The Texas Court of Appeals determined that an online bill payment service was part of a nontaxable professional service, not a taxable data processing service.
A company provided customers with an online service that allowed them to make payments for various bills. It also allowed customers to customize information for different payees and review past payments.
Texas taxes data processing services, which include services for storing, changing, or searching computerized data and information. The Court determined that the bill payment service was not taxable as a data processing service. Instead, the court ruled that the company used the computerized process to make it easier for the company to provide a nontaxable professional service.