Texas Comptroller of Public Accounts STAR System
COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, TX 78774
July 5, 1990
Thank you for your letter concerning the use of a direct payment
exemption certificate by one of your clients.
The client apparently purchased pipe to be used in conjunction
with its oil and gas operations. The pipe was not for resale.
At the time of the purchase, the client elected to pay state tax
and Houston local tax to the Houston supplier. This supplier
then delivered the pipe to one of the client's locations outside
any local taxing jurisdiction.
If the client had issued its direct payment exemption certificate,
and the facts are as presented, the client would not have been re-
quired to accrue and pay the Houston local tax. The question in
this case is if the client should be allowed to issue the direct
payment exemption certificate two years after the actual purchase
of the pipe and claim a refund for either the local tax paid back
in '88 or to claim a refund for both the state and local tax paid
in '88 and then accrue the state tax due when the pipe was used in
I have enclosed a copy of the Comptroller's Hearing #22,959. The
administrative law judge ruled in this very similar case that no
tax had been erroneously or unlawfully collected. A direct pay
permit holder has an election to make when it purchases taxable
items for its own use. The direct pay permit can be issued to the
supplier or applicable taxes can be paid directly to the supplier.
Your client cannot claim a refund or credit because the tax it ini-
tially paid was due.
This opinion is based on the facts presented. If there are addi-
tional facts, or if the circumstances change, the opinion may change.
Please write or call if you have any questions. You can call toll-
free at 800-531-5441. Our regular number is 512-463-3830 and our
FAX number is 512-475-0900.
Legal Services Division
ACCESSION NUMBER: 9007L1032D13
DOCUMENT TYPE: L
TAX TYPE: SALES