Could a Texas seller's clearing-house agent file sales-tax returns and remit tax under the agent's permit number?

Plain-English summary

A seller used a clearing house as its agent to bill customers for services and applicable tax and collect the resulting funds. It proposed having the agent remit tax under the agent's sales-tax permit while the seller reported those sales as exempt.

The Comptroller rejected that procedure. The company remained the seller and was responsible for collecting and remitting tax on taxable transactions, keeping the sales records, and making them available for audit.

Texas accepted the agent's billing and collection role, but the seller could not transfer its return-filing and tax-remittance responsibility to the agent.

What this means for you

Outsourcing invoicing and collection did not outsource the seller's tax account obligations. The agent could handle customer-facing administration without replacing the seller as the reporting taxpayer.

Common questions

Could the agent bill customers and collect tax? Yes, as the seller's agent.

Could it remit under its own sales-tax permit? No.

Who had to file returns and remit the tax? The seller.

Who had to maintain audit records? The seller.

Citations and references

The letter did not cite a statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9012L1068B02

Original ruling text

December 7, 1990

Dear ***:

I am responding to your letter regarding the services provided to your
company by ***. You stated that ***** is a clearing house
acting as your company's agent by billing your customers for services and
applicable taxes and by collecting these funds.

You proposed that * remit the taxes due on these transactions to
Texas under *'s sales tax permit number and that your company report
your gross sales showing the sales reported through ** as exempt.
You also stated your company would continue to remit tax on other taxable
sales/services.

This procedure is not acceptable. Your company, **, is the seller
of these services to your customers and is responsible for collecting and
remitting the taxes due on taxable transactions. As the seller, you are
also responsible for maintaining records regarding these sales and making
these records available in event of audit.

Though this agency accepts your use of an agent for billing and collection
purposes, you may not transfer responsibility for filing returns and remitting
tax to another, even through your agent.

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 Correspondence