Could multistate credit-report customers get refunds of Texas tax already collected because they later elected to pay tax directly?

Plain-English summary

Rule 3.343 allowed a multistate customer to give a credit-reporting service an exemption certificate and pay the correct Texas tax directly to the Comptroller. But customers who adopted that method later could not demand refunds of tax the seller had correctly collected before the election.

Rule 3.325 required the underlying transaction to have been exempt before the seller could refund tax. The earlier tax was due, so the seller should not refund it.

What this means for you

A later direct-pay election did not retroactively turn prior taxable purchases into exempt transactions.

Common questions

Could the customers use direct pay going forward? Yes, under the multistate procedure described in Rule 3.343.

Could they recover tax previously collected? No. The earlier transactions were not exempt.

Citations and references

• 34 Tex. Admin. Code Rule 3.343 — multistate credit-reporting procedure
• 34 Tex. Admin. Code Rule 3.325 — refund guidelines

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9109L1130D03

Original ruling text

September 13, 1991

Dear **:

I understand * has an affiliate in Georgia that provides credit
reports to customers doing business in Texas.

Under Rule 3.343 concerning credit reporting services, a multi-state
customer may give the credit reporting service an exemption certificate
claiming the taxable service is used in several states and the
customer will pay the correct amount of tax directly to the Texas
Comptroller' s office. I understand the credit reporting service has
several customers that have now decided to handle their Texas tax
obligation this way. However, they have asked the service for a refund
of tax previously collected.

Rule 3.325 provides guidelines for refunding taxes. Under this rule,
the transaction must have been exempt from tax. In other words, there
is no provision for the seller to refund tax that was due but that the
purchaser could have elected to pay directly to the Comptroller.

The service should not refund the tax correctly collected.

This opinion is based on the facts presented other facts, although
similar, may result in a different conclusion.

If you have any questions or need more information, please call me. My
number is 512/ 463-4614. Or you may write to the Tax Administration
Division.

Sincerely,

Adina Whittemore
Tax Administration Division