Opinion ID: 2831267
Heading Depth: 2
Heading Rank: 2

Heading: Taxable Services

Text: The Comptroller argues that the taxable services that HCSC bought on the government’s behalf fall outside the sale-for-resale exemption because the title-transfer clauses did not transfer title of the taxable services to the federal government. However, title transfer clearly is not the only way to bring about a resale. Instead, “sale” also includes “performance of a taxable service” for consideration.24 Here, HCSC bought these taxable services (the sale). HCSC then resold the services to the government by directing that they be performed on the government’s behalf with the purpose of receiving reimbursement and compensation (consideration) from the government (the resale). The sale-for-resale exemption explicitly includes the sale-for-resale of a service when it is purchaser who acquires the property or service for the purpose of performing a service that is not taxed under this chapter, regardless of whether title transfers to the service provider's customer, unless the tangible personal property or taxable service is purchased for the purpose of reselling it to the United States in a contract, or a subcontract of a contract, with any branch of the Department of Defense, Department of Homeland Security, Department of Energy, National Aeronautics and Space Administration, Central Intelligence Agency, National Security Agency, National Oceanic and Atmospheric Administration, or National Reconnaissance Office to the extent allocated and billed to the contract with the federal government. See also id. § 151.006(a)(5) which provides that a “sale for resale” means: except as provided by Subsection (c), tangible personal property to a purchaser who acquires the property for the purpose of transferring it as an integral part of performing a contract, or a subcontract of a contract, with the federal government only if the purchaser: (A) allocates and bills to the contract the cost of the property as a direct or indirect cost; and (B) transfers title to the property to the federal government under the contract and applicable federal acquisition regulations. Both of these subsections were added in 2011. Act of June 28, 2011, 82d Leg., 1st C.S., ch. 4, § 12.01, 2011 Tex. Gen. Laws 5263, 5263 (current version at T EX . T AX C O D E § 151.006). 24 T EX . T AX C O DE § 151.005(3). 13 resold “in the form or condition in which it is acquired.”25 Here, HCSC bought the services and then immediately resold them to the federal government, so the services were resold in the same form as they were acquired, thus qualifying for the sale-for-resale exemption. The Comptroller attempts to recharacterize HCSC’s sale-for-resale of services as sale-forresale of service contracts. However, the trial court’s findings of fact include findings that the services at issue were performed on behalf of the federal government and that HCSC was compensated for them. Therefore, because the Comptroller has not challenged the evidentiary sufficiency of these factual findings, we accept them as a true characterization of the transfer. That is, the resale to the government was the performance of the services for consideration, not merely a resale of service contracts.