Texas Private Letter Ruling No. 202003061L
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).
Freeman Law works with tax clients across all industries, including manufacturing, services, technology, oil and gas, financial services, and real estate. State and local tax laws and rules are complex and vary from state to state. As states confront budgetary deficits due to declining tax revenues and increased government spending, tax authorities aggressively enforce state tax laws to recapture lost revenues.
At Freeman Law, our experienced attorneys regularly guide our clients through complex state and local tax issues—issues that are frequently changing as states seek to keep pace with technology and the evolution of business. Staying ahead requires sophisticated legal counsel dedicated to understanding the complex state tax issues that confront businesses and individuals. Schedule a consultation or call (214) 984-3000 to discuss your local & state tax concerns and questions.