If I sell my goods at a cooperative mall where the mall owner collects and remits the sales tax and sends me my proceeds, do I still need my own sales and use tax permit?

Plain-English summary

Someone opening a retail outlet inside a cooperative mall — where the mall owner charges, collects, and remits sales tax and then sends the seller a check for the proceeds — asked whether they need their own sales and use tax permit. The Comptroller's answer turns on a distinction from Rule 3.311 ("Auctioneers, Brokers, and Factors"), which defines a broker as someone who brings buyers and sellers together to bargain over taxable items, and a factor as someone who sells another person's taxable items on consignment:

• If you're identified as the owner of the item before the sale, you are the seller for tax purposes and are responsible for collecting and remitting the tax yourself — which means you need your own sales and use tax permit.
• If you're NOT identified as the owner before the sale, the mall owner is treated as the seller and bears the collection/remittance duty. The mall owner should issue you a resale certificate for the items sold on your behalf, and in that case you generally don't need your own permit for those sales.
• Separately, selling genuinely exempt food products (the letter gives jerky and seasoning spices as examples) doesn't require a permit at all, regardless of the ownership question.

What this means for you

Sellers at cooperative malls, consignment shops, or similar arrangements

Whether you need your own sales tax permit hinges on a documentation question: is the buyer told (before the sale) that you own the item, or does the mall/shop present itself as the seller? Check your consignment agreement and how the arrangement is structured with customers — that's what determines who owes the collection duty, not just who ends up keeping the money.

Mall operators and consignment-shop owners

If your arrangement holds you out as the seller (owner not disclosed pre-sale), you're on the hook for collecting and remitting tax, and you should issue resale certificates to the consignors whose goods you're selling for them.

Accountants and tax professionals

This is a straightforward application of the broker/factor distinction in 34 Tex. Admin. Code Rule 3.311 to a modern cooperative-mall consignment fact pattern — the operative test is pre-sale disclosure of ownership, not who physically handles payment processing.

Common questions

Q: I sell my own goods at a cooperative mall where the owner collects and remits tax for me — do I need my own permit?
A: Only if you're identified as the owner of the item before the sale. If you're not, the mall owner is the seller for tax purposes and should give you a resale certificate instead.

Q: What if I only sell exempt items like jerky or spices?
A: You don't need a sales tax permit for those sales, since food products like these are exempt from sales tax.

Q: Can I rely on this letter for my own consignment arrangement?
A: No. This opinion is based on the facts presented, and different facts may lead to a different answer.

Citations and references

Rules:

• 34 Tex. Admin. Code Rule 3.311 (Auctioneers, Brokers, and Factors)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200004226L

Original ruling text

April 25, 2000

To: **

Subject: Do I need a sales tax ID

Dear **:

I am responding to your e-mail of April 17, 2000, regarding sales tax.

You are opening a retail outlet at a cooperative mall. You are selling your
goods at this mall and the mall owner will charge, collect and remit the tax to
the Comptroller's office and send you a check for your proceeds. You want to
know if you need a sales and use tax permit.

Rule 3.311 "Auctioneers, Brokers, and Factors" defines a broker as a person who
brings other people together to bargain for the sale or purchase of taxable
items and a factor as a person who sells taxable items belonging to a principal
on consignment.

If you are identified as the owner of the item sold before the sale, then you
are considered the seller and are responsible for collecting and remitting the
tax. Under this arrangement, you are required to have a sales and use tax
permit.

If you are not identified as the owner of the item sold before the sale, then
the mall owner is considered the seller and is responsible for collecting and
remitting the tax. The mall owner should issue you a resale certificate for
the items that they sell for you. However, jerky and spices for seasoning are
food products and exempt from sales tax. If you only sell exempt food
products, you do not need a sales tax permit.

You may view or download a copy of the referenced rule at:
http://www.window.state.tx.us/taxinfo/rulendx/rulelist3.html#sst.

You may view or download a sales and use tax application at
www.window.state.tx.us and then click on the following:

1. Tax forms (under "Quick Links")
2. Sales & Use Tax
3. AP-201 (Texas Application for Sales and Use Tax Permit.)

This opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If I can be of further assistance, please call me at 1-800-531-5441, extension
5-9913. You may also write to Tax Policy Division, Comptroller of Public
Accounts, P.O. Box 13528, Austin, TX 78711-3825. The e-mail address is
[email protected].

Sincerely,

Elias Amaya
Tax Policy Division