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In my inbox just now, an email from the California State Board of Equalization. I present it as a reminder to the good people of Texas (where there’s no income tax, the state legislature meets only every second year, the budget is in good shape, a conservative Republican governor is now in his third term, and a general air of sanity predominates) to fall to their knees every so often to offer a word of thanks.
Sales Tax Does Not Apply to City and County Paper Bag Surcharges
Some cities and counties have enacted ordinances that prohibit certain retailers from providing plastic bags to customers. In addition to the ban on providing plastic bags, under certain ordinances, the customer is generally required to pay the retailer a specific amount for each paper bag the customer is provided. These ordinances typically impose the charge upon the customer. Some of these ordinances specifically require that the retailer indicate on the customer’s receipt the number of paper bags provided and the total amount charged for the paper bags.
Under these circumstances, this charge is imposed by the local jurisdiction upon the customer, not the retailer. As such, this charge is not included in the retailer’s gross receipts and is not subject to sales or use tax.