Was a parking-garage manager or the county owner ultimately responsible for sales tax collected under their management agreement?

Plain-English summary

After reviewing the parking-garage management agreement, the Comptroller said the county owner, not the management company alone, was ultimately responsible for the sales tax collected on parking services.

The contract required the manager to collect the tax, calculate the amount due each month, and report it to the Comptroller. But it also required the manager to deposit the receipts each day with the county treasurer. From the state's perspective, the county held the tax, so the state would look to the county for payment.

An earlier letter included in the same STAR document had declined to assign responsibility without seeing the contract and warned that both owner and manager could have potential liability depending on their agreement. The January 1992 answer reflects the specific contract later provided.

What this means for you

Parking owners and managers

Do not assume a management agreement transfers the owner's tax exposure simply because the manager handles collection and reporting. The flow of receipts and exact contract terms mattered here.

Government entities

Contracting operational duties to a private manager did not relieve the county of ultimate responsibility where the county received the collected parking receipts.

Common questions

Who did Texas look to for the tax? The county.

Did the manager have any tax duties? Yes. It collected, calculated, and reported the parking tax under the contract.

Why was the county ultimately responsible? The manager deposited the receipts daily with the county treasurer, leaving the county in possession of the tax.

Would every parking-management agreement have the same result? No. The earlier response said potential liability depended on the contract terms.

Citations and references

The letter does not cite a specific statute or administrative 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/9201L1157A13

Original ruling text

January 29, 1992

Dear *****:

Thank you for your recent letter asking about ABC Co. sales tax
responsibilities under a parking garage management agreement.

After reviewing the document you FAXED to us, I cannot agree that ABC Co.
is directly responsible for the sales tax collected on parking services.

While the agreement between ABC Co. and the county does require ABC CO.
to collect sales tax on parking services, to calculate the tax due each month,
and report the tax to this office, the agreement also requires ABC CO. to
deposit the receipts each day with the treasurer of the county.

From the state's point of view, the county has the tax and the county is
the entity we would look to for the tax. The fact that the county has
contracted with ABC CO. to assume some of the duties connected with the
operation of the garage does not relieve them of their ultimate responsibility
for the tax.

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

If you have any additional questions or need more information, you may
call me toll free at 1-800-252-5555, extension 3-4633. The regular number is
512/463-4633. You may also write to the Tax Administration Division.

Sincerely,

Wanda Hutcheson
Tax Administration Division

November 21, 1991

Dear *****:

Thank you for your letter regarding your company's liability for
collecting and remitting sales tax collected on parking revenues.

You state that your company (ABC Co.) manages a parking garage which is
owned by a separate entity. As the contractual management company, ABC
collects and pays the sales tax collected on parking revenues. You have
requested statement from this office that ABC is responsible for all sales
tax collection and remittance.

Depending on the terms of the management agreement, both the owner and
the manager of the parking garage have potential liability. Without seeing the
contract it is impossible to state that ABC is responsible for all sales tax
collection and remittance. I spoke with the auditor from our Dallas Audit
Office who last audited ABC. She states that ABC had contracts with several
different entities and that the terms of each contract were different. In
order to get a ruling on a specific contract, we will need to see a copy of the
management agreement. We could then make a ruling on that specific contract.

This information should be sent to the attention of the Tax
Administration Division. The toll free number is 1-800-252-5555.

Sincerely,

Joan Hale
Tax Administration Division