Collection and Remittance of Tax on Credit Rating Services for Legal Entities Begins July 1, 2023 in Texas

The Texas Comptroller of Public Accounts has issued a policy letter stating that the provision of credit rating services for legal entities is subject to sales and use tax, and taxpayers must begin collecting and remitting tax on these services beginning July 1, 2023. Collection and remittance of tax on such services was previously scheduled to apply effective April 1, 2023. Any charges to develop or update a credit rating, including any administrative, maintenance, and cancellation fees, are part of the taxable sales price of the credit rating service.

The policy letter notes that the provision of credit rating services for debt obligations is not subject to sales and use tax in Texas. Charges to assign a credit rating for a debt obligation are for the evaluation of a financial instrument instead of a “person.” These services are not the assembling or furnishing of credit information of a person per the Texas tax code and therefore are not taxable.

(Accession Number: 202302004L, Texas Comptroller of Public Accounts, February 17, 2023)

Posted on March 13, 2023