Ezel / Tax Rulings / TX
TX 9008L1038G08 Sales and/or Use Tax (State,Local,MTA) 1990-08-23

Did a seller owe Texas tax when its Missouri customer directed taxable goods to be drop-shipped to a recipient in Texas?

Short answer: Yes. The seller should charge Texas use tax unless the Missouri customer was reselling the goods and gave a valid resale certificate.

Apply this to your situation

This page answers the general question as of 1990. Ezel answers yours, under current Texas tax law, with citations.

Currency note: this ruling is from 1990
Subsequent statutory amendments, regulation changes, court decisions, or later rulings may have changed the analysis. Treat this page as historical context, not current tax advice. Verify current law before relying on any specific rule, rate, or position mentioned here.
Disclaimer: This is an official Texas Comptroller of Public Accounts letter published on the State Tax Automated Research (STAR) system. Letters on STAR can be the basis of a detrimental reliance claim only for the taxpayer to whom the letter was directly issued (see 34 Tex. Admin. Code Rules 3.1 and 3.10); documents on STAR may no longer represent current policy even if not marked superseded. Taxpayer-identifying details are redacted. This summary is informational only and is not legal or tax advice. Consult a licensed Texas tax professional about your specific situation.
About this page: The plain-English summary, reader guidance, and Q&A below were written by Ezel based on the official state tax ruling. The original ruling (linked on this page) is the authoritative source for any reliance.

Plain-English summary

A seller sold taxable items to a Missouri customer, which directed the seller to ship the goods to its own customer in Texas. The Comptroller told the seller to charge the Missouri customer the appropriate Texas use tax.

If the Missouri customer was reselling the items, it could instead give the seller a valid and properly completed resale certificate.

What this means for you

In this 1990 letter, invoicing an out-of-state customer did not remove Texas tax when the goods were delivered to Texas. The resale exception depended on the customer actually reselling the items and providing proper documentation.

Common questions

Who was invoiced? The seller's Missouri customer.

Where were the goods delivered? To that customer's customer in Texas.

When could the seller omit the tax? When the Missouri customer was reselling the goods and furnished a valid, properly completed resale certificate.

Citations and references

  • Comptroller Rule 3.346(b), concerning use tax.
  • Comptroller Rule 3.285(d)(2), concerning resale certificates.

Source

Original ruling text

August 23, 1990

Dear **:

We received your letter questioning your tax responsibilities
concerning Texas tax on your sales of taxable items shipped to
Texas. According to your letter, you sold taxable items to a
Missouri customer who had you drop ship the items to their
Texas customer.

When you invoice your Missouri customer, you should charge the
appropriate Texas use tax. See section (b) of the enclosed Rule
3.346 relating to use tax.

If the Missouri customer is reselling the taxable items, then
they should provide you with a valid and properly completed
resale certificate in lieu of the tax. See section (d)(2) of
the enclosed Rule 3.285 relating to resale certificates.

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

If you have any questions you may call or write Tax Correspondence.
You may call toll free 1-800-252-5555, or our regular number is
512/463-4600. My extension is 3-4658.

Sincerely,

Sherry Buckley
Tax Correspondence

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