When were freight-collect charges taxable, and what historical state and local taxes did the Texas retailer have to collect?

Plain-English summary

The letter required the retailer to collect the historical 6% state tax on taxable sales and 1% Wichita Falls city tax. It also said that using the retailer's own delivery vehicles or having salespeople in an area with metropolitan-transit or city-transit taxes required collection of the described 1% use tax.

The retailer was responsible for applicable sales taxes unless the customer issued a resale or exemption certificate. Freight collect was nontaxable unless the retailer accounted for the transportation charge.

A customer could pay the tax directly to the state by issuing a Direct Payments Exemption Certificate; otherwise, the retailer had to collect it.

What this means for you

The historical answer combined freight treatment with state and local collection duties. The rates and presence rules are specific to 1987 and the described retailer, while the freight result depends on whether the retailer accounted for the transportation charge.

Common questions

Was freight collect taxable? Not unless the retailer accounted for the transportation charges.

Could a customer avoid retailer collection with a certificate? A resale or exemption certificate could apply, and the letter separately allowed direct state payment through a Direct Payments Exemption Certificate.

What state and local rates did the letter print? A historical 6% state rate and 1% Wichita Falls city rate, plus a described 1% transit use tax in applicable areas.

Did delivery activity affect local collection? Yes. The letter referred to the retailer's own delivery vehicles and salespeople in transit-tax areas.

Citations and references

• No statute or administrative rule is cited in the letter text.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8712L0856B08

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller December 16, 1987

Dear ***:

Thank you for your letter regarding your responsibilities for collecting
local sales and use taxes.

You are responsible for collecting 6% state tax on all taxable sales. You
are also responsible for collecting 1% city sales tax for Wichita Falls.
If
you deliver with your own delivery vehicles or have salesmen in any area
that
has MTA or City Transit Department taxes you would also be required to
collect the 1% use tax. You are responsible for collecting all sales
taxes
unless your customer issues you a resale or exemption certificate.

Freight collect is not taxable unless the retailer accounts for the
transportation charges.

The customer can pay all the tax directly to the State if the customer
issues
you a Direct Payments Exemption Certificate. Otherwise, you must collect
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 our
toll-free
number 1-800-531-5441. The regular number is 512/463-4600. You may write
me
at the Tax Policy Division.

Sincerely,
(Mrs.) Jo Ann Dieck
Tax Policy Division