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Ezel / Tax Rulings / TX
TX 8812L0915E06 Sales and/or Use Tax (State,Local,MTA) 1988-12-06

Could a credit-reporting service use a customer's historical taxable percentage for multistate purchases?

Short answer: Yes. The customer could use prior-year data for an exemption certificate, but the percentage and certificate had to be updated annually and supported by records.

Apply this to your situation

This page answers the general question as of 1988. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1988
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

For multistate credit-report purchases, the Comptroller recommended that the customer calculate a taxable-versus-nontaxable percentage from the prior year's purchases and issue an exemption certificate based on that history.

The seller was protected when it accepted the certificate in good faith and taxed only the stated taxable percentage. The customer had to update the figures and certificate annually and maintain business records supporting the allocation; otherwise the customer was liable for tax on the full charge.

Common questions

Could prior-year data be used? Yes.

How often did the allocation need updating? Annually.

What if the customer's records did not support it? The customer became liable for tax on the total charge.

Source

Original ruling text

BOB BULLOCK
COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS

AUSTIN 78774

December 6, 1988

Dear **:

I just want to take a minute to acknowledge your question on Credit Reporting
Services provided to multi-state customers.

I'd recommend you do the following:

  • Have your customer establish a percentage of taxable to non-taxable credit
    reports purchased from you based on the prior year.

  • Your customer may issue you an exemption certificate based on that historical
    data. You will be protected if you accept the certificate in good faith and
    assess tax only on the taxable percentage.

  • The figures and the exemption certificate must be updated annually and the
    customers business records must support the percentage or the customer will be
    liable for the tax on the total charge.

I am enclosing a copy of Rules 3.287 and 3.343 for your reference.

Please don't hesitate to call or write any time I can be of help to you. You
can reach me toll free by calling 1-800-252-5555.

Sincerely,

A1 Van Allen
Taxability Section
Legal Services Division

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