Texas – Sales Tax Refund Guidelines

SALT Report 1630 – The Texas Comptroller of Accounts issued guidance regarding the procedures for requesting a sales tax refund.  Before a taxpayer can file for a refund of sales tax paid or collected in error, one of the following conditions must be established:

  • The taxpayer seeking the refund is the seller of the taxable item (Permitted Seller)
  • The taxpayer seeking the refund is the purchaser of the taxable item and a holder of a sales and use tax permit (Permitted Purchaser) or
  • The taxpayer seeking the refund is the purchaser of the taxable item but does not hold a sales and use tax permit (Non-permitted Purchaser)
In some cases, a taxpayer that holds a Texas sales and use tax permit can be both a permitted seller and a permitted purchaser.  In this situation the taxpayer must select the most appropriate choice, permitted purchaser or permitted seller, depending on what type of refund the taxpayer is claiming.
Refund Claims Processing Procedures
Permitted Sellers – Before requesting a refund, the seller must obtain an exemption certificate or resale certificate from the taxpayer from whom the tax was erroneously collected, and either:
  • Refund any taxes collected in error to the purchaser, or
  • Provide a credit to the purchaser for the tax collected in error
The Comptroller will not refund tax, penalties or interest to a permitted seller who collected tax in error from a purchaser until the above requirements have been satisfied. After the seller has refunded or credited the tax, the seller can either:
  • Take a credit, in the amount of the refund or credit, on a future sales tax return, or
  • Amend the return to take a credit for the period in which the sales tax was paid, or
  • Request a refund from the Comptroller
Permitted Purchasers – The purchaser of taxable goods or services, who hold a sales tax permit at the time sales tax was paid in error, may:
  • Amend the sales tax return for the period in which the tax was paid in error, or
  • Take a credit on a future sales tax return for taxes paid in error, or
  • Request a refund from the Comptroller
A permitted purchaser who did not hold a sales tax permit when the tax was paid must be assigned the right to a refund by the permitted seller and must file a refund claim with the Comptroller.
Non-Permitted Purchasers – A person who does not have a sales and use tax permit must first ask the seller for a refund of any taxes paid in error. The seller has the option to grant the refund or give the purchaser an assignment of right to refund which then allows the purchaser to file a refund claim with the Comptroller.
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