Did an out-of-state auction avoid Texas sales tax when the equipment stayed in Texas and buyers took possession there?

Plain-English summary

An auction's out-of-state location did not prevent Texas tax from applying when the equipment itself was located in Texas and the buyer took possession in Dallas on an “as is, where is” basis. The seller had to collect Texas sales tax.

The letter quoted the 1989 combined rate as 8%: a 6% state rate plus local tax based on the equipment's Texas location. That historical rate should not be treated as a statement of today's rate.

The seller could accept a valid, properly completed Texas resale certificate from a bona fide out-of-state retailer. The letter said the writer could not think of a circumstance in which an exemption certificate should be accepted for this equipment.

Common questions

Did holding the auction outside Texas control the result? No. The equipment and transfer of possession were in Texas.

Could an out-of-state retailer buy for resale without paying tax? Yes, with a valid and properly completed Texas resale certificate.

Is the letter's 8% rate current? The letter stated that rate for 1989; current rates must be checked separately.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8908L0956E11

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

September 15, 1989

Dear ***:

We received your letter questioning the taxability of equipment
sales at an out-of-state auction when the equipment is located in
Texas. CORP ABC is required to collect Texas tax on sales of the
equipment located in Texas.

If, as stated in your brochure, the customer takes possession of
the equipment "as is, where is" in Dallas, you must collect 8%
Texas sales tax. The state sales tax rate is 6%. the local tax
rate is based on the location of the equipment in Texas. Enclosed
is a sales tax rates in Texas brochure for your information.

You may accept a valid and properly completed Texas resale
certificate from bona fide out-of-state retailers in lieu of the
tax. See section (d) of the enclosed rule 3.285 relating to
resale certificates. I can't think of a circumstance where an
exemption certificate should be accepted for this type of
equipment; however, I have enclosed rule 3.287 relating to
exemption certificates for your information.

This opinion is based on the facts presented. If there are
additional or different facts, the opinion may change.

If you have questions, please contact Tax Correspondence. You
may call toll free 1-800-252-5555, or our regular number is
512/463-4600. My extension is 3-4658.

Sincerely,
Sherry Buckley
Tax Correspondence