DALLAS, Feb. 24, 2017 /PRNewswire/ -- In recently published hearings, Kentucky and Texas rejected sale-for-resale claims. (See Kentucky Claims Commission Tax Appeals File Number K16-R-03 and Texas Comptroller Hearing Number 110,655.)
In the Kentucky hearing, the taxpayer provided various services to related insurance providers, including managing group insurance plans. As a part of its service, the taxpayer provided benefit statements to insureds. The benefit statements included other information, such as, appeal rights, health tips, medical information, and advice on how to locate doctors. The taxpayer claimed a sale-for-resale exemption on rolls of paper delivered to its print shop, which were used to print the statements. In finding that the taxpayer used the paper to provide its non-taxable services, the Kentucky Commission explained that the statements were the result of "a number of interrelated and coordinated services, professional and otherwise, that provide information, assistance and advice" to insureds.
In Texas Hearing Number 110,655, the taxpayer leased a building to the General Services Administration (GSA). The lease required that the building be cleaned twice a day, and the GSA reimbursed the taxpayer for the second cleaning. The taxpayer purchased the janitorial services from a third party, paid sales tax on the services, and requested a refund of the tax. The administrative law judge found that services were purchased to enable the taxpayer to fulfill its legal obligations under the lease agreements and denied the refund.
Please note, however, that the Comptroller requires landlords to collect tax from non-exempt tenants on charges for taxable services provided in tenant-occupied space. No tax is due on reimbursements for services provided in common areas. (See Comptroller Letter Ruling 200103322L and 201304670L.)
Both cases highlight the issue of the sale-for-resale concept being utilized in a service industry, and the attention to this issue for the service sector economy will prove to be very important.
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the seventh largest corporate tax practice in the United States. With global headquarters in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a five-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 2,100 professionals and associates serves over 12,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at ryan.com.
TECHNICAL INFORMATION CONTACTS:
Jeremiah T. Lynch
Available Topic Expert:
For information on the listed expert, click appropriate link.
ProfNet - http://www.profnetconnect.com/jeremiahlynch
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/kentucky-and-texas-reject-sale-for-resale-claims-by-service-providers-300413377.html