Texas Issues Updated Guidance on Taxability of Educational Products and Services

The Texas Comptroller of Public Accounts has provided updated guidance discussing the tax treatment for sales of educational products and services. Common taxable educational materials include books or textbooks, learning manipulatives (e.g. pattern blocks), lesson plans, and other handouts or materials. Texas taxes these educational materials, whether digital or physical. Any related fees, such as shipping and handling charges, billed in connection with their sale are also taxable. Local sales and use taxes may also be due on these items depending on where the order is received, fulfilled, or where the taxable item is shipped or delivered.

Generally, stand-alone charges for training or educational services, which are primarily instructional in nature, are exempt. Examples of exempt training or educational services include:

  • A course that provides accreditation, certification, or continuing education credit based on the learner’s final test or assessment
  • Online training courses
  • Webinars during which participating viewers can submit and receive responses to their questions from the presenters

If a seller provides exempt training or educational services and includes complimentary instructional materials or other items or include the items in the sales price of the training, the seller must pay tax on those items when they purchase them. If the seller creates the instructional materials, they owe tax to their suppliers when buying any items (e.g. paper, ink, printing, etc.) used to create the materials. If the seller separates the price of the instructional materials from the price of the training, they can provide a properly completed resale certificate for any items that they resell to their customers, and the seller must collect tax on the sale of these items to their customers. (Tax Policy News, 202002016L, February 2020, Texas Comptroller of Public Accounts)

Posted on March 12, 2020