Did a seller still owe Texas sales tax when customers paid for taxable asset-location services but refused to reimburse the tax?

Plain-English summary

Several customers paid for taxable items or services but refused to pay the sales tax. The Comptroller said the seller still had to remit the tax due on those sales.

The seller provided services locating assets belonging to individuals. Those services required licensing under the Private Investigators and Private Security Agencies Act and were taxable. The State Treasurer's publication of names for dormant accounts or refunds was not investigative activity and did not affect the seller's collection responsibility.

What this means for you

A customer's refusal to reimburse tax did not shift the statutory payment risk away from the seller under this letter. The seller also could not analogize its licensed investigation to the Treasurer's public notice activity.

Common questions

Did customer refusal eliminate the seller's tax liability? No.

Were asset-location services taxable? Yes, because they were licensed investigative services.

Did the State Treasurer's name publication change the result? No.

Citations and references

• Private Investigators and Private Security Agencies Act — licensing basis identified 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/9104L1098G11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774
JOHN SHARP
Comptroller April 5, 1991

Dear **:

Thank you for your letter of February 28, 1991, concerning your
inability to collect sales tax from several of your customers.
You indicate in your letter that you were not able to collect
sales tax on these accounts. If the customers paid you for the
taxable items (tangible personal property or taxable services)
purchased, you are still required to pay the tax due on the sales
to the Comptroller.

I was unable to locate either of the letters that you referred to
concerning this matter. However, I did find your letter dated
July 27, 1990, and my August 13, 1990 response.

Persons providing services to locate assets belonging to individu-
als are required to have a license issued under the Private
Investigators and Private Security Agencies Act. These services
are taxable.

The publication of individuals' names in newspapers by the State
Treasurer in an attempt to notify individuals about dormant
accounts, refunds, etc., is not an investigative activity. The
State Treasurer's activities should not affect your ability or
your responsibility to collect sales tax on your investigative
activities.

A copy of your letter is being forwarded to the State Treasurer's
Department.

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

You may call toll free 1-800-252-5555 if you have any questions or
need more information. You may write to Tax Administration Divi-
sion, Comptroller of Public Accounts.

Sincerely,
Eddie C. Washington
Tax Administration Division