(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
reselling jewelry.
(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.
(i) The seller has 90 days, or until a later date agreed
to in writing by the comptroller and the seller, referred to in this
section as "the period," 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
no earlier than the filing of a petition for redetermination or claim
for refund.
(ii) 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.
(iii) Any certificates delivered to the comptroller
during the period will be subject to independent verification by the
comptroller before any deductions will be allowed. Certificates delivered
after the 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
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.
(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.
Cont'd... |