Could a buyer's self-assessment letter or combined purchase-order certificate protect a supplier that did not collect Texas sales tax?

Plain-English summary

The buyer's letter promising to self-assess tax did not protect its supplier. The Comptroller had previously disapproved the combined purchase-order and exemption-certificate form, despite the buyer's claim of verbal approval.

If the supplier failed to collect tax without a properly completed resale or exemption certificate, an audit could assess the supplier for tax, penalty, and interest. Amounts could be removed only after proof that the buyer paid the tax. A buyer wishing to accrue and pay tax directly on taxable purchases should obtain a direct payment permit.

What this means for you

The historical letter put documentation risk on the supplier. A customer's informal promise to pay tax was not a substitute for a valid certificate or direct-payment-permit process.

Common questions

Did the combined purchase-order certificate work? No. The Comptroller said it had been disapproved in writing.

Did the buyer's self-assessment statement protect the supplier? No.

What could happen in a supplier audit? Tax, penalty, and interest could be assessed until proof of the buyer's tax payment was obtained.

How could the buyer pay tax directly? By obtaining a direct payment permit.

Citations and references

• No statute or rule number is cited in the ruling text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8710L0843E01

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

October 15, l987

Dear ***:

In the course of a recent audit of one of your suppliers, the
Comptroller's
auditor was given a copy of a letter which CORP ABC had provided to the
supplier in lieu of a resale or exemption certificate.

You indicated in your letter that you have obtained verbal approval of
your
combined purchase order/exemption certificates. Please refer to the
enclosed
copy of a letter written to you on November 20, l986, by Al Van Allen.
This
letter constitutes written disapproval of your purchase order/exemption
certificate combination.

Again, please note that if your supplier fails to collect tax and does
not
have a properly completed resale or exemption certificate on file, ABC's
statement that it will self-assess tax will not protect your supplier in
the event of an audit of its records. Your supplier will be assessed tax,
penalty and interest and will be required to obtain proof that the tax
has been paid by ABC before any amounts can be deleted from the audit.

As Mr. Van Allen stated in his previous letter, if ABC wishes to accrue
and pay tax itself on taxable purchases, then ABC should obtain a direct
payment permit.

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
l-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,
Julie Pesl
Tax Policy Division