Could a retailer credit a customer's account for sales tax paid in error without written consent, and when could the retailer take the matching credit on its return?

Plain-English summary

A retailer could not credit a customer's account for sales tax paid in error without first obtaining the customer's written consent. An outright cash refund was different and did not require consent to an account credit.

The retailer could claim the corresponding credit on its own sales-tax return only after properly refunding the customer or making the written-consent account credit.

The attached internal memorandum noted that Rule 3.325 had required written purchaser consent for an account credit since a 1984 amendment.

Common questions

Account credit without written consent allowed? No.

Cash refund allowed without account-credit consent? Yes.

When could the retailer claim its return credit? Only after properly refunding or crediting the customer.

Citations and references

• Comptroller Rule 3.325.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9006L1023A12

Original ruling text

June 13, 1990

Dear **:

I'm answering your letter to Martin because, as you know, he's moved
to another division.

Your first question was whether a retailer could credit a customer's
account with a sales tax refund without getting the customer's written
approval first.

The answer is no. Rule 3.325 requires a customer's written consent
before crediting its account with sales tax paid in error, as opposed
to an outright cash refund.

Your second question is whether, in the future, the retailer must
either directly refund the tax or, with the customer's written
consent, credit the customer's account before the retailer can legally
take a corresponding credit on its sales tax return.

Yes, under Rule 3.325 the retailer may take a credit on its tax return
only after properly refunding the tax to the customer.

This opinion is based on the facts presented in your letter. If there
are additional facts, or if the circumstances change, the opinion may
change.

Please call or write me if you have any questions. My number is
463-4677.

Sincerely,

Lucy Glover

Date: January 17, 1990

To: Martin Cherry

From: Al Van Allen

Subject: ** Refund Letter

In answer to the first question, The retailer acted incorrectly by
crediting the customer's account without written permission. On
February 29, 1984, Rule 3.325 was amended to add the language
requiring the purchasers "written" consent to credit rather than
simply refund the tax.

This smacks of your old hearing on **. It's a moot issue
if the customer "took the credit" as ** says and doesn't
complain. But, if the customer "took credit" on their sales tax return
and the seller also took credit on their return we have a problem.
**'s letter isn't absolutely clear.

The answer to the second question is yes.