through its books and records, an allowance for taxable service and for non-taxable Internet access. Rule 3.366, Internet Access Services, Rule 3.334, Telecommunications Services, and Rule 3.313 are being amended to reflect this change in the taxation of Internet access services. Examples of telecommunications services include local and long distance telephone service, including mobile or satellite telephone service and Voice over Internet Protocol (VoIP), fax service, pager services, text messaging services, and email (unless sold in combination with access to the Internet). Tangible personal property that becomes an ingredient or component of an item manufactured for sale, as well as taxable services performed on a product manufactured to be marketable are exempt.
If you're an online business, you can connect TaxJar directly to your shopping cart and instantly calculate sales tax in each state. A digital good or service is anything that is delivered electronically, such as an album downloaded from iTunes or a movie purchased on Amazon. You may be responsible for collecting and remitting Texas sales and use tax on orders placed or sales made during Texas conventions or trade shows, even if you only attend one trade show in the state in a year, for one day. Telecommunications services involve the electronic or electrical transmission, transport, routing or reception of sounds, signals, data or information using cables, cables, radio waves, microwaves, satellites, fiber optics, or any other method currently in existence or that can be devised.
Providers of telecommunications, Internet access and cable television services may obtain a refund of state sales and use taxes paid for the use of tangible or consumed personal property when transmitting, routing, or distributing those services. In addition, labor to increase the production capacity of a manufacturing or processing production unit in a petrochemical refinery or chemical plant is not taxable. Non-exempt items include office equipment or supplies; maintenance or cleaning equipment or supplies; machinery, equipment and supplies used in sales or transportation activities; machinery, equipment or supplies used in distribution activities, unless otherwise exempted; taxable items incidentally used in qualifying production or broadcast; telecommunications equipment and services; transmission equipment; security services; motor vehicle parking services; and food and beverages. The sales tax nexus can persist even after a retailer ceases activities that led them to “go into business” in the state.