(C) During the exemption period, a customer purchases
a $90 dress that qualifies for the exemption. Later, during the exemption
period, the customer exchanges the $90 dress for a $150 dress. Tax
is due on the $150 dress. The $90 credit from the returned item cannot
be used to reduce the sales price of the $150 item to $60 for exemption
purposes.
(D) During the exemption period, a customer purchases
a $60 dress that qualifies for the exemption. Later, during the exemption
period, the customer exchanges the $60 dress for a $95 dress. Tax
is not due on the $95 dress because it was also purchased during the
exemption period and otherwise meets the qualifications for the exemption.
(l) Returned merchandise. For a 30-day period after
the temporary exemption period, when a customer returns an item that
would qualify for the exemption, no credit for or refund of sales
tax shall be given unless the customer provides a receipt or invoice
that shows tax was paid, or the retailer has sufficient documentation
to show that tax was paid on the specific item. This 30-day period
is set solely for the purpose of designating a time period during
which the customer must provide documentation that shows that sales
tax was paid on returned merchandise. The 30-day period is not intended
to change a retailer's policy on the time period during which the
retailer will accept returns.
(m) Mail, telephone, e-mail, Internet orders, and custom
orders. Under the Texas sales tax law, a sale of tangible personal
property occurs when a purchaser receives title to or possession of
the property for consideration. Therefore, an eligible item may qualify
for this exemption if:
(1) the item is both delivered to and paid for by the
customer during the exemption period; or
(2) the customer orders and pays for the item and the
retailer accepts the order during the exemption period for immediate
shipment, even if delivery is made after the exemption period. The
retailer accepts an order when the retailer has taken action to fill
the order for immediate shipment. Actions to fill an order include
placement of an "in date" stamp on a mail order, or assignment of
an "order number" to a telephone order. An order is for immediate
shipment when the customer does not request delayed shipment. An order
is for immediate shipment notwithstanding that the shipment may be
delayed because of a backlog of orders or because stock is currently
unavailable to, or on back order by, the company.
(n) Shipping and handling charges.
(1) Shipping and handling charges are included as part
of the sales price of an eligible item, regardless of whether the
charges are separately stated. Except as provided in paragraph (2)
of this subsection, if multiple items are shipped on a single invoice,
the shipping and handling charge must be proportionately allocated
to each item ordered, and separately identified on the invoice, to
determine if any items qualify for the exemption. The following examples
illustrate the way these charges should be handled.
(A) A customer orders a jacket for $95. The shipping
charge to deliver the jacket to the customer is $5.00. The sales price
of the jacket is $100. Tax is due on the full sales price.
(B) A customer orders a suit for $285 and a shirt for
$95. The charge to deliver the items is $15. The $15 shipping charge
must be proportionately and separately allocated between the items:
$285 / $380 = 75%; therefore, 75% of the $15 shipping charge, or $11.25,
must be allocated to the suit, and separately identified on the invoice
as such. The remaining 25% of the $15 shipping charge, or $3.75, must
be allocated to the shirt, and separately identified on the invoice
as such. The sales price of the shirt is $95 plus $3.75, which totals
$98.75; therefore, the shirt qualifies for the exemption.
(C) A customer orders a suit for $285 and a shirt for
$95. The charge to deliver the items is $20. The $20 shipping charge
must be proportionately and separately allocated between the items:
$285 / $380 = 75%; therefore, 75% of the $20 shipping charge, or $15,
must be allocated to the suit, and separately identified on the invoice
as such. The remaining 25% of the $20 shipping charge, or $5.00, must
be allocated to the shirt, and separately identified on the invoice
as such. The sales price of the shirt is $95 plus $5.00, which totals
$100; because the sales price of the shirt exceeds $99.99, the purchase
of the shirt is taxable.
(2) If the shipping and handling charge is a flat rate
per package and the amount charged is the same regardless of how many
items are included in the package, for purposes of this exemption
the total charge may be attributed to one of the items in the package
rather than proportionately and separately allocated between the items.
For example, a customer orders five shirts, with four priced at $98
and one at $85. The retailer charges $10 for shipping and handling
the order. The retailer would have charged the same amount for shipping
and handling whether the customer ordered one shirt or five shirts.
The retailer may choose to attribute the $10 shipping and handling
charge to the shirt that was sold for $85 rather than allocate the
charge proportionately and separately between the shirts. If the charge
is attributed to the $85 shirt, the sales price of that shirt is $95,
and all of the shirts will qualify for the exemption.
(o) Documenting exempt sales.
(1) Except as provided in paragraphs (2) and (3) of
this subsection, a retailer is not required to obtain an exemption
certificate on sales of eligible items during the exemption period;
however, the retailer's records should clearly identify the type of
item sold, the date on which the item was sold, and the sales price
of the item.
(2) A retailer who sells more than 10 backpacks to
a customer at the same time must obtain an exemption certificate from
the customer verifying that the backpacks are being purchased for
use by elementary or secondary school students.
(3) If the purchaser is buying the school supplies
under a business account, the retailer must obtain an exemption certificate
from the purchaser certifying that the items are purchased for use
by an elementary or secondary school student. "Under a business account"
means the purchaser is using a business credit card or business check
rather than a personal credit card or personal check; is being billed
under a business account maintained at the retailer; or is using a
business membership at a retailer that is membership based.
(p) Reporting exempt sales. No special reporting procedures
are necessary to report exempt sales made during the exemption period.
Sales should be reported as currently required by law.
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Source Note: The provisions of this §3.365 adopted to be effective September 7, 2000, 25 TexReg 8740; amended to be effective April 13, 2005, 30 TexReg 2085; amended to be effective October 6, 2008, 33 TexReg 8398; amended to be effective November 23, 2009, 34 TexReg 8338; amended to be effective December 3, 2012, 37 TexReg 9525; amended to be effective March 3, 2014, 39 TexReg 1479 |