Sales Tax

Prairie View A&M University is exempt from paying State of Texas sales tax on purchases. However, it is not exempt from collecting tax on sales made by the University.

When a university department sells a taxable item, it is responsible for collecting the sales tax, unless proof of tax exemption is obtained. Sales tax exempt certificates should be kept on file by the selling department following the retention schedule. The department must collect the tax and deposit in into the University’s Sales Tax Payable Account-030003-2110.

There is no such thing as a pass through sale. We cannot pass on the University’s exempt sales tax status to anyone else. For example, a university department cannot purchase shirts and then sell them to non tax exempt persons without collecting the sales tax.

Financial Management Operations remits the sales tax collected by the entire university to the State Comptroller’s Office as required. There is no need for the department to fill out a sales tax form or to remit the tax to the state. This service is provided by Financial Management Operations.

This manual provides information on taxable items and how to calculate the sales tax amount. This is specifically for the Prairie View A&M University in Waller County, Texas. The tax rates vary from county to county and sellers should use the appropriate tax rate for their location. To determine the current sales tax rate for Texas counties, please visit http://www.window.state.tx.us/taxinfo/local/index.html.

Taxable Items: (Please visit Taxable Object Codes for a complete list of TAMU taxable codes.)

  • A tax must be collected on all sales involving tangible personal property.
    The statutory definition for “tangible personal property” is “personal property that can be seen, weighted, measured, felt, or touched or that is perceptible to the senses.” See Sec.151.009.
    Clothing
    Computer programs
    Meals
    Books
  •  A tax must be collected on all taxable services.
    Please see Rule 3.286 and publication 96-259 Taxable Services for more information.
    Cleaning services
    Data Processing
    Telecommunication services
    Amusement services

Sales Tax Exemptions

Some purchasers qualify for a sales tax exemption because of the nature of their organization. When this happens, you must obtain a sales tax exemption certificate from the purchaser at the time of the sale. Please visit TEXAS SALES AND USE TAX EXEMPTION CERTIFICATE for an example of this form.

  • This certificate should be kept with your records as proof of the exempt sale.
  • There is no such thing as an exempt number. The buyer must prove his/her exemption status to you.
  • The certificate must be signed to be valid.
  • If you can identify the business as a governmental entity or a non-profit organization, an official purchase order from the buyer can serve as a tax exempt certificate.
  • Some purchaser may have a resale certificate instead of a sales tax exemption certificate which is acceptable.

Out of State Purchasers

Sales tax is charged based on where the possession of the item takes place. If the purchase is delivered to an out of state purchaser, the sale is considered nontaxable.
If the out of state purchaser picks up the item at an event in Waller County, sales tax should be collected, unless the organization is tax exempt.

Example:
John in Nebraska orders books to be delivered to his office in Nebraska.  Jane, also from Nebraska, orders books, but decides to come by your office to pick them up. Which sale is taxable?
Jane’s—she is taking possession of the item in Texas. This can be compared to Jane going to a local bookstore to buy the items.

Sales Tax Calculation

The tax must be collected on the amount of the sale that is taxable. Taxable sales should be separated from nontaxable sales to perform this calculation. The total amount of taxable sales times the sales tax rate equals the sales tax amount.
Total Amount X 0.0825= Sales Tax Amount
Example:
$150.00 X .0825= $12.30
You may also set the sales price to include the sales tax amount. This must be clearly stated on any documents used to promote the sale.
Sales Price (including tax) / (1+0.0825) = Sales Price (without tax)
Sales Price (including tax) – Sales Price (without tax) = Sales Tax Amount
To check this calculation, multiply the sales price times the tax rate: $11.11 X .0825 = $.90
If the tax on a sale is less than half a cent, no tax is collected. If the sales tax equals half a cent or more, the full one cent is collected. Sales tax on a $.05 sales is not due because it is less than half a cent.

Common scenarios for PVAMU departments

Conferences

Conferences for educational purposes are sales tax exempt. Tax is not collected on books, pamphlets, clothing, meals, etc. if these items are included in the cost of the registration. Attendees are paying for the conferences and not the items. The items included in the conference registration fee should be an insubstantial part of the fee.
Books, pamphlets, clothing, meals, ext. sold separately at the conference are taxable and sales tax should be collected accordingly.

Examples:
A conference registration fee is $100 and includes a notebook. This would not be taxable.

A conference registration fee is $10 and includes a t-shirt. This would be looked upon as selling the t-shirt since the cost of the t-shirt is a substantial part of the registration fee, so it would be subject to sales tax.

Information Services

Information services are defined as furnishing general or specialized news or other current information, including financial information, by printed, mimeographed, electronic, or electrical transmission, or by utilizing wires, cable, radio waves, microwaves, satellites, fiber optics, or any other method now in existence, or which may be devised, and electronic data retrieval or research. Information services do not include Internet access service or information services that are provided in conjunction with and merely incidental to the provision of Internet access service when provided for a single charge. Title 34, Part 1, Chapter 3, Subchapter O, Rule 3.342 http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?sl=T&app=9&p_dir=P&p_rloc=28633&p_tloc=&p_ploc=1&pg=42&p_tac=&ti=34&pt=1&ch=3&rl=298

Taxable:

  • Information that is gathered, maintained, or compiled and made available by the provider of the information service to the public or to a specific segment of industry for a consideration is subject to sales tax. Examples of taxable information services include, but are not limited to, the following:
        • Newsletter;
        • Scouting reports and surveys, including those used in sports and the oil and gas and related industries;
        • Mailing lists, and bad check lists (only that percentage which represents names of persons located in Texas is taxable);
        • Real estate listings;
        • Financial, investment, stock market, or bond rating, or financial reports, other     than charges to a person by a financial institution for account balance information;
        • News clipping services and wire services; and
        • Abstracts of title and other information provided by title plants.

Nontaxable:

  • The sale of information that is gathered or compiled on behalf of a particular client is not subject to tax if the information is of a proprietary nature to that client and may not be sold to others by the person who gathered or compiled the information. Any subsequent sale of such information by the client for whom the information was gathered or compiled is subject to tax. Examples include opinion polls and management consultant reports.
  • Any sale of information primarily derived from laboratory, medical, or exploratory testing or experimentation or any similar method of direct scientific observation of physical phenomena is not subject to tax. Examples include, but are not limited to, geophysical survey information, polygraph test, and medical test results.
  • Information required to be furnished pursuant to the Open Records Act is not subject to sales tax. See *3.341 of this title (relating to Sales of Governmental Publications, Records, or Documents). Fees paid when obtaining these documents may be excluded from the tax base if separately stated when the documents are furnished to clients. Tax will only be due on the amount over and above the cost of the documents.

Laundry Services

Sales tax is due on laundry, cleaning, and garment services. A person who performs these services is required to collect sales tax from the customer. Title 34, Part 1, Chapter 3, Subchapter O, Rule 3.310 http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?sl=T&app=9&p_dir=N&p_rloc=26769&p_tloc=&p_ploc=1&pg=12&p_tac=&ti=34&pt=1&ch=3&rl=298 Examples of laundry, cleaning, and garment services include, but are not limited to:

  • Carpet cleaning and repairing performed in residential structures;
  • Diaper cleaning service;
  • Drapery cleaning service;
  • Dry cleaning services for garments or rugs;
  • Fur garment cleaning, repairing, and storage;
  • garment alterations and repairs;
  • ironing or pressing garment services;
  • mending services;
  • power and hand laundry services;
  • rug cleaning, dying, and repairing services;
  • tailoring garments;
  • treating or applying protective chemicals to carpet, upholstery, rugs, or drapery;
  • upholstery cleaning and repairs;
  • uniform or linen cleaning services that provide only the services to clean or launder the customers’ uniforms or linens; and
  • Valet services.

Postage and Handling

Postage and handling also called transportation charges, freight, shipping, delivery, or convenience fees are taxable to a customer when a taxable item is sold. Title 34, Part 1, Chapter 3, Subchapter O, Rule 3.303 http://info.sos.state.tx.us/pls/pub/readtac$ext.TacPage?sl=T&app=9&p_dir=N&p_rloc=97840&p_tloc=&p_ploc=1&pg=6&p_tac=&ti=34&pt=1&ch=3&rl=298
These charges are considered to be services connected to the sale. Please be sure you are including tax on these fees for any items that you sell.
If the sale is to an exempt organization or shipped out of state, these charges are not taxed.

You must get a tax exempt certificate from Texas customers to exempt them from the tax.

Publications

Newspapers
Newspapers sold or distributed by individual copy or by subscription are sales tax exempt.
Newspaper is defined as a publication:

  • Printed on newsprint;
  • Whose average sales price per copy over a 30-day period does not exceed $1.50;
  • That is printed and distributed periodically at daily, weekly, or other short intervals of four weeks or less;
  • For the dissemination of news of a general character and of a general interest, including advertising;
  • Containing articles and essays of general interest by various writers and advertisements that is produced for the operator of a licensed and certificated carrier of persons and distributed by the operator to its customers during their travel on the carrier.
  • For the dissemination of news of a general character and of a general interest that is printed on newsprint and distributed to the general public free of charge at daily, weekly, or other short intervals of four weeks or less.

The term newspaper does not include magazines, handbills, circulars, flyers, sales catalogs, or the like, unless these items are distributed as a part of a newspaper and the items, after being printed, are delivered by the printer to the person responsible for the distribution of the newspaper.

Magazines
Subscriptions to magazines entered as periodicals class (formerly called second class) that are sold for a semiannual or longer period of time are sales tax exempt.
Magazine is defined as a publication:

  • Usually paper-backed and sometimes illustrated
  • That appears at regular intervals and contains stories, articles, essays by various writers, and advertisements.

Individual magazine sales are taxable.

Periodicals and writings published and distributed by an educational organization are subject to sales tax unless they are subscriptions of six months or longer which are mailed as periodicals class (formerly known as second class).

Surplus Sales

Prairie View A&M University requires that all surplus property be sold by PVAMU Surplus, a part of Fixed Assets Services.
Surplus property sold to any state agency is sales tax exempt.
Sales of typewriters, office furniture, construction equipment and other tangible, personal property to non-state agencies should be charged sales tax, unless proof of tax exemption is received.
Vehicles licensed for use on highways sold to non-state purchasers are exempt from sales tax. These sales are subject only to the Motor Vehicle Sales Tax which is collected by the county Tax Assessor-Collector. Title 34 Part 1 Chapter 3 Subchapter F http://info.sos.state.tx.us/pls/pub/readtac$ext.ViewTAC?tac_view=5&ti=34&pt=1&ch=3&sch=F&rl=Y

Resources

State of Texas Tax Code http://www.window.state.tx.us/taxinfo/local/city.html

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