| (iv) a written assignment with specific language transferring
the right to a credit or refund of Texas sales or use tax paid on
a bad debt executed by the person from whom the assignee acquired
the bad debt.
(8) Alternative recordkeeping and tax calculation methods.
A person who is otherwise qualified to claim a credit or request a
refund under this subsection, and whose volume and character of uncollectible
accounts warrants an alternative method of substantiating the refund
or credit, may request approval from the comptroller to use an alternative
method of maintaining records, or an alternative method of calculating
a credit or refund, by submitting a written request to the Audit Division,
P.O. Box 13528, Austin, Texas 78711-3528.
(A) The comptroller may approve a request to maintain
records other than the records specified in paragraph (7)(C) and (D)
of this subsection if the records fairly and equitably apportion taxable
and nontaxable elements of an uncollectible account or conditional
sales contract, and substantiate the amount of Texas sales tax imposed
and remitted to the comptroller with respect to the bad debt or unpaid
sales price of a taxable item under a conditional sales contract.
(B) The comptroller may approve a request to implement
a system to report future sales and use tax responsibilities based
on a historical percentage calculated from a sample of transactions
if the system utilizes records provided by the person claiming the
credit or refund and the person who reported and remitted such tax
to the comptroller.
(C) The comptroller may revoke the authorization to
report under paragraph (8)(A) or (B) of this subsection if the comptroller
determines that the percentage being used is not representative of
the taxpayer's business operations or because of a change in law,
including a change in the interpretation of an existing law or rule.
(D) A person may submit a new request meeting the requirements
of this paragraph after a revocation. The new request should use a
method that differs from the alternative method that the comptroller
(E) Approval of an alternative method is prospective
only and may not be used to satisfy the requirements of paragraph
(7)(C) and (D) of this subsection, concerning records required, for
periods prior to the date specified in the written approval.
(F) The approval of an alternative method applies to
only the person who submitted the written request. The approval does
not extend to any other person, regardless of whether the requesting
person and the other person are affiliates or file a consolidated
federal income tax return.
(G) Approval of an alternative recordkeeping method
does not apply to any other recordkeeping requirements for any other
(e) Interest on sales and use tax.
(1) Cash basis of accounting. Sellers who use a cash
basis of accounting and who sell taxable items by means of a credit
sale and charge interest on the amount of credit extended, including
sales and use tax, are required to remit to the comptroller a portion
of the interest that has been collected on the state and local sales
and use taxes.
(A) If the amount of interest charged on the sales
and use tax is 18% or less, the seller must remit to the comptroller
one-half of the interest charged on the sales and use tax.
(B) If the amount of interest charged on the sales
and use tax is greater than 18%, the seller must remit the amount
of interest charged less 9.0%. For example, 21% charged less 9.0%
deduction equals 12% interest remitted. A seller will not be allowed
the 9.0% deduction if the interest rate charged on sales and use tax
differs from the interest rate charged on the sales price of the taxable
(2) Determining the amount of interest. In determining
the amount of interest to be remitted to the comptroller, a seller
does not need to calculate the interest on each individual account.
A formula for the calculation may be used if the formula correctly
reflects the amount of interest collected. The formula is subject
to verification upon audit of the seller's records.
(3) Penalty and interest. Except for the provisions
of Tax Code, §151.423 (Reimbursement to Taxpayer for Tax Collections)
and §151.424 (Discount for Prepayments), all reporting, collection,
refund, and penalty provisions of Tax Code, Chapter 151, including
assessment of penalty and interest, apply to interest due.
(1) Acceptable trade-in. The sales price of a taxable
item does not include the value of a trade-in that a seller takes
as all or part of the consideration for a sale of a taxable item of
the same type that is normally sold in the seller's regular course
of business. For example, sales and use tax will be due only on the
difference between the amount allowed on an old piano taken in trade
and the sales price of a new piano.
(2) Unacceptable trade-in. The sales price of a taxable
item does include the value of a trade-in that a seller takes as all
or part of the consideration for the sale of a taxable item, if the
trade-in is a different type from the type normally sold by the seller
in the regular course of business. For example, a seller who sells
only pianos who takes a desk in trade as part of the sales price of
a piano collects sales and use tax on the retail sales price of the
piano without any deduction for the value of the desk. In this situation,
the seller and buyer are considered to be bartering. However, if the
seller of pianos is also a seller of desks, the value of the desk
is allowed as a trade-in.
(3) Tax free items traded-in. Sellers who remove items
from a tax-free inventory for use as a trade-in owe sales and use
tax on their purchase price of the items. If both parties to a transaction
remove items from a tax-free inventory to trade for other items that
each party will use, the transaction is regarded as bartering by both
parties. Each party to the barter is required to collect sales and
use tax on the retail sales price of the item being transferred. For
example, a seller of drill pipe trades pipe to a seller of appliances
in exchange for a refrigerator. Both sellers are trading the respective
items for use, not resale. The pipe seller must collect sales tax
on the retail sales price of the pipe. The appliance seller must collect
sales tax on the retail sales price of the refrigerator. See §3.336
of this title (relating to Currency, Certain Coins, and Gold, Silver,
and Platinum Bullion) for information on persons who barter for taxable
items with gold, silver, diamonds, or precious metals.
(g) Tax Code, §111.064, provides that interest
will be paid on tax amounts found to be erroneously paid and claimed
on a request for refund or in an audit. See also §3.325 of this
title. Tax paid on an account that is later determined to be uncollectible
and written off as a bad debt for federal tax purposes is not tax
paid in error and does not accrue interest.
|Source Note: The provisions of this §3.302 adopted to be effective January 1, 1976; amended to be effective November 14, 1984, 9 TexReg 5583; amended to be effective September 16, 1985, 10 TexReg 3323; amended to be effective December 4, 2000, 25 TexReg 11963; amended to be effective November 21, 2002, 27 TexReg 10744; amended to be effective January 6, 2022, 46 TexReg 9410