Could a country club recover Texas sales tax collected in error from members without first making exact refunds, credits, or member-authorized assignments?

Plain-English summary

The country club could not receive a state refund until the members who actually paid the erroneous tax were protected.

Each member was entitled to a cash refund. With that member's written permission, the club could credit the exact amount to the member's account. A member could also assign the refund right to the club, but could refuse the assignment without losing the personal refund right. Any assignment form had to state the member's specific dollar amount.

The Comptroller would reimburse only exact amounts verified as refunded, credited, or assigned. A percentage-based estimate was unacceptable.

Common questions

Who was entitled to the refund? The club members who paid the tax.

Could the club credit a member's account? Yes, with written permission.

Could the club require members to assign their refunds? No.

Would Texas accept an estimated percentage? No. Exact dollar amounts had to be verified.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1035E07

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774 August 10, 1990

Dear **:

Thank you for your letter of July 17, 1990, requesting a refund of
the sales tax collected from club members on various assessments,
including fees and dues.

The sales tax was collected in error from the members and remitted
to the state in error. The sales tax law does not allow the state
to refund sales tax unless the sales tax has been refunded to the
person(s) who paid the tax. In this case, the members paid the
sales tax.

The country club members who paid the tax are entitled to a cash
refund. With written permission from the members, the country
club may credit each member's account for the amount of sales tax
to be refunded. Each member should be made aware that they are
entitled to a specific amount of tax refund. Members may assign
their right to a refund to the country club. However, each member
has the right to refuse to assign the refund to the country club
without forfeiting their right to the refund.

Any assignment form presented to members should specify the dollar
amount of the refund each member is entitled to.

We will only reimburse the country club the exact dollar amounts
of sales taxes refunded or credited to members' accounts and/or
assigned by the members to the country club.

The assignment percentage used as the basis for seeking reimburse-
ment is not acceptable. We will not issue a refund based on esti-
mated amounts.

We will verify the total dollar amounts refunded, credited, or as-
signed before we issue a refund to the country club.

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

If you have any questions or need more information, you may call
toll free 1-800- 252- 5555. The regular number is 512/ 463-4600.
You may write to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,
Eddie C. Washington
Tax Correspondence