If a vendor refuses to accept a properly completed Texas resale certificate, can the buyer still avoid paying sales tax on items it intends to resell?

Plain-English summary

A business wrote in after one of its suppliers refused to accept its Texas resale certificate, even though the certificate was properly filled out. The Comptroller confirmed there is no law that forces a seller to accept a resale certificate — a retailer can decline one if it chooses to.

That doesn't leave the buyer stuck paying sales tax twice (once to the supplier, then again when it collects tax from its own customer on resale). Instead, the buyer can reimburse itself: on its own Texas sales tax return, it reduces its reported taxable sales (line two) by the amount it paid for the item. Using the letter's example, if a business pays $10 plus sales tax for an item it intends to resell, it can subtract that $10 from its taxable sales figure to offset the tax it already paid.

What this means for you

Retailers and other resellers

If a supplier won't honor your resale certificate, you aren't required to eat the tax twice. Track what you paid (including the tax) on items you buy for resale but end up paying sales tax on anyway, and reduce your reported taxable sales by the cost of those items when you file your own return.

Suppliers and vendors

You are not legally obligated to accept a customer's resale certificate, even a properly completed one. If you'd rather collect and remit tax up front instead of relying on a certificate, that's your prerogative.

Accountants and tax professionals

This is a practical self-help mechanism rather than a refund claim — the client adjusts its own taxable-sales line rather than filing a refund request with the Comptroller. Make sure the client keeps documentation of the tax paid on the resold items to support the adjustment.

Common questions

Q: Can a Texas seller legally refuse a resale certificate?
A: Yes. There is no law requiring a seller to accept a resale certificate, even if it is properly completed.

Q: If my supplier won't accept my resale certificate, do I just lose the tax I paid?
A: No. You can reimburse yourself by reducing your own reported taxable sales (line two of your sales tax return) by the amount you paid for the item.

Q: Does this only work for exact dollar amounts?
A: The letter uses a simple example ($10 item, reduce taxable sales by $10), so the offset is based on what you paid for the item, not including the tax itself.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/200006402L

Original ruling text

June 13, 2000

Dear **:

Thank you for your recent letter regarding Texas resale certificates and your
business.

There is no new or existing law prohibiting your suppliers from accepting a
properly completed Texas resale certificate when you are purchasing items or
components of items to be resold. The retailer, however, is not required to
accept a resale certificate if they choose not to do so.

If your supplier is unwilling to accept a resale certificate, you may reimburse
yourself for Texas sales tax paid on items you resell by reducing your taxable
sales (line two on your Texas sales tax return) by the amount you paid for the
item. For instance, if you pay $10 plus sales tax for an item, you may reduce
your taxable sales on your sales tax return by $10 to reimburse yourself for
the tax you paid on that item.

You suppliers are welcome to contact me if they have questions regarding
accepting Texas resale certificates from you.

This opinion is based on the facts presented. Additional or different facts
may yield different results.

You may call me toll free 1-800-531-5441, extension 5-9787, if you have any
questions or need more information. The direct line is 512/305-9787. You may
also write to Tax Policy Division, Comptroller of Public Accounts.

Sincerely,

Philip Knisely
Tax Policy Division