Who had Texas sales-tax duties at a flea market held on city property—the vendors, the city promoter, or both?

Plain-English summary

The signed taxpayer-facing response said each flea-market or trade-day vendor had to collect and remit the applicable sales tax. It said a vendor did not need a permit when the vendor had only one or two taxable sales events in a calendar year and each event lasted no more than three days, but the vendor still had to report and pay the tax through a one-time-sale account.

The response also said the city promoter could be held liable for tax from vendors without active permits under Rule 3.286(a)(3), and suggested requiring permits from every vendor.

The document then preserves internal staff memos showing a policy conflict. One memo said enforcement did not follow the rule's promoter-liability language and instead held vendors liable. Another described how staff had interpreted Section 151.024 and asked how the response should be framed. Because these notes conflict with the signed response, this document should not be treated as a clear statement of current promoter-liability practice.

What this means for you

The vendor's duty to collect and remit tax was clear in the signed response. The promoter-liability issue was not: the outward-facing answer said the city could be liable, while the attached internal discussion recorded a different enforcement approach.

Common questions

Did occasional vendors still have to collect sales tax? Yes, even when the described one-or-two-event exception meant no permit was required.

Could the city promoter be liable for an unpermitted vendor? The signed response said it could, but the attached staff memo said enforcement was not following that approach.

How could the city reduce the stated risk? The signed response suggested requiring all vendors to hold sales-tax permits.

Citations and references

• Comptroller Rule 3.286(a)(3), concerning flea-market and trade-day promoters.
• Texas Tax Code § 151.008(b)(3), quoted in the internal memo's discussion of sellers and retailers.
• Texas Tax Code § 151.024, cited in the internal memo's discussion of promoter liability.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1037E01

Original ruling text

August 17,1990

Dear **:

We received your letter questioning the tax responsibilities of
vendors who sell arts, crafts, food, etc., from booths set up on
city owned property.

Each vendor is required to collect the applicable tax and remit
it to the State.

The vendor is required to obtain a tax permit unless the vendor
only has one or two taxable sales events during a calendar year
with each event lasting no more than three days. If the vendor
falls in this category, he is not required to obtain a tax permit
but he is required to collect the applicable tax and report it
directly to the State. The vendor may take the tax to one of our
field offices, which will set up a one time sale account for the
vendor. Enclosed is a brochure with a list of our field offices.

Keep in mind that the A CITY, as a promoter of the flea market or
trade day, may also be held liable for the tax due from sales made
at the flea market or trade day by vendors who do not hold tax
permits. According to the enclosed Rule 3.286 (a)(3), a promoter
of a flea market, trade day or other event involving the sales of
taxable items is a seller and is responsible for the collection
and remittance of the sales tax collected by dealers, salespersons
or individuals at such events unless the participants hold active
sales tax permits issued by the Comptroller.

The A CITY may wish to require all vendors to have a tax permit to
relieve the City of any tax liabilities due to vendors not handling
tax properly.

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

If you have any questions you may call or write Tax Correspondence.
You may call toll-free 1-800-252-5555, or our regular number is
512/463-4600. My extension is 3-4658.

Sincerely,

Sherry Buckley
Tax Correspondence

August 10, 1990

TO: Lucy

FROM: Al

SUBJECT: Flea Markets City A

** is concerned about liability the city may incur
if sellers on city owned property are not permitted.

He wants to be sure the city gets all the tax they have coming.

He also finds our vendor letter confusing.

***** is worried about the language in rule 3.286 (a)(3):

"..... A promoter of a flea market, trade day or other event
involving the sales of taxable items is a seller and is responsible
for the collection and remittance of the sales tax collected by
dealers, salespersons, or individuals at such events unless the
participants hold active sales tax permits issued by the Comptroller.
"and the apparent conflict between what our "vendor" letter says"

"If you engage in more than two taxable sales events during
a calendar year, you are required to have a sales tax permit.
Each event may not exceed three days."

and what the statute says in Section 151.008 (b) (3) Seller and
retailer include:

"A person who makes more than two sales of taxable items during a
12-month period"

You can see how we have been creative with the statute but not
without good cause. Flea markets and garage sales have always
been a problem because they require an inordinate amount of field
work for the dollars they produce. Pay and popularity wise this
is a slippery slope. We have actually had investigative TV news
reporters do programs on this in prior years when owners of antique
and second hand store complained of unfair competition.

At the time Rule 3.286 was amended to add the section on flea
market promoters et al., we are having trouble getting the folks
at ** (the big one) to comply. So, we decided to interpret
Section 151.024 to make the promoters liable if their tenants
didn't have a permit. To my knowledge we haven't had to defend
this yet.

TO: Debbie Angus

FROM: Sherry Buckley

SUBJECT: Flea Market Policy

The attached letter from the City A is questioning our policy
concerning sales tax permits for vendors at flea markets.

According to David Berlanga and Beverly Beck in Enforcement
Headquarters, we don't follow Rule 3,286 and hold the promoter
of the flea market responsible for the collection and remittance
of the sales tax collected by the vendors.

Enforcement does not require the vendor to obtain a tax permit
unless they engage in more than two taxable sales events during
a calendar year. However, they do hold the vendor and not the
promoter liable for the tax. If the vendor only has two taxable
sales events during a calendar year, then enforcement sets the
tax up as a one time sale. Enforcement may collect the tax from
these vendors at the flea market or the taxpayer may remit the
tax directly to the State.

According to others in Tax Correspondence, it has been our policy
to hold the promoter of the flea market responsible for the
collection and remittance of the tax. Supposedly, this provi-
sion was added to the statute at enforcement's request.

How should this letter be answered.