When could a Texas machinery auction avoid sales tax for interstate shipment or refund tax after documented export?

Plain-English summary

An out-of-state purchaser could hire a common carrier to collect auctioned goods in Texas without owing Texas sales tax if the auctioneer delivered the goods to the carrier.

Because auctioneers ordinarily sold goods “as is, where is,” the auctioneer had to collect tax unless the goods were delivered immediately to a common carrier at the auction site for out-of-state shipment. The auctioneer also had to retain a copy of the bill of lading.

If the purchaser stored the goods in Texas before shipment, Texas sales tax was due and was not refundable.

For a loader scraper exported to El Salvador, the auctioneer correctly collected tax at sale, but the submitted proof was sufficient to exempt the transaction and refund the tax under Rule 3.323(c)(1)(D). The auctioneer could follow Rule 3.325 refund procedures or amend the affected return.

What this means for you

The historical interstate result depended on the auctioneer's immediate delivery to the carrier, not merely the buyer's out-of-state residence or later shipping plan. Export relief required proof after actual export.

Common questions

Was a buyer-arranged common carrier enough? Only if the auctioneer delivered the goods to the carrier for out-of-state shipment.

What record did the auctioneer retain? A copy of the bill of lading.

What if the buyer stored the goods in Texas first? Tax was due and not refundable.

Could tax collected on the El Salvador export be refunded? Yes, the provided documentation was sufficient.

Citations and references

• Rule 3.323(c)(1)(D) — export documentation cited for the exemption and refund.
• Rule 3.325 — refund procedures.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8708L0826G12

Original ruling text

COMPTROLLER OF PUBLIC ACCOUNTS
STATE OF TEXAS
AUSTIN, 78774

BOB BULLOCK
Comptroller August 3, 1987

Dear ***:

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

Situation:

Our firm conducts auctions of heavy construction machinery with
the terms of our sales requiring that the buyer make his own
shipping arrangements. It has been our opinion that since the
ownership passes to the buyer upon proper payment, that the sale
would be taxable at the place of sale.

At several of our Texas auctions purchasers have raised issues
regarding interstate shipment by common carrier and export
transactions. In the interstate transactions the purchasers from
other states are arguing that since the machine is being shipped
to common carrier it is exempt from Texas tax. In the export
transactions the buyers are arguing that providing a bill of
lading is sufficient to exempt the sale from tax.

Our limited research has indicated that the interstate sales
transactions would be subject to Texas tax regardless of method of
shipment, since title and ownership passes in Texas. We have been
told that the export transaction can be treated as exempt from tax
after proper proof that the machine has actually been exported.
We were also told that the correct approach for handling export
sales was to charge tax at the time of sale and refund it (at our
discretion) upon proper proof of export.

Would you please furnish us with a letter outlining how to
correctly handle these two exemptions under Texas law.

Response: The purchaser may hire a common carrier to pick up the goods in
Texas for delivery to a domestic out-of-state location and not owe Texas
sales tax on the transaction if the auctioneer delivers the goods to the
carrier.

However, auctioneers ordinarily sell "as is, where is". In other words,
the goods belong to the purchaser at the auction site. The auctioneer
must collect tax on the sale if the goods are not delivered immediately
to a common carrier at the auction site for shipment out of state. The
auctioneer must retain a copy of the bill of lading for his records.

If the goods are stored in Texas by the purchaser prior to shipment out
of
state, Texas sales tax is due on the transaction and is not refundable.

You were correct in collecting tax on the caterpillar loader scraper
which
was exported to El Salvador. However, the information they have provided
is sufficient to exempt the transaction and refund the tax under Rule
3.323 (c)(1)(D)(enclosed). Please refer to Rule 3.325 for refund
procedures or you may amend the affected return.

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 me at
1-800-252-5555 toll free from anywhere in Texas. The regular number is
512/463-4600. You may write me at the Tax Policy Division.

Sincerely,
Al Van Allen
Tax Policy Division