Services such as cleaning or repairing shoes, repairing appliances, restoring or upholstering furniture, repairing or cleaning jewelry, and caring for dogs are subject to taxes. See Rule 3, 292, Repair, Remodeling, Maintenance and Restoration of Tangible Personal Property. Some of your customers may have locations inside and outside of Texas. Your service can be purchased for use in all of those places.
Only the portion of your service used in Texas is taxable. If your service is used to support an independent part of a customer's business, other than the general administration or operation of the company, the service will be used where that business activity takes place. 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. Yes, sales taxes are charged for consulting services in Texas. While independent consulting is generally not taxable, consulting with any type of purchase of taxable services is taxable even when listed separately. Production companies can also obtain exemptions from hotel occupancy tax (state and local occupancy taxes can be waived after 30 days for stays longer than 30 consecutive days) and refunds or tax exemptions for fuels used off-road.
Or when you use a computer to analyze faults in a structure, the service is not a data processing service. For example, when you use a computer to prepare a federal tax return, the fee charged to your customer is not taxable because you are using your knowledge of accounting principles and tax laws to prepare the return. Providers of telecommunications, Internet access and cable television services can 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. Collect 6.25 percent of state tax (plus any local tax) from your customer on the charge for your taxable service.
Since sales tax applies to goods and services sold to customers, you may be wondering if it applies to intangible services, such as business consulting in Texas. Before you decide not to collect taxes, make sure that your service is not one of the other taxable services. If your business includes both taxable and non-taxable services, collect taxes only on taxable services. However, if the charge for the taxable portion of the services is not separately indicated at the time of the transaction, the service provider or the purchaser may subsequently establish for the Comptroller, through documentary evidence, the percentage of the total charge related to non-taxable and unrelated services.
As the owner of a business that engages in taxable goods and services, you are responsible for collecting taxes from buyers and passing them on to the appropriate state or local tax authority. Consult the state's sales tax laws to be able to file, calculate, file and remit your sales tax liability. You can use a resale certificate (PDF) instead of paying taxes on the goods you deliver to your customer as part of your service.
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