Texas Sales Tax on Security Services
Whenever we think about a service, the normal reaction or understanding is that it should not be taxed. Just remember, the state of Texas does not have income tax, so if any state will tax a service, it will likely be Texas. If your company is being audited for sales tax, first, think to yourself what kind of service you are offering. If you have to get a security license, then, it is a taxable security service. Most of our clients fall into category 8 and 9 below. Then, remember that during a sales and use tax audit, all of your assets and consumables will also be examined to see whether or not sales tax was paid. Did you have any deliveries? Did you sell a camera along with your service? Did you use a camera system and are you the end user of that camera? It is not only the taxability of the service itself, rather the entire service as a whole.
Let’s talk about what kind of security services in Texas are taxable:
1. Investigations
2. Providing security guards or guard dogs
3. Monitoring certain medical alert systems
4. Installing or monitoring burglar alarm systems
5. Providing armored cars or armed couriers
6. Vehicle location and tracking (also known as Tele-Matics)
7. Unclaimed property services and computer forensic services (e.g., locating and retrieving deleted or hidden computer files).
8. Private Security service
9. Locksmith services
Now, what about security services that are not Taxable:
1. Medical alert services and the services of full-time peace officers privately employed as guards or watchmen are not taxable security services.
2. Vehicle location and tracking service providers can be exempted from the licensing requirement by the Private Security Bureau if they pay an annual fee and meet certain operating standards.
Facing a sales tax audit in Texas? Contact our attorney for a consultation.
