Was a Texas seller still responsible for sales tax when its customer refused both to pay $288.83 in tax and to provide a resale certificate?

Plain-English summary

A seller billed a customer $3,501 on a February 28, 1991 invoice. The customer refused to provide a resale certificate and refused to pay $288.83 in sales tax.

The Comptroller said the seller remained responsible for collecting and remitting the tax. Under Texas Tax Code § 151.052, tax added to a taxable sale became part of the sales price and a debt the seller could recover from the purchaser in the same way as the original price.

If the customer made only a partial payment, a proportional part of that payment was treated as tax. If the seller had omitted tax from the invoice, it could correct the mistake and back-bill the customer; the tax still remained a legally recoverable debt to the seller.

What this means for you

A customer's refusal to pay or provide exemption documentation did not shift the remittance duty away from the seller. The seller could pursue the customer for the tax, but still had to account for it to the state.

Common questions

How much tax did the customer refuse to pay? $288.83.

Did the customer provide a resale certificate? No.

Could the seller recover the tax from the customer? Yes, as part of the sales-price debt.

Could omitted tax be billed later? Yes.

Citations and references

• Tex. Tax Code § 151.052 — seller collection responsibility, purchaser debt, and treatment of partial payments

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9107L1120B04

Original ruling text

July 17, 1991

Dear **:

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

You stated in your letter that on your firm's invoice #XXXXX
dated February 28, 1991, the amount of $3501.00 was billed to
COMPANY ABC, Austin, Texas 78701. ** refuses to
submit a resale certificate and he refused to pay the tax which
amounts to $288.83.

As a seller, you are responsible for collecting the tax and
remitting it to the state. When an individual sells taxable goods
or services, the seller is 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 still a debt to the seller and recoverable at
law (supported by prior court cases).

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, you may call
me toll free at 1-800-531-5441, extension 5-0330. The regular
number is 512/463-4600, or write Tax Administration Division.

Sincerely,

Bettie U. Peterson
Tax Administration Division