| (B) A seller does not owe tax on a sale, lease, or
rental of a taxable item if the seller accepts a properly completed
resale certificate in good faith. A resale certificate is deemed to
be accepted in good faith if:
(i) the resale certificate is accepted at or before
the time of the transaction;
(ii) the resale certificate is properly completed,
meaning that all of the information required by subsection (g) of
this section is legible; and
(iii) the seller does not know, and does not have reason
to know, that the sale is not a sale for resale. It is the seller's
responsibility to be familiar with Texas sales tax law as it applies
to the seller's business and to take notice of the information provided
by the purchaser on the resale certificate. For example, a jewelry
seller should know that a resale certificate from a landscaping service
is invalid because a landscaping service is not in the business of
(C) 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.
(D) Resale certificates are subject to the provisions
of §3.281 of this title (relating to Records Required; Information
Required). A seller is required to keep resale certificates for a
minimum of four years from the date on which the sale is made and
throughout any period in which any tax, penalty, or interest may be
assessed, collected, or refunded by the comptroller or in which an
administrative hearing or judicial proceeding is pending.
(4) Blanket resale certificate. A purchaser may issue
to a seller a blanket resale certificate describing the general nature
of the taxable items purchased for resale. The seller may rely on
the blanket certificate until it is revoked in writing.
(5) Bulk commodities. A resale certificate is not required
to be issued by a broker or dealer that buys and sells only raw commodities
in bulk, such as natural gas, raw cotton bales, or raw aluminum, from
producers or other commodity brokers or dealers solely for resale
in the normal course of business. However, if requested by the seller,
a properly completed resale certificate, absent a sales tax permit
number, may be issued by the purchaser of such raw commodities even
if the purchaser does not hold a sales and use tax permit.
(6) Electricity sales and purchases by independent
organization certified under Texas Utilities Code, §39.151. A
resale certificate is not required to be issued by a person who purchases
electricity solely for the purpose of resale from the independent
organization certified under Texas Utilities Code, §39.151. The
independent organization certified under Texas Utilities Code, §39.151
is not required to issue a resale certificate to a person from whom
it purchases electricity solely for the purpose of resale.
(d) Retailers outside Texas.
(1) A seller in Texas may accept a resale certificate
in lieu of tax from a retailer located outside Texas who purchases
taxable items for resale in the United States or Mexico in a transaction
that is a sale for resale, as defined in subsection (b) of this section.
(2) The resale certificate must show the signature
and address of the purchaser, the date of the sale, the state in which
the purchaser intends to resell the item, the sales tax permit number
or the registration number assigned to the purchaser by the state
in which the purchaser is authorized to do business or a statement
that the purchaser is not required to be permitted in the state in
which the purchaser is authorized to do business. 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 out-of-state retailer even if the Texas retailer
ships or delivers the taxable item directly to a recipient located
(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
(4) Foreign purchasers, other than purchasers from
Mexico, who are not engaged in business in Texas and do not hold a
Texas sales and use tax permit, may issue a properly completed resale
certificate, as described in paragraph (2) of this subsection, in
lieu of paying tax on the purchase of taxable items for sale in the
normal course of business when the items are delivered or shipped
to a location outside of Texas but within the United States or Mexico.
(5) An out-of-state or foreign purchaser who acquires
goods or services from a Texas seller for resale in Texas should refer
to §3.286 of this title for information on their responsibilities.
(6) A purchaser, whether from Texas, Mexico, or another
foreign country, may not issue a resale certificate for taxable items
purchased for resale outside the United States or Mexico. See subsection
(b)(5) of this section. Purchasers who purchase taxable items in Texas
for sale outside the United States or Mexico must comply with the
requirements of §3.323 of this title to claim exemption from
the Texas sales tax.
(e) Taxable use of items purchased for resale; items
removed from tax-free inventory.
(1) Divergent use; paying tax on fair market rental
value. When a taxable item is removed from a valid tax-free inventory
for use in Texas, Texas sales tax is due. When a taxable item 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 taxable item for
the period of time used.
(A) 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.
(B) 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.
(C) At any time the person using a taxable item may
stop paying tax on the value of the taxable item 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.
(2) Donation of taxable item. A purchaser who gives
a valid resale certificate instead of paying tax on the purchase of
a taxable item is not liable for sales tax on the taxable item when
donated to an organization exempt under Tax Code, §151.309 (Governmental
Entities), or §151.310(a)(1) and (2) (Religious, Educational,
And Public Service Organizations), provided the purchaser did not
make a taxable use of the donated taxable item prior to its donation.
(3) Use of taxable item as a trade-in. A purchaser
who gives a valid resale certificate instead of paying tax on 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.
(4) Use of taxable item outside Texas. Texas sales
or use tax is not due on a taxable item removed from a valid tax-free
inventory for use by the purchaser outside the state.
(5) Lost or destroyed inventory. Texas sales or use
tax is not due on tangible personal property purchased under a valid
resale certificate that is totally destroyed or permanently disposed
of by the purchaser in a manner other than for use or sale in the
normal course of business. For example, documented theft, casualty
damage or loss, or disposal in a landfill. This does not apply to
consumable items that are completely used up or destroyed by the purchaser
in the course of performing a service in Texas.
(f) Improper use of a resale certificate; criminal
(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. For
more information, see §3.305 of this title (relating to Criminal
Offenses and Penalties).
(g) Content of a resale certificate. A resale certificate
(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 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. Copies of both certificates are available at comptroller.texas.gov
or may be obtained by calling our toll-free number 1-800-252-5555.
A seller may also accept as a resale certificate the Uniform Sales
and Use Tax Certificate-Multijurisdiction promulgated by the Multistate
Tax Commission and available online at http://www.mtc.gov. The Streamlined
Sales and Use Tax Agreement Certificate of Exemption may not be accepted
as a resale certificate.
|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; amended to be effective November 1, 2017, 42 TexReg 6024; amended to be effective October 13, 2020, 45 TexReg7269