Could an electric utility bill a customer later for Texas sales tax it failed to charge on earlier electricity bills?

Plain-English summary

An electric utility billed a liquor-store owner for sales tax it had failed to charge on earlier electricity bills. The owner's residence and business were on the same electric meter.

The Comptroller said the utility could collect the omitted tax from the customer. The letter cited two court cases holding that a retailer that did not charge sales tax at the time of sale could later sue the purchaser to recover it.

What this means for you

Failing to include tax on the original invoice did not necessarily prevent the retailer from seeking the tax later. This letter answers the retailer's recovery right; it does not separately analyze how mixed residential and business electricity should be allocated.

Common questions

Could the utility bill the customer later? Yes.

Why? The Comptroller relied on cases allowing a retailer to recover sales tax from the purchaser after failing to charge it at the sale.

Did the source decide the tax allocation for the shared meter? No. It states the shared-meter fact but does not separately analyze allocation.

Citations and references

• Sterling Const. Co. Inc. v. West Tex. Equip. Co. Inc. — cited for later retailer recovery of tax.
• Reaves & Bedker Co. v. Wilkes Co. — cited for the same proposition.
• The ruling text provides no reporter citations or statute number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8707L0827B13

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller July 24, 1987

Dear ***:

Thank you for your recent letter about your responsibility for sales tax
on
electricity.

In your letter you stated that you received a bill from your electric
company
for sales tax they failed to charge you on past billings.

In our telephone conversation, you stated that you own a liquor store.
You
also said that both your residence and your business are on the same
electric
meter.

You asked if the vendor, ***, is allowed to collect from you
the
tax, that they failed to bill you on past billings. The answer is yes.
Two court cases have addressed this question - Sterling Const. Co. Inc.
v. West Tex. Equip. Co. Inc. and Reaves & Bedker Co. v. Wilkes Co. In
both cases, the court held that when a retailer does not charge sales tax
at the time of sale, the retailer can later sue the purchaser to recover
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 questions or need more information, please call me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Sandi Skaggs
Tax Policy Division