Ezel / Tax Rulings / TX
TX 8709L0832A01 Sales and/or Use Tax (State,Local,MTA) 1987-09-15

Did a debt collector have to charge Texas sales tax for collection services performed for a 501(c)(3) organization?

Short answer: No, if the organization supplied an exemption certificate. The letter allowed the collector to accept that certificate instead of tax.

Apply this to your situation

This page answers the general question as of 1987. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1987
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is a taxpayer-specific September 1987 Texas Comptroller letter about debt collection for one 501(c)(3) organization. Its answer depended on accepting an exemption certificate under Rule 3.287. Verify the customer's current exempt status, certificate validity, and present service taxability. STAR documents may no longer represent current policy even when not marked superseded. Identities are redacted. This summary is informational only and is not legal or tax advice.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

The collector performed debt-collection services for an organization in Abilene. Because the customer was a 501(c)(3) organization, the collector could accept an exemption certificate instead of collecting sales tax.

The letter enclosed Rule 3.287 for the exemption treatment.

What this means for you

The historical answer depended on both the customer's recognized 501(c)(3) status and the collector receiving an exemption certificate. It did not describe an automatic exemption without documentation.

Common questions

Were the described debt-collection services taxed? No when the exemption certificate was accepted.

Why? The customer was a 501(c)(3) organization.

What documentation did the letter require? An exemption certificate.

Citations and references

  • Texas Comptroller Rule 3.287, exemption treatment referenced by the letter

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

September 15, 1987

Dear ***:

Thank you for your recent letter asking if you are required to collect
sales
tax on debt collection services performed for the *** in
Abilene.

Because *** is a 501(c)(3) organization, you may accept an
exemption certificate in lieu of tax for debt collection services.

I am enclosing Rule 3.287 for your reference.

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

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