(7) Non-permitted sellers. Failure to obtain a sales
and use tax permit does not relieve a seller required by this section
or other applicable law to have a sales and use tax permit from the
obligation to properly collect and remit sales and use taxes. Sellers
whose sales and use tax permits are suspended, pursuant to subsection
(l) of this section, or cancelled, pursuant to subsection (n) of this
section, and sellers who have not received sales and use tax permits
due to unsigned or incomplete applications, are still responsible
for properly collecting and remitting sales and use taxes. See subsection
(g) of this section for return and payment information.
(c) Obtaining a sales and use tax permit.
(1) A seller must complete an application that the
comptroller furnishes and must return that application to the comptroller,
together with bond or other security that may be required by §3.327
of this title (relating to Taxpayer's Bond or Other Security). A seller
who files an electronic application furnished by the comptroller is
deemed to have signed the application and is not required to print
and mail a signed application to the comptroller. A separate sales
and use tax permit under the same taxpayer account number is issued
to the applicant for each place of business of the seller. Sales and
use tax permits are issued without charge.
(2) Each seller must apply for a sales and use tax
permit. An individual or sole proprietor must be at least 18 years
of age unless the comptroller allows an exception from the age requirement.
The sales and use tax permit cannot be transferred from one seller
to another. The sales and use tax permit is valid only for the seller
to whom it was issued and for the transaction of business only at
the address that is shown on the sales and use tax permit. If a seller
operates two or more types of business at the same location, then
only one sales and use tax permit is required.
(3) The sales and use tax permit must be conspicuously
displayed at the place of business of the seller for which it is issued.
A permit holder that has traveling sales persons who operate from
a central office needs only one sales and use tax permit, which must
be displayed at that office.
(4) All sales and use tax permits of the seller will
have the same taxpayer account number; however, each place of business
of the seller will have a different outlet number. The outlet numbers
assigned may not necessarily correspond to the number of business
locations operated by the seller.
(d) Collecting sales and use tax due.
(1) Bracket system.
(A) Each seller must collect sales or use tax on each
separate retail sale in accordance with the statutory bracket system
in Tax Code, §151.053 (Sales Tax Brackets). The practice of rounding
off the amount of sales or use tax that is due on the sale of a taxable
item is prohibited. Copies of the bracket system should be displayed
in each place of business of the seller so both the seller and the
purchaser may easily use them.
(B) The sales and use tax applies to each total sale,
not to each item of each sale. For example, if two items are purchased
at the same time and each item is sold for $.07, then the seller must
collect the tax on the total sum of $.14. Sales and use tax must be
reported and remitted to the comptroller as provided by Tax Code, §151.410
(Method of Reporting Sales Tax; General Rule). When sales and use
tax is collected properly under the bracket system, the seller is
not required to remit any amount that is collected in excess of the
sales and use tax due. Conversely, when the sales and use tax collected
under the bracket system is less than the sales and use tax due on
the seller's total receipts, the seller is required to remit sales
and use tax on the total receipts even though the seller did not collect
sales and use tax from the purchasers.
(2) Sales and use tax due is debt of the purchaser;
document requirements.
(A) The sales and use tax due is a debt of the purchaser
to the seller until collected. Unpaid sales or use tax is recoverable
by the seller in the same manner as the original sales price of the
taxable item itself, if unpaid, would be recoverable. The comptroller
may proceed against either the seller or purchaser, or against both,
until all applicable tax, penalty, and interest due has been paid.
(B) The amount of sales and use tax due must be separately
stated on the bill, contract, or invoice to the purchaser or there
must be a written statement to the purchaser that the stated price
includes sales or use tax. Contracts, bills, or invoices that merely
state that "all taxes" are included are not specific enough to relieve
either party to the transaction of its sales and use tax responsibilities.
The total amount that is shown on such documents is presumed to be
the taxable item's sales price, without sales and use tax included.
The seller or purchaser may overcome the presumption by using the
seller's records to show that sales or use tax was included in the
sales price. Sellers located outside of Texas must identify the tax
as Texas sales or use tax on their bill, contract, or invoice to the
purchaser. If the out-of-state seller does not identify the tax as
Texas sales or use tax at the time of the transaction, the seller
is presumed not to have collected Texas sales or use tax. Either the
seller or the purchaser may overcome the presumption by submitting
evidence that clearly demonstrates that the Texas sales or use tax
was remitted to the comptroller.
(3) Direct sales organizations. A direct sales organization
is responsible for the collection and remittance of the sales and
use tax on all sales of taxable items in this state by the independent
salespersons who sell the organization's product or service as explained
in this paragraph. See subsection (b)(4) of this section for information
about sales and use tax permits required to be held by direct sales
organizations.
(A) If an independent salesperson purchases a taxable
item from a direct sales organization after taking the purchaser's
order, then the direct sales organization must collect from the independent
salesperson, and remit to the comptroller, the sales and use tax on
the actual sales price for which the independent salesperson sold
the taxable item to the purchaser.
(B) If an independent salesperson purchases a taxable
item from a direct sales organization before the purchaser's order
is taken, then the direct sales organization must collect from the
independent salesperson, and remit to the comptroller, the sales and
use tax based on the organization's suggested retail sales price of
the taxable item.
(C) Taxable items that are sold to an independent salesperson
for the salesperson's use are taxed based on the actual sales price
for which the item was sold to the salesperson at the tax rate in
effect for the salesperson's location.
(D) Incentives, including rewards, gifts, and prizes.
(i) Direct sales organizations owe sales and use tax
on the cost of all taxable items used as incentives that are transferred
to a recipient in this state, including purchasers, independent salespersons,
and persons who host a direct sales event.
(ii) Direct sales organizations must collect sales
or use tax on the total amount of consideration received in exchange
for taxable items, including items purchased with hostess points or
similar forms of compensation paid to a person for hosting a direct
sales event and items that are earned by the host based on the volume
of purchases. The redemption of reward points in exchange for taxable
items is subject to sales tax under Tax Code, §151.005(2) ("Sale"
or "Purchase"). See also §3.283 of this title (relating to Bartering
Clubs and Exchanges).
(4) Payment of certain sales and use taxes by a seller.
A seller may directly or indirectly advertise, hold out, or state
to a purchaser or to the public that the seller will pay the sales
and use tax for the customer if:
(A) the seller indicates in the advertisement, holding
out, or statement that the seller is paying the tax for the purchaser;
(B) the seller does not indicate or imply in the advertisement,
holding out, or statement that the sale is exempt or excluded from
taxation; and
(C) any purchaser's receipt or other statement given
to the purchaser identifying the sales price paid or to be paid by
the purchaser separately states the amount of the tax and indicates
that the tax will be paid by the seller.
(5) Printers. A printer is a seller of printed materials
and is required to collect sales and use tax on sales of those materials
in this state. A printer who is engaged in business in this state,
however, is not required to collect the sales and use tax if:
(A) the printed materials are produced by a web offset
or rotogravure printing process;
(B) the printer delivers those materials to a fulfillment
house or to the United States Postal Service for distribution to third
parties who are located both inside and outside of this state; and
Cont'd... |