9007L1032D13 
      COMPTROLLER OF PUBLIC ACCOUNTS
      STATE OF TEXAS
      AUSTIN, TX 78774
      BOB BULLOCK
      Comptroller
      
      July 5, 1990
      
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      Dear **********:
      
      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 
      July, 1990.
      
      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.
      
      Sincerely,
      Larry Koenig
      Taxability Section
      Legal Services Division
      
ACCESSION NUMBER: 9007L1032D13 
SUPERSEDED: N 
DOCUMENT TYPE: L 
DATE: 07/01/1990
TAX TYPE: SALES