Texas Sales Tax Collection and Remittance Responsibilities of an Auctioneer

Texas Administrative Code
Title 34. PUBLIC FINANCE
Part 1. COMPTROLLER OF PUBLIC ACCOUNTS
Chapter 3. TAX ADMINISTRATION
Subchapter O. STATE SALES AND USE TAX

§ 3.311. Auctioneers, Brokers, and Factors

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context indicates otherwise.

(1) Auction or auctioning--The sale by an auctioneer of tangible personal property by competitive bid.
(2) Auctioneer--A person who owns tangible personal property or to whom tangible personal property has been consigned and who offers the tangible personal property for sale at auction.
(3) Broker--A person who brings other people together to bargain for the sale or purchase of taxable items. In absence of contractual provisions to the contrary, a broker:
(A) may not have possession of property;
(B) cannot cause title of property to be transferred to a purchaser without further action on the part of its owner; and
(C) has disclosed to the purchaser the identity of the broker's principal.
(4) Disclosed principal--A principal is considered to be disclosed if before or at the time of sale the purchaser has been given notice of the principal's identity.
(5) Factor--A person who sells taxable items belonging to a principal on consignment. A factor:
(A) has possession and control of property;
(B) can cause title of property to be transferred to a purchaser without further action on the part of its owner; and
(C) has not disclosed to the purchaser the identity of the factor's principal.
(6) Principal--A person who employs a broker or factor to act in the principal's behalf in negotiating with a purchaser for the sale of a taxable item.

(b) Responsibility of an auctioneer.

(1) Sales tax is due from the purchaser on the sales price of taxable items sold at auction.
(2) An auctioneer is responsible for collecting and remitting to the comptroller any tax due on the sale of taxable items sold at auction by the auctioneer.
(3) An auctioneer who does not receive payment for the item sold, does not issue a bill of sale or invoice to the purchaser of the item, and who does not issue a check or other remittance to the owner of the item sold by the auctioneer is not considered a seller responsible for the collection of the tax. In this instance, it is the owner's responsibility to collect and remit the tax.
(4) An auctioneer should not collect tax on the sale of items that are exempt from sales tax such as motor vehicles, real property, or livestock.
(5) Sales tax is not due on a sale of a taxable item when the owner of the item subsequently reclaims the property at the auction.

(c) Letter of waiver. A person, who is seeking an auctioneer's license and requires a letter of waiver as proof no sales tax permit is required, may request a letter of waiver from the comptroller.

(1) A request for a letter of waiver from the comptroller as proof no sales tax permit is required must be in writing and must detail the basis or reason no salestax permit is required.
(2) If the items being auctioned are exempt from sales tax or if the auctioneer is not considered a seller, a letter of waiver will be issued.
(3) A letter of waiver is valid only so long as there is no change in the fact situation as originally presented to the comptroller.

(d) Responsibility of a broker.

(1) Sales tax is due on sales solicited by a broker if the principal is a seller as defined by Tax Code, § 151.008 ; and the sale would not otherwise meet the definition of an occasional sale as found in § 3.316 of this title (relating to Occasional Sales; Joint Ownership Transfers; Sales by Senior Citizens' Organizations; Sales by University and College Student Organizations; and Sales by Nonprofit Animal Shelters). The principal is responsible for collecting and reporting the tax.
(2) Sales tax is not due on sales solicited by a broker if the principal is not a seller and the sale would otherwise meet the definition of occasional sale as found in § 3.316 of this title (relating to Occasional Sales; Joint Ownership Transfers; Sales by Senior Citizens' Organizations; Sales by University and College Student Organizations; and Sales by Nonprofit Animal Shelters).

(e) Responsibility of a factor. Sales tax is due on sales made by a factor. A factor is required to collect and report tax on all sales.

(f) Reference. Auctioneers and factors should refer to § 3.286 of this title (relating to Seller's and Purchaser's Responsibilities).

Source:
The provisions of this §3.311 adopted to be effective December 6, 1996, 21 TexReg 11503; amended to be effective September 5, 2006, 31 TexReg 7133