| (1) Local sales tax. Local sales taxes (city, county, transit authority, and special purpose district) apply to debt collection services in the same way they apply to tangible personal property. Generally, service providers must collect local sales taxes if their place of business is within a local taxing jurisdiction, even if the service is actually provided at a location outside that jurisdiction. (A) Transit sales taxes do not apply to services provided outside the boundaries of the transit area. (B) In the case of multiple locations, if an order for service is placed at one location but the service is provided at another location, the place of business from which the service is provided will determine to which local taxing entity the tax is allocated. (2) Local use tax. (A) If the service provider's place of business is outside a local taxing jurisdiction but service is provided to a customer within a local taxing jurisdiction, local use taxes apply and the service provider is responsible for collecting the local use tax if the service provider has representation in the local jurisdiction. (B) If a customer of a service provider located outside a local taxing jurisdiction claims that part of the debt collection service benefits the customer's business in more than one local taxing jurisdiction, the customer must provide the service provider with an exemption certificate in lieu of use tax. (This claim may be asserted and the exemption certificate issued only in situations where use tax is due and does not apply when local sales tax is applicable.) The local use tax for each local taxing jurisdiction to which the exemption certificate applies must be reported, allocated, and paid by the customer. A debt collector who accepts in good faith an exemption certificate claiming benefit in more than one local taxing jurisdiction is relieved of responsibility for collecting and remitting local use tax on transactions to which the certificate relates. (3) References. For more information on the collection and allocation of local sales and use taxes, see §3.374 of this title (relating to Collection and Allocation of the City Sales Tax), §3.375 of this title (relating to City Use Tax), §3.424 of this title (relating to Collection and Allocation of Transit Sales Tax), and §3.425 of this title (relating to Transit Use Tax). (i) A multistate creditor purchasing debt collection services for the benefit of both in-state and out-of-state locations is responsible for issuing an exemption certificate and for reporting and paying local tax as provided by subsection (g) of this section. (j) Use tax. If a debt collector is not engaged in business in Texas or in a specific local taxing jurisdiction and is not required to collect Texas tax, it is the Texas creditor's responsibility to report and pay the state and local use tax to this office. |
| Source Note: The provisions of this §3.354 adopted to be effective March 24, 1988, 13 TexReg 1222; amended to be effective November 13, 1989, 14 TexReg 5787; amended to be effective December 11, 1992, 17 TexReg 8332; amended to be effective March 23, 1995, 20 TexReg 1749; amended to be effective February 7, 1996, 21 TexReg 601; amended to be effective October 9, 2002, 27 TexReg 9386 |
