For a company that has fixed places of business in some cities but also sells from mobile trucks that travel to customers around the state, is local (city/county) sales tax on the truck sales based on the truck's location when the sale happens, or on the company's place of business that supplies/dispatches the truck?

Subject

Local Tax — Itinerant Vendor — Place Of Business

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9306L1243B06

Plain-English Summary

This June 1993 letter answers a taxpayer's question about how to collect and report local (city and county) sales tax when a business operates in two different ways at once: it has several fixed places of business in Texas (in CITY A, CITY B, and CITY C), and it also sells merchandise from mobile trucks that travel around the state to customers.

The taxpayer explained that it had previously been told to report tax for the fixed places of business based on the location of that place of business, and to report tax for the trucks separately, as an itinerant vendor. More recently, someone told the taxpayer it could no longer treat the truck sales as itinerant-vendor sales because the company also has fixed places of business in Texas. The taxpayer asked the Comptroller to clarify which rule actually applies.

The trucks travel to customers throughout the state, and sales happen wherever the truck is parked when the customer shows up. The taxpayer considers the trucks independent of its fixed locations, even though each truck restocks at a fixed location every weekend (most restock at the CITY C location; one restocks at the CITY A location) and receives its monthly route schedule from the CITY C office. On rare occasions, an order taken by the mobile truck is shipped directly from the CITY C location instead of sold off the truck.

The Comptroller confirmed that sales made from the trucks are sales made by itinerant vendors, and that city and county sales tax on those sales is based on the location of the sales transaction itself — meaning the location of the truck at the moment the customer looks over the merchandise, makes a selection, pays, and takes the merchandise away. The fact that the trucks restock at, and receive schedules from, the fixed places of business does not change this — the truck sales are taxed based on where the truck is, not based on the restocking or dispatching location. Based on the conversation with the taxpayer, the Comptroller told the taxpayer to keep collecting and reporting tax exactly as it had been doing.

What This Means For You

If you operate both fixed locations and mobile sales trucks

Having fixed places of business elsewhere in Texas does not automatically convert your truck sales into place-of-business sales. If a truck is genuinely traveling to customers and completing the sales transaction wherever the truck happens to be, those sales can still be treated as itinerant-vendor sales for local tax purposes, separate from your fixed locations.

If you need to determine which city or county tax applies to a mobile sale

The letter's test is where the transaction itself takes place — where the customer looks over the merchandise, selects it, purchases it, and walks off with it. That is the truck's location at that moment, not the city where the truck is based, restocked, or dispatched from.

If your trucks restock at, or get schedules from, a fixed location

Restocking each weekend at a home-base location and receiving monthly route schedules from a central office did not change the outcome here. The Comptroller still treated the truck sales as itinerant-vendor sales based on the truck's location at the time of sale, not the restocking or scheduling location.

If you occasionally ship an order instead of selling it off the truck

The letter notes that "on rare occasions" an order taken by the mobile truck was shipped from the CITY C location instead of completed at the truck. This letter's holding is about sales that occur at the truck; taxpayers with a mix of truck-completed sales and shipped orders should be careful to source each type of transaction correctly, since a shipped order may be sourced differently than a face-to-face truck sale.

Q&A

Q: Does having fixed places of business in Texas prevent a company from also being treated as an itinerant vendor for its mobile truck sales?
A: No. The Comptroller confirmed that the sales made from the taxpayer's mobile trucks are sales made by itinerant vendors, even though the same company also operates several fixed places of business in Texas.

Q: How is local (city/county) sales tax sourced for sales made from a mobile truck?
A: Based on the location of the sales transaction itself — the location of the truck at the time the customer looks over the merchandise, makes a selection, purchases it, and takes the merchandise away.

Q: Does it matter that the trucks restock every weekend at a fixed place of business, or get their monthly route schedules from a central office?
A: Based on the facts described, no — the letter still treats the truck sales as itinerant-vendor sales sourced to the truck's location, notwithstanding the weekly restocking and centrally issued monthly schedules.

Q: What did the Comptroller tell the taxpayer to do going forward?
A: To continue collecting and reporting tax exactly as it had been doing — i.e., reporting tax for the fixed places of business based on their location, and reporting truck sales based on the truck's location as an itinerant vendor.

Q: What happens when an order is taken by the truck but shipped from a fixed location instead of completed at the truck?
A: The letter notes this happens "on rare occasions" but does not separately analyze the tax treatment of those shipped orders; the letter's holding addresses sales completed at the truck itself.

Q: Can this letter be relied on by other taxpayers with similar facts?
A: This letter states its opinion is based on the facts presented and that the opinion may change if there are additional or different facts. Under Comptroller rules, letters on STAR generally support a detrimental reliance claim only for the taxpayer to whom the letter was issued.

Original ruling text

June 14, 1993

Dear **:

Thank you for your written inquiry and our telephone conversation
earlier this week clarifying your company's operations. You operate
several places of business as well as make sales from mobile trucks.
Several years ago, you were told to report tax for the places of
business based upon the location of the place of business and for the
trucks as an itinerant vendor. Recently, you were told that you could
not collect tax for the sales of the trucks as an itinerant vendor
because you have places of business in Texas. You requested written
directions for your business.

In your letter and our conversation, you stated that you have several
places of business in Texas located in CITY A, CITY B, and CITY C.
Your company also operates mobile trucks. The trucks travel
around to your customers throughout the state of Texas; sales from the
truck take place in the cities where your customers are located. You
consider the trucks to be independent of the places of business.
However, each weekend the trucks go into the CITY C location to
stock up for the next week of sales into the assigned territories. One
truck goes to the CITY A location each weekend for the next week's
inventory. At the beginning of each month each truck is given a
schedule of the routes to be taken during that month. All monthly
schedules are issued by the CITY C Office. On rare occasions, an
order is taken by the mobile truck and shipped from the CITY C
location.

You realize that the transit taxes and special purpose district taxes
will be due based upon point of delivery to the customer. You
requested that we clarify whether city tax should be allocated to the
CITY C and CITY A places of business or to the location of the
truck when the sale is made and whether the CITY A County tax applies
to the truck restocked at the CITY A location.

The sales made from the trucks are sales made by itinerant vendors.
City and county sales taxes are due based upon the location of the
sales transaction. The location of the sales transaction is determined
by the location of the truck when the customers come to the truck,
look over the merchandise, make their selection and purchase, and walk
off with the merchandise. Based upon our conversation, you will
continue collecting and reporting the tax as you are now.

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

You may write Tax Administration Division, Comptroller of Public Accounts.

Sincerely,

Tax Administration Division

NOTE: Previous Accession Number 9308005L.3 and/or 9308005L