Recent Texas Comptroller Private Letter Rulings of Note (PLR 202003061L)

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Texas Private Letter Ruling No. 202003061L

The Texas Comptroller of Public Accounts (“Comptroller”) has determined the sales and use taxability of a software service provider to optometrists and ophthalmologists (“ODs”).

The software service provider (hereinafter “Taxpayer”) offers web-based software that allows ODs to automate key communications. In order to provide the key communications, Taxpayer installs a small piece of prewritten software on the OD’s computer to capture data from their system and sends it to the Taxpayer’s server. Taxpayer provides four (4) main types of key communications: (1) the first is web-based and used for patient relationship management: (2) the second is a cloud-based commerce solution that allows patients to order lenses from their OD on their phone, tablet, or computer and to receive shipments at their door; (3) the third is a digital marketing solution to increase the ODs online visibility; and (4) is a turnkey digital solution that includes a dedicated consultant to help ODs acquire, retain, and engage patients.

The Comptroller looked at each of the four (4) key communications that Taxpayer provides and determined the taxability of each. For each of the four (4) key communications, the Comptroller determined that it constitutes software-as-a-service which is taxable as a data processing service under Tex. Tax Code § 151.0035. See Private Letter Ruling 200805095L (May 28, 2008); see also Comptroller’s Decision 110,019 (2015); Comptroller Decision No. 44,736 (2005).


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