Did holding goods for export over 30 days defeat a refund, and how were bonded imports treated?

Plain-English summary

Keeping Texas-origin goods with the customs broker for more than 30 days did not eliminate the possibility of a refund. A Texas retailer could attach the broker's export documentation to its invoice, retain it, and make an appropriate recorded tax refund. Prompt delivery to the broker and the broker's holding pending shipment could overcome the storage presumption, but purchaser storage in Texas defeated the refund.

Out-of-state goods held by the broker pending export to Mexico were not subject to Texas use tax merely because the broker retained them. Use tax was due if the purchaser stored the goods in Texas before delivering them to the broker.

Imported property retained its character as an import while in bond. After removal from bond, many imported items could still avoid use tax when held for resale.

Common questions

Did the broker's holding goods over 30 days automatically prevent a refund? No.

What if the purchaser stored the goods in Texas? The purchaser had no refund right; for out-of-state goods, Texas use tax was due if purchaser storage occurred before delivery to the broker.

How long did imported property retain its import character? While it remained in bond.

Citations and references

The reproduced letter refers to an attached rule but does not identify its number.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8509L0663B11

Original ruling text

September 9, 1985

Dear ***:

Thank you for your recent letter which is restated with response below.

In reference to your letter pertaining to State Sales Tax we request the
following questions be answered.

1) If merchandise is received for export from within the State, but does
not leave the state for over 30 days, what happens then?

Response: When the goods are exported, you as a licensed United States
Customs Broker would provide documentation to your client as prescribed
in the attached rule.

If your client were a Texas retailer, they would:

• Attach your documentation to their sales invoice for that particular
  transaction and retain them as part of their permanent record.

• Refund tax as appropriate to the customer keeping accurate records of the refund.

The fact that you retained the goods for over 30 days would not remove the
possibility of a refund. In these situations you should clearly indicate when
you received the goods as well as when you saw them leave the country.

The fact that you were holding the goods pending shipment would overcome
the presumption of storage if you received the good promptly after the sale.
If the purchaser stores the goods in Texas, he has no right to a refund.

2) Same as above, except from another state.

Response: The fact that you receive foods from out of state retailers and
retain them pending export to Mexico will not cause them to be subject to
Texas Use Tax. If the goods are stored in Texas by the purchaser prior to
being delivered to you, Texas use tax would be due.

3) What is interpretation of imported property "Retaining its character as an import"?

Response: The imported property retains its character as an import while it is in
"Bond". After being removed from "Bond" many imported items are still not subject
to Use Tax if they are being held for resale.

This opinion is based on the facts presented. If there are additional or different
facts, the opinion may change.

If you have any questions or need more information, please call us at
1-800-252-5555 toll free from anywhere in Texas. You may write us at the Tax
Administration Division.

Sincerely,

Tax Policy Section
Tax Administration Division