<<Prev Rule

Texas Administrative Code

Next Rule>>
TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 3TAX ADMINISTRATION
SUBCHAPTER OSTATE AND LOCAL SALES AND USE TAXES
RULE §3.285Resale Certificate; Sales for Resale (Tax Code, §§151.006, 151.054, 151.151, 151.152, 151.153, 151.154, 151.302,151.707)

(a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

  (1) Mexico--Within the geographical limits of the United Mexican States.

  (2) Sale for resale--A sale of:

    (A) tangible personal property to a purchaser who acquires the property for the purpose of reselling it in the United States or Mexico in the normal course of business either in the form or condition in which it is purchased, or as an attachment to, or as an integral part of other tangible personal property;

    (B) tangible personal property to a purchaser who acquires the property for the sole purpose of leasing or renting it in the United States or Mexico to another person, but not if incidental to the leasing or renting of real estate;

    (C) tangible personal property to a purchaser who acquires the property for the purpose of transferring care, custody, and control of the property to a customer in the United States or Mexico as an integral part of a taxable service;

    (D) a taxable service to a purchaser who obtains the service for the purpose of reselling it in the United States or Mexico in the normal course of business as an integral part of a taxable service; or

    (E) a taxable service performed on tangible personal property that is held for sale by the purchaser of the taxable service.

  (3) United States--Within the geographical limits of the United States of America or within the territories and possessions of the United States of America.

(b) Acceptance of resale certificate.

  (1) A sale for resale as defined in subsection (a)(2) of this section is not taxable. All gross receipts of a seller are subject to sales or use tax unless a properly completed resale or exemption certificate is accepted by the seller. A properly completed resale certificate contains the information required by subsection (g) of this section. See also §3.287 of this title (relating to Exemption Certificates).

  (2) A sale is exempt if the resale certificate is accepted in good faith and the seller lacks actual knowledge that the sale is not a sale for resale. It is the seller's responsibility to take notice of the type business generally engaged in by the purchaser as shown on the resale certificate.

  (3) A resale certificate may be signed by a purchaser at the time of purchase if the purchaser intends to resell, lease, or rent the taxable item or transfer it as an integral part of a taxable service in the regular course of business.

  (4) The seller should obtain a properly executed resale certificate at the time the taxable transaction occurs. All certificates obtained on or after the date the comptroller's auditor actually begins work on the audit at the seller's place of business or on the seller's records after the entrance conference are subject to verification. All incomplete certificates will be disallowed regardless of when they were obtained. The seller has 60 days from the date written notice is received by the seller from the comptroller in which to deliver the certificates to the comptroller. Written notice shall be given by the comptroller upon the filing of a petition for redetermination or claim for refund. For the purposes of this section, written notice given by mail is presumed to have been received by the seller within three business days from the date of deposit in the custody of the United States Postal Service. The seller may overcome the presumption by submitting proof from the United States Postal Service or by other competent evidence showing a later delivery date. Any certificates delivered to the comptroller during the 60-day period will be subject to independent verification by the comptroller before any deductions will be allowed. Certificates delivered after the 60-day period will not be accepted and the deduction will not be granted. See §3.282 of this title (relating to Auditing Taxpayer Records) and §3.286 of this title (relating to Seller's and Purchaser's Responsibilities).

(c) Blanket resale certificate. A blanket resale certificate describing the general nature of the taxable items purchased for resale may be issued to a seller by a purchaser who purchases only items for resale. The seller may rely on the blanket certificate until it is revoked in writing.

(d) Retailers outside Texas.

  (1) A seller in Texas may accept a resale certificate in lieu of tax from a bona fide retailer located outside Texas who purchases taxable items for resale as defined in subsection (a) of this section.

  (2) The resale certificate must show the signature and address of the purchaser, the state to which the property is taken for resale, the sales tax permit number, if any, or the registration number assigned to the purchaser by the purchaser's home state. Mexican retailers who purchase taxable items for resale must show their Federal Taxpayers Registry (RFC) identification number for Mexico on the resale certificate and give a copy of their Mexican Registration Form to the Texas seller. An invoice describing the taxable item purchased and showing the exact street address or office address from which the taxable item will be resold must be attached to the resale certificate. The resale certificate must also state the type business engaged in by the purchaser and the type items sold in the regular course of business. A resale certificate may be accepted from the bona fide out-of-state retailer even if the Texas retailer ships or delivers the taxable item directly to a recipient located inside Texas.

  (3) The Texas retailer is not responsible for determining whether the out-of-state retailer is required to hold a Texas sales and use tax permit or to enter a Texas permit number on the resale certificate.

(e) Improper use of items purchased for resale.

  (1) When tangible personal property is removed from a valid tax-free inventory for use in Texas, Texas sales tax is due. Texas sales tax is not due on tangible personal property removed from a valid tax-free inventory for use outside the state. When tangible personal property or a taxable service purchased under a resale certificate is used for any purpose other than retention, demonstration, or display while holding it for sale, lease, or rental, or for transfer as an integral part of a taxable service, the purchaser is liable for sales tax based on the value of the tangible personal property or taxable service for the period of time used.

  (2) The value of tangible personal property is the fair market rental value of the tangible personal property. The fair market rental value is the amount that a purchaser would pay on the open market to rent or lease the tangible personal property for use. If tangible personal property has no fair market rental value, sales tax is due based upon the original purchase price.

  (3) The value of a taxable service is the fair market value of the taxable service. The fair market value is the amount that a purchaser would pay on the open market to obtain that taxable service. If a taxable service has no fair market value, sales tax is due based upon the original purchase price.

  (4) At any time the person using tangible personal property or a taxable service may stop paying tax on the value of tangible personal property or the value of a taxable service and instead pay sales tax on the original purchase price. When the person elects to pay sales tax on the original purchase price, credit will not be allowed for taxes previously paid based on value.

  (5) A purchaser who gives a valid resale certificate for tangible personal property or a taxable service is not liable for sales tax on tangible personal property or a taxable service donated to an organization exempt under Tax Code, §151.309 or §151.310(a)(1) and (2), provided the purchaser does not use the donated tangible personal property or the donated taxable service.

  (6) A purchaser who gives a resale certificate for the purchase of a taxable item is liable for sales tax if the purchaser uses the taxable item as a trade-in on the purchase of another taxable item. Tax must be paid on the original purchase price of the taxable item used as a trade-in.

(f) Improper use of a resale certificate.

  (1) A person may not issue a resale certificate at the time of purchase for a taxable item if the person knows the item is being purchased for a specific taxable use.

  (2) Any person who intentionally or knowingly makes, presents, uses, or alters a resale certificate for the purpose of evading Texas sales or use tax is guilty of a criminal offense.

    (A) If the tax evaded by the invalid certificate is less than $20, the offense is a Class C misdemeanor.

    (B) If the tax evaded by the invalid certificate is $20 or more but less than $200, the offense is a Class B misdemeanor.

    (C) If the tax evaded by the invalid certificate is $200 or more but less than $750, the offense is a Class A misdemeanor.

    (D) If the tax evaded by the invalid certificate is $750 or more but less than $20,000, the offense is a felony of the third degree.

    (E) If the tax evaded by the invalid certificate is $20,000 or more, the offense is a felony of the second degree.

(g) Content of a resale certificate. A resale certificate must show:

  (1) the name and address of the purchaser;

  (2) the number from the sales tax permit held by the purchaser or a statement that an application for a permit is pending before the comptroller with the date the application for a permit was made. If the application is pending, the resale certificate is valid for only 60 days, after which time the resale certificate must be renewed to show the permanent permit number. If the purchaser holds a Texas sales and use tax permit, the number must consist of 11 digits that begin with a 1, 2, or 3. Federal employer's identification (FEI) numbers or social security numbers are not acceptable evidence of resale. See also subsection (d)(2) of this section regarding registration numbers for retailers outside Texas;

  (3) a description of the taxable items generally sold, leased, or rented by the purchaser in the regular course of business and a description of the taxable items to be purchased tax free by use of the certificate. The item to be purchased may be generally described on the certificate or itemized in an order or invoice attached to the certificate;

  (4) the signature of the purchaser or an electronic form of the purchaser's signature authorized by the comptroller and the date; and

  (5) the name and address of the seller.

(h) Form of a resale certificate. A resale certificate must be substantially either in the form of a Texas Sales and Use Tax Resale Certificate or a Border States Uniform Sale for Resale Certificate. The comptroller adopts both certificates by reference. Copies are available for inspection at the office of the Texas Register or may be obtained from the Comptroller of Public Accounts, Tax Policy Division, 111 W. 6th Street, Austin, Texas 78701-2913. Copies may also be requested by calling our toll-free number 1-800-252-5555. In Austin, call 463-4600. (From a Telecommunication Device for the Deaf (TDD) only, call 1-800-248-4099 toll free. In Austin, the local TDD number is 463-4621.)


Source Note: The provisions of this §3.285 adopted to be effective January 1, 1976; amended to be effective November 17, 1981, 6 TexReg 4064; amended to be effective November 19, 1984, 9 TexReg 5717; amended to be effective November 24, 1987, 12 TexReg 4196; amended to be effective September 18, 1991, 16 TexReg 4957; amended to be effective December 28, 1993, 18 TexReg 9311; amended to be effective March 12, 1996, 21 TexReg 1687; amended to be effective July 26, 1998, 23 TexReg 7381; amended to be effective October 12, 2004, 29 TexReg 9550

Next Page Previous Page



Home TxReg TAC OM NewTac Public Footer Bar