6.2 Taxable Sales Price, Buyer’s Premium, Rates, and Sourcing

6.2 Taxable Sales Price, Buyer’s Premium, Rates, and Sourcing

Calculation order: Hammer price + mandatory buyer's premium + other taxable charges = taxable sales price. Apply the correctly sourced rate to that base.

Sales Price and Buyer’s Premium

Tax Code § 151.007 broadly defines “sales price” or “receipts” as the total amount for which a taxable item is sold, without deduction for seller costs and with specified statutory exclusions. A required buyer's premium is consideration the buyer must pay to acquire the lot, so it is generally included in the taxable base.

The authority is the Tax Code definition of sales price, not Rule 3.311(c). Rule 3.311 addresses auctioneers, brokers, and factors; citing its subsection (c) as the buyer's-premium rule is incorrect.

Example:

• hammer price: $5,000;
• buyer's premium: 10%, or $500;
• taxable sales price: $5,500;
• combined rate: 8.25%;
• tax: $453.75;
• total invoice: $5,953.75.

If the lot itself is exempt under a valid resale or agricultural certificate, the premium follows the exempt sale rather than being carved out as a separately taxable auction service. If only a separate service is being purchased, analyze that service under its own rule.

State and Local Rates

The state sales-tax rate is 6.25%. Cities, counties, transit authorities, and special-purpose districts may impose local taxes, with a maximum combined local rate of 2%, producing an 8.25% maximum combined rate.

Do not automatically charge 8.25% everywhere. Identify the local jurisdictions and the sourcing rule. Using the highest possible rate as a shortcut can overcollect tax, which creates its own duties.

Local Sourcing

Comptroller Rule 3.334 governs local sales and use taxes. The result can depend on whether the seller has a qualifying place of business, where an order is received, where the goods are delivered or picked up, and whether the transaction is an in-state sale or an interstate shipment.

For a live sale at a Texas auction location where the order is received and the buyer takes possession, the auction place commonly supplies the local-sales-tax location. An online order shipped to another Texas location can require a different local-tax analysis. A bidder's home address alone is not the universal answer.

Document:

1. the auction location and seller outlet;
2. how and where the order was received;
3. pickup or delivery location;
4. carrier and bill of lading; and
5. the rate and jurisdictions used.

Because local sourcing can change with business structure, use the Comptroller's current guidance or tax-rate locator for the actual sale.

Invoices

The invoice should show at least:

• lot and buyer identification;
• hammer price;
• buyer's premium;
• other taxable or nontaxable charges;
• exemption applied, if any;
• taxable subtotal;
• state and local rate;
• tax amount; and
• total due.

Texas guidance permits separately stating the tax or clearly indicating that tax is included in the sales price. An auctioneer who advertises “tax included” must still calculate, report, and remit the correct amount.

Charges After the Sale

Delivery, installation, packing, storage, and other charges require classification. A charge that is part of the sale before transfer can enter the taxable sales price, while a genuinely separate nontaxable service may be treated differently. Labels do not decide the result; the timing and substance do.

Interest from extending credit and other statutory exclusions should be separately documented. A penalty for late pickup does not automatically become part of the original taxable price merely because it appears on the same account.

Motor Vehicles

Ordinary tangible personal property is taxed under Chapter 151. Motor vehicles generally use Chapter 152, a 6.25% motor-vehicle sales tax, title documents, and county tax-assessor procedures. Do not run a titled vehicle through the furniture tax calculation without checking the motor-vehicle rules.

Check the Math

For each invoice:

1. verify the premium base;
2. add taxable required charges;
3. remove only supported exemptions or exclusions;
4. apply the properly sourced rate;
5. round consistently; and
6. reconcile collected tax to the return.

A transparent calculation is easier for the bidder, seller, and auditor to verify.

Rate Verification

For a real invoice, verify the current jurisdictional rate instead of relying on a remembered maximum. Save the locator result or other sourcing support with the auction file. If tax was overcollected or undercollected, follow the Comptroller’s correction and refund procedure rather than adjusting an unrelated seller settlement.