Did the City of Dallas have to collect sales or use tax on a floodplain-reclassification application and permit fee?

Plain-English summary

The Comptroller said the City of Dallas did not have to collect sales or use tax on its fee for an application and permit to reclassify a floodplain area.

The fee ranged from $750 to $1,400 depending on location. It helped cover the City's review of technical and engineering data and preparation of the application package for City Council. The letter said the transaction was neither a sale of tangible personal property nor a taxable service.

What this means for you

Cities and permit offices

The particular regulatory application and permit fee described here was outside the sales-and-use-tax base because it did not purchase property or a taxable service.

Applicants

The amount and cost-recovery purpose of the fee did not make it taxable. The classification of the transaction controlled.

Common questions

Was the floodplain-reclassification fee taxable? No.

How much was the fee? The letter stated a range of $750 to $1,400, depending on the area's location.

What did the fee cover? Review of submitted technical and engineering data and preparation of the package for City Council.

How many applications did Dallas process? The letter said 10 to 12 per year at that time.

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/9201L1157C10

Original ruling text

January 30, 1992

Dear **:

I apologize for the delay in responding to your letter, in
which you asked whether the City of Dallas is required to
collect tax on the application fee for a City permit to
reclassify a floodplain area. The fee ranges from $750 to
$1400, depending on the area's location. The fee is imposed
to help defray the City's cost to review technical and
engineering data submitted by the applicant and to prepare
the package for submission to the City Council. The City
currently processes 10 to 12 of these applications per year.

The application/permit fee is not subject to sales or use
tax. The transaction between the City and a permit
applicant is not a sale of tangible personal property or a
taxable service.

This opinion is based on the facts presented. Different
facts, though similar, might lead to different answers. If
you have further questions, feel free to write or call me at
1-800-252-5555, ext. 3-3889.

Sincerely,

John Christian
Attorney
Tax Administration Division