Sales Tax Articles
Sales Tax State Activity Update - February 2008
Texas Taxable Computer Security Services
The Tax Policy Division of the Texas Comptrollers Office received clarification on computer security consulting services from the Department of Public Safety (DPS) which regulates private security consultants.
Persons in the business of providing the services listed below are required to be licensed with the DPS and therefore their services are taxable under Texas Code Section 151.0101(a)(14). In a 2000 Letter (200008608L) it was determined that computer security consultants were not required to be licensed by the then Texas Commission on Private Security(CPS), and therefore their services were exempt. The functions of the CPS were absorbed by the DPS. It now appears the advice given by the CPS was incorrect based on the incomplete facts supplied by the Division of Tax Policy and such security consultants were always required to be licensed and collect tax on their services.
The types of security services subject to tax are as follows:
- Quarterly penetration scans that determine if there is any vulnerability from Internet hackers and any other risk from outsiders to an internal network.
- War dials which are a rapid sequential dial up of all our internal phone numbers to see if there is access through a modem to secure data. If a response is received from a modem then a check is performed to see if an authentication process is required to review the data or if there is open access. Customers are notified of the risk potential found.
- Quarterly desktop risk assessments which are run internally on all personal computers connected to a network, on software, provided by the security consultant and the results are then analyzed.
- An annual on-site inspection which serves as an audit of internal safeguards and redundancies.
- A twenty four hour, seven day a week notification of any new threats from the Internet such as new viruses, worms, etc.
The full letter can be viewed on Texas State Comptroller STAR System.
(Letter No. 200712008L, Texas Comptroller of Public Accounts, 12/20/07)Subscribe to CyberTax News and receive the latest indirect tax news, including rate changes, rule updates, compliance issues, and more, delivered directly to your email.
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