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

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

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9003L0996A11

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