Was an auction purchaser entitled to avoid Texas sales tax by later arranging out-of-state shipment?

Plain-English summary

The Comptroller first advised that no Texas sales tax was due if a Texas retailer delivered goods directly to the purchaser outside Texas. The September 11 amendment changed the result after learning that the auctioneer had not delivered the merchandise to a carrier.

The amendment explained that an auctioneer who clerks the auction and collects the money is treated as the seller. Because auction goods are ordinarily sold "as is, where is" when paid for, the purchaser owns them in Texas. The purchaser could avoid Texas sales tax by hiring a common carrier for domestic out-of-state delivery if the auctioneer delivered the goods to that carrier. That did not happen here, so the seller correctly charged tax and was not entitled to a state refund.

What this means for you

Under this historical letter, an out-of-state destination alone did not make an auction purchase tax-free. The seller's delivery to the common carrier was the decisive fact. A purchaser's own later shipment was not enough on the facts stated.

Common questions

Why was Texas sales tax due? The purchaser took ownership of the auction goods in Texas, and the auctioneer did not deliver them to a common carrier.

Could an out-of-state shipment avoid the tax? The letter says yes if the purchaser hired a common carrier for domestic out-of-state delivery and the auctioneer delivered the goods to that carrier.

Could the Comptroller refund tax collected by the seller directly to the purchaser? The earlier letter said no and cited Rule 3.325(b); it directed the purchaser to seek a refund from the seller.

Which letter controls the outcome in this document? The September 11 amendment, which corrects the August 12 advice based on the clarified delivery facts.

Citations and references

• 34 Tex. Admin. Code Rule 3.325(b) — cited in the August 12 letter for the rule that the Comptroller could not refund the purchaser tax collected by the seller.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8709L0829G07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller September 11, 1987

Dear ***:

I am writing to you to amend Ms. Whittemore's letter of August 12, 1987.

Auctioneers in Texas are considered to be the sellers of the merchandise
consigned to them if they provide the clerking and collect the money.
The
merchandise is usually sold in an "as is, where is" condition at the time
of
payment. Therefore, the purchaser is the owner of the goods in Texas.

A purchaser may hire a common carrier to pick up the goods in Texas for
delivery to a domestic out-of-state location and not owe Texas sales tax
on
the transaction if the auctioneer delivers the goods to the carrier.

According to ***, they did not deliver the merchandise to a
carrier either at the auction site or at any other location. Therefore,
they
were correct in charging sales tax and are not entitled to a refund from
the
State of Texas.

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Al Van Allen
Tax Policy Division

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller August 12, 1987

Dear ***:

I have received your letter of July 14, 1987, requesting a refund of
sales
tax you paid to ***.

You are correct in that no Texas sales tax is due on items purchased from
a
Texas retailer and delivered directly to the purchaser out of state.

You should provide *** a copy of the bill of lading you sent,
along with your request for a refund of the tax collected and a copy of
this
letter. After they refund the tax to you, they may adjust their taxable
sales to reflect the refund.

I understand that *** has previously declined to refund the tax
they collected. Unfortunately, we cannot refund to the purchaser tax
collected by the seller [see enclosed Rule 3.325 (b)]. Perhaps a copy of
this letter will help.

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

If you have any questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Adina Whittemore
Tax Policy Division