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Texas comptroller finds insurance tracking services not taxable data processing services

The Texas Comptroller has issued a private letter ruling holding that a taxpayer providing insurance tracking/notification services to lenders was not providing taxable services. Although the taxpayer used computers in performing the service, the Comptroller found that such service was not considered a taxable data processing service or a taxable insurance service. This private letter ruling is significant because it demonstrates the Comptroller’s consideration of all relevant facts in determining the “essence of the transaction.”