Could a ticket seller give collected sales tax to promoters to report, and who remained accountable if they did not remit it?

Plain-English summary

During a temporary reprogramming period, the ticket seller could continue giving collected sales tax to a promoter if the promoter agreed to accept it. The Comptroller clarified, however, that this arrangement did not eliminate the seller's possible liability for tax it collected.

If the promoter failed to report and pay the tax, the letter said the state could not proceed against the promoter without something in writing in which the promoter assumed responsibility. Although the writer said the situation was unfamiliar and did not state the point with certainty, the letter suspected that the state would hold the person making the sale accountable.

The seller planned to begin collecting and remitting directly by May 1. If a promoter refused to accept the tax before then, the letter instructed the seller to send it directly to the state.

The letter also mentioned two pending bills expected to allocate city and MTA tax to the amusement-event location later that summer. It did not identify the bills or establish that they ultimately became law, so that statement is historical legislative context, not a recorded holding about enacted law.

Common questions

Did passing the money to a promoter automatically discharge the seller? No. What documentation mattered if the promoter was to be responsible? A written assumption of responsibility. Did the letter conclusively decide liability after a promoter default? No; it expressed the writer's suspicion that the seller would be accountable.

Citations and references

The reproduced letter cites no numbered statute, rule, or bill.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8504L0680C12

Original ruling text

April 19, 1985

Dear ***:

Thank you for your letter of April 12, 1985, requesting verification of
our agreement concerning liability and responsibility for the collection
of sales tax.

As I remember it, our agreement was that while you were reprogramming,
you could continue to give the tax to the promoter as long as the promoter
agreed to accept it. I did not agree that you would have no further
liability regarding the tax that you collected. I did say that as long as
the state got all the tax due, you would have no trouble from the state
because the promoter reported it rather than you. If the promoter fails to
report and pay your tax, there is no way the state could proceed against
the promoter unless you had something in writing from the promoter assuming
responsibility for the tax. To my knowledge, I have never seen the situation
where one person collected tax, gave it to another to report and that person
failed to send it in. I do not know for certain, but I suspect the state would
hold the person who made the sale accountable.

You indicate that by May 1, you will be ready to begin collecting and
remitting tax to the state for your outlets in CITY A-CITY B and CITY C and
on behalf of your affiliates in other cities. If any promoters refuse to
accept your taxes in the interim, just send the tax directly to the state.

The two bills in the legislature which would allocate city and MTA tax to
the location of the amusement event are expected to pass into law. The
effective date will be some time in late summer, you might want to keep
this in mind while reprogramming.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the
Tax Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division