Was a separately stated federal retail sales tax collected directly from the customer included in the Texas sales-tax base?

Plain-English summary

Beginning April 1, 1983, the federal retail sales tax described in the letter was not part of the Texas sales- or use-tax base when separately stated.

STAR's editor note limits that paragraph to situations where the federal retail tax was collected directly from the customer rather than imposed at the manufacturer level. The letter contrasted the pre-April 1983 federal excise tax, which had been imposed at the manufacturer level and included in the selling price.

Because the taxpayer had already paid Texas sales tax on the federal retail tax, it could take a credit for the erroneous amount on its next sales-tax return under Rule 3.325.

Common questions

Was the separately stated federal retail tax taxable by Texas? No, under the post-April 1983 customer-collected facts described.

Did the same answer apply to the older manufacturer-level federal excise tax? No. The letter said that older tax was part of the selling price.

How was the prior overpayment corrected? By taking a credit on the next sales-tax return.

Citations and references

• 34 Tex. Admin. Code Rule 3.325 (Refunds and tax paid in error)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9002L0984E13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller February 27, 1990

Dear ***:

Thank you for your recent letter regarding the applicability of
Texas limited sales tax when the Federal Retail Sales Tax applies
to the sale of certain motor vehicle accessories including chassis
and bodies.

Beginning April 1, 1983 the Federal Retail Sales Tax is not subject to the
state sales or use tax when separately stated. (Just for your information,
before April 1, 1983, this tax was called a Federal Excise Tax, was imposed
at the manufacturers level, and was a part of the selling price; therefore
it was subject to the state sales tax.)[EDITOR'S Note: This paragraph applies
when the Federal Retail sales Tax is collected directly from the
customer and not the manufacturer.]

Because you have already paid the sales tax on the Federal Retail
Sales Tax, you may take credit for the portion paid in error on
your next sales tax return. Our Rule 3.325 on refunds and tax
paid in error is enclosed for your information.

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 additional information, you may
call me toll free at 1-800-252-5555, extension 5-0330. The
regular number is 512/463-4600, or write me at Tax Correspondence,
Comptroller of Public Accounts.

Sincerely,
Bettie U. Peterson
Tax Correspondence Division