Does a personal shopper have to collect Texas sales tax on commission and consulting fees charged to clients?

Plain-English summary

A taxpayer who worked as a personal shopper and clothing consultant wrote to the Comptroller to ask how to collect tax on her sales. Her business model: she charged clients a consultation fee, then purchased recommended clothes for them and added a percentage commission on top of her total cost for the clothes.

The Comptroller explained that under the sales tax act, the shopper is considered a seller of the clothes she purchases for her clients. Because of that, the commissions and consulting fees she charges are taxable services connected to the sale of tangible personal property, and she must collect sales tax on the entire charge to the customer — not just the cost of the clothes, but the commission and consulting fee added on top.

There is one important carve-out: if the shopper charges a consulting fee but does not actually sell any clothes to that customer, that fee alone is not taxable. The letter also confirms the shopper may issue a resale certificate to the vendors she buys clothes from, since she is reselling those clothes to her clients rather than consuming them herself.

The letter includes a worked example: a sale of a dress, sweaters, and a suit totaling $1,600, plus a 20% commission ($320) and a 2-hour consulting fee at $50/hour ($100), for a pre-tax total of $2,020, with 8% sales tax of $161.20 added for a final total of $2,180.20 — showing that tax applies to the full combined charge, not just the underlying merchandise cost.

What this means for you

Personal shoppers, image consultants, and similar service providers

If your business involves purchasing tangible goods (like clothing) on behalf of clients and charging a commission or consulting fee tied to that purchase, this letter indicates the Comptroller will treat you as a seller of the goods. That means you should collect Texas sales tax on your entire charge to the customer — the cost of the goods, your commission, and any consulting fee billed in connection with that purchase — not just on the goods themselves.

If, on a particular engagement, you only provide consulting advice and do not purchase or sell any goods to that client, this letter indicates that a stand-alone consulting fee is not taxable.

You can use a resale certificate when you buy the clothes from your vendors, since you are reselling them to your clients as part of a taxable sale.

Accountants and tax professionals

This letter is a useful, concrete illustration of how Texas treats "taxable services in connection with the sale of tangible personal property": once tangible property changes hands as part of the transaction, related fees (commissions, consulting charges) billed to that same customer become part of the taxable sales price, and tax is due on the full invoice total. It also confirms the practical mechanics — resale certificates for the underlying purchase, and a bifurcated approach where fee-only engagements (no goods sold) escape tax. The letter cites no statute or rule number, so it should be treated as an illustration of the general principle rather than binding authority on any other fact pattern.

Clients of personal shoppers or consultants

If you hire someone to buy clothes or other goods for you and they add a commission or consulting fee to the invoice, expect Texas sales tax to be charged on the full amount, including their fee, according to this letter.

Common questions

Q: Does a personal shopper have to charge sales tax on their commission?
A: Yes, according to this letter — if the shopper actually sells clothes to the client, the commission and any consulting fee are taxable services connected to that sale, and tax applies to the entire charge.

Q: What if the shopper only gives styling advice and doesn't buy anything for the client?
A: The letter says that if a consulting fee is charged but no clothes are sold to that customer, the fee is not taxable.

Q: Can the personal shopper avoid paying sales tax when she buys the clothes from the store?
A: Yes. The letter states she may issue a resale certificate to the vendors she buys the clothes from, since she is reselling the clothes to her clients.

Q: In the example in the letter, how was the tax calculated?
A: The letter shows clothes totaling $1,600, a 20% commission of $320, and a consulting fee of $100 (2 hours at $50/hour), for a combined total of $2,020, with 8% sales tax of $161.20 added, for a grand total of $2,180.20 — meaning tax was applied to the commission and consulting fee along with the merchandise.

Q: Does this letter cite a specific Texas statute or rule?
A: No. The letter does not cite any statute or rule number; it simply explains the Comptroller's position on this fact pattern.

Citations and references

The original letter does not cite any specific statute or 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/9404649L

Original ruling text

April 13, 1994

Dear **:

Thank you for coming in and discussing how you should collect tax on your
sales. As I understand your business, you act as a consultant and clothes
purchaser for your clients. Typically, you will charge a customer a certain
amount for consultation services which are added to the price charged the
customer for clothes purchased for them. You then purchase recommended clothes
for them and add a percentage commission to your total cost.

Under the sales tax act, you are considered a seller of the clothes and the
commissions and consulting fees are taxable services in connection with the
sales of tangible property and subject to sales tax. You must collect tax on
the entire charge to the customer. However, if you charge consulting fees, but
do not sell any clothes to the customer, the charge is not taxable. You may
issue a resale certificate to any vendors from whom you purchase clothes for
your customers.

Therefore, a typical invoice of an CITY sale would look as follows:

1 dress $300.00
2 sweaters $850.00
1 suit $450.00
Total $1600.00
commission @ 20% $320.00
consulting fee 2 hrs at $50 per hour $100.00
Total $2020.00
sales tax at 8% $161.20
Total $2180.20

I hope you are successful in your new business venture. Should you have any
further problems or questions, please feel free to call me at 463-4004.

Sincerely,

Wade Anderson
Assistant Director
Tax Administration

cc: Glen Hunt
Director, Tax Administration

Charles Johnstone
Manager, Tax Administration