Did an American Red Cross chapter classified as a governmental entity have to collect Texas tax, obtain a sales-tax permit, and pay the permit fee when making taxable sales?

Plain-English summary

The American Red Cross remained classified as a governmental entity, but that status did not excuse a chapter from ordinary seller obligations when it made taxable sales.

Following an Attorney General opinion, the Comptroller required governmental entities—including Red Cross chapters—to collect and remit Texas sales and use tax, obtain the required sales-tax permit, and pay the permit fee.

The letter said seller requirements were the same for private entities, governmental entities, and exempt organizations.

Common questions

Was the Red Cross treated as a governmental entity? Yes.

Did that status eliminate tax collection on taxable sales? No.

Was a permit and permit fee required? Yes.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9008L1042A01

Original ruling text

August 14, 1990

**, Business Office Director
American Red Cross
San Antonio Headquarters
3642 E. Houston Street
San Antonio, Texas 78219-3818

Dear **:

I am writing to advise you of a change regarding payment of the permit
fees that are due for Texas sales and use tax permits by governmental
entities.

I originally wrote on July 21, 1988, regarding this issue stating that
chapters of the Red Cross are governmental entities. That was and re-
mains to be true.

However, since the date of my first letter, further investigation has
been made into whether a governmental entity is required to pay the
permit fee. This information was sent to the attorney general's office
requesting an opinion to determine whether governmental entities were
exempt from or are required to pay this permit fee.

The attorney general issued an opinion which takes the position that
any governmental entity engaged in making sales of taxable items must
pay the permit fee. The requirements of sellers are the same regardless
of their status as a private entity, governmental entity, or exempt
organization. Therefore, all governmental entities, including the American
Red Cross, making taxable sales are required to collect and remit the Texas
sales and use tax, are required to be permitted, and must pay the required
permit fee.

After receiving this opinion from the attorney general's office, I wrote all
chapters of the Red Cross with whom I had previously corresponded advising
them of this change. I requested that this information be passed along to
other chapters; I am sorry that you did not receive the revised information.

I am enclosing copies of letters that have been written relating to the sale
of books or printed matter sold by certain non-profit organizations. This
change in the taxable status of these items was precipitated by a court case
and subsequent legislative changes. If you have questions regarding this topic,
you may call or write with specific details. These changes affect only printed
matter and do not affect sales, leases, or rentals of other taxable items by
these organizations.

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

You may also write to Tax Correspondence, Comptroller of Public Accounts.

Sincerely,

Tax Policy Division
Tax Correspondence