Ezel / Tax Rulings / TX
TX 8912L0970E07 Sales and/or Use Tax (State,Local,MTA) 1989-12-12

Were a 2% credit-card surcharge and a restocking fee on returned merchandise subject to Texas sales tax?

Short answer: The credit-card surcharge was taxable as part of the selling price. The restocking fee was not taxable because the item was returned and no sale remained; the retailer had to refund all sales tax originally collected.

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This page answers the general question as of 1989. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1989
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 an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
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

A 2% surcharge added when a customer paid by credit card was taxable because the selling price included services and expenses connected with the sale.

A restocking fee charged after the customer returned the item was not taxable. Once the item was returned, no sale remained, and the retailer had to refund the full sales tax originally collected.

Common questions

Was the credit-card surcharge taxable? Yes.

Was the restocking fee taxable? No.

What happened to the original sales tax? It had to be fully refunded to the customer.

Source

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

December 12, 1989

Dear **:

Thank you for your letter dated December 8, 1989, concerning the
taxability of credit card surcharge fees and restocking fees.

The 2% surcharge added to the selling price of an item paid for with a
credit card is taxable. For sales tax purposes, the taxable selling price of
an item includes services or expenses connected with the sale of the item.

A restocking fee charged to a customer who returns an item is not
taxable. Because the customer has returned the item, there is no "sale" of the
item. The full amount of sales tax originally collected from the customer
should be refunded to the customer.

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

Please feel free to contact me if you have any additional questions. You
may write me, call toll-free 1-800-252-5555 (ext. 3-4685) from anywhere in the
United States or phone 512/463-4685.

Sincerely,
Julie Pesl
Tax Correspondence

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