Ezel / Tax Rulings / TX

Was an auction buyer's fee taxable when the auctioned item itself was subject to Texas sales tax?

Short answer Yes. The buyer's fee was part of the taxable sales price. A taxable item sold for a $200 bid plus a 10% buyer's fee had a total taxable sales price of $220.
State
TX
Ruling
9003L0996A11
Tax type
Sales and/or Use Tax (State,Local,MTA)
Issued
1990-03-30
Issued by
Texas Comptroller of Public Accounts, Tax Policy Division
Requested by
A requester asking about auction buyers' fees (identity redacted)
Topics
sales tax auctions auctioneers commissions sales price

Apply this to your situation

This page answers the general question as of 1990. Ask about yours and see what current Texas tax law says, with citations.

Currency note: this ruling is from 1990
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 Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded.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

An auction buyer's fee was taxable when the auctioned item was taxable because the fee formed part of the item's total sales price.

The letter's example used a desk sold for a $200 bid with a 10% buyer's fee. The full $220 was taxable.

Common questions

Was the buyer's fee separately exempt? No, when the underlying item was taxable.

What amount was taxed in the example? The $200 bid plus the $20 fee, for $220 total.

Source

Original ruling text

March 30, 1990

Dear ***:

In your letter of March 11, you requested information regarding the taxability for a buyers fee.

You state that many auctioneers charge a buyers fee to purchasers at auctions. The fee ranges from 2% to 10% of the total purchase and is collected by the cashier.

The buyers fee is taxable if the item sold is a taxable item. Specifically, the sale price of a taxable item is the total amount for which the item is sold. Therefore, if a desk was sold for a bid price of $200 and a buyers fee of 10% was charged (i.e., $20), the total sales price of $220 is taxable.

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

If you have any question, please contact Tax Correspondence. You may call toll free 1-800-252-5555, or our regular number is 512/463-4600. My extension is 3-4662. You may write me at Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Bob Jeffcoat
Tax Correspondence

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