Did assigning a computer purchase to a leasing company remove the customer's Texas sales-tax liability if the customer had already used the computer?

Plain-English summary

A computer seller received a customer's purchase order in late December 1990, billed and remitted sales tax in January 1991, and had not yet been paid. The customer later chose operating-lease financing. On March 7, the customer, seller, and leasing company agreed to assign the purchase to the leasing company, and both the customer and leasing company issued March resale certificates.

The Comptroller gave a conditional answer: if the customer used the computer before assigning the purchase order, the customer owed tax on the purchase. The short letter did not state the result if the customer had not used the computer before the assignment.

What this means for you

For the facts addressed in this 1991 letter, later assignment paperwork and resale certificates did not erase tax liability created by the customer's prior use. The timing of possession and use mattered.

Common questions

Did the customer owe tax if it used the computer before assignment? Yes.

Had the seller already handled sales tax? The letter says the seller billed tax and sent it to the Comptroller's office in January 1991.

When were the assignment and resale certificates executed? The three-party assignment was signed March 7, 1991, and both resale certificates were dated in March.

What if the customer had not used the computer before assignment? The letter did not answer that scenario.

Citations and references

The letter did not cite a numbered statute or 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/9103L1094C11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774

JOHN SHARP
Comptroller March 19, 1991

Dear ***:

In late December of 1990 * received a purchase order
for a computer from a customer. * billed the tax, and
sent it to the Texas Comptroller's Office in January 1991.

The customer decided to finance the purchase via an operating lease.
On March 7, 1991, the three parties signed an agreement to assign the
purchase to the leasing company. The customer issued a resale
certificate
for the hardware purchase, and the leasing company has also issued a
resale
certificate - both dated in March.

The leasing company asked *** to credit the invoice
issued in December and issue an invoice to the leasing
company.

** has not received payment for the computer.

If the customer used the computer before assigning the
purchase order to the leasing company, the customer owes tax
on the purchase of computer.

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

If you have any questions or need more information, please
call me. The toll-free number is 1-800-531-5441. The
regular number is 512/463-4614. Or you may write me at the
Taxability Section of Legal Division. [(fax) 512-475-0900]

Sincerely,
Adina Whittemore
Tax Administration