How could publishers return and recover Texas sales tax on qualifying pre-August 28, 1989 publication sales after Texas Monthly?

Plain-English summary

This December 1990 letter told publishers how qualifying customers could recover tax paid on books and other publications before Texas corrected its former religious-publication exemption on August 28, 1989. Refunds remained limited by a four-year statute of limitations measured from when the publisher took a credit or requested a refund after returning the tax to the customer.

The Comptroller described two routes. A publisher could give the customer a check or signed credit memo and then take a credit on its next sales-tax return or amend the return on which it had remitted the tax. Alternatively, the publisher could assign its refund right to the customer.

An assigned claim required supporting detail. For ten or fewer invoices, the customer needed the actual invoices. Larger claims required a schedule identifying the publication, invoice dates and numbers, reporting periods, sales amounts, and refundable state and named local tax amounts, plus the assignment form and a signed refund request.

What this means for you

The letter is procedural and historical. It did not say every publisher or information-service sale qualified. It addressed tax on publications within the Texas Monthly refund window, before August 28, 1989 and still open under the limitations period.

Common questions

Could a publisher repay the customer directly? Yes, by check or a credit memo signed by the customer, followed by a return credit or amended return.

Could the customer pursue the refund? Yes, if the publisher assigned the refund right and the customer supplied the required records.

How far back did the letter allow refunds? Four years from the relevant credit or refund request after the publisher returned the tax to the customer.

Did purchases after August 28, 1989 qualify under this procedure? No.

Citations and references

• Texas Monthly v. Bullock (named without a formal citation in the letter)
• 34 Tex. Admin. Code Rule 3.325 (refund assignments)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9012L1058F08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

December 4, 1990

Dear Publisher:

As you may have heard, your customers can get back tax on books and
other publications they bought during a three-year period from rough-
ly the latter part of 1986 through the middle of 1989. (This period
will shrink as the statute of limitations runs.)

What's behind the refund is a U.S. Supreme Court case, Texas Monthly
v. Bullock, that says our old statute exempting religious publica-
tions was unconstitutional. (The statute was fixed on August 28, 1989.)
Because of that statute, we weren't collecting tax on writings that
religious groups sold but were getting it on the type of publications
you sell. To make the playing field level we are returning tax your
customers paid before the statute was fixed, as far back as the sta-
tute of limitations will let us.

We believe by far the easiest method of returning this money is for
you to write your customer a check or give him a credit memo that he
signs. Then you can get your refund by simply taking a credit on your
next sales tax return. (The instructions are on the back of the return.)
You can also amend the return you filed when you paid the tax.

The other way to go is to assign your right to the refund to your cus-
tomer. This will mean some effort on your part, because there are some
invoice numbers and dates we need that your customer will probably ask
you for.

I've attached more detailed information to this letter. There's an ex-
ample of an assignment form, a sample schedule, and list of things your
customer will need to tell us if you use the assignment method.

Linda White or Charlie Farrell can help you out with any problems. They
can be reached on our watts line at 1- 800-252 -5555, extension 3-4545.
Our local number is 512/463-4545.

Sincerely
Alvin Miller
Director
Revenue Accounting Division

STATUTE OF LIMITATIONS

We go by the date you take a credit on your return or ask for your
refund after returning the tax to your customer. The refund is for
tax reported four years back from this date. For example, if you
are a monthly filer and you sold a book on September 1, 1986, the
tax you collected would have been sent in with the October 20, 1986
return. If you refund the tax to your customer and ask for your
refund from us by October 20, 1990, you're in the clear. But re-
member, the faulty statute was fixed August 28, 1989, so purchases
after this date don't get the refund.

INFORMATION NEEDED WITH REFUND ASSIGNMENTS

Your customer will need to send in the actual invoices if there are
10 or less. If there are more than 10, we need the following, and
the attached schedule is an example:

Publication name

Invoice number and date

Tax return period that you reported the tax

Total amount of the sale subject to refund, not including tax

Amount of refundable state tax

Amount of refundable city tax reported to each city by name

Amount of refundable MTA/CTD tax reported to each MTA/CTD by name

Amount of refundable county tax reported to each county by name

Total refund requested

Your customer will also need to send in the following:

Refund assignment form

Signed letter requesting a refund

REQUEST FOR REFUND AND ASSIGNMENT OF REFUND

On(Date) a request for a refund of sales/use taxes was received from
(Customer's name) on the purchases(s) of (Item) in the amounts and
on the dates specified in the attached documents. This acknowledges
that the amounts and dates are correct and that the tax collected on
these purchases was properly remitted to the state under taxpayer
number. Exact amounts remitted for State, City, County, MTA/CTD, and
Special Purpose District taxes, if applicable, and reporting periods
for each remittance are attached. The right to receive the refund
from the State is hereby assigned to, taxpayer number, as prescribed
by Rule 3.325 with the understanding that only those amounts remitted
to the State will be refunded by the State. (Discounts for timely
filing retained by the seller are not included.)

Entity Name
Print or type the name of person authorizing assignment
Relationship to Entity (i.e., President, Treasurer)
Signature of person authorizing assignment
Area Code/phone number
Date