Could stamped invoices from a private bridge security service prove that duty-free merchandise was exported for the Texas sales-tax export exemption?

Plain-English summary

A duty-free seller delivered merchandise at an international bridge to a private security service, whose employees stamped invoice copies to certify that customers exported the goods. U.S. Customs accepted that process, but the seller did not retain a customs broker's proof of export or a licensed carrier's bill of lading.

The Comptroller said the stamped invoices were not enough for the Texas export exemption. Section 151.307(b) stated that export could be proved only by one of four kinds of documentation:

1. A qualifying bill of lading from a licensed and certificated carrier showing the seller, buyer, and foreign delivery point.
2. Documentation from a licensed U.S. customs broker certifying foreign delivery.
3. Destination-country import documents.
4. An original air, ocean, or rail bill of lading plus a forwarder's receipt when the freight forwarder took possession.

Because the private security stamps were not one of those listed forms, the auditor could not accept them as alternate proof.

What this means for you

The historical memo treated the statute's document list as exclusive. Commercial evidence that goods actually crossed the border did not substitute for the proof the statute specified.

Common questions

Did it matter that U.S. Customs accepted the security company's certification? No. The Comptroller still rejected it for the Texas exemption.

Were ordinary stamped invoices enough? No.

What controlled the answer? The exclusive proof categories in Tex. Tax Code § 151.307(b).

Citations and references

• Tex. Tax Code § 151.307(b) (exclusive proof of export documents)

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8711L0850B10

Original ruling text

DATE: November 2, 1987

TO: Antonio Rocha, Jr., ** Audit, **

FROM: F. Wayne McDonald, Tax Policy Division

SUBJECT: Proof of Export

Facts: Here are the facts as they appear, in reference to COMPANY A,
"Duty-Free Sales".

The corporation is bonded by U.S. Customs to import duty free merchandise for
export and this exported merchandise is the one in question. The corporation
makes a sale of the duty free merchandise, which is then taken to the
International Bridge where it is handed over to a private security service
(COMPANY B) company performs the services which U.S. Customs use to, that
being, to certify that the duty free merchandise is in fact exported by
customers.

COMPANY A maintains only the copies of invoices stamped by the COMPANY B
employees which indicate that such merchandise was in fact exported. No U.S.
Customs Broker's Proof of Export documents on duty-free merchandise sold in
obtained nor copies of bills of lading by certificated licensed carrier.

Question: Does the fact that the merchandise is exported according to COMPANY
B and the fact that U.S. Customs does in fact accept such proof as Proof of
Export, allow us to accept this proof in audit situations?

The fact as presented were validated by **, Controller.

Answer: Sec. 151.307(b) of the Tax Code is quite explicit in what proof is
acceptable for a claimed exemption for exports. It reads as follows:

(b) When an exemption is claimed because tangible personal property is
exported beyond the territorial limits of the United States, proof of export
may be shown only by:

(1) a bill of lading issued by a licensed and certificated carrier of persons
or property showing the seller as consignor, the buyer as consignee, and a
delivery point outside the territorial limits of the United States;

(2) documentation provided by a licensed United States customs Broker
certifying that delivery was made to a point outside the territorial limits of
the United States;

(3) import documents from the country of destination showing that the property
was imported into a country other than the United States; or

(4) an original airway, ocean, or railroad bill of lading and a forwarder'
receipt if an air, ocean, or rail freight forwarder takes possession of the
property.

Based on the statutorial provisions, we can not accept this alternate proof.