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Texas Appeals Court affirms bill pay services for banks are not taxable data processing services

The Texas Court of Appeals ruled on April 19 in favor of a taxpayer's claiming a refund of $3 million in sales tax assessed during an audit on bill pay services the taxpayer provided for banks to allow banking customers to pay their bills online. The Court of Appeals affirmed the District Court’s judgment that the bill pay services were nontaxable professional services rather than taxable as data processing services. This decision continues the process of defining and narrowing the meaning of what constitutes a data processing service in Texas.

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