What happened when a customer refused to pay sales tax, or the seller initially omitted tax from the invoice?

Plain-English summary

A seller's customer refused to pay sales tax on a bill. The Comptroller said the seller remained responsible for collecting and remitting tax. Once added to the sales price, the tax could be recovered at law in the same way as the original sales price.

If the customer paid only part of the bill, a proportional part of that payment counted as tax. If the seller had omitted tax from the invoice, it could correct the error, back-bill the customer, and treat the tax as a debt recoverable at law.

What this means for you

A customer's refusal did not erase the seller's collection obligation. Invoice errors also did not prevent the seller from later billing the tax under the facts of the letter.

Common questions

Who remained responsible for the tax? The seller.

Could tax be recovered from the customer? Yes, like the original sales price.

How was a partial payment treated? A proportional portion was considered payment of tax.

Could omitted tax be back-billed? Yes.

Citations and references

• Texas Tax Code § 151.052 — seller collection and purchaser-payment treatment cited by the letter

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9104L1098C08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

JOHN SHARP
Comptroller April 8, 1991

Dear ** :

This is in response to your recent letter regarding a customer who
refuses to pay the sales tax on a bill.

As a seller, you are responsible for collecting the tax and
remitting it to the state. When an individual sells taxable goods
or services, they are required to add tax to the sales price. The
tax then becomes part of the sales price and, if the purchaser
refuses to pay, it is recoverable at law in the same manner as the
original sales price. To the extent that a customer does pay his
bill, a pro-rata portion of the payment is considered to be
payment of the tax. See Section 151.052 of the Texas Tax Code.

If a seller failed to reflect tax on an invoice, the seller can
subsequently correct the error and back bill the customer for the
tax, and the tax is a debt to the seller and recoverable at law.

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 additional information, you may
call me toll free at 1-800-252-5555, extension 5-0330. The
regular number is 512/463-4600, or write me at Tax Administration
Division.

Sincerely,
Bettie U. Peterson
Tax Administration Division