When a Texas customer calls an 800 number to order flowers for delivery through an FTD-type wire-order florist network, is the sale subject to Texas sales tax?

Plain-English summary

This 1995 letter from the Texas Comptroller's Tax Administration Division (signed by Bettie Peterson) responds to a taxpayer's question about how Texas sales tax applies to FTD-style wire-order florist operations, where an advertiser, a telemarketer taking phone orders, and a florist that actually fills and delivers the order may be located in different places (potentially both in and out of Texas).

The letter's key framing point: in the arrangement described, the telemarketer is the "selling florist," acting as an agent for the advertiser florist. Because Rule 3.307 (governing florists) turns on identifying the "selling florist," the Comptroller had to pin down which party in the chain plays that role before answering.

The letter then works through three fact situations, each varying where the advertiser, customer, telemarketer, and delivering florist/recipient are located:

• Situation 1 — Advertiser (Texas corporation), customer (Texas resident), telemarketer (Texas resident), florist and recipient (Texas residents). Holding: taxable. An order placed with a Texas "florist" (the telemarketer) for delivery of flowers in Texas is subject to Texas tax. Sales tax is due on the telephone call or telegram charges, and no resale certificate can be issued for those charges.
• Situation 2 — Advertiser (Texas corporation), customer (Texas resident), telemarketer (Texas resident), florist and recipient (out-of-state residents). Holding: taxable. Even though delivery happens outside Texas, an order placed with a Texas "florist" (the telemarketer) is still subject to Texas tax.
• Situation 3 — Advertiser (out-of-state), customer (Texas resident), telemarketer (out-of-state resident), florist and recipient (Texas residents). Holding: not taxable. Even though the flowers are delivered inside Texas, an order placed with an out-of-state "florist" (the telemarketer) is not subject to Texas tax.

The pattern across all three situations is the same: Texas taxability tracks the location of the telemarketer who takes the order (the "selling florist"), not the location of the customer, the advertiser, or where the flowers are actually delivered. The Comptroller notes this opinion is based on the facts presented, and that different — even similar — facts may produce different answers.

What this means for you

Florist businesses operating telemarketing or wire-order call centers

If your business operates the telemarketing side of an FTD-type network and you are located in Texas, orders you take are subject to Texas sales tax regardless of where the flowers end up being delivered — even to an out-of-state recipient. Tax applies to the telephone or telegram charges themselves, and you cannot use a resale certificate to avoid tax on those charges.

Out-of-state telemarketer-florists taking orders that deliver into Texas

Under this letter's reading, if your telemarketing operation is located outside Texas, an order you take is not subject to Texas tax even when the flowers are ultimately delivered to a Texas recipient by a Texas-based delivering florist.

Advertiser florists and local delivering florists

Neither the advertiser's location nor the location of the florist that actually fills and delivers the order determines Texas taxability in these scenarios — what matters is which party is acting as the "selling florist" (the telemarketer who takes the customer's order) and where that telemarketer is located.

Accountants and tax professionals advising florist networks

Because this ruling turns entirely on identifying the "selling florist" under Rule 3.307 and Texas taxability follows that party's location rather than the delivery destination, review the specific facts of each transaction chain carefully — the Comptroller cautions that different facts, even if similar, may produce a different answer.

Common questions

Q: If a Texas customer calls a Texas telemarketer to order flowers delivered in Texas, is the order taxable?
A: Yes. This is Situation 1 in the letter — an order placed with a Texas "florist" (the telemarketer) for delivery in Texas is subject to Texas tax, including tax on the telephone/telegram charges.

Q: If a Texas telemarketer takes the order but the flowers are delivered out of state, does Texas tax still apply?
A: Yes. Per Situation 2, an order placed with a Texas telemarketer-florist is subject to Texas tax even when delivery occurs outside Texas.

Q: If an out-of-state telemarketer takes the order but the flowers are delivered to a Texas recipient, is the sale taxable in Texas?
A: No. Per Situation 3, an order placed with an out-of-state telemarketer-florist is not subject to Texas tax, even though delivery is inside Texas.

Q: Who is the "florist" for purposes of Rule 3.307 in these telemarketing arrangements?
A: The telemarketer is treated as the "selling florist," acting as an agent for the advertiser florist. Identifying this party is necessary to correctly apply Rule 3.307.

Q: Can a resale certificate be used to avoid tax on the telephone or telegram charges in a taxable transaction?
A: No. The letter states that a resale certificate cannot be issued for these charges.

Citations and references

Regulations:

• 34 Tex. Admin. Code Rule 3.307 (Florists)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9506L1353E09

Original ruling text

June 26, 1995

Dear **:

Thank you for your letter dated June 14, 1995, concerning the taxability of
FTD florist operations.

The fact situations presented in your letter are restated below with
responses. Note - in the situation described in your letter, the
telemarketer is the selling "florist", acting as an agent for the advertiser
"florist". It is necessary to identify the "selling florist" in order to
correctly apply the terms set out in Rule 3.307 regarding florists.

Situation 1

Advertiser - Texas corporation
Customer - Texas resident
Telemarketer- Texas resident
Florist and recipient - Texas residents

Response: An order placed with a Texas "florist" (the telemarketer) for
delivery of flowers in Texas is subject to the Texas tax. Sales tax is due
on telephone calls or telegrams; a resale certificate cannot be issued for
these charges.

Situation 2

Advertiser - Texas corporation
Customer - Texas resident
Telemarketer- Texas resident
Florist and recipient - Out-of-state residents

Response: An order placed with a Texas "florist" (the telemarketer) for
delivery of flowers outside Texas is subject to the Texas tax.

Situation 3

Advertiser- Out-of-state
Customer - Texas resident
Telemarketer - Out-of-state resident
Florist and recipient - Texas residents

Response: An order placed with an out-of-state "florist" (the telemarketer)
for delivery of flowers inside Texas is not subject to the Texas tax.

This opinion is based on the facts presented. Different facts although
similar may result in different answers.

You may call or write me for additional information or if you have any
questions. The toll free number is 1-800-531-5441, and my extension is 50330.
The direct line is 512/475-0330. You may also write to Tax Administration,
Comptroller of Public Accounts.

Sincerely,

Bettie Peterson
Tax Administration Division

NOTE: Previous Accession Number 9506195L